Warren Buffett: How Ted and Todd Complement My Investment Strategy

During the 2016 Berkshire Hathaway Annual Meeting, Warren Buffett explains that he seeks very large deals in investments or operating businesses, while his associates, Ted Weschler and Todd Combs, manage $9 billion portfolios with fewer, smaller positions.

Despite this difference, their investment approach is similar, focusing on understanding businesses and buying stocks at sensible prices that are expected to earn significantly more in the future. Buffett highlights the extensive help Ted and Todd provide, often without financial compensation, and praises their cultural fit and intelligence.

He acknowledges their broader knowledge of newer industries, enabling them to explore $500 million opportunities, while he targets multi-billion-dollar deals.

Here’s an excerpt from the meeting:

Well, I’ll answer the last part, the easiest. I am trying to think of very big deals that we can do something in, in investments, or in business, preferably just in operating businesses. I mean, they still are — their primary job is working on — each has a $9 billion portfolio, and one of them has, I don’t know, perhaps seven or eight positions, and the other one has maybe thirteen or fourteen, but they have a very similar approach to investing.

They’ve both been enormously helpful in doing several things, including important things, that — for which they don’t get paid a dime, and which they’re just as happy working on as — working on the things — as they are when they’re working on things that do pay off for them financially. They’ve got — they’re perfect cultural fits for Berkshire. They’re smart at what they do. And, you know, they’re a big addition to Berkshire.

Yeah. They’re — I would say they’re — they have a bigger universe to work with, because they can look at ideas in which they can put $500 million, and I’m looking — I’m trying to think of ways to put, you know, sums into billions. But — and they probably — well, they certainly — have more extensive knowledge of certain industries and activities in business that have developed in the last ten or fifteen years. They’d be smarter on that than I am.

But their approach to investing, I mean, they’re looking for businesses that they understand and that are going to — and through the stocks of those businesses — that they can buy at a sensible price and that they think will be earning significantly more money five or ten years from now. So it’s very similar to what I’m thinking about, except I’d probably add another zero to it.

You can watch the entire meeting here: