WEBVTT - Buffett’s 'Elephant Gun' 0:00:00.440 --> 0:00:03.840 Strap on your parachute. It's time for What Goes Up 0:00:04.120 --> 0:00:14.080 with Sarah Ponzick and Mike Reagan. Hello and welcome to 0:00:14.160 --> 0:00:18.239 What Goes Up, a Bloomberg weekly market podcast on Sarah Ponza, 0:00:18.480 --> 0:00:21.520 reporter on the Cross Asset Team, and I'm Mike Reagan, 0:00:21.680 --> 0:00:24.439 a senior editor on the Markets Team. This week on 0:00:24.440 --> 0:00:26.360 the show, you could say the tone of markets has 0:00:26.440 --> 0:00:29.640 changed all of a sudden. Real yields are rising along 0:00:29.640 --> 0:00:33.479 with the dollar as inflation expectations fall, triggering selling in 0:00:33.520 --> 0:00:36.240 the likes of gold, for example. Cracks have begun to 0:00:36.280 --> 0:00:38.360 show in the credit markets and in the stock market. 0:00:38.720 --> 0:00:42.159 It's economically sensitive areas that have once again turned losers. 0:00:42.520 --> 0:00:45.240 Is this just a blip or is this possibly something more? 0:00:45.800 --> 0:00:48.640 And speaking of something more, we of course will close 0:00:48.680 --> 0:00:51.919 out the episode with our tradition the craziest thing I 0:00:52.000 --> 0:00:55.040 saw in Markets this week? Sarah, I gotta say the 0:00:55.080 --> 0:00:57.440 craziest thing I saw in markets this week. It's actually 0:00:57.440 --> 0:00:59.800 the most disgusting thing I've seen in markets this week too. 0:01:00.000 --> 0:01:01.560 I'm gonna give you a little tease at that, ye 0:01:01.680 --> 0:01:02.800 do we have to wait to the end of the 0:01:02.840 --> 0:01:05.640 show to find out what this most disgusting thing is 0:01:05.680 --> 0:01:10.360 Mike keeping us all on our brace yourself because it's nasty, 0:01:10.400 --> 0:01:14.840 it's crazy and it's nasty. Alright, it's interesting. And if 0:01:14.840 --> 0:01:18.120 you saw anything crazy in markets or even disgusting in 0:01:18.160 --> 0:01:19.880 markets that you want to share with us, give us 0:01:19.880 --> 0:01:23.880 a call on the Bloomberg Podcast hotline six four six 0:01:24.240 --> 0:01:28.480 three to four three four nine zero and leave us 0:01:28.480 --> 0:01:31.360 a voicemail and maybe we'll play it on the show. Also, 0:01:31.400 --> 0:01:35.040 you can tweet to us at podcasts and let us 0:01:35.040 --> 0:01:36.840 know what you think of the show where you've seen 0:01:36.880 --> 0:01:39.800 something crazy. We'd love to hear from you. Sarah, I'm 0:01:39.840 --> 0:01:43.720 excited for this week's guests. Do you know why? You 0:01:43.800 --> 0:01:46.240 must know me well enough to know why my only 0:01:46.240 --> 0:01:49.440 guest would be is is he also from Philly? Mike, now, 0:01:49.480 --> 0:01:52.000 well close enough. He's a Jersey guy. He's a he's 0:01:52.000 --> 0:01:54.280 a Jersey guy like me. I'm from Philly, but I've 0:01:54.320 --> 0:01:58.200 kind of converted to full Jersey guy by now I've defected. 0:01:58.720 --> 0:02:00.840 You've won me over in the Garden State. Eight. Yeah, 0:02:01.160 --> 0:02:03.480 it's all the Italian food won me over. I think 0:02:03.680 --> 0:02:08.040 that's fair enough. Over the Tuesday, but yeah, yeah, it's 0:02:08.040 --> 0:02:11.200 all about the stomach. But glad to have him on 0:02:11.240 --> 0:02:13.919 the show first time on What Goes Up. His name 0:02:14.000 --> 0:02:17.400 is Larry pitt Kowski. He is the co managing partner 0:02:17.520 --> 0:02:22.320 at good Haven Capital Management in good Old Milburn, New Jersey. Larry, 0:02:22.360 --> 0:02:24.799 welcome to the show. Thank you, it's nice to be here. 0:02:25.240 --> 0:02:29.080 O great, So, Larry, I was checking out the good 0:02:29.120 --> 0:02:32.840 Haven Fund before the show. One thing that popped out 0:02:32.840 --> 0:02:34.280 at me. I love to look at sort of the 0:02:34.280 --> 0:02:37.680 asset allocation, and at least as of the end of August, 0:02:37.840 --> 0:02:41.680 equity exposure was about seventy four percent cash and government 0:02:41.680 --> 0:02:46.040 securities making up the rest about a quarter of the fund. So, 