In one of the traditional rites of spring, tens of thousands of investors descended upon Omaha, Nebraska, this month to hear words of wisdom from their oracle, Berkshire Hathaway CEO Warren Buffett, at the company’s annual meeting. The focus this year had less to do with the market views by one of the world’s greatest investors than it did with his take on Wall Street’s favorite firm to hate — Goldman Sachs — and its embattled CEO, Lloyd Blankfein.
Buffett staunchly defended Goldman, which is being sued by the SEC for defrauding certain clients. The investors should have done better due diligence, said Buffett, whose company bought $5 billion of preferred shares in Goldman at the height of the crisis. As for Blankfein, when Buffett was asked by a Berkshire shareholder who he would choose if Goldman needed a new CEO, he replied, “If Lloyd had a twin brother, I would vote for him.”
Blankfein seems in little danger of losing his job, with or without Buffett’s endorsement. Still, the SEC lawsuit against Goldman points to the public and political anger toward Wall Street’s role in the financial crisis that just won’t seem to go away.
It’s against this backdrop of mistrust that the editors of Institutional Investor set out to find the top asset managers in the U.S. by surveying the pension funds and other institutional investors that use them. The results can be found in our four-story feature package, “The Money Masters,” beginning on page 29. In addition to stories on Modern Portfolio Theory and behavioral finance, the package includes a piece written by hedge fund managers Clifford Asness, David Kabiller and Michael Mendelson defending the use of leverage and derivatives by money managers that even the Oracle of Omaha would find compelling.