CNBC's Becky Quick interviewed fund manager David Rolfe of Wedgewood Partners this morning. Wedgewood has a very good long-term track record of outperforming the S&P 500 with a portfolio of twenty high quality companies. At this point Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) is in their top 10 holdings, and they have owned it for roughly 13 years.
Here is the video and and notes from the interview:
http://video.cnbc.com/gallery/?video=3000018820
David Rolfe has a big β David Rolfe has a big stake in Berkshire. He's the chief investment officer of Wedgewood Partners. Thank you very much for joining us.
Thanks.
I know that you keep a limited number of companies that you own stakes in, right? This is continually one of your fifth or sixth biggest, Berkshire? We typically own 20 stocks in our portfolio. Everything matters. And we've been a long-term β long-term shareholders nearly continuously with Berkshire for 13 years. Right now it's about our fifth or sixth largest in our client portfolios, as well as the mutual fund.
You mentioned nearly continuous. You did sell out at one point.
Yeah. I think Buffett in the past mentioned β he quotes Mae West saying that she was snow white, but we drifted. We drifted when the S&P 500 adds β added it to the index. We sold it, and in hindsight we made a mistake and got lucky. The mistake was we didn't grasp the enormity of what the master stroke, what Burlington Northern (BNI) would be. Since then the stock was basically flat. We had a chance to get back in, no harm done, but Warren β I'm sorry. Okay.
So you're here this weekend, and the Sokol situation has been on everybody's minds heading into this. What did you think as you were preparing to come to Omaha this week?
I was perplexed. Given all the news and what seemed to be a very tepid press release. And then we had β the original prerelease that announced soak β press release that announced Sokol's resignation, right? That stirred more questions than it answered. Then the commodity report which in my mind was a 180-degree difference in terms of my view and certainly the restoration of Berkshire's and Buffett's reputation took a big leap forward.
Okay. What do you want to hear from Warren Buffett this weekend?
I don't β I don't need to hear that much more on the Sokol matter. There will be plenty of questions. The audit committee clarified a lot of things in my mind.
What specifically?
You wanted them to weigh in on whether he had acted incorrectly?
Exactly, the timeline. You know, it was β Mr. Buffett wants managers who like the gig better than the dough. And inelk milk only, you know β and inexplicably, you know, here's this $300 million profit that's hard to explain. We know the timeline. And there's been clarification. As a long-term shareholder what I'm interested in is I'd like for Mr. Buffett and obviously Mr. Munger to get back to that β the shareholder letter was very unique. One of the most bullish β one of the most celebratory that I've read in many years. The verbiage was really different. I mean, Warren Buffett talked about outperforming the S&P 500 by several percentage points. Before it was just a few. And in that first paragraph he talked about normalized earning power. We haven't β usually it's been the lumpy stuff.
You're approaching this letter the way fed members parse Bernanke's word from β every word.
Obviously it's the folksy charm which is really fun. But i believe the man chooses his words very carefully. And particularly when it comes to this collection of businesses that's earning so much money now, and right off the bat he talks about Burlington Northern. It's moving the pretax needle by 40%. And, you know, at his core, Buffett is a very competitive guy. So when he's talking about β he had that table that had the five-year numbers. The two worst five-year periods were the dot-com boom and housing boom. All those other five-year periods, even of late with this big conglomerate, he's out performing, 700, 800, 900 points per year. As a money manager I want to be all over that action. It's terrific. Again, I thought that this is β typically it's a reduce expectations type of verbiage that Buffett has written over many years. I thought this was a different tone this year. I want to get back to that type of bullishness about all these businesses. Okay.
If you have one question, I take it that would be it?
That would be it. Give us that red meat of more about Marman, Iskar, tell us about Burlington Northern. Tell us about the great conglomerate that you think can outperform the S&P 500 by several hundred basis points per year. I want to hear more.
Okay. David, thank you very much for your time today. David Rolfe. Appreciate it.
Here is the video and and notes from the interview:
http://video.cnbc.com/gallery/?video=3000018820
David Rolfe has a big β David Rolfe has a big stake in Berkshire. He's the chief investment officer of Wedgewood Partners. Thank you very much for joining us.
Thanks.
I know that you keep a limited number of companies that you own stakes in, right? This is continually one of your fifth or sixth biggest, Berkshire? We typically own 20 stocks in our portfolio. Everything matters. And we've been a long-term β long-term shareholders nearly continuously with Berkshire for 13 years. Right now it's about our fifth or sixth largest in our client portfolios, as well as the mutual fund.
You mentioned nearly continuous. You did sell out at one point.
Yeah. I think Buffett in the past mentioned β he quotes Mae West saying that she was snow white, but we drifted. We drifted when the S&P 500 adds β added it to the index. We sold it, and in hindsight we made a mistake and got lucky. The mistake was we didn't grasp the enormity of what the master stroke, what Burlington Northern (BNI) would be. Since then the stock was basically flat. We had a chance to get back in, no harm done, but Warren β I'm sorry. Okay.
So you're here this weekend, and the Sokol situation has been on everybody's minds heading into this. What did you think as you were preparing to come to Omaha this week?
I was perplexed. Given all the news and what seemed to be a very tepid press release. And then we had β the original prerelease that announced soak β press release that announced Sokol's resignation, right? That stirred more questions than it answered. Then the commodity report which in my mind was a 180-degree difference in terms of my view and certainly the restoration of Berkshire's and Buffett's reputation took a big leap forward.
Okay. What do you want to hear from Warren Buffett this weekend?
I don't β I don't need to hear that much more on the Sokol matter. There will be plenty of questions. The audit committee clarified a lot of things in my mind.
What specifically?
You wanted them to weigh in on whether he had acted incorrectly?
Exactly, the timeline. You know, it was β Mr. Buffett wants managers who like the gig better than the dough. And inelk milk only, you know β and inexplicably, you know, here's this $300 million profit that's hard to explain. We know the timeline. And there's been clarification. As a long-term shareholder what I'm interested in is I'd like for Mr. Buffett and obviously Mr. Munger to get back to that β the shareholder letter was very unique. One of the most bullish β one of the most celebratory that I've read in many years. The verbiage was really different. I mean, Warren Buffett talked about outperforming the S&P 500 by several percentage points. Before it was just a few. And in that first paragraph he talked about normalized earning power. We haven't β usually it's been the lumpy stuff.
You're approaching this letter the way fed members parse Bernanke's word from β every word.
Obviously it's the folksy charm which is really fun. But i believe the man chooses his words very carefully. And particularly when it comes to this collection of businesses that's earning so much money now, and right off the bat he talks about Burlington Northern. It's moving the pretax needle by 40%. And, you know, at his core, Buffett is a very competitive guy. So when he's talking about β he had that table that had the five-year numbers. The two worst five-year periods were the dot-com boom and housing boom. All those other five-year periods, even of late with this big conglomerate, he's out performing, 700, 800, 900 points per year. As a money manager I want to be all over that action. It's terrific. Again, I thought that this is β typically it's a reduce expectations type of verbiage that Buffett has written over many years. I thought this was a different tone this year. I want to get back to that type of bullishness about all these businesses. Okay.
If you have one question, I take it that would be it?
That would be it. Give us that red meat of more about Marman, Iskar, tell us about Burlington Northern. Tell us about the great conglomerate that you think can outperform the S&P 500 by several hundred basis points per year. I want to hear more.
Okay. David, thank you very much for your time today. David Rolfe. Appreciate it.
