[Music]

I just received a copy of Brett's book

and was fascinated to read about Warren

Buffett's early investments, come up on

stage. What I really enjoyed about Brett

is that he clearly had done an enormous

amount of research in public libraries

and all sorts of places and discovered

there are many stories that we tell

about Berkshire Haway that are reto

repeats and in Brett's book you get not

repeats you get original research. So

thank you for coming up and thank you

sharing your knowledge. Thanks.

[Music]

First I want to thank uh Guy and Chantel

for uh inviting me and the rest of the

Aqua Aquamarine team. Um really honored

to be among some great speakers. Um so

one of the questions I get is as a

Buffett author is what interactions I

had with Warren. Um so first years prior

to deciding to write the book, I wrote

to him asking for a 1952 memo on

Cleveland worsted mills and I got uh a

letter back from Debbie saying it's in

dead storage but check security

analysis. Ben Graham talks about in

there and sure enough it was there. Um

second I wrote to him when I decided to

write the book for an interview and he

sent a email to me politely declining

but wishing me luck. And then third when

I got physical copies of the book I sent

two to Warren uh asked him to sign one

back and he uh generously did. He wrote

um Brett put me in your will. Best

wishes Warren Buffett. Um I haven't

gotten around to updating it so if any

of you went in let me know. Um, Robert

Hagster, who I saw earlier, actually

gave me uh very helpful advice uh in

terms of writing to Warren. Um, so I

want to thank him as well. Um, so I I

wrote the book for for two primary

reasons. Uh, first I think um the

profoundly narrative on Warren Buffett's

early career

um is false. think it it kind of people

have this idea that he was kind of just

reading these Moody's manuals in his

office uh and covering these incredibly

cheap stocks and earning these like

spectacular returns and I think it does

a disservice to the amount of tenacious

work and creative work he he did to

generate these returns. Um second I I

think that in order to understand the

Warren about Buffett of today

approaching 95 years old you have to

um understand these years of Warren

Buffett the gravitation from uh being a

scar but investor to uh focused on

quality businesses. um guy in his his

book uh the education of value investor

kind of notes that Buffett has a uh

structural advantage due to the

permanent capital capital vehicle that

is Bergkshire Hathaway. And in my view,

when Warren Buffett was 24 years old

sitting uh as an analyst at Graham

Newman, he saw what uh Mickey Newman and

Ben Graham were doing with Philadelphia

and Reading um in terms of um buying

coal companies, buying partial stake in

companies on the stock market, uh

incentivizing management teams through

creative ways, creative deal

structuring,

um creative creative uh tax schemes. Um,

and he decided at 24 that he had to do

this one day. Obviously, when he was

buying Berkshire in 1962, I don't think

he had any idea it would become what

it's become. Um, but I think he had that

inspiration and the Philadelphia Reading

served as that blueprint. Um, so in the

book I kind of lay out four conclusions

of why I think Buffett was so good, was

and is so good. Uh, first, um, he was an

activist investor. Um,

In the partnership years, he was largely

he was initially

an abrasive activist investor taking

seizing control of companies and

reallocating capital away. And then

eventually he gravitated towards um

being a uh more friendly activist uh

writing to Howard Clark, the CEO of

American Express in 1964, offering him

support during the salad oil scandal and

then more famously um becoming great

friends with uh K. Graham uh in the 70s

when he was acquiring Washington Post.

Um, next, Buffett was uh an incredibly

concentrated investor uh frequently

having uh three positions comprise about

60% or more of the portfolio.

Um,

and I want to quick note on on Ben

Graham who wrote the intelligent

investor and security analysis and was

uh Buffett's mentor. Um, Graham was

actually a lot more concentrated and

activist than I think is commonly known.

