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Warren Buffett's annual letter to shareholders is out, and the blogosphere is buzzing. One of the more popular blog posts out there compares his letter to the one written by Eddie Lampert, chairman of embattled retail giant Sears Holdings .

Jeff Matthews, a hedge fund manager who wrote Pilgrimage to Warren Buffett's Omaha, points out that Mr. Buffett and Mr. Lampert both started out as hedge fund managers, are fabulously wealthy, write annual shareholder letters after taking control of a fading, once-giant, public company, and spent years wrestling with how to turn the original business around.

"In the end, of course, one (Buffett) decided the rational thing was to disinvest in the original business and re-create the company to his liking, while the other (Lampert) is still wrestling with Sears even as he extracts cash from 'hidden' assets like real estate and minority-controlled subsidiaries," Mr. Matthews writes.

Mr. Buffett and Mr. Lampert also have different styles when they write about investing excess cash:

"As we have done since we took control of Kmart in 2003, we will continue to evaluate alternative uses of the company's cash flow and capital resources to generate long-term value for all shareholders. Each year brings with it different circumstances, and we expect to have a variety of opportunities to invest our cash in the years to come. Our discipline in evaluating opportunities leaves us prepared to weather difficult times as well as to prosper when economic conditions improve," writes Mr. Lampert

Whereas Mr. Buffett writes: "Our elephant gun has been reloaded, and my trigger finger is itchy."

And on "wonderful businesses vs. the wonder of financial legerdemain":

"I wouldn't be surprised to see our share of Coke's annual earnings to exceed 100 per cent of what we paid for the investment. Time is the friend of the wonderful business," Mr. Buffett writes.

"Furthermore, not a dime of cash has left Berkshire for dividends or share repurchases during the past 40 years. Instead, we have retained all of our earnings to strengthen our business, a reinforcement now running about $1 billion per month."

Whereas Mr. Lampert writes: "In April, we had the opportunity to purchase an additional 17% of Sears Canada for $560 million, increasing our ownership from 73% to 90%. In 2010, Sears Canada has paid two dividends, which returned $639 million of cash to Sears Holdings. Of course, of the cash we received in dividends, we would have received $518 million without the additional shares purchased (because we already owned 73% of Sears Canada), so in effect we received $121 million in dividends on behalf of the additional shares purchased in 2010."

By the way, Globe Investor writer David Milstead recently wrote a fascinating column about this:

Also by the way, the ukulele-playing Mr. Buffett continues to make jokes that only he can make. He quotes an investor in 2009 as saying, "This is worse than divorce. I've lost half my net worth – and I still have my wife."

He also changes a traditional proverb, on value investing, perhaps: "To update Aesop, a girl in a convertible is worth five in the phone book."

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