How Would A Young Warren Buffett Invest Today?

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During their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed How Would A Young Warren Buffett Invest Today? Here’s an excerpt from the episode:

Tobias: Got a good question. Got a Superchat. So, the question was, Buffett gets a million dollars. What does Buffett do to get his 50% a year out in this market?

Jake: Scrabble bag.

Tobias: [laughs]

Jake: I don’t know.

Bill: Man, if I knew that I’d be doing it myself.

Tobias: Yeah.

Bill: I bet given his knowledge base today, it would probably be something Beshorey. I’m not sure he would be in the market. He might go liquidation on some small caps and run some activist campaigns. That dude was a monster when he was young. It wasn’t always some jovial grandpa.

Jake: Get that inventory below this line that I painted in the warehouse or else you’re all fired.

Bill: Yeah, you get Buffett some money today and give him some hunger, I think he’d probably go activist on some names.

Tobias: Well, small-cap value has really bombed out.

Jake: I think he’d actually be international. I think he’d be in South Korea or something right now.

Bill: I don’t know, man. That’s outside his circle, but maybe.

Tobias: He’s done [crosstalk] his PA.

Jake: [crosstalk] PA.

Bill: Yeah.

Tobias: [crosstalk] Korean flour mills in his PA. I think—[crosstalk]

Bill: Maybe.

Tobias: Small-cap value is really bombed out. You can find some names in there that are too cheap. You take your million, put it with your other, invest this money or maybe just do it by yourself. I don’t know. There’s probably some stuff that’s small enough where you could get control. That’s really difficult stuff to do and you’ve got one bullet so you don’t want to get it wrong.

Bill: Yeah, then you go activist. You create some value and then do it. Yeah, that’s what I would bet he would be more likely to do.

Jake: Why aren’t we doing that then?

Tobias: Ah, it’s a lot of work.

Bill: One, I don’t know that I have the skills, but I sort of just proved that I might. So, I’m not totally opposed to it. I don’t know that I would have the motivation, certainly not right now. That was a unique combination of motivation and something within me saw a good strategy, I don’t know.

Tobias: Here’s a suggestion, leap option on a midstream oil company-

Bill: Fuck, no.

Tobias: Good chance at 50% of your money, 10x your money?

Bill: No. [laughs] Whoever you are, watch your risk.

Tobias: Yeah. What’s a leap? This ain’t leap. And he’s saying 50% chance of a 10x.

Bill: Yeah. Okay. Well–

Tobias: Not with the whole million, obviously.

Bill: It all depends on how you’re sizing it.

Tobias: Sticking it to Kelly?

Bill: Yeah, well.

Jake: It says 100% when I did this. It actually says I need to lever up the leap and says 200%.

Bill: My response to that is I have no sense of how to assign the probability of winning in that particular game.

Tobias: You see what the market was, saying 50%. 50/50.

Jake: That’s a coin flip. And it’s a 10x for a coin flip.

Tobias: Yeah, it’s got positive expected return.

Bill: Yeah, I mean that’s–The math checks out–

Tobias: And then you go activist.

Bill: I’m just not sure I’m going after that math.

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