Um there's Philadelphia reading that

there's also this company called uh

Atlantic Gulf and West Indies company

that he went activist on and uh 24-y old

Warren Buffett was actually a corporate

secretary of that company um at the time

and Graham kind

of did a partial liquidation and

reallocated capital away. Um so it

wasn't that Graham was not an activist

or that he was not concentrated. Um

Graham occasionally had 25% of his

portfolio in a single name. However, he

had a very long fat tail. Like, so the

year that he had um about 27% of the

portfolio in uh Atlantic Gulf and West

Indies, the top 10 names might be like

43% and then you just have 90 uh

positions uh with less than 1% allocated

to each of them. Um and also Buffett was

more consistently concentrated than

Graham was. So Graham, there's some

years where Graham would have uh 50% of

his portfolio in three three ideas. Some

years it was 30 30%, sometimes it was

less. Um, Buffett was just very

tenacious and persistent about being uh

concentrated. Next, Buffett did an

enormous amount of gum shoe creative

research. Uh, there the famous most

famous example is him taking the train

down from New York to DC to meet with

Lauren Moore Davidson um when he was

studying GEICO. Uh,

but in my book, I lay out a bunch of

these case studies and examples of what

he does. Um and you know for him he's

driving around Ohio to meet with barrel

makers. He's flying to Cleveland for an

annual meeting. Um he was just

incredibly unique person. And then

finally um he had a

um he dealt developed an incredible

filter for finding good ideas and and

good businesses. Uh Ben Graham in

contrast did not really care about

quality of businesses. he um you know

really just cared about the quantitative

and Buffett always pushed himself to

learn more and become a better and

better investor.

So uh happy to take some questions if uh

if there are any

talking to my friend onish when you what

is your last

sentence first of I have a question.

Yeah thank you.

So what drives somebody to

um how many years did you work on this

book? So kind kind of seven but it was

mostly weekends for most of it and then

I took a year uh off from uh being a

professional investor to actually write

the book. This kind of like basic

research you you're saying I'm not going

to just repeat stories that I've heard.

I'm not going to read Loenstein of

course you've read. I'm going to go to

libraries and really uncover everything

that I can uncover. what makes somebody

want to do that as opposed to lying on

the beach or whatever else you could

have been doing? Um, I just thought it

was so interesting like I I think

business history is very

um is not studied very well and I always

wanted to go to the source documents

instead of kind of read like narratives.

Um, so I'd go to like the New York

public library and and read all the

physical annual reports or the annual

reports on microcart or microfich just

cuz I thought it was like interesting

and also because I was like a few years

into my professional investment career

and I was like I thought that Buffett

had it just much easier because you read

the snowball you see these stocks that

are trading at point6 times net current

asset value, three times earnings and

you're like he just had it easier and

the more I actually read the source

documents and saw the performance of

these seemingly cheap stocks I realized

it was really not true. the much fuller

story.

It was impressive and I really loved it.

I think for time we have to keep moving,

but I really appreciate you coming and

sharing the book. It's a wonderful book.

Should be on everybody's shelves. Thank

you so much for coming back. Yeah. Thank

you. So,

[Music]

so I really enjoyed your book. I think

it was uh must have been an incredible

amount of work to put it together

because uh I never read any of that

anywhere else, which is great. So the

question I had for you was that uh what

investment and maybe a story within the

investment did you enjoy the most?

So

um my favorite chapter in the book is

Philadelphia reading just because I

think that it was the blueprint for

Berkshire Hathaway. But my favorite

story is um Walt Disney Productions. Uh

so Warren has talked about this a ton.

he's written about in his letters um

talked about at annual meetings but he

left out what I thought was the most

important thing which is that there was

some corporate governance issues um with

Walt Disney where Walt had a side

company personal holding company that

was siphoning value from Walt Disney

Productions into his own pocket. Um, and

Warren has never talked about this. And

there was a front page article in 1966

as Warren was buying the stock that

meant he like almost certainly knew

about it. And I thought the nuances to

that story were like so fascinating.

That was my kind of favorite to

research. Okay. Well, it was a great

read and I uh commend you because it's

true labor of love. Thank you. I really

appreciate it. Okay. Thank you.

[Music]