Tag: berkshire-hathaway

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401k and Personal Finance Business Fun Fun Video Investing Life Life Tips Master Series

The 4 right hand men of Warren Buffett 巴菲特的四大金刚

Reading Time: 3 minutes

油管：my Youtube 2022 video for BRK HQ video below (narration mostly in Chinese)

Charlie Munger

We know Charlie Munger (Wiki) passed away recently, and he was the vice chairman of Berkshire Hathaway: he had some influence on Warren Buffet’s investments over the years, including See’s Candy, Coca Cola and so on. Here is the free online book Poor Charlie’s Almanack (you can purchase the paper versions through the links here). Also, the last interview before he passed away with CNBC’s Becky Quick (1 hour 42 mins, YouTube link here). I still think Warren makes most investments decisions independently. though.

If you like to have a quick look, I listed some shorter videos of Charlie Munger’s classical moments here.

四大金刚 (google; baidu baike, Wiki) is a common idiom in Chinese, and I think it may be suitable to describe the current top 4 men who works for Warren Buffett. And I assume they take over most of what Warren does today, should Warren decides to retire.

Top Two (Duo)

Greg Abel (Wiki): current Vice Chairman of BRK, responsible for all non-insurance operations, which also means he is in charge of the BRK Energy (formerly Mid-America Energy), BNSF Railway, many manufacturing and retail operations ranges from BH Home Service (real estate agents), Brooks Running, Clayton Home, Diary Queen, to ISCAR, Nebraska Furniture Market (NFM), Net Jets, See’s Candies, to Oriental Trading, Squish Marrow and so on. Note there are many business people may have not heard of. As of now, Greg will be the CEO of Berkshire Hathaway when Warren Buffett retires, in addition to his curent Vice Chair title.

Ajit Jain: current Vice Chairman of BRK, responsible for all insurance operations, companies such as Geico (car insurance) to reinsurance business.

Warren asked Greg and Ajit to be on the stage in last few years’ annual shareholder meeting, and they answered relevant questions in their portfolio. This is a good move. I think also, once Charlie slipped his tongue during an Q&A, and he said Greg will keep the culture (or something similar). So the world knows Greg is the CEO heir apparent.

Investment managers (also a duo)

Ted and Todd are two former hedge fund managers that Warren Buffet hired about 15 years ago (exact date please refer to their Wikipedia links below, or you can google it). Quite a few people including $BRK.A and $BRK.B shareholders would question Warren Buffett’s age and they are worried what if Warren suddenly became incapacitated or die. Who is the heir apparent. This is a tricky question or problem, because very few hedge fund managers would give up their career, at the same time would basically be prepared when this inevitable happens. It seems in Ted W. and Todd C. Warren found the perfect duo for this job. This is somewhat like the duo of Warren himself and Charlie.

Berkshire began buying Apple stock in 2016 under the influence of Buffett’s investing deputies, Todd Combs and Ted Weschler.

Ted Weschler: Ted got a bit unwanted attention from his personal IRA investment. But his performance speaks louder than his words. Quote Wikipedia: in 2012, Weschler joined Buffett at Berkshire Hathaway, a year after Todd Combs joined as Berkshire’s first investment manager. As of 2019, he managed $13 billion of the equity portfolio and $8 billion in pension funds.

Todd Combs: in addition to his investment duty (along with Ted), note Todd is also the CEO of Geico (and technically for that role he reports to Ajit). Here is a picture of Todd during “invest in yourself 5k” during the annual Berkshire Hathaway shareholder meeting. Here is a picture of Ted, Todd and Tracy Britt Cool during that run. Note Tracy used to work for Warren as well, and she started to work on her own investment partnership in recent years. Maybe someday she will come back to BRK: if the right opportunity arises.

Board

Howard Buffett, Warren’s older son, plans to take over the Chairman role when Warren retires. Susan Buffett, Warren’s daughter, and a few others will be on the board. They may need to add one or 2 board seats because Charile used to be a board member.

One thing it’s interesting is Warren likes #pairProgramming, or #pairWorking, because he has two pairs of magnificent managers for CEO and investment managers job.

