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Kass' Q&A Left Me Wanting More

Ever the idealist, The Business Press Maven likes nothing more than to hear a case for shorting motherhood, apple pie or Berkshire Hathaway (BRK.A). And Doug Kass, a highly regarded short seller as well as contributor to our own, obliged (in the case of Berkshire) on the pages of this weekend's Barron's.

And that is where my trouble began. As much as I wanted to hear Doug's courageous case (though courage might be a kind word for betting against Warren Buffett), his interview with Barron's was given in the question and answer format, which should always always be a red flag for you, the savvy investor.

Why? Because Q&As work to the interviewee's advantage in that it is hard to frame, challenge or dispute the subject's thoughts and claims. And if you are a savvy investor, you want to hear thoughts (especially thoughts about going short a man commonly referred to as a Sage). Otherwise it is too easily to be lulled into believing the last printed word you read, which of course is bad investment technique indeed.

They Just Don't Get Berkshire and Kass!

In this case particularly, such a mountain mover of a call needs to be put to the test and the Q&A, which involves asking a simple question, hearing the answer and moving on to the next question, too often fails when it comes to placing an interviewee's theories against counterclaims.

And there is a lot the reporter could have counterclaimed here.

When asked "Why do so now," (referring to shorting Berkshire), Kass opens with the argument that Berkshire's outperformance has been narrowing in the past decade because pay for hedge fund managers has risen. And because it has risen, finding a successor will be difficult. Said Kass:

"... in part because of the lucrative compensation set-up in the hedge-fund industry, the investment landscape now is inhabited by a lot more smart and aggressive managers who comb for value -- far more than there were 10, 20 or 30 years ago. Berkshire Hathaway's outperformance versus the market has been narrowing in the last decade, and I expect that will continue."

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