See our informal notes from yesterday, also stay tuned for more notes (and videos) coming,  and also see MarketFolly’s notes here.


Byron Trott & Carol Loomis,

WEB – teaching ability and desire to teach

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[drizzle]1/15 or 1/20 are mutual fits, always representing the clients.

With Warren you have a perfect 10 times 2. (1) as a human being - best sense of humor that he uses effectively, you want to be with him. (2) Combined with incredible mind. What I pay close attention to every day (1) don't do anything you don't want in the paper. (2) discipline in investing is incredible. Wait for the right pitch. Amazing the things he's turned down over the years. In every 10 year period, the world will turn upside down and I will have the cash to utilize better than anyone else. You'd cry if you've seen the things he's passed on. Won't overpay by 15%. Cash on cash returns. No change over 13 years, but we talked about market multiples since 2010 - paid higher multiples for recent acq than he would have liked (PCP?) but sometimes you need to reach for a great business. Carol - a reporter but a stickler for details, accounting and finance. Almost every business day I've talked to carol and she's an encyclopedia on WEB and Berkshire Hathaway; nothing she doesn't know. She also dated Ty Cobb.

Loomis: I answered some quiz questions on baseball, Cobb's nephew contacted her and said he'd like to take you to lunch. Met and had a great time. At lunch he said I want you to come to all-star game with me. My dad said - keep going. Went to old timers game, went to dugout and got me a signed baseball. We got a picture and that was the end of it.

2008 - WEB made an investment in GS> he always held GS in a special place b/c of city of Weinberg. 20 minute negotiation, did not take long. 3-5 days leading up to it, we needed 10bln of capital. Thought we were bulletproof, MS couldn't get their deal done w/ Japanese, etc. warren was looking for a good investment, but also looking to tell the world that you could go back in - the waters were safe. WEB was out of money by time of GE, sold some stuff to get in. Went on CNBC, wrote op ed. Was trying to give a history lesson. The world doesn't understand how important WEB was in the solution of 08. from GS investment on.. "Pragmatic optimist grounded in reality." convinced treasury to inject banks with capital, and make it cheap at first, not painful, and raise as time goes on. WEB has the ability to take something so complex and develop a simple solution. TAARP to all the banks, mandatory to all the Big Banks. Phone call from Warren caused everything to happen. Warren didn't do it for his own self-interest, he did it to save America. 1/3 of S&P companies are controlled by families - not necessarily majority but still family holds. He buys things and he never sells them, that's why they're a safe home for investors. Loomis: My husband read about WEB, went to Omaha, WEB said "yeah come in" and they went to lunch. He said "I think I just met the smartest investor in the world." I said "Who is this guy?" didn't believe him. They asked us to have lunch and I realized that he was. Lucky for us. We became investors very early and it's been marvelous. 21.3% between 1962 and today vs S&P at 10% including reinvested. 15k to 424mln in Berkshire Hathaway. Look for passionate owners and give them capital to make acquisitions.

Q&A From The Berkshire Hathaway 50th Anniversary Symposium

You said he hasn't changed, what about Munger's influence paying for quality?

= CM is my number 2. always been a sounding board.

How does Buffett think differently than other capital allocators?

- Warren is a safe home for those owners who want a safe place to run their businesses, wants to know that it will still be theirs 50 years from now.

How will WEB be in the history books? Investor? Manager?

- there won't be a book. All of the above. People will try to copycat and he will go down as the greatest of all time. Berkshire Hathaway will still be intact. Someone will have that job of continuing that. He thinks 50 years out as to what he wants it to look like. "You can't control that"? "Well I can certainly try." he knows how to interconnect the railroad to other businesses and take the complex and make it simple. Business owner, acquirer, investor, allocator, philanthropist.

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Lowenstein, Klarman, Ackman

Bill Ackman: asked dad who he knew - great investors. Marks, Buffett. When he saw Buffett salting the brownie, that's when he knew. Sat with SK for an hour and talked after reading MoS. Two person investment club at HBS.

Seth Klarman: worked with Michael Price at Mutualshares out of Cornell. WEB was common parlance. Saw old partnership letters. Not sure if value investing is an inoculation or a gene. Not common with the rest of society.

Bill Ackman: concentration, business quality. Be greedy when others are greedy and greedy when others are fearful. I have a new one, based on recent experiences - be fearful when others are fearful. The most complicated thing about investing is not a DCF, its figuring out how strong a moat is in light of how dynamic the world is. Hard things are the qualitative aspects of business. Buffett looks for opportunities where it's almost impossible to lose money. The idea of don't lose money doesn't mean not on one investment but such that it doesn't lost your entire portfolio. Business risk vs portfolio risk. The insurance business is all about losing money but probability.

Seth Klarman: three phases (1) cigar butt (2) increasing acceptance of Munger & Fisher. Pay up for quality. In 70s quality was available freely without paying up. (3) and then paying up for it. Lesson: need to be flexible in your career. The world is going to change, market environment will change, your ability will change. Plan for next 50 years: not handing us ideas but teaching us how to make our own map.

Is the public getting the wrong message? SK: I would suspect he thinks some of this is silly "Here are 20 stocks WEB would like" based on ROE assumptions. Anything he does is influenced by his judgment. Most important aspect of any decision. Hardest aspect of my career is understanding quality. Businesses are up against enormous forces. The idea that there is any formula or for a reporter to do that is over-adulation. Degree where people are so admiring that they're missing the opportunity to become him not by understanding what he does but how he thinks. "Think for yourself, and go apart from the crowd."

Bill Ackman: WEB has made more people rich than anyone in history - you tend to make friends that way. He did in a high quality manner. And of course he gives back to the society - multiplier effect. Great reasons to be revered. He's been a great educator and professor.

Has Bill

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