WB & CM

Reading Maxthetrade’s anecdote about them this thought came to my mind:

Is there anybody comparable?

To explain: I have no skills in investing. Luckily in 2000 I found Warren and with him Charlie. Unavoidably their Era will end. This will be a sad day, emotionally and financially.

With my money managers gone I will first stay with Berkshire and watch what develops, but I am having problems to imagine trusting any successor(s) longterm with the majority of my assets as I do with those two, so I probably will diversify. I should do what Warren preaches and simply index invest then.

But is there an alternative? Do you know others financially halfway as skillful as those two and comparable regarding their other outstanding qualities? Managers of big, in themselves diversified companies that you’d trust with your (financial) life who installed a “culture of permanence”? So that it’s ensured as good as possible that the conglomerate is chugging along and it’s nearly impossible that over night catastrophic changes can happen? So that you’d sleep well after trusting them with 1/2 of your money, no matter what?

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But is there an alternative? Do you know others financially halfway as skilful as those two and comparable regarding their other outstanding qualities?

Nope.

Over the years many people and their firms have been suggested as alternatives, often investors with great histories.
But the great returns always seem to fade, suggesting that the stretch of investment success,
however long, was some mix of luck and/or risk and/or match of an investing approach to an era.
There is some kernel of truth to the observation that Mr Buffett’s true skill is not capital allocation but learning how to do capital allocation. Repeatedly, as times change.
Markel, Fairfax, Loews. Anybody remember when Eddie Lampert was considered a truly gifted compounder of capital?
The popular alternative of the day seems to come and go, and Jim Simons won’t let me invest along side him. He was nice when we met, though.

So, instead, I have looked for businesses or industries that seem to have great underlying economics, not a dependence on the capital allocation skills of the boss.
A bad jockey on a great horse is better than a great jockey who might or might not still be great.
Jockeys that remain “hot” after you pick them are vanishingly rare and hard to spot.
Great horses, great industries, slightly less so.

Alleged Peter Lynch quote: “Is this firm so profitable that even an idiot could run it? Because someday, one will.”
Alleged Warren Buffett quote: "I always used to tell Gates that a ham sandwich could run Coca-Cola.
And it was a damn good thing, too, because we had a period there a couple years ago where,
if it hadn’t been that great of a business, it might not have survived."

If my life is longer than the life of Berkshire as a truly attractive investment, I’ll switch to a self-built index.
If there were a demonstrably suitable replacement for Mr Buffett–absolute success without hype or gambling–we’d know about it by now.

Jim

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Jim Simons won’t let me invest along side him. He was nice when we met, though.

So far his great success is a mystery. He and his team used lots of math and algorithms. Do you have any insight about the essence of their methods? What kind of information did they exploit?

So far his great success is a mystery. He and his team used lots of math and algorithms.
Do you have any insight about the essence of their methods? What kind of information did they exploit?

No idea. They aren’t telling.

I know they do spend a lot of time building databases nobody else has.
And hiring mostly top mathematicians, which surprisingly seems to be a good choice.
Their flagship Medallion fund was named for the Fields Medal.
Perhaps not so surprising: their business is predictive modelling, not business capital allocation.

Jim

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Worth a read if you want a an insight on the fund and man himself.

https://www.goodreads.com/en/book/show/43889703-the-man-who-…

The returns are astounding.

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No idea. They aren’t telling.

He probably figured out that you are too smart to let you in.:slight_smile:

And if memory serve me right they make those kind of returns in all markets, not had a down year I think.

But is there an alternative [to switching to indexing after Warren and Charlie retire]?

I share your concern, but I think that we will have some time to diversify after Warren and Charlie are gone. Berkshire won’t deteriorate overnight.

I also think that if you follow Warren’s teaching you can buy individual stocks yourself and beat the market. Choose companies that make good products and provide good service, ones that have wide moats and are highly profitable, and that grow IV at a high rate as measured by sales, earnings and BV growth. It’s difficult to determine the character of the CEOs, so buy a basket of companies to distribute the risk. You can also buy a few companies yourself and index the rest.

We will all miss Warren and Charlie, but hopefully we have learned from their generous teaching.

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Is there anybody comparable?

How about better? Millions and Millions of investors benefitted from John Bogle. A singular idea saved billions in fees and lifted many folks investment returns.

While Buffett is great, John Bogle’s impact far wider.

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“We will all miss Warren and Charlie, but hopefully we have learned from their generous teaching.”

Absolutely! They have thought about succession and ongoing owner interests for decades and have planned accordingly as hundreds of billions will be pouring in and allocated. I honestly feel quite optimistic about Greg, Ajit and T&T who have proven long-term records, learned from the best and been evaluated thoroughly.

On a side note, I appreciate WEB’s participation in the Secret Millionaire’s Club cartoons and the CNBC video library made available. These things and daily Buffett/Munger quotes applied to everyday life have truly sparked my young kids’ interest in BRK, saving, investing, markets, business and even math/compound interest. Never saw this type of “return” when I bought my first share!

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Jim, thanks for mentioning Jim Simon,

This TED Talk from a few yrs ago is worth the Sun Aft 20 min diversion,

https://www.ted.com/talks/jim_simons_the_mathematician_who_c…

& this more recent article has some of his comments on Berkshire,

https://financhill.com/blog/investing/jim-simons-hedge-fund-…

ciao

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No idea. They aren’t telling.

I know they do spend a lot of time building databases nobody else has.
And hiring mostly top mathematicians, which surprisingly seems to be a good choice.
Their flagship Medallion fund was named for the Fields Medal.
Perhaps not so surprising: their business is predictive modelling, not business capital allocation.