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401k and Personal Finance Business Fun Investing Master Series

Weekend thoughts 05-07-2022: Berkshire Hathaway 2022 shareholder meeting

Reading Time: 5 minutes

I went to Omaha last weekend, left STL on April 29 Friday, attended meeting on April 30 Saturday, and left Omaha back to STL on May 1st Sunday. The full comment and Q&A session (including the actual shareholder meeting) is broadcasted by CNBC and available at YouTube.

Note when I drove to Omaha on Friday 4/29, the market was in a tail spin, and so did the market perform poorly this week. But at the Berkshire church, we are value investors, and we don’t care about the daily (weekly, monthly) fluctuations. I think with the modern technology (don’t recall exactly at which year Berkshire starts to broadcast its annual shareholder meeting), the technical side of things can be learned at the comfort of home. On YouTube there are a lot of materials on Warren / Charlie spoke at past shareholder meetings, such as this YAPSS channel, note there are others too including Warren and Charlie’s other talks especially to college students. The whole #BRK2022 meeting video is about 6 hours long, with the last hour being the official shareholder meeting, with questions related to shareholder proposal (somewhat politics related). One thing surprised me a bit is the tone of some of the shareholder proposal, and Buffett’s patience on answering some of those, such as this one at 5 hour 18 minutes mark of the video. My sense is very few CEO would have that kind of patience. This is shown in the Q&A part of the meeting as well, I imagine some of the questions have been asked again and again because they have done this probably for 20 years. But Charlie and Warren answered those regardless.

The movie at the beginning of the meeting: I noticed Susan Buffett (Warren’s daughter) is the executive producer, and it was fun to watch overall. It has some ads, as well as some old video clips such as Warren’s testimony during Salomon Brother crisis. Other notable things are the exhibits, which has things from Brooks Running, to Clayton homes (manufactured home), DQ, Netjets, See’s candies. The movie also showed all Berkshire managers including Ted and Todd (investing managers). Warren’s skit with Bill Murray was a bit interesting too (confuse Warren Buffett with Jimmy Buffett, the singer). I noticed Bill Murray is a BRK shareholder and recently he got into hot water. I was not 100% sure that Susan Buffett (or Warren Buffett) was taking a side here. Also I am not positive the movie is available online: this seems like one benefit that’s only available for shareholders attending in person. Overall I liked the movie especially on the side of “don’t take oneself too seriously”, “poke fun at self” (again Warren vs Jimmy Buffett) and so on. It’s a strength of American culture, as poking fun at politicians are allowed, sometimes I felt bad for Bill Clinton as I saw comedians and talk show hosts pounced on him all the time, but hey, why would he looked at Aliana Grande (who could be his grand daughter’s age) in such a creepy way. Okay I will back to the topic.

International audience: there are many international audience in person, as some may have see from the questions being asked, also I noticed in the hotel I stayed, there are quite a few private jet pilots. Maybe next time I will fly the private jet, instead of driving back and forth. Talking about driving, I was a bit tired on the way home, both due to the 5k I ran in the morning (the invest in yourself 5k), and also because of I was a bit sick coming in, plus I had a small incident on Saturday.

The incident was I messed up my only long pant in the morning when I was waiting outside CHI health center. The line was long at about 7:30 am, so I decided to go to the nearby hotel to see if I can use the restroom. It was a bit too late… thus on the rest of the day I only had a swimming trunk as my bottom. The temperature was in 50s that day, and people may think I am a runner or something. Yes I do run, but I would probably wear a long pant in that kind of weather. The lesson here is always have some margin of safety (room for error or unexpected), so I will bring an extra pants next time when traveling. Another lesson is try to look out for restroom in a new area, just in case, in this scenario it seems the nearest one is Marriott hotel across the street.

