From time to time, there are people stop by and sneer at GuruFocus for devoting our site to the greatest investors of our times such as Warren Buffett. They typically make some audacious statements such as “buy-and-hold doesn’t work”, brag about their own super trading systems and hastily move on, leaving behind them people like us defending value investing as an investment approach that overtime deliver superb results.
Well, next time such a person shows up, we will refer them to Wallace Weitz of Wallace R. Weitz & Co. who manages about three billion dollars with 8 employees. Weitz bought his first shares of Berkshire Hathaway in 1976 and still owns them.
Weitz Partners Value (WPVLX) has returned nearly 15 percent this year, tops among large-cap value funds. The $604 million fund is far ahead of the nearly 3 percent gain for the Standard & Poor's 500. Morningstar recently listed Weitz among a handful of early favorites for its manager of the year award in the domestic fund category.
Like us at GuruFocus, Weitz has his own share of devotion to Buffett. As you probably know, Weitz is based in Omaha, Nebraska, and "I look out our east window every morning, and bow to (Buffett's office at) Kiewit Plaza to keep the world turning the right way," as he joked in a recent interview with CNBC.
Here are some more excerpt of the transcript of the CNBC interview:
Q: What mistakes did you make in 2008, when the funds suffered losses of around 40 percent, slightly worse than the S&P 500?Again, you should read the CNBC article so you can better defend long term value investing next time.
A: A lot of the contrarian investing that had worked well for us in the past didn't work. It used to be that when people got pessimistic and worried about credit risk and banks and mortgages, you could take a contrary position and just wait it out. Eventually the Federal Reserve would lower interest rates and everything would be fine, and we would make a fortune. It became a real bread-and-butter approach for us over the decades.
But in 2008 I really underestimated how bad it would be. We kept a few stocks like Countrywide and Fannie Mae and Freddie Mac that we thought benefitted from economies of scale, and that had the special sources of financing. We thought they would benefit from the troubles of other financial institutions.
But that first wave of credit losses turned into a negative loop, where the foreclosures and the forced sales of the others companies' mortgages hurt the bank stocks that we thought were going to survive.
We got out of those stocks in late 2007 and early 2008, but not before it messed up our performance quite a bit.
Q: Do you expect to always hold some Berkshire Hathaway stock, since you've continuously owned it for so long?
A: I may have developed a sentimental attachment to the stock, so it may never get to zero in some of our funds.
In early 2009, it was up to 12 to 13 percent, probably our largest position ever. It really felt like a good anchor when the market collapsed.
All things being equal, we could give Berkshire an edge over other companies we don't know as well, and whose management we don't trust as much. But it's not magic, and we try to be disciplined about the stock's price relative to its value.
Also watch this footage:
Weitz’s portfolio doesn’t church a lot, so the following top holding list is still very much up-to-dated:
No. 1: Redwood Trust Inc. (RWT), Weightings: 5.5% - 6,836,155 Shares
REDWOOD TRUST INC. is a self-advised and self-managed real estate investment trust. Redwood Trust Inc. has a market cap of $1.13 billion; its shares were traded at around $14.46 with a P/E ratio of 8.5 and P/S ratio of 3.9. The dividend yield of Redwood Trust Inc. stocks is 6.8%.
No. 2: Berkshire Hathaway Inc. (BRK.B), Weightings: 5.35% - 1,221,939 Shares
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. Berkshire Hathaway Inc. has a market cap of $205.05 billion; its shares were traded at around $82.68 with a P/E ratio of 24.4 and P/S ratio of 2.2. Berkshire Hathaway Inc. had an annual average earning growth of 13.2% over the past 10 years.
Just as we are talking about loyalty, he has been selling the stock. Who will blame him? Given the run-up of the stock during the year. He did promise he would never completely sold this stock out.
No. 3: Liberty Global Inc. Series C (LBTYK), Weightings: 5.18% - 3,629,300 Shares
Liberty Global Inc. Series C has a market cap of $39.19 billion; its shares were traded at around $30.56 .
No. 4: Liberty Media Corp. Interactive (LINTA), Weightings: 4.99% - 8,652,400 Shares
Liberty Media Corporation owns a broad range of electronic retailing, media, communications and entertainment businesses and investments. Liberty Media Corp. Interactive Common S has a market cap of $7.8 billion; its shares were traded at around $13.71 with a P/E ratio of 14.8 and P/S ratio of 0.9.
No. 5: Omnicare Inc. (OCR), Weightings: 4.72% - 3,625,535 Shares
No. 6: Microsoft Corp. (MSFT), Weightings: 4.56% - 3,611,211 Shares
Microsoft develops, manufactures, licenses, and supports a wide range of software products for a multitude of computing devices. Microsoft Corp. has a market cap of $211.93 billion; its shares were traded at around $24.49 with a P/E ratio of 11.7 and P/S ratio of 3.4. The dividend yield of Microsoft Corp. stocks is 2.1%.
Check out Wallace Weitz’s portfolio and trading activities here: http://www.gurufocus.com/holdings.php?GuruName=Wallace+Weitz
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