0:02:46.520 --> 0:02:48.520 as Sarah will tell you, I'm I'm about to launch 0:02:48.520 --> 0:02:53.079 a twelve part question based on that, probably as I 0:02:53.160 --> 0:02:58.880 usually sit down, say, take take notes on this question now. 0:02:59.040 --> 0:03:02.200 But to me, so that seems like it correct me 0:03:02.240 --> 0:03:05.040 if I'm wrong. But historically, is that sort of a 0:03:05.120 --> 0:03:11.080 low equity exposure for your fund? And you know, depending 0:03:11.120 --> 0:03:13.200 on the f the answer is yes. I'm curious. Does 0:03:13.240 --> 0:03:15.640 it have something to do with this sort of froughthy 0:03:15.760 --> 0:03:20.200 valuations we've seen over the summer, the market getting up 0:03:20.240 --> 0:03:22.720 in in in some cases depending on what index, what 0:03:22.840 --> 0:03:26.720 sector you're looking at almost back to dot com style valuations, 0:03:27.240 --> 0:03:31.160 and if that is a low equity exposure, uh, anything 0:03:31.160 --> 0:03:34.560 in this correction getting you ready to sort of up 0:03:34.639 --> 0:03:38.040 up that equity exposure or or what. I'm just curious 0:03:38.040 --> 0:03:40.920 how you're thinking about that non equity portion of the 0:03:41.080 --> 0:03:43.720 of the fund. You know, Mike, get a good haven. 0:03:44.280 --> 0:03:48.680 The amount of cash and cash equivalence we've got is 0:03:48.800 --> 0:03:52.320 normally a byproduct of finding more or less things to 0:03:52.400 --> 0:03:55.160 do where you know, I don't manage the portfolio too 0:03:55.920 --> 0:03:59.720 Some target cash levels, however, you know, you make a 0:03:59.800 --> 0:04:03.680 fair point. During periods where there's more stress and more bargains, 0:04:04.360 --> 0:04:08.480 cash levels will normally come down, often sometimes dramatically, and 0:04:08.520 --> 0:04:11.720 when there's less to do, cash levels will will build. 0:04:11.960 --> 0:04:15.280 I would say the current cash level we've got, which 0:04:15.480 --> 0:04:18.120 as of you know recently is you know, kind of 0:04:18.120 --> 0:04:21.120 sitting around let's say high teens, is you know, kind 0:04:21.160 --> 0:04:24.600 of probably on average to what we've had over the 0:04:24.680 --> 0:04:28.719 last bunch of years. But it's interesting in this spring, uh, 0:04:28.880 --> 0:04:31.719 during the height of the market swomen you know, March 0:04:32.080 --> 0:04:36.400 of we put about of our then cash to work 0:04:36.960 --> 0:04:41.040 as there were despite the unbelievable uncertainty and the unpredictability 0:04:41.080 --> 0:04:42.960 and something nobody had ever seen as far as in 0:04:43.279 --> 0:04:46.440 you know, an economy that had partially shut down. We 0:04:46.480 --> 0:04:48.760 did put a lot of cash to work and high 0:04:48.800 --> 0:04:52.440 quality things that I think are already turning out to 0:04:52.480 --> 0:04:56.360 be very good buys. And I would say that's how 0:04:56.400 --> 0:04:59.560 we look to behave. We look to behave opportunistically when 0:04:59.560 --> 0:05:02.760 there are lots of things to do. However, I wouldn't 0:05:02.760 --> 0:05:05.800 ever say that I'm sitting around every day, you know, 0:05:05.880 --> 0:05:08.440 making some kind of market prediction by having a little 0:05:08.480 --> 0:05:10.480 bit more a little less cash. I don't know anybody 0:05:10.480 --> 0:05:12.640 who can do that. I certainly can't do it, but 0:05:12.880 --> 0:05:14.880 you make a very good point. It is a often 0:05:14.920 --> 0:05:17.640 a byproduct of finding more or less to do end 0:05:17.680 --> 0:05:20.000 flows of money. You have to be a psychic in 0:05:20.080 --> 0:05:22.440 order to be able to time that, really, especially the 0:05:22.440 --> 0:05:25.280 way markets have been lately, Larry. I was looking through 0:05:25.320 --> 0:05:27.320 your holdings as well, and I noticed that Barrett Gold 0:05:27.400 --> 0:05:29.120 is one of your top holdings. And as I kind 0:05:29.120 --> 0:05:33.039 of mentioned off the bat of the show that lately, 0:05:33.120 --> 0:05:35.480 although we had seen this unbelievable run at least in 0:05:35.520 --> 0:05:37.960 the price of spot gold over the past couple of months, 0:05:38.000 --> 0:05:42.200 that since waned as we've seen inflation expectations come off 0:05:42.640 --> 0:05:45.080 as it looks like we might not get a fiscal 0:05:45.120 --> 0:05:49.120 package from Congress. I wonder is your holding of Barrett 0:05:49.200 --> 0:05:52.480 Gold at all tied to an outlook on growth and 0:05:52.520 --> 0:05:54.600 outlook on inflation, or is there a different reason that 0:05:54.640 --> 0:05:58.960 you're actually interested Barrett Gold. It's a very interesting story. 