Tuesday, April 5, 2011

A Few More Thoughts on Steinhardt versus Buffett

Below I linked to Michael Steinhardt ripping Warren Buffett apart. Now that I have a few additional free moments, here are a few more thoughts on Steinhardt's comments.

My guess is that Steinhardt is a friend of John Gutfreund's and that this was a hit job by Steinhardt on Buffett.

As some will recall, Buffett dumped Gutfreund from the top spot at Salomon Inc., following a trading scandal surrounding one of Salomon's employees. Some viewed the firing of  Gutfreund harsh treatment, since Gutfreund wasn't involved in the trading. What's more, Buffett (and his partner Charlie Munger) blocked Gutfreund's multi-million dollar severance package. NYT wrote at the time:
In sharp contrast to the normal fate of ousted chief executives, Mr. Gutfreund got almost nothing from Salomon after he left three years ago. Although the company announced that he resigned -- which he insists was the case -- it now maintains he was fired and adds that he should have been fired for cause. As a result, Salomon even decided to seize the stock options and restricted stock he had received in prior years.

Mr. Gutfreund, who will be 65 next month, has spent millions of dollars in legal fees trying to get Salomon to pay him what he is convinced he is owed.
The recent David Sokol episode must have opened some not quite healed wounds in the Gutfreund camp. And as Eliot Spitzer can attest, you shouldn't mess with billionaire Wall Street operators. Buffett's a billionaire, but he's from Omaha, not Wall Street. He's fair game as far as their concerned.

As for Steinhardt's comments, he threw everything, including the kitchen sink at Buffett. Questioning Buffett's investing performance is absurd (Though lately Buffett's performance has been boosted substantially by playing footsie with the government during the height of the financial crisis). Implying that Buffett was somehow "caught" in the Sokol episode is a howler. But, remember, Steinhardt's job he were was not to bring truth to CNBC viewers, but to dirty Buffett, and he was quite successful.

Watch the video again and notice how smoothly Steinhardt brings up the topic of Buffett, keeps Buffett the topic and manages to smoothly bring up what happened to Gutfreund. Smooth, real smooth. Buffett has to be not only pissed, but jealous. Steinhardt is smoother than Buffett.

As for some of the other Steinhardt comments about Buffett having the media snowed, well, that's been a theme here at EPJ for quite awhile. And as far as the absurd way Buffett gave his billions away to the Bill Gates charity, Steinhardt also has a point there.

BTW, aside from the hit job on Buffett, don't miss Steinhardt's dissing of Bernanke. He nails the inflation threat and, at one point, even references Bernanke as "Bernak". And calls out Bernanke for hurting "nice old people", who have saved all their lives, but are now being hurt by Bernanke keeping interest rates artificially low.


  1. Steinhardt did not impress me. Seemed like someone who made lots of money by being in the right place (hedge funds) at the right time (when hedge funds were arriving), I personally got into the Internet when it was starting and probably lots of my success was due simply to that. As Ross Peot ssid aboout his own success(paraphrase) it did not require much to make a fortune selling IBM when the world was computerizing.

  2. Steinhardt concern over the ever diminishing standing of US standing in the world struct me possibly as a little insincere considering that he is a champion of the state of Israel and likely a hardcore zionist. Everyone is entitled to their own political beliefs and I agree with some that find zionism to be essentially a political philosophy. But it is a philosophy that puts the concern for a select group of people and their nation above all others.

  3. I found his commentary refreshing--not wanting to please his hosts, but saying exactly what was on his mind.