Daily Journal Annual Shareholders Meeting - 2/10/16

[netnet]

Well done Rishig!!

 

You know how to herd cats.  (Must be that Google training  ;))

[icollins]

Please add me plus 1 for lunch, thank you for organizing.

[rishig]

Please add me plus 1 for lunch, thank you for organizing.

 

Can you please RSVP in the google doc. Thank you.

[fa21212]

Does anyone have detailed notes or a recording of the event? Thanks in advance!

[feynmanresearch]

Does anyone have detailed notes or a recording of the event? Thanks in advance!

+1

[Agrippa07]

This is what I could find online:

http://www.valuewalk.com/2016/02/2016-daily-journal-corporation-meeting-munger-notes/?all=1

[TREVNI]

Audio here:

 

[TREVNI]

Audio here:

 

The question I asked him starts at 31:40.  I don't know if he didn't fully hear me or comprehend me because his answer was more investment focused.  Here was my question:

 

"Charlie, when is it appropriate to use those quick 'cut to the chase' algorithms you talk about in Poor Charlie's Almanack?  Do you arrive at that fluency only after having gone through you entire mental model checklist over a long period of time? Or is it simply a matter of, for example, knowing you're looking at a social situation and so the psychology checklist might be more appropriate?"

 

I'd be interested to know if anyone on this board had any thoughts on the matter. 

[TREVNI]

If I got the mic again my next question was this: "Charlie, when the time comes for Berkshire to return excess cash to shareholders via a dividend, would paying an annual dividend like they do in Europe maintain more of the long-term owner-oriented shareholder base that we currently have with no dividend, over the more traditional quarterly payment?"

[valuebull]

thecharlieton.com has comprehensive notes too

[LongTermView]

Audio here:

 

Thanks for the audio. 

 

The part about Wells Fargo was nice:

When Berkshire bought into Wells Fargo, the world was coming unglued in the banking panic.  And again real estate lending had been the source of it.  And Wells Fargo had been huge in real estate lending.

 

So this was back when Berkshire bought Wells Fargo.  Well the answer was, we knew that the lending officers at Wells Fargo were not normal lending officers.  They had grown up, a lot them, in the garment district.  They had a cynical view of human life.

They were appropriately careful and when they needed to intervene strongly they did so because they learned that was the right way to run a garment lending business.

 

They were just better and so we knew they weren't going to lose as much money as everybody thought they would with the real estate portfolio.  Because they had chosen it better and they managed it better, etc, etc.

 

So we had an information advantage just based on general thinking and collecting data.  And we weren't using it, we didn't own any Wells Fargo stock.  But we were aware they had that special capacity.  That gave us a big advantage so we bought heavily.

 

Now #2, The Daily Journal Corporation.  The world was coming unglued when the Daily Journal Corporation bought its Wells Fargo stock.  Again, we knew that the bankers at Wells Fargo were more rational than ordinary bankers.  There's a different kind of superiority and rationality.  It wasn't this big real estate portfolio on a shrewd way of handling developers.  It was still a shrewder way of being in banking.

 

I don't think anybody should ever buy a bank that doesn't have a feeling for how really sure the management is.  Banking is a field where it's easy to delude yourself and record big numbers that aren't really being earned.  It's a very dangerous place for an investor without deep insight into banking [inaudible].

 

The things he said about GM were interesting too:

GM is in the Berkshire portfolio because one of our young men likes it, and Warren lets the young men do as they please.  Warren, when he was a young man, didn't want any old man telling him what to do.  Therefore he delivers that kind of treatment to his young men.  That's just the way it is.

 

I haven’t the faintest idea why that young man likes GM.  It is true that it is statistically cheap.  But of course, and it may be affected by the federal government in the end so it may be a very good investment.  But the auto industry is about as brutally a competitive business as I have ever seen.  Everybody knows how to make good cars.  Everybody.  And they rely on the same suppliers, and the cars last a long time with very little service, and everybody leases them for cheap rents and has all kinds of incentives.

 

This just has all the earmarks of a very commoditized, difficult, supercompetitive market so I don't think the auto industry is going to be an easy place.  And it may shrink one of these days.  In other words, the culture of everybody having 3 or 4 cars could shrink.  I think the auto industry is not as safe.  If I was investing in the auto industry, I'd want someplace that I thought was a way the hell better competitor than the others, and that’s hard to find.