0:05:59.600 --> 0:06:03.960 We made it a big holding when John Thorne, the 0:06:04.000 --> 0:06:06.920 current executive chairman of the board, came in and really 0:06:06.920 --> 0:06:08.920 started to clean up what had been a prior mess 0:06:09.000 --> 0:06:11.440 under old management where they made an acquisition of a 0:06:11.480 --> 0:06:15.120 copper company with no due diligence and they overlevered themselves. 0:06:15.680 --> 0:06:20.440 And I'm primarily a business analyst. Okay, I'm a securities analyst. 0:06:20.480 --> 0:06:23.080 I'm a business analyst, I'm a stock picker, and I'm 0:06:23.080 --> 0:06:28.840 a risk manager. Lastly our macroeconomic thoughts. So Barreck has 0:06:28.880 --> 0:06:32.640 been an important holding for us for a couple of years. 0:06:33.320 --> 0:06:38.560 And I never minded having the optionality of the exposure 0:06:38.600 --> 0:06:42.680 to gold, which is an alternative currency for all intensive purposes, 0:06:42.839 --> 0:06:46.200 as part of the thesis, as long as the majority 0:06:46.240 --> 0:06:48.760 of the thesis, which was the business. The evaluation we 0:06:48.880 --> 0:06:54.120 paid the management team was really the predominant reason to 0:06:54.200 --> 0:06:57.000 be in it now when Barrick merged with Rangold and 0:06:57.040 --> 0:06:59.760 Mark Bristow took over it because the story got even better, 0:07:00.120 --> 0:07:02.240 okay a couple of years ago, because Wrangled was the 0:07:02.240 --> 0:07:04.840 best managed gold miner I think in the world and 0:07:05.279 --> 0:07:10.400 had unbelievable statistics for creating shareholder value. So as I 0:07:10.440 --> 0:07:14.720 was looking at the portfolio somewhat recently, what you've seen 0:07:14.920 --> 0:07:17.920 since the pandemic as far as money printing increases in 0:07:18.000 --> 0:07:20.280 debt and that goes you know, in the US and 0:07:20.280 --> 0:07:24.720 around the world, it does lead one to be even 0:07:24.760 --> 0:07:28.120 happier to have some exposure and material exposure to an 0:07:28.160 --> 0:07:31.920 alternative currency. The thing to keep in mind about these 0:07:31.920 --> 0:07:35.000 types of things, you know, after the OAIT financial crisis, 0:07:35.080 --> 0:07:38.640 the number of people who were thoughtful and you know, 0:07:38.800 --> 0:07:40.720 really had a strong view that we were about to 0:07:40.800 --> 0:07:43.560 enter a period of hyper inflation and the stuff done 0:07:43.640 --> 0:07:47.160 during the Great Financial Crisis to create certain bailouts was 0:07:47.200 --> 0:07:50.320 going to create a weeker dollar and runaway inflation, all 0:07:50.400 --> 0:07:53.160 kinds of problems. There were strong views about that, and instead, 0:07:53.240 --> 0:07:56.560 over the next nine years we had deflation and a 0:07:56.600 --> 0:07:59.160 stronger dollar. So you gotta be very careful because these 0:07:59.200 --> 0:08:02.560 are very difficult things. But from where I sit today, 0:08:02.960 --> 0:08:06.720 Barrick is a we We have an enormous unrealized gain 0:08:06.800 --> 0:08:09.440 in it. The thesis and how they're running the company 0:08:09.520 --> 0:08:13.720 keeps getting better, and it's hard not to look at 0:08:13.760 --> 0:08:19.600 what's happening as far as printing of money deficits stimulus, 0:08:19.880 --> 0:08:23.040 you know, negative real interest rates. The Federal Reserve is 0:08:23.440 --> 0:08:25.280 very clear that they want to keep rates low for 0:08:25.320 --> 0:08:28.000 a long long time, and and feel that it's nice 0:08:28.040 --> 0:08:32.520 to have something in the portfolio that has some potential 0:08:32.559 --> 0:08:37.000 exposure positively to all those things, but wrapped around what 0:08:37.120 --> 0:08:39.520 appears to be a well run company. And it's not 0:08:39.559 --> 0:08:42.640 an easy business to be in. You know, mining is 0:08:42.640 --> 0:08:46.440 is not There's not an enormous number of companies in 0:08:46.440 --> 0:08:48.920 that business that have created a lot of long term value. 