Warren Buffett wrote to Leon Cooperman about stock buybacks, taxing the rich, and Henry Singleton.
When Cooperman contemplated a presidential run, Buffett joked that he could “deliver” Nebraska to him.
Cooperman shared three messages he received from Buffett in his newly published memoir.
Warren Buffett wrote to Leon Cooperman on everything from Henry Singleton and Teledyne to stock buybacks, income taxes and Cooperman’s potential presidential bid.
Cooperman, the former CEO of Goldman Sachs’ asset management division, shares three missions with Buffett in his newly published memoir: “From the Bronx to Wall Street: My Fifty Years in Finance and Philanthropy.”
Here are the three messages and the context surrounding them:
1. Dear editor
In the year Cooperman, who turned Omega Advisors hedge fund into a family office in 2018 In 1982, he wrote an open letter to the editor of Business Week. Teledyne founder and CEO Henry Singleton was upset by the magazine’s critical profile.
In the letter, the billionaire tycoon touted his ability to grow individual companies through acquisitions and spinning off Teledyne subsidiaries. Cooperman also credited Industrialist with buying shares at an attractive price, investing excess cash from the Teledyne insurance business into the stock and building the company’s cash reserves.
After reading the letter, Buffett wrote him a note, which Cooperman still has taped in his office:
I always enjoy the quality of your writing and the quality of your thinking. Your letter to Business Week regarding Teledyne was 100% on the mark.
2. Shopping, good and bad
Cooperman He praised Singleton at a value-investing event in 2007. He points to the Teledyne boss as an example of an executive who did the buyback the right way. Only shares bought at a discount to their intrinsic value.
Buffett wrote to Cooperman after the speech to explain the deal:
Henry was the manager that all investors, CEOs, would-be CEOs, and MBA students should study. In the end he was 100% reasonable and there are very few CEOs I can make that statement to. The stock buyback scenario is attractive to me. The answer is because it is very simple. They only do so when they buy dollar bills at a clear discount and at a significant discount.
As a general observation, I would say that most companies that bought stock thirty years ago were doing it for the right reasons, and most companies that are doing it now are doing it for the wrong reasons. From time to time I see managers trying to be ‘fashionable’ or perhaps unconsciously hoping to prop up their stock.
Lowe’s is a good example of a company that has always bought stocks for the right reasons. I could give examples of the reverse, but I try to follow the saying ‘praise by name, criticize by class’.
3. Deliver Nebraska and punish the rich
Cooperman He briefly ran for president in 2011. He laid out a nine-point platform that included withdrawing US troops from Iraq and Afghanistan, rebuilding US infrastructure, regulating the domestic energy industry and strengthening government spending.
The veteran investor also proposed targeting people earning more than $500,000 a year and paying them 10% of their income over three years. Cooperman sent the plan to Buffett and directly asked the Berkshire boss what the top tax rate should be on the top earners in the US.
Buffett said in response to Cooperman’s 2012 support for lower taxes:
If you run for president, I can deliver Nebraska. Just let me know when I will be ready.
There are two possible ways to increase the value of a taxable estate of $1 million or more to a secondary property of $10 million. One is to increase 1 million dollars by five points and 10 million dollars by ten points.
Another approach is definitely the minimum tax (counting income tax and payroll tax paid by the taxpayer or representative) of 30% on $1 million and 35% on $10 million. The latter tax really hurts me and I lean towards it. Just changing the margin rate doesn’t hurt me.
Let me know your thoughts. Regardless, you still got my vote.
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