Chris Roush at the Talking Biz News blog points out that within an hour of the release of Berkshire Hathaway’s annual report, Fortune Magazine was reporting the content of the report. What’s more, Fortune sent out an email touting three different stories about Warren Buffett.
So how did Fortune accomplish this bit of speedy journalism? Well it turns out that Fortune editor at large Carol Loomis has a “close relationship” with Buffett. They’re buddies. And Loomis does all sorts of things friends do for friends. You know, like visiting when the Omaha winter gets a little dull. Or hanging around eating cheeseburgers. Or playing cards. Or editing Berkshire Hathaway’s annual report.
As Roush explains:
I bring all of this background up, as well as the e-mail, to point out that Loomis, who received the lifetime achievement award last year from the Society of American Business Editors and Writers, is writing about information disclosed in an annual report that she edited. Carmine Tiso, senior manager of communications for Fortune, told me in an e-mail, “Yes, Carol did edit the annual report, as she has mentioned in some of her previous stories on Warren Buffet and Berkshire Hathaway in FORTUNE.”
However, this point — that Loomis edited the annual report that she’s writing about — is not mentioned in any of the current stories.
I’ve heard from at least one prize-winning business journalist this afternoon who can’t understand why a business publication allows one of its writers to cover a story in which they played a part. This journalist, who was at the SABEW annual meeting last year when Loomis received her award, said that such a conflict of interest would be grounds for dismissal at any other newsroom.
The Wall Street Journal this morning reports that the feds are investigating Apple’s backdated stock options grants to Steve Jobs. The way the story reads, however, makes it sound as if the investigators are reading from the script that Al Gore and Steve Jobs wrote: no wrong doing by current management–all the backdating miscreants are formers. You know, former attorneys for Apple. Former financial offers. Formers.
But can Jobs really escape further scrutiny? Apple itself has admitted that Jobs personally recommended favorable dates for some stock options grants, although not the grants that he received. Have the feds adopted the Apple standard of guilt? If so, this will be news to us. In the past, the feds have indicated that direct self-dealing was not sole the test for criminality of backdating, and that the benefit to executives from employee retention through backdated grants crossed the line. We’re not saying we want the feds to go after Jobs but we’re sure there are quite a few executives out there who are scratching their heads over what appears to be the Jobs Immunity Defense to backdating.
Investigators are now focusing on the grant to Mr. Jobs for 7.5 million options that were finalized in December 2001, when Apple’s share price was higher. The false dating increased the value of the grant to Mr. Jobs, and resulted in a retroactive $20 million charge to Apple’s earnings when it was discovered by a special internal investigation.
People familiar with the matter say the false documentation was created by an Apple attorney named Wendy Howell, whom the company quietly dismissed last month. Ms. Howell contends that Apple’s general counsel at the time, Nancy Heinen, instructed her to create the false documentation, these people say. Thomas Carlucci, Ms. Howell’s attorney, said that while at Apple “Ms. Howell acted as instructed by Apple management and with the company’s best interest being paramount.”
Ms. Heinen left Apple in May for reasons that were unrelated to backdated options, a person familiar with the matter says. Her attorney, Cristina C. Arguedas, says Ms. Heinen didn’t knowingly engage in any wrongdoing and denies she instructed Ms. Howell to falsify documentation. Ms. Arguedas said in a statement that “each of the option grants involving Ms. Heinen was authorized and approved by her superiors.”
One of the reasons we love poking fun at Warren Buffett is the reaction we get from his many admirers, fans, groupies and cultists. Our latest post on the old man of Omaha, wondering if part of the mysterious hold Buffett seems to have over the psyches of some people was based on his resemblance to a Midwest grandmother, drew a lot of comments. In fact, we wrote that post last week and it’s still drawing comments. (Is there some central clearing house of Buffett fans dispatching commenters to DealBreaker or do we just naturally have an outsized readership of Buffett fans? Doesn’t the latter seem unlikely?)
The most over the top comment came from “Cir,” who literally elevated Buffett to the level of divinity. “Let me explain. Buffett is no mere mortal like you and me. As investors we’re fortunate enough to be around the same time as the great one. Doubtful that there will be another one like him in the next 100 yrs. Buffett’s has no peer in the investment world. He is comparable to only other historical greats (genius) like Einstein and DaVinci,” Cir wrote.
There are lots more like that. And in fact, they are quite diverse. Some admire Buffett because he makes lots of money (fair enough). And others because he is a “good person” (open to debate). Still others because he is a kind of Nietzschean Uber-man (scary). Check out the comments and feel free to keep the debate going!
Making gypsum wallboard may not be the most glamorous business, but some investors seem to be betting that it will catch the eye of billionaire investor Warren E. Buffett. Shares of building-materials company USG rose 8.3 percent on speculation that Mr. Buffett, its biggest shareholder, may want to buy the company, Bloomberg News reported. An analysts told Reuters that there is also talk of a potential private equity bid for the company, which has a market capitalization of about $5 billion.
As you might have noticed, we kind of don’t get the appeal of Warren Buffett. Other than the whole, you know, making a lot of money thing. But beyond that, we’re kind of creeped out by the weird cult of personality he seems to attract. (And if you have your doubts about this, take a brief skim through some of the comments from cult-members in our Warren Buffett archive.)
But then today we came across a woman who watched a CNBC interview with Buffett over the weekend with her husband. It’s a bit weird, but then we thought—maybe this is it! Maybe everyone loves Warren because he reminds them of their grandmother!
