Berkshire: Pinch Hit Weschler

We have argued for years that the biggest mistake being made by Berkshire Hathaway was not giving shareholders access to the thoughts and investment discipline of their two talented stock pickers, Ted Weschler and Todd Combs. After all, Buffett calls the shareholders “partners” and has not allowed his partners to understand anything about the strategies and results of upwards of $30 billion of shareholder capital.

person using MacBook Pro on table

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Thanks to Allan Sloan from The Washington Post, we have learned more about Ted Weschler from the footnotes at ProPublica and Sloan’s phone call to Mr. Weschler than we have ever learned from the Berkshire annual reports or the Berkshire Hathaway annual meetings. Where has any of this been in the Berkshire Hathaway footnotes? Weschler has made himself a centi-millionaire just from his personal investments in his Roth IRA. These funds came from converting his traditional IRA and paying a whopping $26 million in taxes to have future gains grow tax free. Here is how Sloan explained these circumstances:

I stumbled across Weschler’s investment acumen by reading the email that he sent ProPublica in response to questions about his Roth account, which was worth $264.4 million at year-end 2018, according to IRS information that ProPublica obtained.

By reading the ProPublica story, parsing Weschler’s email and doing about 15 minutes of research, I realized that unless my calculator was having a meltdown, his IRA had outperformed Berkshire stock by about 120 to 1 from 1989 through 2012, and by almost 90 to 1 from 1989 through 2018.

Sloan proceeded to contact Weschler, who was happy to demystify what he had done in his Roth IRA to amass such a fortune. Weschler explained that he had run a very concentrated portfolio with his “pedal to the metal,” much like what Buffett did back in Omaha in his limited partnerships and in the early years of running Berkshire’s capital. Here is how Weschler described his aggressive approach:

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Disclosure: This article contains information and opinions based on data obtained from reliable sources, which is current as of the publication date, and does not constitute a recommendation ...

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