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Old 07-12-2009, 02:24 AM
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Warren Watch: A $1.7 million lunch with Buffett? It's all part of the plan


Courtenay Wolfe

By Steve Jordon
OMAHA WORLD-HERALD STAFF WRITER


Courtenay Wolfe, Danny Guy and Brad White figure it's worth a $1,680,300 donation to have lunch with Warren Buffett, what with $500 million of their investors' money tied up in the Lehman Brothers bankruptcy and the economy in a black box.
The three major partners in Salida Capital of Toronto had been thinking about such a bid for several years and decided this was the right time, partly because the firm's 10th anniversary is approaching. (It was founded in December 2001.)
Last year, said Wolfe, the firm's CEO, “was a very difficult environment for us. But you've got to stay focused and look toward the future. The only opportunity you have is to do everything you can to get those assets back, which we're doing, and to make more money for our investors.
“We want to make all of the money back for investors who lost it in the market last year.”

Spending a few hours with Buffett at a New York steakhouse is part of that plan. Besides the group of investors they plan to invite to the lunch, the partners are compiling a list of questions for Buffett.
“His perspective on where the world is and where the markets are is of great interest to us,” Wolfe said. “He has decades of wisdom and experience. We plan to be doing this for at least another couple of decades.”

Before entering the investment industry, Wolfe headed Dell Computer's Canadian online sales operation. Guy is Salida's founder, chief investment officer and a portfolio manager. White is managing director and a portfolio manager.

The group bills itself as “active, aggressive growth managers,” but Salida's investment philosophy has some parallels with Buffett's Berkshire Hathaway Inc., Wolfe said, including choosing investments they understand and companies with good management that are undervalued by the market. So far this year, the company's three remaining investment funds are up sharply.
Some had speculated that the online auction's winning bidder was Chinese, because the winner's bids used the number 8, which is considered lucky in China. But Wolfe said the bids, made by White, had no apparent significance other than to try to win the auction.
“Whatever he did worked,” she said, topping a rival bidder in the last seconds of the auction by $100.

The partners, who will make the donation from their own funds, also are happy that the money will go to the Glide Foundation of San Francisco, a church-related charity that helps the poor. They did not know much about Glide before the auction but have learned more and are impressed.
Glide officials invited them to see firsthand what their money will support, and Wolfe said they hope to schedule a visit in the next six to eight months.

Yes, “Salida” comes from the Spanish word for “exit,” and Wolfe said it's an appropriate name at a time of economic turmoil.
“You have to exit somewhere to enter somewhere,” she said. “Change creates opportunity.”
Some of Salida's investment funds carry the name BTR. Wolfe said the letters don't stand for anything specific.
How about “Buffett's Tips Revive”?

WuMart
Hong Kong hedge fund manager Zhao Danyang, whose $2.1 million bid last year won him a lunch with Buffett last month, has been defending his contribution from bloggers who claim he did it to make a profit.
Danyang had told reporters he gave Buffett copies of annual reports from WuMart, a Chinese retailer Danyang predicts will become China's Wal-Mart. When word got out that Buffett had gotten a tip on WuMart, its share price rose 25 percent.
That yielded a $16 million paper profit on the shares of WuMart that Danyang's funds own, according to the bloggers.
But Danyang, the New York Times reported, was “clearly annoyed” at the idea he tried to make a $14 million windfall by touting WuMart to Buffett.
“I didn't want to influence the market,” the Times quoted him as saying. “It was just a tip from a friend. ... I don't think Buffett will invest in this company. Every day, he can look at thousands of companies.”

Cort furniture
A Berkshire company, Cort Business Services of Fairfax, Va., is finding a niche within the slumping housing industry.
Cort rents furniture, often to businesses, and in May started a marketing program to help businesses that end up with houses they purchase from employees who are transferred from one city to another.
By renting Cort furniture, businesses can “stage” the houses they own so that they sell more quickly. Cort said the right furniture and accessories can cut the time it takes to sell a house in half and boost sale prices, even in markets with slow sales.
A $3,000 staging by Cort of a condominium in Arlington, Texas, brought a purchase offer a week later and a finished sale in three weeks, the company said.

Idaho gathering
The annual Sun Valley, Idaho, gathering of the media “uberclass,” as the Los Angeles Times calls it, by Allen & Co. last week drew Buffett and many others.
The list included Microsoft founder Bill Gates, Time Warner Chairman Jeff Bewkes, media magnates Sumner Redstone and Rupert Murdoch, Google co-founder Sergey Brin, Facebook co-founder Mark Zuckerberg, Newark Mayor Cory Booker, MySpace CEO Owen Van Natta and NFL Commissioner Roger Goodell.
Also attending: the New Yorker's Ken Auletta, the New York Times' Thomas Friedman, Washington Post columnist David Ignatius and CNBC's Erin Burnett, along with basketball MVP LeBron James, a friend of Buffett's.
Relatively few women attend, the report said, listing Susan Decker, a Berkshire board member formerly with Yahoo; Hearst Magazines chief Cathie Black; and “fashionista Diane von Furstenburg (Mrs. Barry Diller).”

Berkshire board
Berkshire is one of three corporations praised by Eric Jackson of the Seeking Alpha Web site for having the best boards of directors. The two others are Amazon.com and Johnson & Johnson.
Berkshire's financial performance has outpaced most other companies, Jackson said. Its directors, except for recent board member Susan Decker, own at least $6 million worth of company stock, and most of the directors are paid only $2,700 a year to serve.
Buffett's informative annual letter to shareholders and lengthy question-and-answer session during shareholders' annual meeting also are positives, Jackson said.
“The biggest problem I have with the Berkshire board is its average age. A third of the board is above the age of 80,” he wrote. “These directors will have to face board succession issues, as well as CEO succession issues, over the next few years.”

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