Buffet’s interview was the last one we had seen. It was fascinating. I never knew I liked Buffet, but I do. He has a great mind — even outside of his financial thinking. Buffet is a genuine, sincere and happy man. He is the kind of man when something bad happens to him, he quickly puts it into perspective, copes and looks forward. He doesn’t dwell on what he can’t control. He doesn’t stew, he doesn’t get mad — he just gets perspective.
I explained to my husband, Buffet is much like his own grandmother was. It was when I was watching Buffet that I first saw the jawline of my husband’s dad. Buffet has a similar jawline to my father-in-law — and as he was talking — my father-in-law’s face came to mind. Then as Buffet’s jovial spirit continued to come across the screen, I saw my husband’s grandmother — his father’s mother in Buffet, in bits and flashes. Not in looks so much as his father — but in personality.
As the flashes came to me, I had an instant connection, much without thought — that these two people (my husband’s grandmother and Buffet) shared a similar personality trait — the trait of jovial happiness. With that, knowing his grandmother, I could predict how Buffet would behave given certain circumstances. If Buffet told me he was crossed, and stewed for days about a deal gone bad and wanted revenge — I wouldn’t believe him. I’d know better! My husband’s grandmother would get upset briefly, but then she’d let it go and move on. So would Buffet.
Warren Buffett’s announcement in June that he was giving $31 billion in Berkshire Hathaway stock to the Bill and Melinda Gates Foundation was greeted with near universal acclaim. About 120 years ago, when Andrew Carnegie declared in his “Gospel of Wealth” essays that he was going to give away his entire fortune and asserted that it was the duty of other rich men to give away theirs, his announcement provoked as much criticism as praise. Labor leaders condemned Carnegie for giving away money that did not rightfully belong to him. Prominent churchmen, including Methodist Bishop Hugh Price Hughes, characterized him as “an anti-Christian phenomenon, a social monstrosity, and a grave political peril.”
Hughes insisted that millionaires, even those who agreed to give away their fortunes, were “the unnatural product of artificial social regulations.” He believed that Carnegie’s accumulation of millions had come at the expense of his less fortunate countrymen. “Millionaires at one end of the scale involved paupers at the other end, and even so excellent a man as Mr. Carnegie is too dear at that price,” he argued. His point was well-taken. One doesn’t have to a Socialist—and Bishop Hughes certainly was not —to wonder whether a more equitable distribution of wealth might be better for society than the idiosyncrasies of large-scale philanthropy.
As you know from our weekly Friday links to WallStrip, Lindsay Campbell is nicer to look at than some of us here at DealBreaker. (Hint: he’s usually sitting to her right on Fridays.) She’s also just plain nicer. So we thought we’d throw a bone to you Warren Buffett fans out there and post Lindsay’s video blog on the oracle of Omaha.
One thing, Lindsay. Before you start speculating on where Warren Buffett is headed after he shakes off his mortal coil, you might want to read what a couple of experts told us.
This clip is from CNBC’s Liz Claman’s trip to Omaha to visit Warren Buffett. About thirty-seconds into the clip, some random guy in the shopping mall decides that its his chance to meet a billionaire, interrupts the interview and says hello. Random dude is pretty relaxed, especially since there is a camera crew circling around. Buffett looks mortified, barely gets out a word and keeps the guy at a distance by extending a very stiff arm to shake his hand.
We were going to say something about Buffett losing touch with the common man but then we realized that we’d probably have broken into a dash to escape some stranger approaching us in a shopping mall. Hell, we’d probably break out into a dash just to escape a shopping mall period. So Warren gets a pass on our reverse snobbery today.
The stunningly high price of Berkshire Hathaway stock—now over $100,000—might make many companies consider a stock split. Investors like splits because they can make the equity trade easier. There’s a far more limited numbers of buyers for a stock priced at $100K than at $100. But Berkshire Hathaway has refused to split its stock despite the constraints this might put on the liquidity of the stock.
Today we learned why. CNBC’s Liz Claman spent six hours with Berkshire boss Warren Buffett yesterday, and the Oracle of Omaha revealed why the stock doesn’t split—his salary is directly tied to the price of the shares. His pay is based on the market price of the company’s shares, so any split would reduce his pay.
Of course, the company could always split adjust his pay, so this isn’t entirely a serious answer. But it demonstrates how a metric designed by bring management’s incentives in line with shareholder interests can have perverse effects. Linking executive pay to stock price seems like a good idea but here we see it acting to deny shareholders the value of a stock split.
Of course, this hasn’t actually gone through the trouble of actually happening. Yet. It’s just the latest from the warped minds at the Long Or Short Capital blog. The set up is that Lucy Gao takes out a personal ad inviting readers to a “party” that is taking place in her pants. And Aleksey responds. Now if only LOSC had them being chauffeured around by Warren Buffett and Eugene Plotkin cutting in on their dance, this would be the perfect DealBreaker item.
We were especially happy about how LOSC imagines Aleksey Vayner describing the past week of his life.
Before last week, I was basically nothing having only started my own investment fund, won the grand slam of men’s tennis, outdrinken and outskiied Bode Miller in the winter Olympics, won the Nobel peace prize for the charity which I started, held the Street Fighter II machine in my local arcade for 15 straight hours and bedded 5,437 women. This week, I have accomplished so much more and been named the CEO of Vayner Lehman Stern UBS, after I brokered the deal which brought them together in a merger. The key was getting them to focus on my revolutionary “never lose money” investment strategy.