Did Warren Buffett listen to four University of Nebraska at Omaha students who recommended that he invest in John Deere & Co.?
But last week's disclosure of a Deere investment by Berkshire Hathaway Inc. shows the students had the right idea when they completed their final exam for adjunct instructor Robert Miles, who teaches an executive MBA class at UNO.
Gretter Ramirez, James Bowen, Chandrakanth Are and Vincent Wong wrote in their 20-page research paper that Deere would fit Berkshire's criteria — good earnings, a strong brand name, a “moat” to protect against competitors and growth prospects given the world demand for food.
They turned in the paper Oct. 13. Last week, Berkshire reported that it had purchased about $330 million worth of Deere shares sometime before Sept. 30.
“Bingo, they got it,” said Miles, who has written books about Buffett. “It made me feel good.”
The MBA students are a diverse group: Ramirez is a native of Cuba, Are a native of India and Bowen a native of Nebraska. Wong, from Seattle, took the class as a “lifelong learner.”
Miles said the students' correct reasoning about Deere shows that one can study Buffett's principles and past investments and come up with ideas that would fit into Berkshire's investment portfolio. The purchase likely was not by Buffett but rather by one of his two like-minded money managers, Ted Weschler or Todd Combs, who handle most “smaller” investments.
During the three semesters Miles has been teaching the Buffett-oriented class, students have made a couple of dozen such recommendations, and this is the first one to nearly coincide with an actual Berkshire investment.
Chatter on Chubb
There's chatter that property insurer Chubb Corp. was an “elephant” investment target for Buffett.
The Omaha investor, chairman and CEO of Berkshire, said at the company's annual shareholders meeting last May that he had considered a $22 billion investment but walked away.
Since then, the Wall Street Journal reported, analysts have been guessing about the name, and Chubb keeps coming up, including mentions by Barclays, Barron's and Credit Suisse.
No confirmation from Buffett so far.
Renewables look good
Utilities are too expensive these days, but renewable energy businesses may be good targets for acquisition, an executive with Berkshire's MidAmerican Energy Holdings Co. of Des Moines said last week.
MidAmerican Chief Financial Officer Patrick Goodman said in an interview with Bloomberg News in Phoenix that the company wants to invest its cash.
“We believe renewables is the better investment right now,” he said. “As a cash buyer, we will be looking at utilities if pricing comes in a bit.”
The company is buying wind and solar projects such as the $2.4 billion, 550-megawatt Topaz Solar Farm in California and now gets 31 percent of its energy from wind, hydroelectric, solar, nuclear and geothermal sources. Several years ago, Buffett said that owning utilities is “not a way to get rich. It's a way to stay rich.”
Give or take 100 years
A draft script of Ridley Scott's film “Prometheus” popped up online last week. It's a science-fiction tale about space explorations and aliens, like a prequel to the “Alien” movies.
The script sets a new goal, age-wise, for Buffett, describing the movie's CEO of a space exploration company like this:
“Peter Weyland sits behind a mahogany desk. He's a Warren Buffett type: a country sage, horse-sense and hard knocks. He might be seventy years old, or a hundred and seventy.”
No email for him
Buffett was the leadoff guest on a new quick-interview format on CNBC called “Off the Cuff,” with interviewer Becky Quick.
They talked about his casual dress at home, his uncluttered appointment book and his reliance on the Internet for the information he needs. “The amount of time it's freed up for other things, it's just incredible,” he said.
Buffett said he doesn't have an email account. “No, I've got plenty of other things to do that are making me happy. On email, I just do it through my assistant. The only thing is, I can't say anything to anybody that I don't want her to know.”
Buffett said he has never wanted other houses or possessions. “Money should free you from things,” he said. “It's freedom that lets you do what you want to do.” If there's a day when nothing happens, that's fine, he said. “I don't have any problem being alone and just sitting and reading and thinking.”
Buffett's will leaves his three children plenty of money, according to son Howard Buffett in an interview for the London Daily Telegraph.
Writer Marry Riddell went along with Howard Buffett on a cheetah-finding excursion in South Africa, where he talked about his life and coming role someday as chairman of Berkshire.
Although the bulk of his father's estate is pledged to charity, he said, “he's left the three of us enough money that we won't have to worry about anything. Not billions. He'd never do that. It'll be a lot less than people think.”
Howard's farm at Ukulima, South Africa, develops new crops to help poor farmers, part of the agricultural improvement efforts by the foundation he runs. Earlier this year, Howard Buffett went to the Olympics opening ceremony in London, visited former British Prime Minister Tony Blair and spent an hour with the Prince of Wales.
“I love the prince,” Buffett said. “He's got such a great sense of humour, and he really believes in what he's doing. He invited me to his Highgrove farm, and I'd love to go. But he is restrained by so much protocol. I have no protocol. I can say (on visits) that I don't want to meet the ambassador or the minister. I don't envy the prince at all. He is who he is, and he doesn't have a choice.”
Buffett said he is spending less time in Africa, partly because his wife, Devon, has said, “OK, I've done my duty. I've traveled with you so many times. I'm done.”
The story points out that while Warren Buffett is a Democrat, Howard is a Republican, although he favors relaxing U.S. immigration laws and did not view presidential nominee Mitt Romney favorably.
“One of the biggest mistakes he made was to criticize the London Olympics,” Howard said. “His was a typical American attitude — we'll show them how to do it. The world doesn't work that way, and I was embarrassed by his comments. I thought the Games ran like clockwork.”
On the other hand, he said, President Barack Obama must “show real leadership and force everyone to understand we must make difficult and unpopular choices if we want to improve our future.
“We have failed to deal with some of the most critical issues — an unsustainable debt, immigration reform that will eventually have an impact on our food security, growing hunger and poverty and expanding inequity both socially and economically.”
He said he's not looking forward to being chairman of Berkshire “because my dad won't be around.” He also said his father has planned his own funeral. The story added:
“A man who once ignored his own mortality now regularly summons his three children to discuss his constantly amended will. 'We have a pretty big role to play. We will be trustees of the trust that gives out all the money,' ” Howard Buffett said.
The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.
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