You may find this interview with Simons interesting: https://youtu.be/QUTaQvnwLzM?t=689
Interestingly he began trading currencies on his own based on fundamentals. At Rennaissance they traded commodoties and only later developed a trading system for stocks. He said that they don’t do fundamental analysis, a big part seems to be anylysis of time series of prices with statistical methods.
He thinks, though, that there will always be a place for fundamental investing, he calls it the ‘Warren Buffett kind of investing’.

I think whoever ”2nd best” after themselves they pick is going to better than the “2nd best” I pick for my portfolio

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Anyone know Pabrai’s long-term performance? Coincidentally, I’ve been watching some of his youtube videos and he certainly talks the Buffet talk.

But how has his fund performed, how much AUM, and where are his picks focused?
I don’t have a subscription to gurufocus and wasn’t able to pull up much stats via a quick google.

“Anyone know Pabrai’s long-term performance? ”

I watched that youtube video as well. I feel he’s not that good. He mentioned he sold baba and bought Tencent because baba is a retail company and he doesn’t like retail. That tells me he doesn’t understand the company he bought. Baba is not really a retail company. It’s more like a social media company that make money from ads. Baba doesn’t take a cut from retailers’s revenue. It’s not the Chinese Amazon

He mentioned he sold baba and bought Tencent because baba is a retail company and he doesn’t like retail.
That tells me he doesn’t understand the company he bought. Baba is not really a retail company.
It’s more like a social media company that make money from ads. Baba doesn’t take a cut from retailers’s revenue. It’s not the Chinese Amazon

Ummm…are you thinking of another company?
The retail portion of Alibaba is indeed unlike Amazon in the sense that it is not (to generalize) ever selling you things as the counterparty, they’re primarily a marketplace like Ebay.
But they do indeed make their money from that process by charging vendors a commission on sales.
This is a whole lot of money, maybe 2/3 of the top line, and the reason that Alibaba has been so profitable for so long.
It’s what they do.

There is an “freemium” exception for small vendors with fewer than 50 items listed, where they make
their money mostly from processing payments, but that’s not the bulk of the business.

One might or might not consider a marketplace to be a retailer. It’s a matter of perspective.
But they definitely “take a cut from retailers’ revenue”

Jim

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But is there an alternative? Do you know others financially halfway as skillful as those two and comparable regarding their other outstanding qualities? Managers of big, in themselves diversified companies that you’d trust with your (financial) life who installed a “culture of permanence”? So that it’s ensured as good as possible that the conglomerate is chugging along and it’s nearly impossible that over night catastrophic changes can happen? So that you’d sleep well after trusting them with 1/2 of your money, no matter what?

I would not suggest anyone put 50% of their money in any one stock, including Berkshire Hathaway. I realize others on this board are more comfortable doing so. As for a substitute investment, one might consider Constellation Software. It’s a serial acquirer of software businesses. They aren’t identical to Berkshire as they prefer hundreds of very small acquisitions. The average size of a deal is about $5 million in annual revenues. Their business and stock results have been astounding, especially considering they have utilized very little leverage to return about 35% CAGR for a couple of decades. The founder, Mark Leonard, much more low profile than Warren or Charlie. But he’s also very transparent. You can look through all his past letters on their website. He talks openly and honestly about the challenges of scaling the business. So far they’ve been focused on optimizing their purchase process for only vertical software businesses and they are probably the best in the world at that. But it’s possible they might wander into other industries. If they do, it will likely be when those are very out of favor. He looked at a deal in the energy space a year of two ago, but he never did the deal. Today they are worth about $40 billion. They are rarely ever cheap, so it’s best to consider what you think is a fair price to pay for an excellent business.

Even if you don’t consider Constellation a suitable alternative, you will learn a lot about business by reading the President’s letters to shareholders. https://www.csisoftware.com/category/pres-letters

As an aside, their annual meeting is by far the best run meeting that I follow. Berkshire, who only got through 22 questions this past year, would be wise to follow their format. They have about 12 managers on stage who answer the questions and unless there is data that needs to be pulled, they aren’t informed of the shareholder questions in advance.

Cheers,
Buck
TMFBuck
Who owns shares of Constellation.

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I could be wrong but I don’t think baba make any money from getting a cut from the sales price/ The merchant need to spend money to buy “flow”, which is essential ads. Here is on page 99 of 2021 annual report:

“We generate revenue from merchants by leveraging our consumer insights and data technologies which enable brands and merchants to attract, engage and retain consumers, complete transactions, improve their branding, enhance operating efficiency, and offer various services.
The revenue model of our China commerce retail business is primarily performance-based marketing services that are typically set by market-based bidding systems. Revenue from this model primarily consists of customer management revenue and other revenue.”

“Anyone know Pabrai’s long-term performance? ”

This from an earlier post,
https://discussion.fool.com/pabrai-funds-pif2-over-the-yrs-end-d…


Pabrai Funds , (PIF2) over the yrs, (end date 3/31/2022)

5 yrs PIF2 1.4%/yr S&P 15.1%/yr BRK/A 16.2%/yr
10 yrs PIF2 5.5%/yr S&P 14.3%/yr BRK/A 15.8%/yr
15 yrs PIF2 3.6%/yr S&P 10.0%/yr BRK/A 11.2%/yr
20 yrs PIF2 9.0%/yr S&P 9.0%/yr BRK/A 10.6%/yr

Would guess even the 20 yr # comparison will be neg when Q2 results are published.
Like many managed funds, the 1st few yrs of superb “out-performance” will carry favorable results when compared with the “from inception” date.

ciao

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Seems like Monish has a halo that may not be warranted

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