Charlie Munger: There’s Way Too Much Turnover In The Berkshire Portfolio

Charlie Munger: There’s Way Too Much Turnover In The Berkshire Portfolio

During the latest Berkshire Hathaway Annual Meeting, Charlie Munger joked that there’s way too much turnover in the Berkshire portfolio. Here’s an excerpt from the meeting:

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Turnover In The Berkshire Portfolio

Host: Mr Buffett has espoused for decades the philosophy of buy and hold or hold forever was too short of a time period. Is it a misperception on my part or has his philosophy changed? It seems to be a much greater turnover in the equity portfolio lately.

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Buffett: I don’t think there’s that much turnover I mean but…

Munger: No there’s too much!

Buffett: What?

Munger: There’s way too much [Laughter]. It’s still too much it’s the same amount.

Buffett: Yeah I’d agree with that and the truth is we own… our businesses are equities so we own 400 or 500 billion and maybe more. In businesses we don’t turn them over at all. We don’t resell businesses. We could probably… well we won’t even get into that what we could do, but we don’t do it, and we do relatively little and Charlie says we’d do better if we’d… not if we, if I’d done less.

You can watch the entire meeting here:

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The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates. It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization. The Acquirer’s Multiple® is calculated as follows: Enterprise Value / Operating Earnings* It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations. Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up. Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC. He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law. Articles written for Seeking Alpha are provided by the team of analysts at, home of The Acquirer's Multiple Deep Value Stock Screener. All metrics use trailing twelve month or most recent quarter data. * The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
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