Some other odds and ends: I noticed there are a few homeless people near the downtown hotel I stayed. I stayed at the Hyatt Inn near old market in downtown Omaha. I also found a bit authentic Chinese restaurant (Blue and Fly) eventually, after eating ramens at two Japanese restaurants near downtown. I found and walked near the Berkshire HQ office as well. CHI Health center: it’s a big place, noticed they did not charge sales tax for See’s candies etc, don’t know why. But they don’t allow outside snacks or food, drinks in (to protect their concession sales). I did not bring much, but they threw away a few small snacks I bring in the case I don’t know where to get lunch. Warren said “midwestern time” instead of “US central time”. I noticed Gerald Ford, the former US president, was born in Omaha (saw a sign on highway on Ford). I think “midwestern value” can be seen in both in Omaha, and in Berkshire (Warren and Charlie). In addition to international audience, there are lots of domestic audience including US, midwest and Omaha residents too.

PS: this is my dream 16 years in the making. Back in 2006 I thought about going, but didn’t due to various reasons (maybe mostly financial). I am glad I am in a better position now 🙂 All in all, I like what I saw in this trip, and hope to visit sometime in the future too. If my kids and my wife can join, that will be even better.

Photos and video

Slideshow for 04-30-2022

Berkshire Hathaway HQ outside view

Tweets thread (Mine, Thomas Chua, The Rational Walk)

Planning trip

Past BRK Shareholder meetings (full sessions)

2020

2012

2011 (before 48 mins mark, there are quite a bit coverage on David Sokol. Tom Murphy: you can always tell a man go to hell if this is such a good idea. -Charlie Munger summed it well)

2005 (TIMESAVER EDIT – FULL Q&A) (Fun momemnts: at 43 minutes mark, a kid asked about See’s Candies and Petro China) (One hour 30 minutes: public school systems in Omaha) (2 hours mark: the comments on AIG and Hank Greenberg are interesting, as we know AIG blew up about 3.5 years later, amid 2008 financial crisis)

2001 (3 hours 54 mins mark: don’t go short. At 4:12 mark, Warren talked about California utility does not have incentive to produce more electricity due to new regulation. This sounds like what the US oil industry is doing in recent years. Note I am not taking sides on politics / climate change)

1999 (At one hour 4 minutes mark, shareholder asked about a question on Chinese stocks, Charlie commented “I don’t know much about China”. This is interesting, as Charlie grew closer to Li Lu in last 20 years or so, and Berkshire bought $BYD shares too. Also at one hour 8 minutes mark, “rich vs wealthy” is interesting.) (Books Charlie and Warren recommended: The Warren Buffett Portfolio, Titan the biography of the original John D. Rockefeller, Guns, Germs, and Steel,” which was a physiologist’s view of the economic history of man, The Wealth and Poverty of Nations.” And the guy’s name is [David] Landes; “Common Sense on Mutual Funds,” by Jack Bogle)

1998 (TIMESAVER EDIT – FULL Q&A, I just noticed all the TIMESAVER EDIT video have all the notes)

1997 (At 3 hours 28 minutes mark, an audience asked a Disney question which is relatable to today’s political environment. Buffett’s answer: I’m delighted to have my grand children expose to full range of #Disney products, and I love to take them to #DisneyLand #DisneyWorld, Disney movie and videos…I don’t have problem gays being employed (clap). Ditto here for me taking my kids to Disney. At 4 hours 19 minutes mark, the comments about McDonald’s are interesting.) || I just noticed the video has all the notes too, such as the McDonald’s vs Coca-Cola… this is excellent.

1996

1994

Last but not least, below is a tweet thread of interviews of “becoming Warren Buffett”, total 11 videos. I noticed YouTube (HBO) has a condensed version too (a documentary movie).

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Master Series

Why Buffett bought BNSF and did stock split?

Reading Time: < 1 minutebuffett burger
(Source: lsnhs.leesummit.k12.mo.us)

I can think of a few reasons:

1) He sees value in BNSF;

2) He want to use some cash so that his successor won’t have too much cash to squander (this is legit considering his age, and a lot of times people make mistake when they are rich);

3) Last but most important, financial crisis taught Buffett a lesson: liquidity is very important. GE and GS got his endorsement and got cash by issuing stocks in one day. Buffett could not do that before buying BNSF and the stock split. Now he can. BRK is S&P component, much more widely held. “Get access to capital market” is one reason Goldman went public in 1990s.

I think Buffett only said 1. But I think 2 and 3 are also the factor here. Remember Buffett was against stock split up to this BNSF deal. Although he said publicly splitting Berkshire stock is for small BNSF shareholders, a valid point. Nonetheless I would be astonished that was the only reason to overthrow 40 years belief/rule in one deal.

