5 ms·

Little rich coming from an ex-hedge fund manager...

curuinor 10y ago
Buffett's main deal is Berkshire Hathaway, which is a conglomerate holding company and has little to do with hedge funds. So you wouldn't have to be a qualified investor to put money in BH, for example (although you would have to afford their stock, which is incredibly expensive). BH did own a part share in a hedge fund at one point, but Buffett never did anything like, say, charging 2 and 20
- curuinor 10y ago
  (that is, the crux of his argument has always come from the fact that he was always an thoroughly a cheap cheap person when it came to buying equities and he got real good deals by buying when everyone else had no money: he is the greatest and biggest value investor by far)
- cliftonk 10y ago
  His original partnership was a hedge fund and he did have an incentive fee. His logic is that large fees on top of what can be excruciating fees by PBs are a major drag on realized returns. And given beta is the average, gross of fees, of all the alpha, then it holds that a material drag on the average will cause most active managers to do worse than the market.
  - curuinor 10y ago
    Buffett Partnership Ltd paid 4% interest and 50% profits above 4%, and if there was a loss 25% of it was hit directly to Buffett, unlimited. Friends and family only. Buffett and Buffett charged jack shit. Again, extremely limited. The important thing he was criticizing was the excruciating fees, I think.
- caminante 10y ago
  Ever heard of Buffett Partnership Ltd.[0], his activist investor days, or his use of insurance float to invest in alternative assets? [0] https://www.wsj.com/articles/daniel-loeb-criticizes-warren-buffett-in-a-rare-public-swipe-1431041716 https://www.wsj.com/articles/daniel-loeb-criticizes-warren-b...
  - curuinor 10y ago
    I put in a bit about Buffett Partnership above. Much more favorable pricing scheme (forexample in 2 and 20 or 2 and 15 the hedge folks don't ameliorate losses), and it was a family and friends partnership He was indeed an activist investor. But he was an activist investor for dirt cheap, doing the dirt cheap things. Same for the use of insurance float (the cheapest money around) for alternative investments (the cheapest ones he could get). (you could definitely argue that 50 over the higher threshhold is very different tho)
  - djsumdog 10y ago
    I don't understand this thread. He's not some saint. He's a member of the 1%. He's in the same circles as all of those investment bankers who benefited from the 2008 financial crisis while everyone else lost their homes.
    - curuinor 10y ago
      I'm not enamoured of the man but pretending that he's some cocaine-sniffing master of the universe is not congruent to the truth. He's a successfully enormously cheap investor.
    - mindcrime 10y ago
      So he happens to be rich, so what? That doesn't make him a bad person, or anything else. If there was evidence that he was part of any of the dirty dealing that went on in the lead-up to the subprime crisis and all of the follow-on stuff, then that would be one thing. But up to this point, I haven't heard anything to suggest that. Are you aware of something like that, or is this strictly a sentiment rooted in "guilt by association"?
- CydeWeys 10y ago
  > although you would have to afford their stock, which is incredibly expensive Berkshire Hathaway has B-class shares available that only cost $170. Anyone can afford them. https://finance.yahoo.com/quote/BRK-B/?p=BRK-B https://finance.yahoo.com/quote/BRK-B/?p=BRK-B
  - Glyptodon 10y ago
    Is there a difference between different share classes besides the massive price difference (IE as in besides being 1/500th or whatnot of an A share)?
    - CydeWeys 10y ago
      The cheaper share class gets less voting power, even after controlling for difference in price.
    - hervature 10y ago
      Different size of the share of the company and less voting rights.
- hervature 10y ago
  To be pedantic, only the class A stock are expensive (quarter million for 1). Which is somewhat comical because stocks are traded in groups of 100 (so called "lot") and so $25 million is required to make a single transaction. Class B stock is much cheaper at $170.
  - lbradstreet 10y ago
    You can trade odd lots pretty cheaply these days.
  - nyscotsman 10y ago
    For BRK/A the lot size is one share (see https://www.sec.gov/marketstructure/research/highlight-2014-01.html#footnote_1 https://www.sec.gov/marketstructure/research/highlight-2014-...)
- deleted 10y ago
  [deleted]
PDoyle 10y ago
[citation needed]
- stagbeetle 10y ago
  Buffett Associates, Ltd.[0] [0] http://www.valuewalk.com/2015/05/warren-buffett-partnership/ http://www.valuewalk.com/2015/05/warren-buffett-partnership/
valuearb 10y ago
Buffett charged no annual fee when he ran his partnerships. He took a 25% profit share, but only after investors earned 4% a year first. Nominally it was a 0/25 deal vs, typical hedge funds 2/20, but the 4% hurdle makes it even better. It was the second best deal in financial management history. The best deal in history has been Berkshire Hathaway. He charges no fees, zilch, only a nominal salary ($100k iirc). If Warren had carried forward his incrediably investor friendly 0/25 deal he'd have ended up being far richer.
- nstj 10y ago
  I have to dig out the letter to partners from the 60's but he also took some of the downside in the partnership too, which is rather progressive

