Charlie Munger

Buffett 1972 Letter to See’s Candies

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I recently came across a letter that Buffett sent to Chuck Huggins, the CEO of See’s Candies in 1972 (thanks to Marcelo Lima at Heller House for posting it). See’s is a case study that has been dissected from every angle, but this was a letter I hadn’t seen before, so I thought some notes I wrote while reading it. In the letter, Buffett attempts to give some general advice on the distribution, merchandising, and marketing of the chocolates. The […]

Charlie Munger

Thoughts on Cost of Capital and Buffett’s $1 Test – Part 1

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“I’ve never heard an intelligent discussion about ‘cost of capital’.” – Charlie Munger I read something a few weeks back that referenced some comments that Charlie Munger once made on the topic of cost of capital. Maybe these comments will be yet another unintelligent discussion of cost of capital, but I thought I’d share some notes I wrote down this past week as I gave this concept some more thought. This post will touch on Buffett’s $1 test, which is […]

Charlie Munger

Berkshire Meeting Notes – Daily Improvement, Business Evolution, and Investment Strategy

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Last week I headed to Omaha to attend Berkshire Hathaway’s annual meeting. Nowadays, there is less of a reason to attend the meeting in person because it is available to watch online, but I love attending the event for all of the peripheral meetings that occur. It was a great weekend, and I got to connect with a few Saber Capital clients, as well as some good friends that I don’t see very often. No matter how long you’ve been […]

General Thoughts

Analyst Ratings and the Institutional Imperative

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Buffett talks a lot about the concept he calls the “institutional imperative”. In his 1989 shareholder letter, when he was describing his mistakes of the first 25 years managing Berkshire, he outlines what he means by this (emphasis mine): “My most surprising discovery: the overwhelming importance in business of an unseen force that we might call “the institutional imperative.” In business school, I was given no hint of the imperative’s existence and I did not intuitively understand it when I […]

Investment Philosophy

Two Key Checklist Items

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I am not a big fan of going through specific “checklist” items one by one when evaluating an investment idea. I know this idea has gained enormous popularity in recent years, partly due to the good book The Checklist Manifesto, and partly popularized in value investing circles by Mohnish Pabrai. I respect Mohnish a lot, and I think his idea of evaluating previous investment mistakes (both his own mistakes and especially the mistakes of other great investors) is an excellent exercise. […]

Portfolio Management

A 1977 Warren Buffett Interview From the WSJ Archives

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Someone I’m connected with on Linkedin sent me this old article from 1977 in the Wall Street Journal on Warren Buffett. I thought I’d share it here, along with a few highlights. It’s an article I haven’t seen previously. There isn’t much new here, but I thought it was quick read with a couple passages worth commenting on. One thing I don’t recall Buffett ever describing were the pressures of money management that he felt while running his partnership. This […]

Case Studies

Buffett’s Investment in Dempster Mill–A Cigar Butt

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I came across a case study that discusses Dempster Mill recently. I thought I’d post a brief summary of some notes I jotted down while reading it. Dempster Mill is a company that Buffett bought in the early 1960’s when operating his partnership. The company manufactured farm equipment, specifically windmills and water irrigation systems. It was a difficult business because the farm equipment it made was not much different than its competitors’ products, and because of these commodity-like economics, the […]

General Thoughts

Warren Buffett 1998 Talk at University of Florida

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I spent some time traveling in the car last week. Whenever I am driving by myself, I always listen to something—usually related to business or investing. I keep a long list of videos of interviews or talks that I can pick from whenever I am in the car. On this particular short trip, I had got through two different videos. I listened to this talk from 2012 where Jeff Bezos talks about Amazon Web Services—the cloud computing services business that […]

General Thoughts

General Thoughts on Portfolio Management and Diversification

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“Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” –Ecclesiastes 11:1-2 Investors have always discussed and debated the merits of diversification—apparently even as far back as the days of King Solomon (although his definition of diversification—7 or 8 “ventures”—might not sit well with modern day portfolio theory and mutual fund managers who often hold 30, 50, or 100 […]

Investment Ideas & Company Research

Berkshire Hathaway is Safe and Cheap

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I own Berkshire Hathaway stock. In fact, it’s a stock I bought recently for the first time ever, despite following it for years. I think earlier this year it became (and to a large extent still is) far too cheap. It’s not a stock that I think has huge upside, but it is a stock that I think has no downside. (That said, I do think there is enough upside to get plenty excited). In proper investment parlance, the risk/reward […]