Kraft’s Executive Compensation Policies Reward Value Destruction
Kraft Foods Inc. released its annual proxy statement yesterday which serves as timely illustration of the faulty logic that compensation committees regularly use when setting executive compensation. As we discussed last month, compensation policies can encourage executives to pursue value ...
Taco Bell Expands to India: Paneer and Potato Tacos?
One of the qualities investors look for when evaluating companies is the presence of brand equity. Does a business sell products that can command a premium due to actual or perceived quality or through social factors like peer pressure or ...
Wesco’s CORT and Precision Steel Units Were “Hammered” in 2009
Charlie Munger's annual letter to shareholders of Wesco Financial Corporation was published last week. Wesco Financial is a publicly traded company that is 80 percent owned by Berkshire Hathaway. Charlie Munger is Berkshire Hathaway’s longtime Vice Chairman and also serves ...
Roth IRA Conversion Can Hedge Against Higher Taxes
No one can forecast what tax policy will be in the future, especially in the distant future. Holding assets in a Roth IRA can potentially hedge against higher tax rates down the road ...
Examining Middleburg Financial: David Sokol’s Favorite Bank?
Middleburg Financial Corporation is a small bank holding company with primary operations in the western suburbs of Washington D.C. The bank's headquarters are in Middleburg, Virginia. Over the past two years, David Sokol has accumulated nearly twenty percent of the ...
Natural Gas Gets Cheap Compared to Oil; Contango Remains Low Cost Producer
Volatility in the markets for various forms of energy is nothing new. Prices react to a variety of factors including the weather, political and economic developments, and speculation. While short term prices of individual commodities can be influenced by any ...
BYD Offers Dual Mode Hybrid to Individual Buyers in China
BYD has announced the availability of its F3DM dual-mode electric vehicle to individual buyers in China starting on March 29. The first sales location will be in Shenzhen. The city plans to have 24,000 dual mode hybrids on the road ...
Berkshire’s McLane Subsidiary Acquires Kahn Ventures
Berkshire Hathaway’s McLane subsidiary has agreed to acquire Kahn Ventures, the parent company of Empire Distributors, Inc. Empire Distributors is a wholesale distributor of distilled spirits, wine, and beer operating mainly in the Southeastern United States. Empire Distributors was founded ...
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
The privileged bankers who run institutions that are considered to be "too big to fail" do not suffer the same fate as their smaller counterparts as Simon Johnson and James Kwak describe in their forthcoming book 13 Bankers: The Wall ...
Catastrophic Insurance and HSAs Can Control Costs
Catastrophic health insurance, when coupled with a health savings account, has the potential to reduce health care spending at the individual level as well as in society as a whole ...
Share Buybacks Gain Popularity as Stock Prices Rebound
It has become relatively common to read annual reports of companies that previously engaged in regular share buybacks yet mysteriously decided to halt the practice during 2009 even as share prices hit multi-year lows. As The Economist has noted, share ...
China’s Ambitious High Speed Rail Plans Dwarf American Initiatives
It is so fashionable these days to read stories about a rising China and declining America that any contrarian feels almost provoked to offer a rebuttal. However, it is increasingly difficult to do so at a time when the Chinese ...
A Response to S. Raj Rajagopal’s Short Case for Berkshire Hathaway
In a guest post yesterday on the excellent Greenbackd blog, S. Raj Rajagopal made a case for shorting Berkshire Hathaway and followed up later with more details regarding valuation. Mr. Rajagopal is an MBA student at Cornell and has work ...
The Dangers of Commitment Bias
In the world of purely efficient markets, economic actors behave in their own rational self interest by dispassionately weighing the evidence and making optimal decisions on investment matters. In the real world, emotions are often an investor’s worst enemy and ...
The Feds Knew About Lehman’s Repo 105 Transactions
It is difficult to be shocked about new revelations stemming from the financial crisis, but today’s DealBook column by Andrew Ross Sorkin was a real revelation. S.E.C. examiners, working during the watch of Christopher Cox as S.E.C. commissioner, apparently saw ...
Clayton’s i-house Experiencing Slow Sales
Clayton Homes, a subsidiary of Berkshire Hathaway, introduced a novel concept in 2008 intended to appeal to a wider demographic than the typical buyers of manufactured and modular homes. The Clayton i-house incorporates numerous upscale design features and energy efficient ...
A Modest Proposal for Audit Reform
Attempting to understand the sequence of events that led to the downfall of Lehman Brothers is normally a mind numbing process, but occasionally an obvious outrage is discovered such as Lehman's use of "Repo 105" transactions. While we have not ...
Was Lehman’s CEO Criminally Negligent or Merely Incompetent?
In a pattern that would be amusing if it was not so disturbing, we are again witnessing the spectacle of lawyers for a disgraced CEO who claim that their client was "unaware" of key risks that led to the downfall ...
A Closer Look at Berkshire’s Executive Compensation Policy
Berkshire Hathaway's 2010 Proxy Statement was released yesterday and much attention has been devoted to the low compensation provided to Warren Buffett and Charlie Munger. Mr. Buffett's total compensation remained at $175,000 which included $100,000 of salary and $75,000 in ...
Berkshire’s Investment in BYD: A Bet on Wang Chuan-Fu
Berkshire Hathaway's investment in BYD made its first appearance in Warren Buffett's annual letter which provides a table listing common stock investments with a market value of more than $1 billion. As of December 31, 2009, Berkshire held 225 million ...