market folly

Berkshire Hathaway's Warren Buffett recently was interviewed by Andrew Ross Sorkin for Dealbook and he made some interesting comments about hedge funds, respected investors, and short selling that we wanted to flag:


Buffett on Hedge Fund Managers: "They're not as good as the old ones generally.  The field has gotten swamped, so there's so much money playing and people have been able to raise money by just saying 'hedge fund.  That was not the case earlier on; you really had to have some performance for some time before people would put money with you.  It's a marketing thing."

Julian Robertson echoed this sentiment when he also recently commented that hedge funds aren't doing as well as they used to because the competition is more hedge funds.   

Buffett mentioned a few hedge fund managers who were successful like Julian Robertson (Tiger Management), and he mentioned that he liked Seth Klarman (Baupost Group).  As we highlighted today, Klarman was named one of the 'next Warren Buffetts' way back in 1989 by Fortune.


On Short Selling: "Charlie and I have both talked about it. We probably had a hundred ideas of things that would be good short sales.  Probably 95 percent of them at least turned out to be, and I don't think we would have made a dime out of it if we had been engaged in the activity.  It's too difficult."


On Going Long: "The whole thing about 'longs' is, if you know you're right, you can just keep buying, and the lower it goes, the better you like it, and you can't do that with shorts."


On Running 'Too Much' Money: "... money starts getting self-defeating at a point, too."


Head over to Dealbook for the full interview with Buffett.