0:08:48.920 --> 0:08:53.000 But Mark Bristow has done it. At at Wrangled were 0:08:53.080 --> 0:08:55.440 forever grateful for John Thorn for having come in and 0:08:55.480 --> 0:08:57.440 really right in this ship. And so that's how we 0:08:57.480 --> 0:09:00.640 think about that position and how it he came where 0:09:00.679 --> 0:09:03.520 it is today. It's funny I always think back on 0:09:03.559 --> 0:09:06.160 that there was that famous open letter to the Fed 0:09:06.400 --> 0:09:10.600 that like thirty forty investors and fund managers signed warning 0:09:10.640 --> 0:09:14.840 of you know, Zimbabwe like inflation from quantitative using and 0:09:15.120 --> 0:09:17.199 I guess a lesson there. Larry has never saw in 0:09:17.280 --> 0:09:21.120 your your name to a letter like that predicting dire outcomes. 0:09:21.320 --> 0:09:24.480 The lesson is is that trying to put together a 0:09:24.720 --> 0:09:28.880 portfolio using macroeconomic predictions is really, really hard. There's a 0:09:28.920 --> 0:09:30.720 couple of people in the world that have done it well, 0:09:30.760 --> 0:09:33.160 you know, there's Soros and drugcon Miility. But I think 0:09:33.200 --> 0:09:36.400 a lot of investors you should you should really try 0:09:36.760 --> 0:09:42.400 to steer clear of having that be the thing that is, uh, 0:09:42.440 --> 0:09:45.440 you know, the driving force and how you're picking stocks 0:09:45.480 --> 0:09:47.920 for your portfolio, because it's very, very hard, and very 0:09:47.960 --> 0:09:50.400 few people get that kind of stuff right. So I'm 0:09:50.440 --> 0:09:53.200 and again the interesting thing also, but Barrick is, you know, 0:09:53.280 --> 0:09:55.240 it's become over the last few months, a lot of 0:09:55.240 --> 0:09:57.920 people have become interested in this sector and it's and 0:09:58.000 --> 0:10:01.440 it's interesting. And of course with golden nineteen hundred bucks 0:10:01.480 --> 0:10:03.360 there cash flow is a lot more than when gold 0:10:03.400 --> 0:10:05.400 is a thirteen hundred bucks. But you know, when we 0:10:05.840 --> 0:10:07.880 made it a bigger holding a couple of years ago, 0:10:08.360 --> 0:10:10.120 you know, nobody was calling me up saying, oh, that's 0:10:10.160 --> 0:10:11.840 really interesting you made that a bigger holding. I was 0:10:11.840 --> 0:10:13.840 getting more you know, polite, like what the heck are 0:10:13.880 --> 0:10:16.320 you thinking? And you know what are you doing? And 0:10:16.400 --> 0:10:19.600 you know and and things that I wouldn't repeat on 0:10:19.760 --> 0:10:23.240 your very high class Uh you know, a podcast so 0:10:23.320 --> 0:10:25.720 high class, Larry, I'm sure people are people are writing 0:10:25.760 --> 0:10:28.280 in like why Gold? Why not Apple? But yeah, I'm 0:10:28.320 --> 0:10:30.880 so flattered that you called this high class. I think 0:10:30.920 --> 0:10:35.079 Mike's a bit surprised. I think he might best probably 0:10:35.960 --> 0:10:38.920 I think he he dialed into the wrong but I 0:10:38.960 --> 0:10:59.959 gotta go. But but Larry, you make a great point. 