Warren Buffett: Seizing Opportunities with Small Amounts of Capital

During the 2010 Berkshire Hathaway Annual Meeting, Warren Buffett discusses the perpetual presence of investment opportunities, particularly for those not managing large sums of money.

He highlights the inherent conflict in the investment management industry, where asset gathering can overshadow asset management. Buffett illustrates this with an example from Charlie Munger’s Daily Journal Company, which turned a $15 million investment into $45 million by waiting for the right moment.

He emphasizes the importance of patience and readiness to seize opportunities, noting that while the landscape has changed with more information and competition, mistakes are still made, and opportunities still arise.

Here’s an excerpt from the meeting:

There will probably be fewer, but I would say there will always be — except in the most bubbly of markets, perhaps — but there will always be opportunities if you’re not working with large amounts of money. The money manager — there’s a basic conflict. There are conflicts in most businesses.

Everybody’s pointing out the conflicts now in the investment banking business. But the investment management business has a conflict that’s equally as significant in the fact that asset gathering can become a way more important part of your income than asset managing. But if you manage moderate sums of money, I think there will always be opportunities to overperform. That doesn’t mean lots of people are going to do it, but they will be out there.

And, you know, it might have been easier many years ago when there were fewer people looking and not as much information was available on the internet and all that. But people still make the same mistakes and they still get — well, I’ll give you an illustration. Charlie has a company called the Daily Journal Company. And the Daily Journal Company has a bunch of cash.

And it sat there with cash, and it sat there with cash, and I own 100 shares — which is all he’ll let me own — and I got their annual report here a while back. And in their fiscal year of 2009, they never bought stocks before that I’d seen, and all of a sudden they’d bought $15 million worth of stocks and they were worth 45 million.

So by sitting around for a while, but waiting until things got really ridiculous in certain cases, he put $15 million out that became 45 million within, probably, a six-month period or so. So opportunities come around. You have to be prepared to grab them when they come.

And you can’t do it with the kind of money — I mean, you can’t get the extraordinary things with the kind of money that we’re running. With moderate amounts of money, I think there will always be opportunities.

You can watch the entire meeting here: