Warren Buffett: Billionaire, philanthropist … hypocrite?
That’s what star investor Dan Loeb suggested, knocking the Oracle of Omaha for failing to practice what he preaches on taxes and other issues.
“I love reading Warren Buffett’s letters. And I love contrasting his words with his actions,” Loeb said on Wednesday to cheers from the hedge fund crowd at SkyBridge Capital’s SALT Conference in Las Vegas.
Buffett vs. hedge funds: It’s clear that Buffett’s criticisms of the hefty fees charged by hedge funds have not made him many friends in the industry.
“I love how he criticizes hedge funds, yet he really had the first hedge fund. He criticizes activist investors, yet he was the first activist,” said Loeb, who’s amassed a fortune of his own as founder of Third Point, an activist hedge fund.
It’s no secret Buffett favors index funds over hedge funds. In 2008, he bet that a low-priced index fund tracking the S&P 500 would beat a portfolio of hedge funds over a 10-year period when fees are included. As of early 2014, Buffett’s low-cost index fund was handily beating the hedge funds, according to Morningstar.
Tax avoider? Loeb also knocked the Oracle of Omaha for his advocacy on tax issues, including his calls to raise rates on the richest Americans.
“He thinks we should all pay more taxes but he loves avoiding them himself,” said Loeb.
Critics say that despite Buffett’s personal willingness to pay more tax, he has been very good at minimizing the taxes paid by Berkshire. At least year’s SALT Conference, John Burbank of Passport Capital said that Buffett was “basically a tax evader.”
Does Buffett love or hate banks? Loeb also took Buffett to task for his recent critique of Wall Street more broadly. In his letter to shareholders this year, Buffett called bankers, lawyers and consultants in the industry “a lot of mouths with expensive tastes” who resort to financial engineering to artificially inflate earnings.
Yet Loeb correctly pointed out that Buffett “loves to invest” in financial services firms, and has stakes in Bank of America, Goldman Sachs and Wells Fargo.
T. Boone Pickens, the Texan oil billionaire, came to Buffett’s defense. “He’s a pretty successful guy. Anybody who owns a railroad impresses me,” Pickens said at SALT on Thursday.
Loeb seemed to be itching for a fight. His comments about Buffett were actually triggered by a seemingly innocuous question about what types of investing books he enjoys reading.
While Loeb professed a love for Buffett’s “wisdom,” he said there is a “disconnect between his wisdom and his actions.”
Berkshire did not respond to a request for comment on Loeb’s remarks.
