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Let& #39;s talk about Warren Buffett. A thread. 1/ I grew up in Omaha, born and raised. All I ever wanted to do was escape. I loved hedge funds. Hated Buffett. The one day someone told me Buffett used to be the wildest fund manager of all. I didn& #39;t believe at first, but I learned.
2/ Berkshire was only a thing because Buffett had gone activist on the manager, and fired him ruthlessly. Okay. Now I was interested. Later I learned Buffett had an extremely high Sharpe ratio as a fund manager from one of his LPs& #39; kids. This didn& #39;t make sense. Time to study.
3/ By now I was in Wharton. I had access to "WRDS" - an exhaustive database of survivorship bias adjusted fundamentals. Using tangible book and a series of value factors would not have produced good returns especially in Buffett& #39;s earlier years when he posted monster CAGRs.
4/ The story Buffett told about "bottom& #39;s up" due diligence and folksy stock picking was likely just something that played well to audiences that he learned to talk to in a Dale Carnegie speaking course. He certainly did value invest but usually with a crazy edge due to distress.
5/ I needed to meet him. So I managed to take over the "Warren Buffett Club" at Wharton, which carted Wharton MBAs off to Omaha each year for the Oracle& #39;s wisdom. Warren would laugh delightedly and say that he dropped out of Wharton and it turned out well. He& #39;s a great troll.
6/ In fact, he trolls a lot. Some examples: 1] being best friends with Bill Gates but his biggest position is Apple. 2] Saying derivatives are poison shortly before taking a massive derivatives position 3] trash talking investment bankers before bailing them out (Citi, Goldman)
7/ I won& #39;t ever forget when I asked him what he& #39;d do with $100k today. He listed off 2 obscure off the run HY bonds he was & #39;salivating over& #39; this morning and quoted them in 1/8ths. He said, "I would truly love having to start over with $100k. The returns I could make..."
