In their recent episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Tobias Carlisle discussed Key Takeaways From The Berkshire Meeting. Here’s an excerpt from the episode:
Tobias: What was your like big ticket item? The thing that you took away like, the thing that you just hammer into the nut. You got to remember this for the rest of time.
Jake: Yeah, I would say, it’s not your rate of return. It’s the exponent on that calculation. How many years can you do it? If you can stay alive to get that exponent to be as big a number as possible, then that’s the real name of this game. It’s not putting up 25% or 30% returns for a couple of years. Can you do it for a lot of years and you that’s how you win.
Tobias: Yeah, that was mine, too.
Jake: Sorry, I got that one already. You have to come up with something else.
Tobias: Oh, mine was that Charlie said, “It’s not doing the brilliant things. It’s not doing the dumb things. But that’s basically how you achieve what you’re talking about.” That’s what I’m trying to get to. I just want to survive to the ripe old age of 98. I’ll get my– [crosstalk]
Jake: I think that applies to the businesses too, where those returns on capital that aren’t 50%, then go to zero in three years, because everyone wants to get in on your honeypot. I think the flying under the radar at that-
Tobias: Yeah, 13% return.
Jake: -low teens is the–
Tobias: Well, the S&P 500 averages 13.3%. Maybe you want to be at-
Jake: [laughs] No one’s looking there.
Tobias: And like just under the market multiple. Just surging on the wave.
Tobias: What’s your big takeaway, Bill from your single idea that you want to remember, that you want to carve in the beams of your office?
Bill: I don’t have any from that. Those guys are the men. I just have a lot of respect for them. I think that the world would be better if more people listen to what they said and I just am really grateful that I found them.
Tobias: Yeah, likewise. I had to quite appreciate what a lad Charlie is here. Charlie’s one liners in that second half were hysterical.
Bill: Ah, he’s the man.
Tobias: Yeah. He’s real– [crosstalk]
Jake: There was a little bit of complaining in the beginning, because Buffett was meandering a bit, and they only got through seven questions in the first half, something like that. So, it’s like, “Oh, come on. This is feeling a little draggy.” Unless you’re at 2x, what Bill was able to do.
Bill: Still little meandering.
Tobias: But here’s a picture of a duck that looks like a-
Jake: It looks like a rabbit.
Tobias: -rabbit, if you switch it around. Isn’t that cool? Just found them on the internet.
Jake: Then second half, though, picked up the pace, got through more questions. And then my absolute favorite is, when the two of them talk back and forth as if we’re not there.
Jake: They ask each other questions and “Oh, do you tell them this story? Remember this.” I could do that all day long and not have any questions from the audience.
Tobias: Oh, 100%.
Bill: Yeah. Just a podcast between the Buff Dawg and the Mung.
Jake: So good.
Tobias: That’s what it is. That’s what it is. They have been doing a podcast now for 50 something years.
Jake: It’s so good when they get into that mode.
Tobias: They had some interesting stories. I like the fact that Charlie couldn’t remember one of the stories that he had told Buffett, Buffett had to start him off.
Bill: Yeah. [crosstalk]
Tobias: I can’t remember what the story was, though.
Jake: That was the one on chiseling down the–
Tobias: Oh, that was good. Yeah. The Fairness Opinions.
Jake: Yeah, Fairness Opinions.
Tobias: The story was, when they were doing some of those related party transactions with Berkshire, it was tidying up blue chips, and diversified, and a few other things. They had to get a Fairness Opinion, because Buffett was the biggest shareholder on both sides and Munger had a shareholding on both sides. They have to recuse themselves and get a Fairness Opinion. And Fairness Opinions are– The bank is putting its reputation on the line.
Jake: Do you ever have to do any of those? Did you write those up before?
Tobias: I have sought them. I actually had to ever do them. As a lawyer, you’re not doing Fairness Opinions. You’re doing an opinion on, is the company properly formed? Does it hold the assets that it says it does? That’s what he’s saying?
Jake: Gotcha. Yeah.
Tobias: But it’s the same idea. But basically, you’re writing it insurance contract. You are writing a put for them.
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