Value Investing

Daily Journal Annual Meeting Videos And Notes; Aphria’s Whitewash

Whitney Tilson’s email discussing videos and notes from the Munger’s Daily Journal Annual meeting; old Munger materials; Aphria‘s whitewash.

See the full Charlie Munger 2019 Daily Journal (DJCO) Meeting Transcript right here

Daily Journal Annual

I’m at the Columbia Student Investment Management Association conference all day today (click here for details) so I’m again sending out my daily email early.

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Q4 hedge fund letters, conference, scoops etc

1) I got home after midnight from a long day trip to LA yesterday to see one of my heroes, Charlie Munger. It was exhausting, but energizing – I never get tired of listening to him – and even though it was livestreamed (you can watch the video here), there’s something special about being there in person.

Think of it this way: if you were (or wanted to be) a professional baseball player and Ted Williams – the greatest hitter of all time and the last man to hit over .400 – were hosting a free two-hour clinic, wouldn’t you go?

Plus, nearly 300 people attended the lunch I hosted afterward. It was a bit of a madhouse, as rain forced us indoors and the hotel had to roll in extra tables, but I really enjoyed catching up with old friends and making new ones – and I think everyone else did as well. In dozens of Berkshire, Wesco and Daily Journal annual meetings over the past two decades, I’ve found that Buffett and Munger junkies are almost universally great folks.

See the full transcript here

2) I’m sure some young eager beavers will soon be publishing notes from the meeting, which I’ll send around, but in the meantime here are two video clips CNBC posted:

Also, here’s an article in Forbes: 5 Insights from Charlie Munger's 2019 Daily Journal Annual Meeting. Excerpt:

  • “My idea of being properly educated is being right when the professor is wrong. Anyone can just spit back what the professor is saying. It takes a really educated person to think for themselves.”
  • “It is really important to stay within your circle of competence. If you are not sure what the boundaries of that circle are for you, then you do not have real mastery of your field.”
  • “The first rule of fishing is to fish where the fish are.”
  • “If you have trouble finding good investments, join the club… My advice to the seeker of high compound interest is to reduce your expectations. Things are likely to be tough for a while.”
  • “The idea of diversification makes sense to a point. If you don’t know what you are doing and don’t want to embarrass yourself, then owning a lot of investments makes sense. But that is not something that deserves a big reward. The idea of diversification if you are looking for excellence does not make sense… At Berkshire Hathaway and the Daily Journal our investment results have been better than the index. Now why is that? Because we try to do less. We don’t know much about a lot of things, so we just focus on the few that we do know well.”

3) Attending the meeting and seeing Munger remind me of two web pages I put together long ago that might be of interest:

  • Here are my notes from the Berkshire and Wesco meetings from 1998-2008; and
  • Here is a collection of old Munger speeches and other materials.

As I look at these pages for the first time in more than a decade, there’s some really cool historical stuff there…

4) Aphria released its whitewash – oops, I mean report – by its special committee regarding its “investigation” into Gabriel Grego’s epic takedown at my shorting conference last December 3 (slides and video here and here). In it, he showed conclusively that insiders massively enriched themselves by engineering three wildly overpriced sham acquisitions in Argentina, Colombia and Jamaica.

It will come as absolutely no surprise to anyone that the well-paid gutless weasels Aphria hired came back with the desired answer: “Move along, nothing to see here…”

If you read carefully, however, you’ll see that the report does, in fact, validate Gabriel’s presentation – but of course nothing is being done to recover the looted assets. Here are the key lines:

  • “…it appears that certain of the non-independent directors of the Company had conflicting interests in the Acquisition that were not fully disclosed to the Board.”
  • “…Vic Neufeld and Cole Cacciavillani have completed a responsible transition plan and effective March 1, 2019 will be retiring from the Company (including in their capacity as directors).” (But they’ll still be “special advisors.”)

Look for write-offs in the future as the acquired assets are marked down.