Cramer rejects Buffett’s stance on inventory selecting, favors hybrid mannequin

CNBC’s Jim Cramer on Monday denied Warren Buffett’s claim that Wall Street’s new retail investors will remain away from individual stock selection in favor of investing in index funds.

“I respect Warren Buffett, but I’ll always be the Peter Lynch type,” Cramer said.Bad money, “Responding to the comments from the Berkshire Hathaway Chairman and CEO. Cramer endorses the investment philosophy of Lynch, the legendary investor best known for his management of Fidelity’s Magellan Fund and his book on investing, One Up on Wall Street.

Lynch’s philosophy is based on an investor using their ability to watch, study, and take action on a stock, Cramer said.

“That’s why I believe in a hybrid. I don’t share Buffett’s disdain for home gamers trying to pick stocks, nor do I want you to go all-in on individual stocks,” he said.

Cramer provided a list of retail stock ideas for investors to test the principles of Lynch.

“I don’t want it to sound easy. If you want to invest like Peter Lynch, you have to actually visit these places or try things on, whatever piques your curiosity,” Cramer said, suggesting that viewers read Lynch’s book. “But I think a game or two of these reopening games will go well with an index fund in your retirement account.”

A Berkshire Hathaway spokesman did not immediately return a request for comment.

Disclosure: Cramer’s charitable foundation owns shares in Walmart and Costco.

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How Shopping for See’s Sweet Modified Warren Buffett’s Model

In 1972 Warren Buffett (Trades, Portfolio) and his partner, Charlie Munger (Trades, Portfolio), made one of the most important deals of her career. Munger had convinced Buffett to buy See’s Candy for Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), at what Buffett thought was a high price tag of $ 25 million. This was above the book value of the group and a multiple of 5.2 times the profit at the time. That might not seem expensive by today’s standards, but it was back then for Buffett.

In the years leading up to the deal, Buffett only bought stocks that traded at a deep discount to book value. Buffett followed in the footsteps of his teacher and mentor Benjamin Graham and pursued a strategy called net-net investing, which sought to buy stocks that were trading at a discount to the value of their net worth.

If a company were to trade at a discount to the value of its net assets, the buyer of that company would theoretically pick up the rest of the company for free (excluding the net worth). Buffett’s adherence to this mindset, however, began to wane after the deal of the lake.

Buffett and See’s Candy

In Janet Lowe’s book, “Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger,” the author gave an insight into why the deal was so transformative for Buffett and his partner.

“It was acquired at a premium over book [value] and it works, “Munger said in an interview with Lowe.” Hochschild, Kohn, the department store chain, was bought at a discount from the book and liquidation value. It didn’t work … Those two things together helped shift our thinking to the idea of ​​paying higher prices for better companies. “

The book also stated that as their business grew, Buffett and Munger realized they needed to deviate from bottom fishing. It was becoming increasingly difficult to find investments and buy those who found them in sufficient quantities to make a difference. As Munger said to the author at the time: “You could find value if you just rummaged through the pink sheets in the less traveled parts of the world – you would find many options.”

When Munger and Buffett realized how easy it was to run an excellent ongoing business that was generating steady profits when compared to the previously purchased high value stocks they had previously bought, their investment strategy changed completely.

“If we hadn’t bought See’s, we wouldn’t have bought a Coke,” Buffett said. “So thank you See’s for the $ 12 billion. We were lucky enough to buy the whole business, and that taught us a lot. We had windmills, well, I had windmills. Charlie was never in the windmill business. I ‘we had top notch Department stores, pumps and textile factories … “which in his opinion were almost as bad as problematic as the windmills.”

The book added a comment from Munger who stated that the duo should have noticed the benefits of paying for quality much earlier: “I don’t think it’s necessary to be as stupid as we are.”

I think Munger’s comments that the pair are “stupid” are a bit of an exaggeration as the markets are slow to change and it is not always obvious at first when your old strategy used to work so well. Even so, we shouldn’t overlook how important this deal has been in all of Buffett’s history. With the acquisition of See’s, the Oracle of Omaha bought its first “quality” business. He quickly realized how much easier it was to be an investor who bought good companies and just sat on them rather than constantly looking for new opportunities.

Since then, this mentality has defined his investment style. Today, both Buffett and Munger specialize in finding and sitting on good companies. This strategy has worked incredibly well over the years.

Disclosure: The author owns no mentioned part.

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About the author:

Rupert Hargreaves

Rupert is a committed value investor and regularly writes and invests according to the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter for institutional investors.

Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers all value investing for ValueWalk and other freelance websites.

Visit Rupert Hargreaves’ website

NFL Buccaneers’ Ndamukong Suh utilizing Warren Buffett’s recommendation

Falcons’ Matt Ryan (2) is chased by Ndamukong Suh (93) of the Bucs during the regular season game between the Atlanta Falcons and the Tampa Bay Buccaneers on January 3, 2021 at Raymond James Stadium in Tampa, Florida.

