If Warren Buffett had held onto all of his Berkshire Hathaway Inc. shares instead of donating billions to foundations, he would have placed No. 2 on Forbes magazine's list of the world's richest people rather than his latest No. 4 ranking.
By our calculation, the shares of Berkshire stock that Buffett has donated to the Bill & Melinda Gates Foundation and four Buffett family foundations since 2006 are worth $18.8 billion today.
Combined with his $53.5 billion net worth, as measured by Forbes, that would put Buffett at $72.3 billion, just behind No. 1, Mexican telecom magnate Carlos Slim Helu, with $75 billion.
Certainly, Slim and the other top billionaires on the list may have made big donations, too. Gates, No. 2 on the Forbes list at $67 billion, has donated many more billions to his foundation. Spanish clothing maker and real estate investor Amancio Ortega, whose $57 billion total pushed Buffett down to No. 4, donated close to $26 million to a charity last year.
'A lack of clarity'
Buffett's essay on stock dividends in his latest letter to Berkshire shareholders was “uncharacteristically dry” and, combined with earlier mistakes, may show “a lack of clarity” in his thinking, John Addis wrote in the Sydney (Australia) Morning Herald.
Addis wrote of the 82-year-old Buffett: “Certainly, his mistakes appear to be accumulating.”
Addis is editor of Intelligent Investor, an Australian financial research and advisory company. He, like Buffett, is a fan of value investing and the late Benjamin Graham. Buffett's office did not comment on the story.
In the newspaper article, Addis said Buffett would provide a greater return for his shareholders by paying dividends and letting them find higher-return investments with the cash. Buffett then could focus on smaller investments that would give Berkshire better returns.
Instead, Addis said, Buffett seeks huge acquisitions to make an impact on Berkshire, “and that increases the risk of one going wrong.”
The article cites Buffett's investment decisions on Conoco-Phillips in 2008, which Buffett said at the time were costly to Berkshire, and his description in 2009 of Wells Fargo as a “fabulous bank.” Addis wrote that Wells Fargo may fail a U.S. government stress test.
“The greatest threat to Berkshire investors may not be who succeeds the great man but how long he hangs around,” Addis wrote, describing Buffett as craving the spotlight. “I hope Buffett departs with his reputation intact. But with every year that passes with him in the corner office, the risk of him not doing so increases.”
Lessons for London
Investment adviser Tom Stevenson wrote in the Sunday Telegraph of London that Buffett's encouragement to invest in businesses applies to London's real estate market, where commercial prices in some parts of the city have lagged due to investors' doubts.
In his letter to Berkshire shareholders, Buffett said too many executives hold back on investing in their businesses, even when it could yield profits, because of fears about what might happen in the future. He said Berkshire's businesses are making investments that will pay off in the long run.
In the Telegraph, Stevenson wrote that “excessive risk aversion” has depressed real estate prices outside central London, increasing the potential profits from owning property there.
Help for women
Warren's son Peter wrote a song, “Silence Broken,” after meeting young women who talked about being sexually abused as children. The song, released in honor of the recent International Women's Day, has a message about ending violence against women.
The young women “made me realize how easy it is to be manipulated when your heart — your sense of safety and trust — is broken,” Buffett told Spinner.com.
“Power feeds off of shame,” he said. “Shaming is probably the most effective weapon of hurt and manipulation. And sexual abuse must surely cut the deepest. The heart wants to be healed and will believe just about anything as a possible salve — especially when it's young.”
Leadership in China's low-pollution car market may end up with Japan Toyota Motor Corp., not Chinese car makers such as BYD Co., which is 10 percent owned by Berkshire, Bloomberg News reported.
China's incentives to encourage BYD and other Chinese electric-vehicle makers haven't worked as planned, officials said at a recent meeting on vehicle standards and air pollution.
Consumer demand for BYD's e6 and other all-electric autos didn't take off even though financial incentives reduced prices by half. There are 27,800 electric vehicles in China, less than 6 percent of the government's target for 2015 and 0.02 percent of the civilian total, Bloomberg reported.
All-electric autos need charging stations, and there are few in China. Traffic jams put electric car owners in jeopardy of running out of power or having to shut down air conditioning or heating to conserve batteries, while hybrids can recharge from their gasoline motors.
Industry minister Miao Wei said China needs to promote other technologies to cut pollution, such as subsidies for hybrids. Wan Gang, who is science minister and a leading advocate of electric cars, said recently the switch to electric vehicles will take more time than planned.
At the same time, Hewlett-Packard Co. said it selected BYD to manufacture its new Android tablet computer, called Slate 7, according to MarketWatch.com.
Emotions take over
Most investors agree with Buffett's investing philosophy but end up doing exactly the opposite, Larry Swedroe writes in “Think, Act, and Invest Like Warren Buffett” (McGraw Hill, 134 pages, $16.95).
Tribune Media Services writer Elliot Raphaelson said the book contains excellent advice from Buffett.
“Swedroe points out that while it is simple to invest like Buffett (with a well-designed plan), it is not easy to stick to it,” Raphaelson wrote. “Emotions such as fear, panic and greed are not easy to control, and when investors allow such emotions to take over, 'even well-designed plans end up in the trash heap.'”
Among the tips Swedroe has gleaned from Buffett's writings and actions:
• A “know-nothing” investor can beat most professionals by periodically investing in a low-fee stock index fund.
• “Active” investment strategies end up costing higher fees and commissions.
• Investors should ignore economic forecasts because they don't predict where the market is heading.
• Not everyone should do financial planning for themselves.
Government authorities in India are looking into an arrangement between Berkshire and a state-owned insurance company, General Insurance Corp., that was later canceled, according to the Indian Express newspaper of New Delhi.
GIC had an arrangement with Berkshire's National Indemnity Co. of Omaha that included a $15.2 million premium payment for property liability coverage, the newspaper said. The coverage was canceled on Dec. 5 after what a government official said was a short period of time.
The transaction did not result in any losses for GIC, the Express story said.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
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