Dan Loeb bashes Warren Buffett at hedge fund conference

Dan Loeb bashes Warren Buffett at hedge fund conference

The prominent hedge fund manager claimed the world’s most famous investor doesn’t practice what he preaches.

Daniel Loeb thinks Warren Buffett needs to start walking his own talk. Apparently, other hedge fund managers think the same.

On Wednesday, at the SALT hedge fund conference in Las Vegas, Loeb took a few minutes during a talk about his own strategy to bash the world’s most famous, and widely admired, investor. This past weekend, over 40,000 people attended Berkshire Hathaway’s annual meeting to hear Buffett pontificate on the market Berkshire and why he has been so successful.

At SALT, Loeb, who runs the Third Point hedge fund, said that he enjoys reading Buffett’s Berkshire Hathaway annual letters. But Loeb said Buffett doesn’t practice much of what he preaches. The critical comments of Buffett drew loud applause from the hedge fund industry crowd.

Loeb cited taxes, hedge funds, and activist investing as issues where there has been a major difference between what Buffett says and what he does. Loeb came short of calling Buffett a hypocrite outright, but that’s what he was certainly implicating.

“He [Buffett] criticizes hedge funds, but he used to run one,” Loeb said. “He criticizes activists, but he was the first activist. He says we should all pay more taxes, yet he avoids them himself.

“There’s a lot of wisdom in those letters, but I see a wide disconnect from the wisdom and how he actually behaves.”

Loeb’s Buffett diatribe may have been inspired by recent events related to Dow Chemical. Loeb, an activist investor, has been after the giant corporation to make changes, including spinning off a division. In January, Dow CEO Andrew Liveris said he had met with Buffett, who also owns shares of Dow. According to Liveris, Buffett had said he was glad that Liveris was “running the company for the investors who will stay versus the investors who will leave,” which was considered a shot at Loeb. Activist investors are often criticized for being focused on short-term gains and out for a quick buck.

Loeb’s Buffett comments created an awkward moment on stage. Anthony Scaramucci, whose fund-of-fund firm SkyBridge Investments runs the SALT investment conference and is a master networker, remarked that his chances of having Buffett at SALT next year were shot. “Warren Buffett, if you are listening, I’m sorry,” Scaramucci said.

I think the recent coca cola remuneration is a case in point

Many recognise Loeb as one of the smartest HF managers around and i think he is not totally wrong but some issues like tax he is taking out of context

"Do/See what they do, not what they say"

(08-05-2015, 09:00 AM)specuvestor Wrote: I think the recent coca cola remuneration is a case in point

Many recognise Loeb as one of the smartest HF managers around and i think he is not totally wrong but some issues like tax he is taking out of context

I recalled the Mr. Buffett 1 mil hedge-fund bet case.
http://fortune.com/2015/02/03/berkshires...edge-fund/

During the initial period of reading Mr. Buffett, I did find suspicious "speculation", and "short-term bet" during his investing. But after digested more into the detail, it appeared as "speculation" and "short-term bet", but value-investing principle still apply in the core. Peter Lynch behaves as a speculator, with his rotation approach, but he is one of the value investing guru.

大勇若怯,大智若愚 （smart one, appears as stupid, courage one, appears as timid).

If hedge funds don't even out-performed S&P, and Mr. Buffett has out-performed S&P, it speaks loudly Mr. Buffett has followed his own unique way.

I think it is obvious that the idea of “running the company for the investors who will stay versus the investors who will leave,” makes a lot of sense. Imagine if a country is run based on the interests of rich PRs.

That's why I think Singapore's policy of sole citizenchip makes sense. The question in both cases is whether the leaders/ CEO can stand up to the pressure.

I think HF or activism is not wrong either way. The question is how vested is your interest and are you looking at the longer term welfare of the company/ country or you are just fly by night self-interest centric. And unfortunately HF by most definition is much shorter term driven rather than going by the mantra of buying as if to hold forever. For example as a company I would be keener to have Aberdeen as my shareholder than Pershing Square.

I think everyone can be caught out in not practising what they preach at some point. I think Loebs points about Buffett running a hedge fund are a bit moot, given Buffetts fee's were far from the 2 and 20 we see nowadays, he actually had a hurdle. Also I think Buffett talks a lot in generalizations because of the audience he's speaking too, so when he says invest in index funds and avoid hedge funds that doesn't mean he thinks no one should invest in hedge funds, just that the average joe would be best server in trackers.

(07-05-2015, 11:34 PM)BlueKelah Wrote: Dan Loeb bashes Warren Buffett at hedge fund conference

The prominent hedge fund manager claimed the world’s most famous investor doesn’t practice what he preaches.

Daniel Loeb thinks Warren Buffett needs to start walking his own talk. Apparently, other hedge fund managers think the same.

On Wednesday, at the SALT hedge fund conference in Las Vegas, Loeb took a few minutes during a talk about his own strategy to bash the world’s most famous, and widely admired, investor. This past weekend, over 40,000 people attended Berkshire Hathaway’s annual meeting to hear Buffett pontificate on the market Berkshire and why he has been so successful.

At SALT, Loeb, who runs the Third Point hedge fund, said that he enjoys reading Buffett’s Berkshire Hathaway annual letters. But Loeb said Buffett doesn’t practice much of what he preaches. The critical comments of Buffett drew loud applause from the hedge fund industry crowd.

Loeb cited taxes, hedge funds, and activist investing as issues where there has been a major difference between what Buffett says and what he does. Loeb came short of calling Buffett a hypocrite outright, but that’s what he was certainly implicating.

“He [Buffett] criticizes hedge funds, but he used to run one,” Loeb said. “He criticizes activists, but he was the first activist. He says we should all pay more taxes, yet he avoids them himself.

“There’s a lot of wisdom in those letters, but I see a wide disconnect from the wisdom and how he actually behaves.”

Loeb’s Buffett diatribe may have been inspired by recent events related to Dow Chemical. Loeb, an activist investor, has been after the giant corporation to make changes, including spinning off a division. In January, Dow CEO Andrew Liveris said he had met with Buffett, who also owns shares of Dow. According to Liveris, Buffett had said he was glad that Liveris was “running the company for the investors who will stay versus the investors who will leave,” which was considered a shot at Loeb. Activist investors are often criticized for being focused on short-term gains and out for a quick buck.

Loeb’s Buffett comments created an awkward moment on stage. Anthony Scaramucci, whose fund-of-fund firm SkyBridge Investments runs the SALT investment conference and is a master networker, remarked that his chances of having Buffett at SALT next year were shot. “Warren Buffett, if you are listening, I’m sorry,” Scaramucci said.

1 more contradiction that's not mentioned by Dan Loeb:

WB famously labels derivatives as "financial weapons of mass destruction"
Yet Berkshire has exposure to large derivatives contracts that weighed down on earnings
As mentioned by another VB, WB does not always act what he preaches. Let's not forget he preaches to the masses.
Not everyone has his acumen to assess risk vs reward
For eg. in the case of the derivatives, he probably views the reward (premiums) to adequately compensate for the risks he accepts under the given conditions of the derivatives.