June Newsletter 2025
June 3, 2025
Dear Clients and Friends:
From my early days as a CPA at Price Waterhouse in Los Angles, I remember my first encounter with the investor genius that is Warren Buffett. He was expanding his list of investments in companies that met his unique list of “value” requirements and had focused on one of my clients: Blue Chip Stamps that owned See’s Candies. Berkshire Hathaway acquired Blue Chip Stamps (now long forgotten) and added See’s Candies to his diverse corral of “forever owned” companies. I recently watched the coverage of the always anticipated Berkshire Hathaway Annual Shareholder’s meeting, where Buffett once again highlighted the reasons that See’s Candies will be “forever owned,” as the attendees at the meeting snapped up all the boxes of See’s chocolates that they could carry.
Some years later after I had moved to Durango to escape the madness that is Southern California, I turned to the investment lessons of Warren Buffett when I started our investment management company at the bequest of my CPA firm clients. Buffett’s professor and mentor, Benjamin Graham, who authored “The Intelligent Investor” inspired Warren as he learned and applied the principles of thorough analysis, rational decision-making and focusing on intrinsic value. Graham’s book became the genesis of our firm’s namesake: Intelligent Investment Management. To quote Buffett: “Price is what you pay, value is what you get.”
As a continuing student of Buffett’s teachings, these are the takeaways that have inspired James and I; that we rely on daily as we manage your life’s nest eggs:
- Invest in what you understand; choosing companies and funds with business models that resonate with us and our clients.
- Focus on quality; invest in companies with strong underlying fundamentals. The CPA in me has provided that focus.
- Integrity, intelligence and energy are crucial traits for success in investing and life.
- Patience, patience and more patience; building wealth takes time.
- Tune out the noise; market fluctuations are normal. Trust the research and have a long-term plan.
Warren Buffett closed the annual Berkshire Hathaway meeting announcing that he will be retiring as CEO at the end of this year and will assume the Chairperson of the Board duties as his long-time student and associate Greg Abel takes the CEO reins. All expectations are that Abel, and his capable team will “stay the course”. Looking back for five years, as of May 30, 2025, Berkshire Hathaway (BRK) stock has risen by 149.22 percent; or roughly thirty percent annually, outperforming all related stock market indices by leaps and bounds.
Riding BRK’s coattails, our broadly diversified portfolio has long included significant positions in SRH Total Return Fund (STEW). The fund has a total return investment objective and is heavily invested in BRK and many of the individual companies included in the BRK diversified portfolio. The graphic below illustrates the diverse industries included in the STEW portfolio. Note that the “diversified” and “diversified financial services” components are primarily the BRK holdings.
Over the years we have used quotes from Buffett in our letters and on our website to remind us of his brilliance. Here are a few of my favorites:
- The most important investment you can make is in yourself.
- Rule number one is never lose money. Rule number two is never forget Rule number one.
- Someone is sitting in the shade today because someone planted a tree a long time ago.
Remember, Warren Buffett says, “Be fearful when others are greedy, and greedy when others are fearful”.
One of Warren Buffett’s teaching is timely right now. The global Trade Wars turbulence began on April 2nd and investors ran for cover out of fear. As the trade wars saber-rattling settled down a bit in May, the markets recovered the losses and turned positive on the year. Of course, James and I put in some long hours “buying low” the quality large-cap domestic equity funds that were badly beaten down. Our efforts were then rewarded, as illustrated in the Green Line Graph prepared by Laura for our Domestic Equity Portfolio for the two-month period, April 2, 2025, through May 30, 2025. Our Domestic Equity Portfolio allocation saw a roughly thirteen percent total return for that short period. Most client portfolios include allocations to this category of between twenty-five and thirty percent of the total managed portfolio. Roughly $1,500,000 in cash was moved to the Domestic Equity Portfolio allocation, bringing the total allocation up to just over thirty percent of the total managed Portfolio.
Just yesterday, the Atlanta Fed’s “GDP Now” report was released reflecting an estimate of real GDP growth in the second quarter of 2025 at 4.6 percent (up from 3.8 percent just last week). It appears that investors are now paying more attention to the economic growth forecasts and less attention to the back-and-forth trade negotiations. Now, all eyes are on Washington as the Senate focuses on the Houe of Representatives’ narrowly passed budget and spending bill. Lower taxes and less government spending are front and center; with the deficit and Social Security, Medicare and Medicaid bringing up the rear. Hard and painful decisions to benefit our next generations are clearly in the crosshairs. Warren Buffet has a very common-sense solution to these problems, he said he could end the U.S. deficit in five minutes: “if you guys cannot get it done, we will get some other guys to get it done.”
As summer nears, try to spend some time outdoors enjoying all the reasons we live here!
Reach out to any of us with any questions. We have been meeting with clients regularly to update Investment Policy Statements and to review beneficiary designations on all accounts.
Sincerely,
Intelligent Investment Management, LLP
G. Stephen Wheeldon 