Ted on BRK (5/20):
TheStreet.com: You own a sizable block of Berkshire Hathaway (BRK^A:NYSE - news - boards) stock. Obviously, with Warren Buffett in your backyard, you know better than most his actions and interests. Does the Omaha connection provide a leg up for your fund?
Ted Bridges: Having a local company is not really necessarily a part of our investment philosophy and process. However, to the extent that you know and own a company that's in your backyard, perhaps that can give you a little bit of a leg up over time. I wouldn't say that it's something we seek out. However, we do own a handful of companies that operate from Omaha.
Obviously, Berkshire Hathaway is not an undiscovered idea. However, there was talk just a little over a year ago about Buffett's approach and whether he had become less relevant because of technology and the Internet. Our feeling was that Buffett operates in a zone of confidence and he has been successful, over long periods of time, by staying there.
His investments in the last 12 to 18 months underscore that he's looking at cash flow, he's looking for businesses that generate a lot of cash without the need for significant amounts of incremental capital investment. He is a master at using the float from insurance premiums to generate and leverage return. He is again proving his long-term success this year.
We actually added to our position in Berkshire in the past year. Our feeling was that regardless of what was going on in the outside world, this was a company whose market cap had basically been cut in half in the prior year or so. While you can never be sure when the pricing discrepancy will be eliminated, it isn't as important if you plan to hold the stock for a long time. And we are willing to do that when we are confident in the management. And we are comfortable with Buffett. |
