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This is written with serious investors in mind. I'm a former reporter, private investigator and institutional equity analyst who digs deep to find niche undervalued and undiscovered securities. I manage money for individuals, institutions and family offices via my business Long Cast Advisers. This blog is part decision-diary, part investment observations and part general musings about Philadelphia sports. It should not be viewed as a solicitation for business or a recommendation to buy or sell securities.

Wednesday, May 15, 2013

From Omaha, With Love

Arrived in Omaha on a cold and rainy Friday evening overdressed and not knowing what to expect (you can get by in jeans, a flannel and workboots). I shared a room downtown with a value fund friend and agreed to go to the arena early to help him save seats. So at 5:45AM went to the Hilton to the skybridge entrance and at 6:30 did the high net worth wal*mart dash to get seats. The rest of the day was kind of surreal but here's a few things I saw and heard ...

Every meeting starts out with a few short movies and clips. This year's included a brilliant Breaking Bad spoof where Bryan Cranston and Aaron Paul (i.e Mr. White and Jesse Pinkman) cook-up out in the desert, but instead of making the blue meth, they make peanut brittle. ("Mr. White, I can't sling peanut brittle on the corner!"). But of course it's the best peanut brittle ever and WB shows up to buy them out. After some hard core negotiating they agree.

There was also a silly spoof where WB wanted to appear opposite Arnold Schwarzenegger in Terminator 5. Arnold chooses Charlie instead. Oh, and they premiered a GEICO ad ("as happy as a camel on hump day") and a version of YMCA that Buffett really grooved to: "We love the managers of BRKA". Silly.

I spent much of this time chatting with an analyst for a university endowment who shared with me his thoughts on starting a fund; "Whatever you start, you need to consider it as something to be built for decades." That's good advice about any career choice.

Charlie really had the most pithy and funniest quotes of the day so I'll start with him.

CM -
"my old age might come on at any time"
"game of life is a game of everlasting learning"
"it's important to know the edge of competency"
"i want to tell the Mungers in the audience don't be so stupid to sell the shares"
"it's true there's a history of big companies making bad acquisitions but we think we have a better system"
"you can't succeed at something you don't like doing. we were lucky to find things we liked doing early in life"
[on inflation] printing money has the potential to be inflationary - the professionals wish it were - but Japan has tried every trick in the economists book for the last 20 years and so far no inflation ... "this is a huge experiment"

[on making decisions] "shouldn't make decisions while tired. concurrently, making decisions is tiring. we have found that sugar and caffeine are great for making decisions."
[on newspapers, after WB gave a long explanation for why he invests in them] "it's an exception and you like doing it"
[on short selling] "we don't like trading agony for money"

WB -
"our competitive advantage is staying sane when other people are crazy"
"we treat subsidiaries the way we would want to be treated and be a good partner"
[on being thanked for letting investors in early] "if we'd owned a coat business we would have kept you outside"
"the distinction is a person who spends time learning new businesses vs. the person investing at the wrong time"
[on AIG poaching] "they reached out to us ... waited until AIG repaid the loans ... possibly more to follow"
[on question from doug kass about paying premia for acquisitions] "it's not bad to pay a premium for good management ... we paid up for GEICO ... we will pay up for extraordinary businesses"
[on HOG debt] "any company that gets its customers to tattoo ads on their chests must be a good company"
[asked if CM and WB should move closer to each other] "we know what each other thinks now. we used to talk a lot when it was expensive to call. now it's cheap and we don't have to talk."

mgr of BNSF -
[on the impact to rail assets if power plants convert from coal to natural gas] "oil by rail will remain important for a long time. one of the myths is that oil moves faster by pipeline but it actually moves faster by rail and it's more flexible. currently handling 650kbpd by rail and expect it to go to 1.2mbpd"

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