0:11:00.040 --> 0:11:02.880 I mean, I think a lot of investors struggle to 0:11:02.920 --> 0:11:06.200 wear that micro and macro cap at the same time. 0:11:06.760 --> 0:11:09.760 And Sarah and I appreciate being able to talk individual 0:11:09.840 --> 0:11:11.280 names like this. I don't know how many guests we 0:11:11.280 --> 0:11:13.560 have on We're like, I'm not allowed to talk about 0:11:13.559 --> 0:11:16.680 individual stocks, so it's it's refreshing for us. So I 0:11:16.720 --> 0:11:19.439 just I want to talk about the biggest holding um 0:11:19.480 --> 0:11:21.800 at least as of the the end of last month, 0:11:22.360 --> 0:11:26.600 Berkshire Hathaway. Maybe a few listeners have heard of that company, Larry, 0:11:26.679 --> 0:11:29.720 kind of an obscure one there, But uh, are you 0:11:30.000 --> 0:11:33.520 are you a buffetologist, I assume, and I guess the 0:11:33.520 --> 0:11:36.720 the big question I have is, you know, eventually we're 0:11:36.720 --> 0:11:39.480 gonna get this passing of the reins from Buffett to 0:11:39.640 --> 0:11:43.400 his successor. Is that a buying opportunity or a selling opportunity? 0:11:43.679 --> 0:11:47.360 Do you think I've you know, owned you know, Berkshire 0:11:47.480 --> 0:11:51.800 on and off in different sizes for many decades. And 0:11:52.120 --> 0:11:55.080 the interesting thing is that, which I wrote about in 0:11:55.800 --> 0:11:58.640 a last shareholder letter, is that, you know, I find 0:11:58.840 --> 0:12:02.920 that many people who are you know, supposed to be 0:12:03.040 --> 0:12:06.240 you know, professional investors, have very strange ways of thinking 0:12:06.280 --> 0:12:09.480 about Berkshire. Some you know, there's some form of worship 0:12:09.559 --> 0:12:12.360 without really you know, doing any real, you know, deep 0:12:12.400 --> 0:12:15.360 analytical work and thinking about it as a business. And 0:12:15.480 --> 0:12:18.360 some just you know, there's never ending joy in a 0:12:18.480 --> 0:12:21.360 kind of a gotcha kind of moment of finding anything 0:12:21.360 --> 0:12:24.120 that Berkshire does wrong with just like, oh, I told 0:12:24.160 --> 0:12:27.160 you that's so good. So, you know, neither of those 0:12:27.200 --> 0:12:30.640 two extremes are logical ways to think if you're trying 0:12:30.679 --> 0:12:35.719 to make logical decisions with with money. So from my 0:12:35.880 --> 0:12:39.280 perspective when I looked at them, by the way in 0:12:39.320 --> 0:12:43.160 the in you know, March March April, during the height 0:12:43.240 --> 0:12:48.400 of the market collapse, I basically doubled our exposure to Berkshire. So, 0:12:49.160 --> 0:12:51.560 you know what, what was I thinking? I was thinking, well, 0:12:51.920 --> 0:12:55.400 you know, we have an economy that is shut down 0:12:55.720 --> 0:12:57.880 to a great extent. Here's a company that has a 0:12:57.920 --> 0:13:01.320 hundred forty billion dollars of of cash. Here's a company 0:13:01.320 --> 0:13:07.360 that has a long history of great shareholder returns. Their 0:13:07.440 --> 0:13:11.240 main business is property and casualty insurance in a couple 0:13:11.240 --> 0:13:15.600 of different sectors. My feeling was that property and casualty insurance, 0:13:15.640 --> 0:13:20.400 the market for pricing in terms is improving claims from 0:13:20.480 --> 0:13:22.000 the and they would be able to deal with the 0:13:22.040 --> 0:13:25.400 you know, COVID nineteen claims, and there's some noise around 0:13:25.559 --> 0:13:28.360 some of that. And the stock price was I thought, 0:13:28.400 --> 0:13:31.520 selling at a very attractive price really kind of approached 0:13:31.520 --> 0:13:35.760 the book value. The optionality for them to put money 0:13:35.800 --> 0:13:39.200 to work in different rescue financing and transactions existed, though 0:13:39.200 --> 0:13:41.920 they may or may not do it, and I think 0:13:42.000 --> 0:13:45.080 it's unfortunately a certainty that at some point Mr Buffet 0:13:45.080 --> 0:13:48.000 and Mrmonger won't be you know, calling the shots anymore, 0:13:48.120 --> 0:13:51.400 I think, and I have some knowledge the bench at 0:13:51.440 --> 0:13:56.240 Berkshire is much more talented and deeper, uh than I 0:13:56.240 --> 0:13:59.280 think people really give it credit for. And I think 0:13:59.280 --> 0:14:02.680 Berkshire twenty years ago was really, you know, a holding 0:14:02.679 --> 0:14:05.000 company with a securities portfolio. I think it's much more 0:14:05.000 --> 0:14:09.360 than that today. The magic of Berkshire is the generation 0:14:09.400 --> 0:14:13.160 of insurance float at no