Warren Buffett has found his bear.
In his annual letter to shareholders, published Friday, Buffett said that he wanted to “spice things up” by finding a money manager with an unfavorable view of Berkshire Hathaway to participate in the company's annual meeting.
Monday, Buffett said Doug Kass, a hedge fund manager who has shorted Berkshire stock and thus bet that its price will fall, would be added to the panel of analysts at the company's yearly gathering May 4. He will be among those who question Buffett and Berkshire's vice chairman, Charlie Munger, on stage.
Kass, the owner of Seabreeze Partners Management in Palm Beach, Fla., is a widely known stock picker by virtue of his writings for a financial website, TheStreet.com, and frequent appearances on CNBC.
“I am going to Disneyland — I mean, Omaha!” Kass, 63, wrote on TheStreet.com. “I will be Daniel in the Lion's Den, wading in a sea of Warren Buffett's strongest admirers.”
Kass said he had read the Berkshire letter as soon as it came out Friday, just as he had done each of the past 40 years. After seeing Buffett's solicitation, he began preparing a proposal. Kass has credentials as a Berkshire bear, having written a piece in March 2008 for TheStreet.com, “Kass Katch: 11 Reasons to Short Berkshire” that laid out his rationale for betting against the company. (Berkshire's stock is up about 16 percent since Kass wrote the column, but it did have down years in 2008 and 2011).
“I have worshipped at the altar of Warren Buffett since the late 1970s,” Kass wrote at the time. “Indeed my writings over the last seven years have often been punctuated with Buffett-isms.”
Yet Kass said that despite his idolatry of Buffett, 82, the Berkshire business faced a number of headwinds. He cited Buffett's advanced age, saying that “there will never be another Warren Buffett.” He also said that Berkshire's large size could impede returns, pointing out that even Buffett had written that the company's asset base was too large to make outsize gains in the future.
Monday morning, in a live CNBC interview from La Vista, Buffett made the surprise announcement about Kass. “Think of tough questions,” Buffett challenged Kass on the air. “See if you can drive the stock down 10 percent.” Kass was in his Palm Beach office, preparing for the trading day with CNBC playing in the background, and he heard Buffett make the announcement.
“I was as shocked as everyone else,” said Kass, who has never met Buffett. “I am flattered, honored and surprised.”
Kass acknowledges that deep down, he remains an unabashed fan of Buffett.
“I can't wait to take a picture with him,” Kass said.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.