David Fleer
Bristlecone Value Partners, LLC
12301 Wilshire Blvd., Suite 320
Los Angeles, CA 90025 USA
Work 1-877-806-4141

Berkshire Hathaway: In Praise of Synthetic Leverage

March 22nd, 2017

“Life is like a snowball. The important thing is finding wet snow and a really long hill.”

–Warren Buffett

A few weeks ago, Warren Buffett published his annual letter to shareholders of Berkshire Hathaway–one which we read with interest each year.  The letter’s opening page contains a performance table tracking the annual percentage change in Berkshire’s per-share book value, compared to the return of the S&P 500 Index. By this very basic performance measure, Mr. Buffett’s track record is remarkable, outpacing the S&P 500 by an average of 9.3% per year over the past 52 years!   Read the rest of this entry »


Productivity and Prosperity

March 17th, 2016

Amidst the backdrop of extreme partisanship in this year’s presidential primary–and prevailing negative talking points on the state of the union–Berkshire Hathaway’s 2015 letter to shareholders offered a more optimistic take on America’s future.  Berkshire’s 85 year old CEO, Warren Buffett, reflected on the growth in living standards during his lifetime:

“American GDP per capita is now about $56,000. As I mentioned last year that – in real terms – is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. . . All families in my upper middle-class neighborhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth. His unparalleled fortune couldn’t buy what we now take for granted, whether the field is – to name just a few – transportation, entertainment, communication or medical services.” Read the rest of this entry »


Gambling vs. Investing

February 18th, 2014

For a game widely touted as a matchup for the ages (#1 offense vs. #1 defense), Super Bowl XLVIII was decidedly anti-climactic, with the Seattle Seahawks trouncing the Denver Broncos 43-8.  Another big winner (besides the Seahawks) was Nevada casinos, which reportedly netted $19.7 million in profits on $119.4 million in legal wagers (both record amounts for the Super Bowl).  Part of the reason for this record haul is that the Super Bowl attracts wagers from a large number of fans who don’t usually gamble.  These unsophisticated gamblers are more likely to make sentimental bets based on favorite players (i.e. veteran Denver quarterback Peyton Manning) or hometown teams, rationalizing their wagers as a fun way to make watching the big game “a little more interesting.”

In contrast, casino bookmakers exhibit no sentimentality whatsoever.  The casino’s goal is to limit its net exposure to either side of a bet, targeting a “spread” which will attract a roughly equal dollar amount of wagers to each outcome.  Each side of the bet is given odds which implicitly leave a reasonable commission to the casino for acting as middle-man.  In this way, the casino acts similar to a market-maker in a stock, whose objective is to balance buy and sell orders to ascertain a market-clearing price, and who pockets a small bid/ask spread for his efforts.  Thanks to such diligence and discipline, Nevada casinos have been net winners in 18 of the last 20 Super Bowls. Read the rest of this entry »


Quarterly Commentary – Third Quarter 2011

October 28th, 2011

The whiff of fear alluded to in our last commentary gained force in the third quarter, with looming worries about domestic recession and European sovereign debt woes growing.  The result was a strong downdraft in equity markets, with the S&P 500 down about 14% in the quarter and most other equity categories down further. On October 3, the S&P 500 dipped below 1100, the lowest level of the year, putting the peak to trough (so far, at least) decline since April right at 20%. That is slightly worse than the downturn experienced last summer.

Read the Full Commentary


Monthly Digest – September 2011

September 23rd, 2011


Though not adopted until 1963 as the official motto of our home state of California, “Eureka” was first officially associated with the Golden State upon adoption of the state seal in 1849, which includes the word above an idyllic image of the goddess Minerva surrounded by a bear, grapes, and a miner, set against a backdrop of the Sacramento river and snow-capped Sierra Nevada mountains.

Eureka—translated from the Greek as “I have found it!”—was widely associated with the discovery of gold in the state in 1848. It could as well be the motto for today’s gold-obsessed market. Read the rest of this entry »

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