Investment Collection Additions

I added a few links to the Investment Collection segment. Here are some new links:

 

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Berkshire Beyond Buffett

Berkshire Beyond BuffettI finished Berkshire Beyond Buffett by Lawrence Cunningham (@CunninghamProf). Prof Cunningham is well known for his work on Berkshire Hathaway (BRK) and Warren Buffett. Prof Cunningham’s books on BRK and Buffett are among the best. He’s been a follower for decades and has direct access to Buffett and its managers.  If you want to read this book, I would assume it’s not your first book about Buffett and BRK. There’s ton of material you can read before this one. If you don’t know where to start, here’s a good start: The Essays of Warren Buffett: Lessons for Corporate America.

This book on Buffett/BRK book is different. This is not a Warren Buffett centric book. It’s more like the bio of BRK. And not just a book full of happy stories about BRK.

BRK is structually complex and highly decentralized. Lawrence had access to many people in BRK organization to realized this book with Buffett’s blessing. Despite its popularity, few people understand Berkshire and many assume it cannot survive without Buffett. They are wrong and this book proves them wrong. This is a comprehensive portrait of the corporate culture that unites BRK’s subsidiaries and the traits that ensure the conglomerate’s continued prosperity.

“The special Berkshire culture is deeply ingrained throughout our subsidiaries, and these operations won’t miss a beat when I die” – Warren Buffett

The book also goes on to explain why many companies picked BRK as their home, even when a more lucrative offer was on the table. It goes beyond the dollar amount. For many entrepreneurs, their business is their baby. It’s their life’s work. And it’s very important for them to preserve it.

I’m glad I read this book. I was looking forward for a book like that for a while. One that goes inside and throughout the subsidiaries. Even the smallest ones. Cunningham talked to many family businesses belonging to the Blumkins, Bridges, and Child and several entrepreneurs like at FlightSafety and Justin Boots.

An interesting question why aren’t there many more companies like BRK? Markel is the closest clone that I can think off. BRK has been cloned before, but you don’t seem to hear about their success. The reason is because it goes beyond the corporate structure. It’s about the attitude. Berkshire takes a partnership attitude toward its shareholders whereas most corporations are hierarchies, with shareholders seen to own a residual claim on firm assets, an equity stake after liabilities are covered by assets. BRK is simple, but hard to replicate.

Here are some characteristics among many others:

  • Decentralized. The managers of the subsidiaries have massive power.
  • It rarely uses intermediaries — brokers, lenders, advisers, consultants and other staples of today’s corporate bureaucracies.
  • No strategic plans administrated by an acquisitions department.
  • Berkshire defined itself as a partnership from the outset: “While our form is corporate, our attitude is partnership.”
  • While American companies borrow heavily, Berkshire shuns debt as costly and constraining, preferring to rely on itself and to use its own money.
  • BRK generates abundant earnings and retains 100 percent, having not paid a dividend in more than 50 years.
  • Berkshire earns some $30 billion annually — all available for reinvestment.
  • In addition, thanks to its longtime horizon, Berkshire holds many assets acquired decades ago, resulting in deferred taxes now nearing $100 billion.
  • The principal leverage at Berkshire is insurance float. This refers to funds that arise because Berkshire receives premiums up front but need not pay claims until later, if it all.

 

Walt Disney’s 1957 Vision

Walter Elias Disney’s corporate vision since it was codified back in 1957. Only two years after the company’s first theme park opened, Walt detailed an expansive vision for Disney – one where every segment of the business worked in concert.

Disney 1957 vision

The Investment Collection

I want to introduce a new section to the blog: The Investment Collection. It’s simply a collection of links and resources that I found interesting. I will try to update it when I have time. Why am I doing this? First, I wanted to gather some of the most important investment material under one roof. Second, somehow stuff gets lost on the Internet. The resources are not simply about investing. It is about becoming a better human being. Learning from the success and failure of others is the fastest way to get smarter and wiser without a lot of pain.

The best thing a human being can do is help another human being know more. – Charlie Munger, Berkshire Hathaway Annual Meeting, 2010

Charlie Munger DJCO Meeting

I will be attending the Charlie Munger DJCO Meeting in LA on February 14, 2018. I booked the day.  I will probably bounce around the meetups and lunch afterward.  I will then go to San Francisco for a couple days.  I also posted on Reddit here. One of the best part of these meetings are the great people that you meet. If anyone wants to meetup reach out. This approach worked when I went to Omaha.

 

Warren Buffett’s 1950s Articles

Last Monday I published a post on Warren Buffett’s letter in Barron’s in 1962. I was wondering if it was Buffett’s earliest public appearance. David Shahrestani from the blog Wiser Daily,  found earlier. He posted a link in the comments that led 4 articles published in The Commercial and Financial Chronicle by Warren Buffett during the 1950s.

The articles are in the PDF below.

Here’s the original link on Dropbox provided by David: Dropbox (PDF)

Warren Buffett 1950s Articles (PDF)

Warren Buffett 1950s Article.JPG

Here are the four stocks that Warren recommended back in the 50s.

1951: GEICO, which is now a big holding in Berkshire Hathaway. 100%+ gained following the publication of the article. Even though it was up 100%, he still though it was cheap.

1953: Western Insurance Securities. Was trading at less than 2x earnings and at 55% book value. He liked it because it was cheap.

1957: Home Protective Co. I couldn’t find anything on what happened to it.

1957: Oil and Gas Property Management. I couldn’t find anything on it either but I didn’t search very hard.

 

 

Bitcoin Cartoon and Bubble

I know it’s not Christmas but it’s still funny.

Bitcoin necklace

cartoon-wanna-cry

Bitcoin bubble
Source: Goldman Sachs

Warren Buffett’s 1962 Letter to Barron’s

Here’s a gem. Is this one of the earliest public exposure of Warren Buffett? Check it out. The letter is from December 24, 1962 issue of Barron’s.  That’s was back in the days when he was running his partnership. 1962 was also the year he became a millionaire. Look at how detailed oriented his letter is.

Warren Buffett's letter to Barron's 1962

Elon Musk

Elon MuskElon Musk is a very interesting character. We know that. But after just finishing his biography it really fresh. He is, quite arguably, the most successful and important entrepreneur in the world. There was a time when electric cars and private space flights seemed silly.  Now they are becoming normal.

At first, this biography by technology journalist Ashlee Vance wasn’t supposed to happen. Before this book Musk rejected all demands for a biography, including this one. But Ashlee did his homework. He told Musk that he talked to over 200 people associated with him over time and they have a story, and not all nice things. In the end Musk collaborated and gave his side of the story. Continue reading “Elon Musk”

Elon’s Email to SpaceX Employees Regarding Taking The Company Public

Elon’s email to SpaceX employees regarding taking the company public (excerpted from Ashlee Vance’s biography)


From: Elon Musk
Date: June 7, 2013, 12:43:06 AM PDT
To: All <All@spacex.com>
Subject: Going Public

Per my recent comments, I am increasingly concerned about SpaceX going public before the Mars transport system is in place. Creating the technology needed to establish life on Mars is and always has been the fundamental goal of SpaceX. If being a public company diminishes that likelihood, then we should not do so until Mars is secure. This is something that I am open to reconsidering, but, given my experiences with Tesla and SolarCity, I am hesitant to foist being public on SpaceX, especially given the long term nature of our mission.

Continue reading “Elon’s Email to SpaceX Employees Regarding Taking The Company Public”