May 9, 2012 | By Niall O’Malley
This article originally appeared in CITYBIZLIST on May 9, 2012
The turmoil in the financial markets during the past four years has galvanized the need for a balanced approach in uncertain times. As a portfolio manager for Blue Point Investment Management, I was thrilled to receive an invitation from a portfolio manager to attend Warren Buffett‘s Annual Meeting. As a newbie, I was asked to present a company to group of portfolio managers. The Berkshire Hathaway Annual Shareholders Meeting was held in a 16,000 person indoor arena. After the mad rush for a seat, the mood changed to that of a class reunion. Nearly half of the attendees were professional portfolio managers, analysts, investment advisors or members of the financial media. The level of international participation was quite extraordinary. Countries represented by fresh arrivals were India, Korea, Japan, the U.K., France and Switzerland. The German contingent was easily in the hundreds.
The perspectives offered and gained were diverse. The total attendance count including other overflow venues was estimated at 35,000. In between the questions, the facts and the figures of what was learned was the importance of wit and humor. The questions spanned virtually all aspects of the financial markets and management issues associated with the Berkshire Hathaway companies. On a standalone basis Berkshire Hathaway has eight separate companies that qualify as Fortune 500 companies. Berkshire Hathaway as a conglomerate has over 270,000 employees. The holding company uses the premiums received from its insurance operations as its primary funding source.
A key theme of Buffett’s investment philosophy is investing in companies that are growing with solid management teams. Buffett’s value orientation causes him to seek companies that are out of favor or selling below their intrinsic value. Charlie Munger is very much a sounding board who has very quick dead pan responses to the attractiveness of an investment or a follow-up comment on a financial market issue. Warren Buffett warned against the declining purchasing power of the U.S. dollar. He cautioned investors not to buy long-term and medium term fixed income investments. He sees inflation as a real risk.
Perhaps Buffett’s greatest insights come from his observations about Mr. Market. As a disciple of Benjamin Graham, Buffett is quick to point out that Mr. Market is there to serve the disciplined investor. Mr. Market is likened to a psychotic drunk who acts irrationally. Mr. Market is emotional. He reflects the desire of people to get rich quickly and, when it does not happen, they become disappointed and then depressed about the results. Mr. Market’s irrational behavior creates the investment opportunities. In the end, the U.S. and the rest of the world are not going away. Panic equals opportunity.
About Blue Point Investment Management
Blue Point Investment Management, LLC, is a state-registered investment Advisor with its principal place of business located in Baltimore, Maryland. The firm also maintains an office in Towson, Maryland. Blue Point started out as a family office in 2006 and has evolved into a Registered Investment Advisor. Blue Point offers clients equity-oriented growth with a global perspective. The investment discipline is market-oriented and seeks Growth-At-a-Reasonable-Price (GARP). The Blue Point portfolio is based on a model portfolio applied to separately managed accounts.
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