Tags: Buffett | Adams | Loeb | Forbes

Forbes' Adams: Buffett Will Withstand Attacks From Loeb, Others

By    |   Monday, 11 May 2015 10:00 AM

Legendary investor Warren Buffett faces heated criticism on several fronts, but his reputation will survive the hits, says Forbes writer Susan Adams.

The latest blow came from hedge fund heavyweight Daniel Loeb, founder of Third Point. He accused Buffett of hypocrisy at a hedge fund conference in Las Vegas on Wednesday. "I love how he criticizes hedge funds, yet he really had the first hedge fund," Loeb said, according to The Wall Street Journal.

Meanwhile, the Center for Public Integrity and The Seattle Times have taken Buffett to task for allegedly predatory lending by the Clayton Homes subsidiary of Buffett's Berkshire Hathaway.

But "I predict the headlines will soon blow over," Adams writes.

"While I believe the latest Buffett critiques are warranted, he has carved out a legacy with his philanthropy that will outlast whatever behavior Berkshire Hathaway engages in as a rapacious capitalist force."

Buffett obviously broke some eggs to get rich. "But his overarching approach, of buying solid, well-run companies and supporting them for the long term, is a distinctive one among American capitalists," Adams maintains.

Meanwhile, have you ever thought about which stocks Buffett would purchase if he was starting his career now and focusing on a 50-year time horizon?

If so, MarketWatch columnist Mark Hulbert has some answers for you.

He made some selections based on a recent study by the National Bureau of Economic Research and AQR Capital Management. They came up with a formula to find stocks that could replicate Buffett’s returns of the past 50 years.

Three key elements include "safety, as measured by low historical volatility and low beta; cheap, as measured by low price-to-book ratios, and high quality," measured by profits, stability, growth and dividends, Hulbert writes.

And don't overlook leverage. The study states that Buffett utilizes a leverage factor of about 1.6-to-1. So you'd have to copy that to match his performance, Hulbert says.

He came up with 12 stocks, including:
  • American Eagle Outfitters
  • Haverty Furniture
  • Kohl’s
  • Owens & Minor
  • Rent-A-Center
  • Scholastic

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Legendary investor Warren Buffett faces heated criticism on several fronts, but his reputation will survive the hits, says Forbes writer Susan Adams.
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2015-00-11
Monday, 11 May 2015 10:00 AM
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