The Best of the Value Investing Conference

The Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) annual meeting draws investors to Omaha like moths to a flame. We're almost helpless to resist the witty charms of the high priests of our practice, Warren Buffett and Charlie Munger. The annual marathon Q&A sessions with Buffett and Munger are the stuff of investing legend, which is why we're live blogging the whole thing so that you can feel like part of the action.

But the Berkshire meeting isn't the only game in Omaha this weekend. The city also played host to the Value Investing Conference, organized annually by Robert Miles, author of The Warren Buffett CEO. This year's meeting featured speakers who rank among some of the brightest minds in the value realm, so it was a real treat to sit back, soak up the discussion, and furiously pound out notes on my laptop.

You had to be there to have enjoyed the presentations, banter, and Q&A in full. But here's my stab at sharing some of the more interesting themes of this stellar event.

  • On stocks being cheap: Both Charles Brandes and Legg Mason's Robert Hagstrom presented compelling cases for stocks being cheap -- especially those in the bargain bin. According to Brandes, the cheapest quintile of global stocks on a price-to-book basis are 20% below the historical average.
  • On attractive sectors: I got a nice jolt of confirmation bias from a couple of speakers who believed that IT, health care, and telecom are all attractively priced right now. Indeed, my last two purchases have been Johnson & Johnson (NYSE: JNJ  ) , which represents a fantastic risk-adjusted opportunity in health care, and Google, an information juggernaut that's also building itself a new mobile moat with its wildly successful Android operating system.
  • On materials: There was a general vibe that commodity prices and basic material stocks are overheated right now.
  • On Japan: This marks the third value-investing conference in the past years where I've heard smart folks make an ardent case for Japan. This time around, global investor and Benjamin Graham pupil Brandes was making the case for the down-and-out country. And although Japan does face very serious challenges, I tend to agree that there could be some great opportunities there.
  • On Berkshire Hathaway: Surprise: These guys like Berkshire. According to Markel (NYSE: MKL  ) CIO Tom Gayner, Berkshire has been Markel's largest holding since 1990.
  • On biggest mistakes: Miles asked each of the speakers to fess up to their biggest investing mistake. Nearly every speaker sheepishly talked about getting hit by the financial steamroller back in 2008. Said Brandes: "We bought bank stocks too early. We did our own stress tests on their portfolios, but they weren't stressful enough."
  • On cash: The speakers were collectively bullish, but Gayner doesn't mind sitting on cash: "It isn't as though I like cash. It is a pathetic investment. It earns you next to nothing and depreciates each day. It does give you optionality, though, and the ability to act decisively and quickly."
  • On going global: According to Hagstrom, the S&P 500 is now correlating more with global GDP than with U.S. GDP. In addition, almost 70% of the S&P 100 has more than 25% of revenues coming from outside the United States.
  • On holding periods: The humble Chuck Akre ironically wowed the crowd with the massive returns of some of his uber-long-term holdings, including American Tower (NYSE: AMT  ) . Pat Dorsey, meanwhile, argued that Mr. Market is myopic and that Wall Street is abysmal at incorporating longer-term information into market prices.
  • On the very long view: Akre, when pressed for a stock that he could see as a future 10-bagger over a very, very long time horizon, said that both beleaguered Visa (NYSE: V  ) or MasterCard (NYSE: MA  ) could fit the bill.
  • On beating the S&P 500: Gayner: "You want to beat the S&P 500? Buy 500 stocks and sell the airlines."

Berkshire 2011
Hungry for more value goodness? Read up on the questions Buffett must answer, follow Warren and Charlie's Q&A session with us as we live blog, and check out our photos and videos from Berkshire weekend on The Motley Fool's Facebook page.

Stay thrifty, my friends.

Joe Magyer owns shares of Berkshire Hathaway, Philip Morris International, Google, and Johnson & Johnson. Berkshire Hathaway, Google, Johnson & Johnson, Markel, and Visa are Motley Fool Inside Value picks. American Tower and Google are Motley Fool Rule Breakers selections. Berkshire Hathaway is a Motley Fool Stock Advisor recommendation. Johnson & Johnson is a Motley Fool Income Investor pick. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. The Fool owns shares of Berkshire Hathaway, Google, Johnson & Johnson, Legg Mason, and Markel. Alpha Newsletter Account, LLC, owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (17)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 30, 2011, at 12:21 PM, TMFRhino wrote:

    Love the Gayner quote on beating the S&P 500.

  • Report this Comment On May 01, 2011, at 10:00 AM, DrRonPaul4Prez wrote:

    I don't like V and MA. MA is selling for several times its book value, and V's book value is made up 2/3 of intangibles! Neither one is any good from a value perspective.

  • Report this Comment On May 01, 2011, at 11:08 AM, TMFJoeInvestor wrote:

    @DrRonPaul4Prez: Visa and MasterCard's value isn't in hard assets -- and that's actually the beauty of their models. Capital light with high returns on reinvestment and the ability to pour our tons of cash in buybacks and dividends.

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