Buffett's main deal is Berkshire Hathaway, which is a conglomerate holding company and has little to do with hedge funds. So you wouldn't have to be a qualified investor to put money in BH, for example (although you would have to afford their stock, which is incredibly expensive). BH did own a part share in a hedge fund at one point, but Buffett never did anything like, say, charging 2 and 20

curuinor 10y ago
(that is, the crux of his argument has always come from the fact that he was always an thoroughly a cheap cheap person when it came to buying equities and he got real good deals by buying when everyone else had no money: he is the greatest and biggest value investor by far)
cliftonk 10y ago
His original partnership was a hedge fund and he did have an incentive fee. His logic is that large fees on top of what can be excruciating fees by PBs are a major drag on realized returns. And given beta is the average, gross of fees, of all the alpha, then it holds that a material drag on the average will cause most active managers to do worse than the market.
- curuinor 10y ago
  Buffett Partnership Ltd paid 4% interest and 50% profits above 4%, and if there was a loss 25% of it was hit directly to Buffett, unlimited. Friends and family only. Buffett and Buffett charged jack shit. Again, extremely limited. The important thing he was criticizing was the excruciating fees, I think.
caminante 10y ago
Ever heard of Buffett Partnership Ltd.[0], his activist investor days, or his use of insurance float to invest in alternative assets? [0] https://www.wsj.com/articles/daniel-loeb-criticizes-warren-buffett-in-a-rare-public-swipe-1431041716 https://www.wsj.com/articles/daniel-loeb-criticizes-warren-b...
- curuinor 10y ago
  I put in a bit about Buffett Partnership above. Much more favorable pricing scheme (forexample in 2 and 20 or 2 and 15 the hedge folks don't ameliorate losses), and it was a family and friends partnership He was indeed an activist investor. But he was an activist investor for dirt cheap, doing the dirt cheap things. Same for the use of insurance float (the cheapest money around) for alternative investments (the cheapest ones he could get). (you could definitely argue that 50 over the higher threshhold is very different tho)
- djsumdog 10y ago
  I don't understand this thread. He's not some saint. He's a member of the 1%. He's in the same circles as all of those investment bankers who benefited from the 2008 financial crisis while everyone else lost their homes.
  - curuinor 10y ago
    I'm not enamoured of the man but pretending that he's some cocaine-sniffing master of the universe is not congruent to the truth. He's a successfully enormously cheap investor.
  - mindcrime 10y ago
    So he happens to be rich, so what? That doesn't make him a bad person, or anything else. If there was evidence that he was part of any of the dirty dealing that went on in the lead-up to the subprime crisis and all of the follow-on stuff, then that would be one thing. But up to this point, I haven't heard anything to suggest that. Are you aware of something like that, or is this strictly a sentiment rooted in "guilt by association"?
CydeWeys 10y ago
> although you would have to afford their stock, which is incredibly expensive Berkshire Hathaway has B-class shares available that only cost $170. Anyone can afford them. https://finance.yahoo.com/quote/BRK-B/?p=BRK-B https://finance.yahoo.com/quote/BRK-B/?p=BRK-B
- Glyptodon 10y ago
  Is there a difference between different share classes besides the massive price difference (IE as in besides being 1/500th or whatnot of an A share)?
  - CydeWeys 10y ago
    The cheaper share class gets less voting power, even after controlling for difference in price.
  - hervature 10y ago
    Different size of the share of the company and less voting rights.
hervature 10y ago
To be pedantic, only the class A stock are expensive (quarter million for 1). Which is somewhat comical because stocks are traded in groups of 100 (so called "lot") and so $25 million is required to make a single transaction. Class B stock is much cheaper at $170.
- lbradstreet 10y ago
  You can trade odd lots pretty cheaply these days.
- nyscotsman 10y ago
  For BRK/A the lot size is one share (see https://www.sec.gov/marketstructure/research/highlight-2014-01.html#footnote_1 https://www.sec.gov/marketstructure/research/highlight-2014-...)
deleted 10y ago
[deleted]

PDoyle 10y ago

[citation needed]

stagbeetle 10y ago
Buffett Associates, Ltd.[0] [0] http://www.valuewalk.com/2015/05/warren-buffett-partnership/ http://www.valuewalk.com/2015/05/warren-buffett-partnership/

valuearb 10y ago

Buffett charged no annual fee when he ran his partnerships. He took a 25% profit share, but only after investors earned 4% a year first. Nominally it was a 0/25 deal vs, typical hedge funds 2/20, but the 4% hurdle makes it even better. It was the second best deal in financial management history. The best deal in history has been Berkshire Hathaway. He charges no fees, zilch, only a nominal salary ($100k iirc). If Warren had carried forward his incrediably investor friendly 0/25 deal he'd have ended up being far richer.

nstj 10y ago
I have to dig out the letter to partners from the 60's but he also took some of the downside in the partnership too, which is rather progressive