Alice Schroeder (born December 14, 1956) is an American author and insurance analyst. In the first week of October 2008, she published The Snowball, Warren Buffett and the Business of Life, which debuted as a #1 New York Times bestseller. Alice was Institutional Investor's highest rated insurance analyst at Morgan Stanley. At the US FASB, she drafted and oversaw SFAS No. 113, sweeping changes to the US reinsurance accounting rules. Since 2008, her columns have been published in Bloomberg News. In 2008 BusinessWeek, chose her alongside Ben Bernanke and Hillary Clinton as one of the "People to Watch in 2008." Snowball was named a finalist at the 2009 Gerald Loeb Awards for Distinguished Business and Financial Journalism and shortlisted for the Financial Times and Goldman Sachs Business Book of the Year Award.[1]
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Alice Lynnette Davey is a native of Dallas, Texas. Her father was a lawyer, and her mother was a housewife.[2] She has a BBA in finance and an MBA from the McCombs School of Business at the University of Texas at Austin.[1] In 1990, she married Harold Schroeder, a CPA. They divorced in 2006. Schroeder married executive search consultant David Moyer in 2008.[2]
Schroeder worked as a CPA at Ernst and Young from 1980 to 1991. Until 1993 she was a project manager with the Financial Accounting Standards Board.[2] At the FASB she was responsible for three projects designed to curtail abusive accounting by insurers:
Schroeder began work on Wall Street in 1994 at broker-dealer Dowling Partners, then moved to CIBC Oppenheimer and PaineWebber before joining Morgan Stanley in 2000.[2] She was ranked as a member of the Institutional Investor All-America Research Team for seven years and named the #1 Property-Casualty insurance analyst two years in a row.[3] In 2002. Schroeder was voted one of ‘’Business Insurance’’ magazine's Rising Stars. That year, she was also named analyst/researcher of the year by ‘’The Review,’’ a reinsurance industry publication.[3] Schroeder was also considered an expert on the effect of the September 11 attacks on the insurance industry.[4]
Schroeder followed AIG closely as an analyst and for years was a strong supporter of the stock. In 2002 she stated that AIG’s CEO Hank Greenberg was so revered that “What investors really want is for Hank to be immortal.”[4] In October 2000, Schroeder declared that market concerns about AIG’s reserves were “overblown.” [5] Subsequently, Greenberg was terminated from AIG at the insistence of New York State Attorney General Eliot Spitzer and five employees of General Re and AIG were indicted in connection with an accounting fraud at AIG that overstated reserves in this and subsequent quarters. The accounting rules violated were those Schroeder oversaw as an FASB project manager in 1993 and 1994. Schroeder testified at the federal criminal conspiracy trial in Hartford, Connecticut and stated that had she known the company’s true financial status it would almost certainly affected her opinion on the stock.[6] The defendants were convicted on all counts and are appealing.
In 2002, activist hedge fund manager Bill Ackman challenged bond insurer MBIA's AAA rating [7] calling for a division between MBIA's bond insurers' structured finance business and its municipal bond insurance side. Ackman published a controversial report [5] on MBIA criticizing the company as undercapitalized. He gave Schroeder’s team an early draft and suggested they downgrade MBIA. Schroeder and her colleague Vinay Saqi responded to Ackman’s report, generally supporting Ackman’s thesis. A few months later Morgan Stanley downgraded MBIA. New York Attorney General Eliot Spitzer later investigated Ackman’s activities, but no charges were filed.[8] Ackman continued to pursue MBIA until 2008, when rating agencies downgraded the bond insurers.
Schroeder met Warren Buffett in 1998 when his company, Berkshire Hathaway, acquired General Re, a stock she covered as an analyst. For six years, Schroeder was the only Wall Street sell side analyst to whom Buffett [6] spoke.[9] Schroeder’s 1999 PaineWebber report on Berkshire Hathaway was the first significant Wall Street coverage the company received.[10]
In June 2003, Schroeder, then a managing director at Morgan Stanley, gave up her analyst duties and became an advisory director to the company. At this time, she began to write The Snowball with Buffett’s stated cooperation and access to his personal records, an unprecedented level of access. As later recounted in the book, Buffett told Schroeder, where accounts of his life differed, to always use the “less flattering version.” In researching The Snowball, Schroeder spent 2,000 hours with Buffett and interviewed 250 other people.[11]
The Snowball was published September 29, 2008 and debuted at #1 on the New York Times, Wall Street Journal and Publishers Weekly lists of hardcover nonfiction best-sellers. New York Times reviewer Janet Maslin called it one of her ten favorite books of 2008.[12] Time Magazine[7] and People [13] also named The Snowball one of the ten best books of the year. Other notable best of the year lists on which The Snowball appeared were included those of Publishers Weekly [8], The Financial Times[9], BusinessWeek[10], USA Today[11], and The Washington Post[12]. The book was named a Top 100 Editor’s Pick, the #1 business and investing book, and one of the five best biographies of the year by Amazon.com editors. [13]
After the book’s publication, Buffett reportedly stopped speaking to Schroeder, displeased with his portrayal in the book. He canceled the yearly dinner Schroeder hosted in Omaha at which she interviewed him before several hundred people.[14] In a New Republic cover story, author Michael Lewis wrote that Schroeder fit neatly into a pattern in which Buffett brought “attractive, intelligent women” into his life, but unlike the rest Schroeder had failed to “shelter and protect” Buffett.[15]
On November 30, 2009, Alice Schroeder published an opinion piece on Bloomberg News[14] stating that several Goldman Sachs bankers, in a show of prescience about potential social unrest, had obtained pistol permits. Alice Schroeder based this information on a Freedom of Information Act Letter she had received from the New York City Police Department. The column made fun of Goldman Sachs CEO Lloyd Blankfein for having installed a security gate at his house shortly before the fall of Bear Stearns and used Goldman's famous economic prescience as a metaphor for the potential perils of government intervention in free markets. In a December 9, 2009, Wall Street Journal blog post [15], journalist Susanne Craig reported that New York City Police Department spokesman Paul J. Browne retracted certain earlier information it had earlier given Alice Schroeder, which was part of the basis for the column. Bloomberg has since re-published the column on its website in corrected form.
In 2002, Thomson Reuters First Call, a research database that compiles earnings estimates by Wall Street analysts, agreed to include a broader range and interpretation of the judgment factors that analysts use to estimate earnings after complaints[16] from several brokerage firms. The dispute with First Call became public when the Wall Street Journal reported that First Call had removed Schroeder’s estimate on Chubb Insurance from the database after Schroeder refused[17] to raise her estimate on Chubb to match that of other analysts.