Cliff Welch | Icon Sportswire | Getty Images

National Football League lineman Ndamukong Suh tries to speak to Warren Buffett quarterly for investment advice and advice.

The two were closed since 2009when Suh attended the University of Nebraska. The last time he spoke to the “Oracle of Omaha” was on vacation. Suh, who now plays for the Tampa Bay Buccaneers, said Buffett has been talking about options and will be in position if they arrive.

“As you can see, he was super cash-heavy,” Suh ​​told CNBC on Friday. “It is being prepared to take steps and see where there are opportunities in the market.”

Despite being busy preparing for Sunday’s New Orleans Saints, Suh said in a showdown between legendary NFL quarterbacks Tom Brady on the Bucs and Drew Brees on the Saints he was aware of the market turmoil and activity across CNBC- Cell phone notifications remain aware.

While waiting for investment opportunities, he is also preparing for life after football.

“I aspire to be more successful off the field than on the field,” said Suh. “I think I’m in a pretty good place, but I know I have a lot of hard work to do to make that happen.”

Suh’s portfolio

Suh, 34, was particularly interested in hospitality and restaurant opportunities and says he is “bullish” in the sectors.

“I’ve seen a lot of good growth in these areas that a lot of people wouldn’t expect,” said Suh. (He is an investor in a hospitality SPAC but declined to name it.)

“There will be more demand as the vaccine comes out and people are more open to being in public,” Suh ​​said. “Deliveries and the ability to grab and go; I’ve seen a lot of success in these areas.”

Suh didn’t add a publicly traded food company to his portfolio in 2020, but privately he has “projects in the pipeline” this year near Portland, Oregon, where he grew up.

“We have signed leases and are waiting for things to get going again when things come back,” said Suh.

Other investments include Silophyte, a fitness company that specializes in privatized workouts. The Canadian company went through a $ 2.5 million fundraising round last November. according to Crunchbaseand Suh says the company is expanding.

He’s used his NFL fame to make connections Gary Shiffman, Chairman of the real estate company Sun Communities Inc.and earlier Starbucks CEO Howard Schultz. He has interests in both companies and is also considering investing in technology companies.

“I’d say I’m a practical investor,” said Suh. “I like getting my hands dirty. I like adding value, which is why I enjoy being a corporate advisor when I’m not a board member or venture partner.”

Defensive crackdown on Ndamukong Suh of the Detroit Lions

Getty Images

A meeting with Phil Knight

While with the Detroit Lions in 2011, Suh made the headlines when he was suspended for two games after kicking a Green Bay Packers player. He returned to Portland and met with Nike founder Phil Knightwho helped him turn a negative into an opportunity.

Suh said Knight told him, “‘We’ll be able to use this from a branding perspective.’ And Nike is one of the smartest groups in storytelling, so they’ve been able to use me in a variety of ways. “

Since then, Suh’s Foundation has focused on creating opportunities for others, one of which he called the Young Black Professional Housing Project. Suh’s mission is to provide housing for young entrepreneurs so they can focus on building their business, not renting.

With Covid-19 affecting the nation, rental rates in the city have fallen, but the monthly rent for a one-bedroom apartment still reportedly tops $ 1,100 The Oregonianwho used data from apartment websites.

“Renting is not easy,” Suh ​​said, adding that he has a 40- and 56-unit project in the architectural phase before moving on to city approval.

“I think they will find that it is a good project and that it will be online soon,” he said. “It’s a quality life and the ability to help young professionals get their feet wet in their business areas of activity, but also not have to worry about their life situation at the same time.”

Tom Brady # 12 of the Tampa Bay Buccaneers throws a pass during the first half against the New Orleans Saints at Raymond James Stadium on November 8, 2020 in Tampa, Florida.

Mike Ehrmann | Getty Images

Brady owes Suh

Suh described the NFL’s Covid-19 season as “challenging,” especially with protocols changing as the league got serious after one Breakout on the Baltimore Ravens.

“I’m happy to be an older man,” he said. “I anticipated what I had to do and knew everything I had to do when it came to football. I could just handle the by-products as they came.”

Suh added that he was impressed with how young players at the Bucs have handled the season, especially newbies.

“I know their head only turned with football, let alone the pandemic they were struggling with,” Suh ​​said. “Definitely a challenging year, but something we all believed we could do. As professional athletes we are constantly adapting and adapting. I think finding ways to make things are in our blood to do.”

Suh believes Brady will lead the team past the Saints to continue the chase for a Super Bowl. It would be his first title and Brady’s seventh.

Suh gives Brady Flak for them 2019 Super Bowl The quarterback cost him when the Los Angeles Rams fell to Brady’s New England Patriots.

“He owes me a Super Bowl since he stole one from me [2019]”Joked Suh.” I had business to take care of this year and I would love to have this Super Bowl, “he added.” I’ve seen a lot of individual success, but I need that team success to really solidify my career. “