During their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed NYSE:BRK.A / NYSE:BRK.B and Tech. Here’s an excerpt from the podcast:
Q4 2020 hedge fund letters, conferences and more
NYSE:BRK.A / NYSE:BRK.B And Tech
Bill: The one thing that– Buffett is most definitely not a quant Robinhood investor, negative, sir. Anyway, I guess that the one thing that I keep going back to as I watch the business unfold, I understand that tech’s not in his circle of competence per se, but what I don’t understand is why they’ve been so unwilling to swing it at some of the tech companies that are pretty easy to identify and have been, at least for the last five years. I understand that you could say, “Well, he doesn’t want to take a zero and you can’t have a permanent impairment of capital,” but on any given insurance risk, you could get screwed. So, I don’t understand why that level of scrutiny is applied to investment sometimes. It’s hard for me to reconcile.
Tobias: That’s interesting. He takes a probabilistic approach to insurance, but not the same-
Bill: Yeah, but–
Tobias: -approach to investing.
Bill: Yeah, I don’t understand why they seem to me to be so focused on making these concentrated bets that they make them when there’s almost no risk, but if you look at the history of the equity markets, and you listen to what he says about buying an index, and over time America is going to work, why would that– there seems to be a disconnect in logic to me.
Tobias: You would say take a smaller bet on something that has the good economics that a Google does if you can get it at the right price, which maybe you have been able to on occasion over the last 10 years, since they started discussing it as a mistake.
Bill: Yeah, and maybe you think that–
Tobias: Put $5 billion into it.
Bill: Yeah, right. Then, maybe you buy another $5 billion if you’re down a bit, as long as the business is good enough. Rather than just accumulating all this cash waiting to deploy it when it’s pretty clear there’s not an elephant big enough that’s going to hit the market. In March, I thought he’d get a shot, maybe that’s what he was waiting for, and maybe the government bailed everybody out. That’s why you see $24 billion of buybacks this year. That’s very possible. But that’s the only thing that I don’t know.
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