Todd Combs Interview

Graham & Dodd Annual Breakfast 2022

Guest Speaker: Todd Combs, Moderator: Michael Mauboussin

Summary:

The event’s guest speaker was Todd Combs and was moderated by Michael Mauboussin. Combs provided his insight on defining a “good business,” the longevity of these businesses, the accuracy of financial statements, and a unit cost centered valuation approach.

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Great interview, thanks. It has been pretty rare to get this kind of insight on either Todd or Ted. How lucky for BRK that these two investors get so much time with Warren and Charlie.

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This impressed me:

“With respect to his time management, Combs said that he has a couple of jobs. From an allocation perspective, 100-110% at GEICO, 16-hour days there, and he does his investing at nights and weekends, which makes up approximately 25%, and finally bank board meetings and other is 25% (Combs sits on JP Morgan’s board which unlike a traditional company has 8 board meetings a year as opposed to 4).”

Add the long talks with Mr. Buffett most Saturdays. Wow!

Hope he can get GEICO issues resolved.

With people like Todd Combs at Berkshire one would think BRK will beat the S&P 500 going forward.

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Excellent find, thank you! I wanted to go to this breakfast but couldn’t find any convenient way to get into NYC. I live within driving travel distance, but tolls, parking headaches and my large vehicles kept me away. Trains didn’t have good arrival times either.

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TYVM! We are in great hands with T&T when the time comes. Would like to see them manage even more funds. Todd’s responses sound nearly identical to WEB and CTM imo. NFM did a podcast with Ted in Omaha during the mtg which was superb, broad and insightful. He has a super sense of humor beyond his intellect and pragmatism! These fellas seem to read endlessly and work incredibly hard, but they must love it!

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He works a lot but why does GEICO need 16 of his hours a day? Seems like he doesn’t delegate appropriately or trust people he has working for him. He’s been there long enough he should have solved this problem by putting in appropriate processes. Not sure I like it, most companies strive for ownership culture, where they drive decision making down as far as possible and only bubble up bigger things.

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“He works a lot but why does GEICO need 16 of his hours a day?”

Reasonable question. GEICO has problems. If you were working for Mr. Buffet and he told you he wanted you to fix the problems, how many hours would you work to fix it? I like the fact that he’s working 16 hours. How many S&P CEO’s do that? Think I’ve read Warren worked long hours in the early partnership years. Why? Because he loved what he was doing. Maybe Todd does as well?

“Seems like he doesn’t delegate appropriately or trust people he has working for him.”

Could be true. Thought this excerpt, which possibly supports what you are saying, was revealing. "Combs loves “skip level meetings”.That’s where all the information is, speak to the people 3-7 levels down!" Almost sounds like he’s a micro manager. Perhaps he doesn’t trust upper level management? And perhaps there is organizational bloat (7 levels?) at GEICO that he is trying get his hands around?

“He’s been there long enough he should have solved this problem by putting in appropriate processes.”

He was appointed CEO less than three years ago. How long does it take, with a large (40K employee) organization like GEICO, to assess the situation and turn things around? I imagine there may be many issues he’s looking at. Todd says in the interview that he quickly changed the incentive structure at GEICO. Sounds like he’s at least implementing some appropriate processes. “Show me the incentives and I’ll show you the results” It takes time to assess the results.

“Not sure I like it, most companies strive for ownership culture, where they drive decision making down as far as possible and only bubble up bigger things.”

I imagine Todd will drive down decisions once he gets comfortable with his people, the organization and processes. Also sounds like he’s got two old wise guys looking over his shoulder.

I smell a turn around success story at GEICO.

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BreckHutHigh, this is great. Thanks for sharing!

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