The first week in May is always eventful. The Kentucky Derby, Cinco de Mayo and of course the Berkshire Hathaway Shareholder meeting in Omaha Nebraska. As a former shareholder, I attended several meetings with my friends from Wall Street. I looked forward to the meeting and still do. For a stock junkie like me, the financial meetings of early May are the equivalent of the super-bowl or NCAA March Madness.
SEE BELOW RILEY'S APPEARANCE ON GOLOCAL LIVE DISCUSSING PUERTO RICO'S BANKRUPTCY
Every young entrant into the world of finance is told, by his new mentors, to read the annual shareholder letter penned by Berkshire Chairman Warren Buffett aka the “Oracle of Omaha." Not only were rookies told to read the current Annual report but also every letter he had written since becoming Chairman. His partner Charlie Munger has also delivered wisdom over the years and the two of them are like a comedy act. The event brings to town tens of thousands of shareholders devoted to every word uttered by Warren or his curmudgeon-like partner Charlie.
This year’s event easily filled the CenturyLink Center and overflowed into several nearby rooms and buildings with simulcast large screens everywhere. The seats in the stadium cannot be reserved and a surprising number of people sleep outside the entrance to run the 6:30 a.m. sprint to grab a great seat. Buffett and Munger go all day and the crowd enthusiastically takes notes. Now I can enjoy full coverage for that weekend ending with a Monday Morning 3-hour interview on CNBC. Nearly simultaneous to the “Woodstock for capitalists," is the Value Investors Conference in Omaha and in New York there is the Ira Sohn Conference featuring the wisdom of leading Hedge Fund Managers and their best current ideas.
This May blitz is pure heaven for me and I can watch it all with my feet up in my own den, live. Even if I don’t spend 72 hours straight watching “May madness” I can get highlights and replays on the internet. Talk about the information age.
I currently manage a Hedge Fund Narragansett Multi-Strategy Fund that my partner Danny Mintz and I started in Narragansett, Rhode Island in 2006. Each year, since the mid-1990’s, I have actively borrowed several ideas from these meetings and because of our background in listed Option Trading (me 1973, Danny 1975) we formed hedged strategies reflecting the ideas that we really liked.
2017 Ideas
By emerging markets and short SPY - US stocks are expensive this idea is from the Sohn conference and Jeffrey Gundlach
Three recent long idea picks from Buffett PSX, LSXMK - Liberty SiriusXM Group Class C and AAL- American Airlines
Investors Bancorp (NASDAQ: ISBC) from the Vale Investors Conference
I encourage readers to do their own google search on these conferences and this year’s ideas. I guarantee other professionals like me are paying close attention and for beginners you should read the Buffett letters starting with this one.
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
Related Slideshow: Timeline - Rhode Island Pension Reform
GoLocalProv breaks down the sequence of events that have played out during Rhode Island's State Employee Pension Fund reform.
In the five years before Raimondo was elected, pension changes included a decrease in established retirement age from 65 to 62, increased eligibility to retire, and modified COLA adjustments.
Rhode Island increased mandatory employee contributions for new and current employees. New Mexico was the only other state to mandate current employees to increase their contributions.
Gina Raimondo defeats opponent Kernan King in the election for General Treasurer of Rhode Island using her platform to reform the structure of Rhode Island's public employee pension system. She received 201,625 votes, more than any other politician on the 2010 Rhode Island ballot.
Raimondo leads effort to reduce the state’s assumed rate of return on pension investments from 8.25 to 7.5%.
Her proposal includes plans to suspend the Cost of Living Adjustment (which allows for raises corresponding with rates of inflation for retirees), changing the retirement age to match Social Security ages, and adding a defined contribution plan.
Raimondo releases “Truth in Numbers”, a report detailing the pension crisis and offering possible solutions. She continues to work to raise public support for her proposal.
"Decades of ignoring actuarial assumptions led to lower taxpayer & employee contributions being made into the system." - Gina Raimondo (Truth in Numbers)
Governor Lincoln Chafee and General Treasurer Gina Raimondo present their pension reform legislation proposal before a joint session of the General Assembly.
“Our fundamental goal throughout this process has been to provide retirement security through reforms that are fair to the three main interested parties: retirees, current employees and the taxpayer…I join the General Treasurer in urging the General Assembly to take decisive action and adopt these reforms.”- Gov. Lincoln Chafee
Head of Rhode Island firefighters’ union accuses Raimondo of “cooking the books” to create a pension problem where one did not exist. Paul Valletta Jr. states that Raimondo raised Rhode Islanders’ assumed mortality rate to increase liability to the state, using data from 1994 instead of updated information from 2008, and lowered the anticipated rate of return on state investments.
“You’re going after the retirees! In this economic time, how could you possibly take a pension away?” Paul Valletta Jr (Head of RI Firefighters' Union)
Read more from the firefighters' battle with Raimondo here.
Check out the New York Times' take on RI's pension crisis here.
The Rhode Island Retirement Security Act (RIRSA) is enacted by the General Assembly with bipartisan support in both chambers. RIRSA’s passing is slated to reduce the unfunded liability of RI’s pension system and increase its funding status by $3 billion and 60% respectively, level contributions to the pension system by taxpayers, save municipalities $100 million through lessened contributions to teacher and MERS pension systems, and lower the cost of borrowing.
Governor Lincoln Chafee signs RIRSA into law. According to a December 2011 Brown University poll, 60% of Rhode Island residents support the reform. Following its enactment, Raimondo holds regional sessions to educate public employees on the effects of the legislation on their retirement benefits.
Read about how Rhode Islanders react to RIRSA here.
Raimondo hosts local workshops to explain the pension reforms across Rhode Island. She also receives national attention for her contributions to the state’s pension reforms. The reforms are given praise and many believe Rhode Island will serve as a template for other States’ future pension reforms.
Raimondo publicly opposes Governor Chafee’s meetings with union leaders in an effort to avoid judicial rulings on the pension reform package. In response, Chafee issues a statement supporting the negotiations.
Led by the Rhode Island State Association of Fire Fighters, unions protest the 2011 pension reform outside of the Omni Providence where Governor Lincoln Chafee and General Treasurer Gina Raimondo conduct a national conference of bond investors.
Read about Raimondo's discussion of distressed municipalities here.
The pension plan comes under increased scrutiny as a result of the involvement of hedge funds and private equity firms. Reports show that $200 million of the state pension fund was lost in 2012.
"In short, impressive educational credentials and limited knowledge of investment industry realities made Raimondo ideally suited to champion private equity’s public pension money grab." - Ted Seidle (Forbes)
Read GoLocalProv's coverage of the State Pension Fund's losses here.
Read Ted Seidle's criticism of Raimondo in Forbes.