cost, which then can be 0:14:13.200 --> 0:14:16.120 invested and helped to drive book value growth. And a 0:14:16.160 --> 0:14:21.440 couple of very large businesses, the railroad business, the utility business, uh, 0:14:21.560 --> 0:14:24.680 the insurance business, and an investment portfolio that one has 0:14:24.720 --> 0:14:26.640 to make a judgment of. So when you when you 0:14:26.640 --> 0:14:29.360 put that all in the mix, I thought, at the 0:14:29.440 --> 0:14:32.960 prices that were available in the spring, I thought these 0:14:32.960 --> 0:14:36.120 were really dirt cheap prices, and so we what an 0:14:36.200 --> 0:14:40.080 enormous amount. And you know, I think that it is 0:14:40.120 --> 0:14:44.680 playing out reasonably well. The negative on Berkshire, which is material, 0:14:44.760 --> 0:14:46.680 it's just size. It's hard to move the needle. You know, 0:14:46.680 --> 0:14:49.560 it's five billion dollar market cap and they do something 0:14:49.680 --> 0:14:51.600 very clever and they make a billion dollars. It doesn't 0:14:51.640 --> 0:14:55.400 really move the needle that much. But if you buy 0:14:55.400 --> 0:14:57.840 back more stock or you know, at some point you 0:14:58.040 --> 0:15:01.120 distribute more money, you know, that's a lovable problem. So 0:15:01.760 --> 0:15:04.520 One of the keys I found over over all the 0:15:04.600 --> 0:15:08.160 years is just to try and be rational and not 0:15:08.600 --> 0:15:11.720 you know, get caught up in too much emotional drama 0:15:11.760 --> 0:15:14.840 about how you think about any holding. You know, so Berkshire. 0:15:14.840 --> 0:15:17.320 I may change my mind one day, but I thought 0:15:17.320 --> 0:15:20.080 it was a very good thing to increase our exposure 0:15:20.160 --> 0:15:23.080 to dramatically in this spring. And as it turns out, 0:15:23.160 --> 0:15:26.200 you know, a lot of the criticism lately of Berkshire 0:15:26.320 --> 0:15:29.080 had been, oh, you know, it's a it's a lot 0:15:29.120 --> 0:15:31.800 of old economy assets. Will meanwhile, you know, something like 0:15:32.480 --> 0:15:37.480 the portfolio is Apple and they've been too inactive. Well, 0:15:38.200 --> 0:15:41.960 you know, shortly after all that criticism, they made a 0:15:42.000 --> 0:15:45.080 ten billion dollar deal from some you know, natural gas 0:15:45.080 --> 0:15:49.200 distribution assets from Dominion. Uh, you know, so there, and 0:15:49.240 --> 0:15:52.000 they've done plenty of other things over the last month 0:15:52.120 --> 0:15:55.040 or so, so you know, and you had a board member, actually, 0:15:55.040 --> 0:15:57.640 Meryl Whitmer, who's well respected investors on the board, who 0:15:57.640 --> 0:16:00.360 bought I think two million dollars worth is in the 0:16:00.360 --> 0:16:02.960 open market for herself and her family in the spring. 0:16:03.040 --> 0:16:06.360 So you know, but again we'll just try. You know, 0:16:07.400 --> 0:16:12.280 I'm ably assisted here in in uh doing the analysis 0:16:12.280 --> 0:16:15.560 and running a good haven on the portfolio side. Uh, 0:16:15.640 --> 0:16:18.160 you know, by ARTI quak and we'll just continue to 0:16:18.360 --> 0:16:21.080 you know, crunch through the numbers and and think about, 0:16:21.280 --> 0:16:23.680 you know, where the business or the company has headed 0:16:23.720 --> 0:16:43.480 over time. I kept thinking back during the turmoil in 0:16:43.520 --> 0:16:47.040 the spring. I kept thinking back to the financial crisis, 0:16:47.280 --> 0:16:51.600 when they made those really well timed investments, uh with 0:16:51.680 --> 0:16:53.680 the preferred shares and in some of the banks that 0:16:53.720 --> 0:16:57.440 were struggling back then. I was kind of expecting something 0:16:57.480 --> 0:17:00.400 like that this time. I wonder if it's know, if 0:17:00.400 --> 0:17:03.520 it tells you anything. You know, Buffett calls it his 0:17:03.840 --> 0:17:06.919 elephant hunting gun. All that cash, you know, he like 0:17:07.000 --> 0:17:09.439 you said, he's he's fired a few shots from it, 0:17:09.520 --> 0:17:13.560 but still kind of holding fire with