2009 Morningstar Investment Conference – 1

The 2009 Morningstar Investment Conference is underway and today’s opening session was a focused discussion entitled “Let’s Talk Stocks.”  Participating were Bruce Berkowitz of Fairholme Capital Management, Tom Marsico of Marsico Capital Management, and Wally Weitz of Weitz Funds.

One thing that I found extremely interesting was the contrast in investment styles between the Buffett following Berkowitz and Weitz and the growth investor Marsico. 

Marsico started by saying the overall valuations today are not as cheap as they were in 1981, but certain groups of stocks are very good values (he mentioned financials).  Regarding financials, he thinks the banks will go back to lending directly (i.e. bank lends to businesses directly) as opposed to the third party lending they’ve been doing the last few years (i.e. bank lends to hedge fund who then invests in individual businesses).

Weitz made a statement that the longer the recovery takes, the more likely the long-term changes in the market and investor behavior will take hold.  He mentioned that the system has taken a huge shock lately but behavior will only change if the recovery takes long enough for it to sink in.

Berkowitz added that there is so much defense going on that it is hard to go on the offensive side of investing.  This reminded me of the concept of psychology of investing – we must be able to stomach the difficult times in order to maximize profit opportunities.

At one point Marsico mentioned that he sold his shares in Burlington Northern to Warren Buffett.  I think that sums of his opposition to Buffett pretty well.  There are two sides to every stock sale/purchase – and I certainly would not want to be the one to sell to Buffett.

Just a couple more thoughts on the opening session today:
– Weitz has a good value based style and thought process.  I’d be interested in reading more about him – anybody know of any publications related to him?
– Weitz said that the sum of parts valuation method doesn’t work without management that you trust to handle the assets.  He mentioned that Buffett would be the only manager he would trust without knowing the assets of the business.

More of our coverage of the 2009 Morningstar Investment Conference:
Two Sides of the Coin breakout session
Three Takes on Value breakout session
Thursday lunch general session
Thursday general session with John Bogle






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