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Master Series

Reading Buffett letter to shareholder 2009

Reading Time: 1 minutelink to 2009 PDF annual shareholder letter here.

Buffett CNBC interview
(part 1 here, following the link from part 1 to get to part 2 to 8 )

Recommend reading by Buffett
Keynes’s *General Theory*, chapter 12

Intelligent Investor Chapter 8 and 20

My Notes

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Master Series

Random thoughts on Berkshire annual meeting weekend

Reading Time: 2 minutes(Update 04May09) Buffett CNBC interview. (Monday Becky Quick)

I did not go to the Berkshire annual shareholder meeting, partly because of the recession (cost cutting), partly because I sold the stock recently (note: one does not have to buy stock to get the admission ticket, they sell it at $5 on eBay). There are live blog and twitter on the meeting (6 hours Q&A), such as MarketBeat (WSJ), CNBC BuffettWatch and NY Times Andrew Sokin. But there are no webcast, because Warren and Charlie are old fashioned.

Succession plan

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Master Series

Reading Poor Charlie’s Almanac

Reading Time: < 1 minute(Update 04May09) CNBC interview.

(Update 01May09) Today PBS Nightly Business Report (NBR) Susie Ghalib interviewed Charlie Munger at Omaha.

(Original) One lesson I should learn from him: trade less.

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Investing

This “Wang Yang Bu Lao thing” on credit rating

Reading Time: 2 minutes(Update) Big bro started to act now.

(Original) We all know the stock rating game: I mean those “buy”, “hold” and “sell” rating usually issued by sell side (brokeage) analysts. They are mostly not objective, because at the end of the day the dealers want to sell you more stocks, regardless they are good or bad. At the height of this analyst game is Goldman “conviction buy”, my question for them is why there are no “conviction sell”? Presumably, one can use a sell list to short stocks?

Oh well, Michael Lewis, the former Soloman bond salesman, described the analysts in his “Liar’ Poker” very well. So I won’t keep beat on them. My focus on this little article is on the credit rating (bond rating) game. We all know the credit rating agencies (agencies may have mislead some to think they are independent organization, they are really for-profit companies) have been under attack for the debale of housing/mortgage markets because they had been slept in the same bed with the issuers of MBS (mortgage backed securities).

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Fun

My Berkshire Hathaway proxy vote

Reading Time: < 1 minuteI sold my remaining BRK.B share last week, and got some US bank (NYSE: USB) shares instead. The main reason I sold BRK.B is:

1) I don’t really understand the valuation of the business, which is 50% insurance + 50% manufacturing, housing, retailing etc. I have no idea for insurance and the whole thing is too complicated (big) for me.

2) I feel while Buffett escaped the worst market in 2008 with relatively few wound, he has appeared too much in public (CNBC?), and may have spent too much time with people he felt comfortable with (CEOs of Goldman Sach etc.). In other words, I hope he spend more time in Omaha, doing his thing/improving himself, rather than “start get into bubble”.

BRK_proxy_vote

For the similar reason, I decided not to worship him in Omaha this May, although I understand the chance of seeing the great investor becomes slimmer and slimmer as time goes (as I told my wife 🙂

That’s OK, at least I voted with my best judgement. I will explain why I voted against some of the directors if you are curious.

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Economy

Dow 5,000?

Reading Time: < 1 minuteI remember years ago (in dot com era) there is a book named Dow 36,000. Obviously that predication was a laughing stock becaue Dow crashed in year 2000. No I am not trying to make a fool of myself, my title Dow 5,000 is merely to reflect today the Dow and S&P dropped to 12 year low again (source: bloomberg).

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Master Series

Buffett on NBR (PBS)

Reading Time: < 1 minuteBerkshire Hathaway (NYSE: BRK.A; BRK.B) has not done well lately. Nonetheless, Nightly Business Report (PBS) interviewed Buffett. The topic ranges from new administration, recession and investing. The interview is about 30 minutes long.

Interestingly Susie Gharib tried to ask particular investment advice, Buffett declined politely.