Omaha draws those eager to get in touch with 'the real spirit of Berkshire'

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Posted: Friday, May 2, 2014 12:00 am | Updated: 1:52 am, Tue May 20, 2014.

Baseball has Cooperstown. The cinema world has Cannes; classical music, Vienna.

And value investing, the investment discipline closely associated with Warren Buffett and Berkshire Hathaway, has found its spiritual home for many recent years on the banks of the Missouri River in Omaha.

For days surrounding Berkshire Hathaway's annual meeting on Saturday, Omaha is a mecca for value-themed conferences, satellite meetings and encounter groups.

Value-investing experts

Notable value-investing experts are in town for Berkshire Hathaway's annual meeting week.

At the University of Nebraska at Omaha's 11th Annual Value Investor Conference:

>> Tom Gayner, president and chief investment officer, Markel Corp.

>> Megh Manseta, founder and asset allocator, Manseta Family Office

>> Sarah Ketterer, CEO and fundamental portfolio manager, Causeway Funds

>> Ron Mulhenkamp, president, Mulhenkamp Fund

>> Bill Nygren, portfolio manager, Oakmark Funds

At Creighton University's Value Investment Panel and related events:

>> Robert Cialdini, author, “Influence: The Psychology of Persuasion”

>> Patrick Brennan, Portfolio Manager at Hutchinson Capital Management

>> Paul Schwarzbach, founder, Allied Value LLC

>> Vitaliy Katsenelson, chief investment officer at Investment Management Associates

>> Mark Wynegar, partner, Tributary Capital Management

>> Paul Allard, portfolio manager at Antares

Live Berkshire weekend coverage: Our live chat begins at 7:30 a.m. and continues through the question-and-answer session with Warren Buffett and Charlie Munger. At 5 p.m., join a post-meeting chat with World-Herald Berkshire Hathaway reporter Steve Jordon. Omaha.com/Berkshire

The week has become a convention of sorts for the worldwide legions of value investors, the buy-and-hold aficionados who believe share purchases are for life and human prosperity and, therefore, stock markets are just scratching the surface of their long-term potential. For some people, it is an all-encompassing world view that includes investing, philosophy and social aspects.

“For us, this was a bucket-list item,” said first-time visitor Roelf Alberts, in town from South Africa to attend the three-day “Genius of Warren Buffett” class taught by University of Nebraska at Omaha adjunct faculty member Robert Miles.

“We plan to make it an annual event,” Alberts said. “You get the real spirit of Berkshire by actually being here.”

Professional money manager Alberts attended with his wife, Ilze, a behavioral psychologist who is making a study of value investors (“humble, patient, able to delay gratification”). They are already familiar with many of the sites on the pilgrims' trail, with dinner Wednesday at Buffett favorite Gorat's, the Center Street steakhouse.

The UNO class attracted about three dozen people from six continents and 16 foreign nations, mostly seasoned adults. They were there, well, to be there.

“Lifelong learners is what we call them,” said Miles, who has taught the class since 2011.

Topics included “the Oracle of Omaha's educational timeline, investment principles, management philosophies, corporate governance, succession plan, mistakes, philanthropy and more,” according to the class marketing materials.

Miles acknowledges that while successfully investing is extremely difficult, there is nothing intellectually challenging about value investing's basics — buying shares at an attractive price based on the present value of estimated future earnings, finding companies with honest leaders and a competitive advantage to protect from cut-price newcomers.

“It is not complicated,” Miles said.

UNO's business college is also sponsoring a two-day value investing panel that started Thursday. Heavy hitters on the speaking roster include money managers from around the world who are imbued with the Buffett value philosophy, which the Berkshire CEO learned in the 1940s under Colombia University professor Ben Graham, the discipline's most revered forefather.

There are other methods of investing, but they tend to appeal to a different type of personality than that attracted to value investing. There is growth investing for those who bet on the unproven but promising, technical for people who like to chart the direction and velocity of the markets for hidden signs and signals, even short selling for those who believe stocks will fall and profit when they do.

“That's no way to live,” said Tom Gayner, a speaker at the UNO panel and famed value investor, referring to living and dying with each tick of the stock market. “People tend to be happier and wealthier with a value-based outlook.”

Gayner is the investing chief at Virginia-based Markel Corp. Markel is a Berkshire-like company. Money for stock market investments and purchase of whole companies is provided by profitable insurance subsidiaries in the form of premiums paid in but not paid out to settle claims.

Markel's $17.6 billion stock portfolio, managed by Gayner, rose 33 percent last year, just beating the Standard & Poor's 500. He has been coming to Omaha for almost 25 years on value quests. For him, it is a philosophy, and Omaha its wellspring.

“The way people do business is just a manifestation of a wider world view,” said Gayner over breakfast at an Omaha diner Thursday. “It is one way in which our human natures play out.”

Gayner started coming to Berkshire annual meetings in 1990 — Markel is a big shareholder. A lunch Gayner had that year with a few like-minded folks turned into a bigger gathering the next. And the next. Value investors love to talk to one another about their passion and outlook on the world, which is cheerfully optimistic on the social and economic prospects of people who are free to innovate and cooperate.

“People best get ahead by helping others,” said Gayner, proud to be called a “perma-bull,” or permanently bullish investor. “With value investing, you kind of either get it right away or you don't.”

Those modest early Markel lunches have turned into a major event. About 600 people are expected for this year's Markel brunch Sunday at the Hilton Omaha across the street from the CenturyLink Center. The meeting follows a Berkshire-style format, with Gayner and other executives taking audience questions.

“We started out coming to Omaha to cultivate special relationships,” Gayner said. “Having long-term business horizons requires shareholders who understand that, and we figured Omaha was a good place to find them.”

There are plenty of budding Gayners in Omaha. Some of them are at Creighton University, also a longtime participant in Berkshire week.

The Heider College of Business is sponsoring a variety of events, including its own value-investing panel discussion, this one involving the student-run portfolio, an actual fund with $5 million in it that is invested by business majors under faculty and professional guidance.

Holdings include Berkshire and a slew of Buffett favorites, past and present — Exxon Mobil, McDonald's, Johnson & Johnson. Presented in a brochure that captures true Berkshire annual report style, the holdings were amassed at a cost of $4.3 billion and had a year-end market value of $5.2billion, for a Buffett-like gain of 21 percent.

“I would say value is the dominant approach among Creighton finance majors,” said Sean Gill, a junior in the business school who works on the fund. “There is still plenty of value out there, even among blue chips.”

About 400 people are expected for the student-organized Value Investing Panel at Creighton on Sunday, said Minnesota native Gill, who, like many biz school undergrads, already has a job lined up and waiting upon graduation next year, so hungry are the world's companies for young people with finance expertise.

“Value investing and Omaha?” Gill said. “Sure, it makes perfect sense. We've got Berkshire, we've got Buffett, we have a great deal of success associated with all of it.”

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