Investing Hero for Lou Dobbs
03/26/2004 12:00 am EST
"Warren Buffett is my personal investing hero, and arguably the most successful (and famous) investor of our times-maybe of all time," says Lou Dobbs. In his The Lou Dobbs Money Letter, he explains why Buffett's company should be a part of all investor portfolios.
"Buffett is the driving force behind Berkshire Hathaway (BRK.A NYSE) which is really a holding company that owns other companies. I've told Warren before that it amazes me that he still considers himself an individual stock investor. He doesn't invest in stocks; he invests in the whole company. So those who invest in Berkshire Hathaway are actually investing in a variety of companies. It may sound a little bit like a mutual fund, which is correct in the sense that you are investing in more than one company. However, a key difference is that Warren and his number-two man, Charlie Munger, usually own large stakes in the companies they acquire and are sometimes directors of those companies, meaning they play a role in running them.
"An investment in Berkshire Hathaway is actually a smart investment in the man himself. It was patience that got him a position under Benjamin Graham, a famous investor in the 1920s and one of the founding fathers of value investing. It was here that Buffett really developed his philosophy for investing. He found that a company's management and place within an industry were far more interesting than simply "running the numbers." Buffett focused on management's commitment to corporate governance and dedication to success, and invested his money in only the best. Through strategic acquisitions and Buffett's dedication to buying good businesses that are selling below intrinsic value, Berkshire Hathaway's overall gain from 1964 through 2003 was 259,485%, compared with a mere 4,743% for the S&P 500.
"No wonder Harvey Eisen, the respected chairman of Bedford Oak partners and one of our panelists in The Lou Dobbs Money Letter, told us as recently as January of this year that Berkshire Hathaway 'is the ultimate investment because you have the best manager in the world working for you, Warren Buffett. We think it's a core long-term holding. 'The stock is up almost 30% since Harvey 's initial recommendation last July. I usually agree with Harvey Eisen, but I really think he's on the money with Berkshire. Warren Buffett and his company represent well my 'good people doing good business' approach to investing, and there should be a place in all investors' portfolios for such an investment.
"There are two ways investors can ride Warren 's distinguished coattails by investing in his company: Class A shares (BRK.A NYSE) and Class B shares (BRK.B NYSE). For most, Class B shares are the way to go, as they sell for 1/30th of the price of the 'A' shares. The biggest difference is that owners of Class B shares have less voting power (1/200th) than owners of A shares, but when the company is run by Warren Buffett, chances are you'll vote with him anyway."