Felix Salmon

Why Warren Buffett would never have gone into private equity

By Felix Salmon
May 18, 2009

Here’s a snippet from that Michael Lewis review of The Snowball:

Buffett’s second great decision was to maximize, at great financial cost to himself, the interest that the public might take in his business affairs. In 1986, Congress passed a tax reform that changed how Berkshire Hathaway’s capital gains were taxed. Previously, those gains had been taxed only once, when a shareholder sold his shares. Now, so long as Berkshire remained a public corporation, Buffett would need also to pay tax on any gains from the sale of stocks inside his portfolio. There was an obvious solution, and it was seized upon by public fund managers everywhere in Buffett’s position: shutter the corporation and become a private equity fund. At the time Berkshire had $1.2 billion of unrealized capital gains. Buffett might have doled these out, and then restarted as a partnership free of corporate double tax. Instead, at a cost to himself that Schroeder puts at $185 million, he kept Berkshire intact.

Insider-trading datapoint of the day

By Felix Salmon
May 18, 2009

How incompetent are the lawyers at the SEC? Here’s what happens when they use the material non-public information at their fingertips to indulge in insider-trading schemes:

Is the Obama administration condoning Ecuador’s default?

By Felix Salmon
May 18, 2009

One of the great things about working for Reuters is that if an important story appears on the wire, I can agitate to have it put online as well. So go and read this, by Alexandra Valecia and Alonso Soto: the astonishing yet seemingly all-but-missed news that Ecuador’s audacious and dangerous decision to bite its thumb at the entire international financial community has seemingly been ratified by not only its Andean neighbors, the owners of the Andean Development Corporation, but also by the international community more generally, in the shape of the Inter-American Development Bank.

Michael Lewis takes down Warren Buffett

By Felix Salmon
May 18, 2009

Michael Lewis has done it again, this time with a monster 4,700-word book review of Alice Schroeder’s biography of Warren Buffett. (Of course, it’s much less of a monster than the 838-page book itself, and it’s much more readable than Schroeder’s ridiculously overspecific prose.)

The full Gillian Tett interview

By Felix Salmon
May 18, 2009

My full 18-minute interview with Gillian Tett for Reuters TV, talking about Gillian’s new book, is now up:

Bad idea of the day: A crippled iPhone

By Felix Salmon
May 18, 2009

Olga Kharif speculates that AT&T might release a crippled iPhone later this month:

The return of the IHT archives

By Felix Salmon
May 18, 2009

Richard Pérez-Peña has the story: the IHT archives, which disappeared back in March, are reappearing. Finally. But the story is a little odd:

Donald Math

By Felix Salmon
May 18, 2009

Alex Frangos has some spectacular tidbits from a Donald Trump deposition today. My favorite is in the sidebar:

How’s that AIG unwind going?

By Felix Salmon
May 18, 2009

Are AIG traders dumping their CDS positions at ridiculous prices in order to ingratiate themselves with potential future bosses? It seems not — in fact, it seems that they’re barely making a dent in AIG’s $1.5 trillion CDS portfolio at all, any more. Maybe that’s what happens when you stop paying retention bonuses: your traders stop losing you billions of dollars. Yet another case where going to the beach and doing nothing is vastly more profitable than working very hard.