all that cash 0:17:13.640 --> 0:17:15.720 through all all of this. Does that tell you anything 0:17:15.760 --> 0:17:21.040 about perhaps how just uncertain and risky this environment is 0:17:21.440 --> 0:17:24.000 where where Buffett doesn't seem to be comfortable really writing 0:17:24.000 --> 0:17:27.080 a giant check for for some distressed asset right now. 0:17:27.840 --> 0:17:31.920 I think in the March and April time frame, one 0:17:31.920 --> 0:17:35.399 of the things that I think got in the way 0:17:35.560 --> 0:17:38.080 of Berkshire potentially doing some rescue finance was the FED 0:17:38.200 --> 0:17:41.680 coming in so fast and in such an extreme way 0:17:42.040 --> 0:17:45.600 into the credit markets, which I think allowed a lot 0:17:45.680 --> 0:17:49.719 of bar words that were viable and interesting but on 0:17:49.760 --> 0:17:53.600 somewhat shaky ground to access. The fixed income markets are 0:17:53.600 --> 0:17:57.440 the equity markets, and you saw the you know, the 0:17:57.520 --> 0:18:00.720 number of underwriting is done by across the investment banking spectrum. 0:18:00.720 --> 0:18:04.040 And I think, you know, if not for that massive 0:18:04.040 --> 0:18:08.359 FED intervention, some of those companies would have been knocking 0:18:08.400 --> 0:18:11.320 on Berkshire's door, you know, but you know again, you know, 0:18:11.400 --> 0:18:15.000 they they have not been. Thursday morning, Berkshire announced a 0:18:15.040 --> 0:18:18.360 deal with Scripts which was a you know, a preferred 0:18:18.400 --> 0:18:21.400 with some warrants on very attractive terms, you know, kind 0:18:21.400 --> 0:18:25.160 of of smaller size, but a very typical Berkshire deal. 0:18:25.240 --> 0:18:28.200 And you know they did by, you know, recently a 0:18:28.240 --> 0:18:31.040 slug of all the Japanese the five or six major 0:18:31.119 --> 0:18:34.040 Japanese trading houses, and you know, so but they were 0:18:34.119 --> 0:18:37.320 less active at that period. And you know, again, I 0:18:37.400 --> 0:18:39.840 think there were a couple of reasons. And and Mr 0:18:39.840 --> 0:18:42.880 buffin May very well and Deputies May very very well 0:18:42.880 --> 0:18:47.240 looked at, uh, you know, a shutdown economy and said, well, 0:18:47.359 --> 0:18:50.280 you know, let's you know, let's tread gingerly a little bit. 0:18:50.320 --> 0:18:52.159 But I think the FED intervention and the ability of 0:18:52.200 --> 0:18:55.960 companies to access traditional financing so quickly. It was very 0:18:55.960 --> 0:18:59.080 different than if you remember the the global financial crisis. 0:18:59.160 --> 0:19:04.200 That's not that that process took months. You know that, 0:19:04.480 --> 0:19:07.280 you know, FED intervention and go for you know that, 0:19:07.359 --> 0:19:10.880 and it gave Berkshire an opportunity to you know, put 0:19:10.960 --> 0:19:13.760 some capital to work. It does feel as though, I 0:19:13.760 --> 0:19:16.560 mean policy response, but everything this year has almost just 0:19:16.600 --> 0:19:19.800 happened at warp speed. Um. You mentioned earlier on the 0:19:19.960 --> 0:19:22.679 Larry how Berkshire is a really big company. Um, so 0:19:22.720 --> 0:19:24.600 something has to happen to really move the needle. And 0:19:24.640 --> 0:19:26.159 I'm just gonna make my way down the list and 0:19:26.200 --> 0:19:28.199 looking at the portfolio, and I see you also have 0:19:28.240 --> 0:19:31.040 Alphabet as another one of your top holdings, which is 0:19:31.080 --> 0:19:33.479 also a large company. And I'm also going to preface 0:19:33.480 --> 0:19:35.520 this by saying it's my turn now, Mike to ask 0:19:35.560 --> 0:19:40.560 a twelve part question. Uh, but one I want to 0:19:40.600 --> 0:19:43.200 ask you. I know, Uh, there's a lot of talk 0:19:43.240 --> 0:19:45.479 about how some people when they think of value investing, 0:19:45.480 --> 0:19:47.760 they think about it in the wrong way that some 0:19:47.840 --> 0:19:51.640 think of value investing, and you're leaving out possible ways 0:19:51.640 --> 0:19:54.560 to value a company. You know, especially