This reader has a great point on Berkowitz and Buffett…
From a Reader…
Kiplinger asks what went wrong at Dodge&Cox. Why did Fairholme (FAIRX) sidestep the mess at AIG (AIG) and some others? Pabrai has discussed Berkowitz as a manager that places great importance on the financials, but also importantly on the management skills.
I sold my AIG in the mid-$30’s because I gradually became aware of Martin Sullivan’s shutting off the credit risk reviews as unimportant to the business while I knew that Greenberg was on top of risks daily. Managers who simply review the #’s missed this change in risk monitoring including Davis even though Davis in particular felt that they had special insights to their companies.
In my view there is no such thing as a “Moat” often touted by value managers because of your market position. Many have taken up the “Moat” banner, i.e. Morningstar with a “Moat” rating.
AIG is a clear example of a company’s management style causing the companies virtual extinction. The only “Moat” a company has vs. competitors is a qualified management and culture. Lose this and the company can lose everything. Investment managers who do not understand this will have markets in which their shallow, numbers only methodology will fail to protect their clients.
Berkowitz and Berkshire’s (BRK.A) Buffet have the learned to distinguish between good and bad management as well as calculate buy and sell valuations.
The Kiplinger question has missed the “management quality” just like 99.98% of investors. We do not teach “How to identify good management?” Most people simply look at the historical financials and assume a new manager’s record will continue in the same direction. NOT NECESSARIALY!!!!
Berkowitz looks more deeply than any other mutual fund manager I know and it shows in his results.
Disclosure (“none” means no position):None
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