this year, a 0:19:54.600 --> 0:19:57.119 lot of people have brought up conversations about how to 0:19:57.200 --> 0:20:00.520 price the likes of intangible assets, and I just wonder 0:20:00.560 --> 0:20:03.600 how you work this into your thinking um and your 0:20:03.640 --> 0:20:07.120 process when you're looking at companies to put in your portfolio, 0:20:07.200 --> 0:20:11.359 and how Alphabet might fit into that that process as well. 0:20:11.920 --> 0:20:13.239 By the way, Mike, I don't know how to tell 0:20:13.280 --> 0:20:15.159 you this, but that's my favorite question so far that 0:20:15.240 --> 0:20:18.679 Sarah just asked. So well, thank you. Don't take this 0:20:18.720 --> 0:20:23.000 the wrong way, you know, Sarah, you raised a really 0:20:23.000 --> 0:20:26.760 interesting point. And in my last shareholder letter, I attached 0:20:26.920 --> 0:20:32.080 a letter I had written to then clients talking about 0:20:32.119 --> 0:20:37.800 how owning good businesses with high returns on capital that 0:20:38.000 --> 0:20:41.960 had some defensible mode of some sort, that were well 0:20:42.040 --> 0:20:46.720 managed quality is not inconsistent with value investing. And it's 0:20:46.720 --> 0:20:49.719 one of the things that I think is, uh, you know, 0:20:49.880 --> 0:20:52.399 here at good Haven, as I took control of the 0:20:52.440 --> 0:20:55.800 firm recently, we we needed to hearken back to a 0:20:55.840 --> 0:21:01.640 little bit more our history and owning Alphabet for instance, Uh, 0:21:02.000 --> 0:21:06.920 you know, purchases were mostly made after a bunch of 0:21:07.000 --> 0:21:10.040 years ago, after they had uh you know, they had 0:21:10.080 --> 0:21:13.600 shortly bought YouTube and there was all kinds of noise, 0:21:13.640 --> 0:21:15.840 people saying, oh my god, you know you paid whatever 0:21:15.880 --> 0:21:17.879 it was, a billion, six billion eight to YouTube and 0:21:18.000 --> 0:21:23.080 that's an insane evaluation. And the companies a one tricked pony, 0:21:23.240 --> 0:21:27.359 and you know, paid searches is peaking. And I think 0:21:27.680 --> 0:21:30.640 that you make a very good point, Sarah. I think, 0:21:30.680 --> 0:21:33.440 first of all, in the world of technology, for those 0:21:33.440 --> 0:21:35.080 of us that have been around a long time, one 0:21:35.119 --> 0:21:39.040 of the problems with investing in technology many years ago, Okay, 0:21:39.040 --> 0:21:41.399 in my my recent letter, I talked about how in 0:21:42.080 --> 0:21:44.560 two of somebody come to and said, look, half the 0:21:45.359 --> 0:21:47.760 you know, half the world, you know in ten or 0:21:47.760 --> 0:21:49.639 fifteen years is going to have a PC. You know, 0:21:49.680 --> 0:21:51.160 you want to put a big chunk of your net 0:21:51.160 --> 0:21:53.359 worth in the top three PC companies. And they were 0:21:53.400 --> 0:21:55.679 then Commodore, Tandy and Whang. And if you would have 0:21:55.680 --> 0:21:57.359 done that, you would have lost a lot of money. Right. 0:21:57.760 --> 0:21:59.520 It was a very hard business to see the future 0:21:59.520 --> 0:22:02.840 because it was aging so rapidly. However, if you looked 0:22:02.840 --> 0:22:05.440 at you know, Alphabet six seven, eight years ago, I 0:22:05.480 --> 0:22:08.120 think you would have seen something selling it a relatively 0:22:08.760 --> 0:22:11.879 attractive p ratio, maybe not eight times earnings, maybe was 0:22:11.920 --> 0:22:15.119 low teens or mid teens and growing rapidly. And then 0:22:15.160 --> 0:22:16.639 you had to do some research and you had to 0:22:16.640 --> 0:22:20.480 say to yourself, Okay, you know the snowball of advertising 0:22:20.520 --> 0:22:23.359 budgets moving digital from non digital. You know where is 0:22:23.359 --> 0:22:25.320 it is? The ninth inning is at the second ending? 0:22:25.400 --> 0:22:27.600 Is it's still growing? And and how are they going 0:22:27.640 --> 0:22:30.840 to allocate capital? And what about these new things they 0:22:30.880 --> 0:22:34.520 just bought YouTube? Is it sensible? And I think if 0:22:34.560 --> 0:22:37.600