[00:03:03] Lawrence Cunningham: But they contain so much more, including a lot of knowledge about corporate governance, boards of directors, managerial oversight, incentive compensation, accounting, M&A, and on. And I thought, there is a high visibility program. And through a network of friends, I got the proposal and went to Warren’s desk.

[00:03:26] Lawrence Cunningham: And for a symposium for a conference, kind of what I was supposed to be doing. And to my surprise, and I guess the surprise of many others, he said, yes. And so we convened the conference in October of ’96. A couple hundred people in the auditorium of my university in the middle of New York City. You know, you could never do that today.

[00:03:49] Lawrence Cunningham: I mean, you need a rock concert hall for that, but we did it right in my school and his colleagues, his wife Susie was there, his son Howard, and then colleagues like, Charlie Munger, the vice chair, Ajit Jain, the insurance maven, Carol Loomis, who’s editor of his letters and many others, Lou Simpson, who was the investment manager at GEICO and on and my colleagues.

[00:04:14] Lawrence Cunningham: And we just had a great intellectual, debate. You know, I’d put onto the conference table selections of his letters rearranged by theme. And so I had panels on, each of the different themes. And it was just huge fun. A lot of great ideas exchanged. I published the academic papers in a journal, and then it got this attention, wider attention, in the popular press.

[00:04:38] Lawrence Cunningham: Warren was well known in investment circles then, I mean he was famous, wasn’t as famous as he is today, but there was interest beyond my symposium in a book, and I think it was Warren’s idea to actually do the book, I know it was his idea to do a series there, so every five years as he writes new letters and as the world changes, We update the book to weave in the new ideas and eliminate redundancies and stuff like that.

[00:05:05] Lawrence Cunningham: And that was his idea. He said, Hey, you know, every five years or so you can update the book. So that’s what we’ve done. It’s just been a wonderful project. I’m interested in just rewinding a little bit in time and just understanding your interest in governance, specifically in corporate America.

[00:05:21] Lawrence Cunningham: What got you specifically so interested in that area? 

[00:05:25] Lawrence Cunningham: I think of corporate governance as the guardrail for investor protection that you can have a wonderful business, you know, making an excellent product. People really need want people pay for the company produces significant profits. But then without governance guardrails, all those profits can be channeled to insiders.

[00:05:46] Lawrence Cunningham: Executive compensation and bonuses and payouts and perks, and who knows what else? Fees. My interest was to, you know, help maintain and, support a system that would be owner oriented, that would be protecting shareholder investments. And that’s one of the things that I loved about Warren’s letters and this book is that it demonstrates that investors.

[00:06:09] Lawrence Cunningham: Obviously, we, you have to conduct fundamental valuation analysis and examine the business case, but you have to have a section in that analysis on governance, on, on how will the shareholders be protected? Because I’ve seen, and I’ve been involved with companies that were wonderful businesses, But the shareholders didn’t receive most of the result of that because of managerial leakage, let’s call it.

[00:06:32] Lawrence Cunningham: So that was my interest. I think it’s a fascinating subject on its own, but the real purpose is to protect investors, protect shareholders. 

[00:06:42] Kyle Grieve: So one thing I like from the intro of your book was, that you talked about how Buffett places a very high degree of importance on forthrightness and candor and his communications with shareholders.

[00:06:53] Kyle Grieve: So you also pointed out how simple he makes the annual reports and how he likes to make sure he uses simple terms, simple language and numbers that, you know, anybody can probably understand. So I’m interested in understanding if you think that this structure of his annual report has been some sort of competitive advantage for Berkshire Hathaway.

[00:07:09] Lawrence Cunningham: Oh, yes, absolutely. Most CEOs today, and for decades, have professionals write their, letters and, their communications, press releases, and other public speeches. And it’s obvious how these things have been produced. They have a sense of scriptedness. They’re often elliptic or foggy or written in PR speak.

[00:07:36] Lawrence Cunningham: And it’s hard to do what Buffett does, which is to sit down. I mean, it takes him hundreds of hours during the last quarter of the year to produce this. Writing is a difficult art under any circumstances. And here you’re trying to capture and explain. performance over a year, and especially in his case, a lot of different businesses, a lot of different engines, and then you try to put it in the context, not only of that particular year but the arc of the company and its operating environment.

[00:08:07] Lawrence Cunningham: So it’s painful. It’s hard to do what he’s done. I can understand why a lot of CEOs just outsource it to the professionals. And they might add their, little touch, but to do it yourself and to really put the effort that, he does has value because it conveys the real essence of a company, the culture, especially if it’s the founder who’s writing these letters, what DNA that person has injected into the company.

[00:08:33] Lawrence Cunningham: So it becomes a very distinctive expression of who the company is, and that will be a distinction. And if it’s a positive distinction, it’ll be a competitive advantage. And so it certainly is, as Warren, as you said, he tries to explain it in such a clear way, which he makes a joke that his audience, any writer has to think, for whom am I writing?

[00:08:54] Lawrence Cunningham: What’s the reception going to be like? He tries to, he imagines that he’s writing his letter to his sister, a smart person, but not an expert. And yeah, the accounting concepts are explained in very accessible language. It’s not dumbed down. it’s written for smart people, you know, intelligent people, but not a CPA or an MBA.

[00:09:16] Lawrence Cunningham: necessarily. And I think that, so yes, he was good at this from the beginning. He took the care and the effort, you know, in his early days, he was writing annual reports to the small number of partners that were in his partnership, might have been a dozen friends and family, including his sister, where, you know, he had to be very, personal, very thoughtful, very deliberate, very honest.

[00:09:40] Lawrence Cunningham: And he just carried that into the public company and has been doing it now for a long time. 50 plus years. And there’s no question that it’s a competitive advantage. It’s also like most competitive advantages. It’s not an easy thing to do, but he does it very well. 

[00:09:54] Kyle Grieve: You’re on the board of Markel, Constellation Software and Kelly Partners Group.

[00:09:59] Kyle Grieve: All of them, which I noticed have very good social governance. So I’m interested in knowing if you can suggest some other businesses that also have good corporate governance that listeners to the show and probably myself should spend some time learning more about. 

[00:10:11] Lawrence Cunningham: Yes, thank you. I am on the street boards.

[00:10:14] Lawrence Cunningham: I think those companies are wonderful companies led by outstanding executives and indeed, not coincidentally, I compiled, I did some research on I like how you call it good social governance. you know, this, that, that sense that the CEO should be a partner to his or her shareholders and, write to them in using, you know, his own time and effort and attention, writing that very carefully and all of those guys.

[00:10:40] Lawrence Cunningham: All the CEOs of those companies do that. And I had done a bunch of research on the quality of shareholder letters using linguistic analytic tools, you know, that test for candor versus obfuscation. And, I did other research just around rankings of letters and stuff like that. and I did a whole report on that.

[00:10:59] Lawrence Cunningham: And then I decided, and I ranked them and tho those companies that who Bo I said are, at the top of that. And then I turned around and wrote a, just published a book, a collection of the best shareholder letters from about 15 CEOs, and so it’s, those companies plus, and Warren is at the top of that deck, and the others I put in there, just to answer your question of examples, I, think I’d cite Fairfax Financial, run by the CEO and founder is Prem Watsa, like Markel, it’s in the insurance business.

[00:11:31] Lawrence Cunningham: In fact, it was actually a part of Markel when Prem Watsa bought it and like Constellation, it’s based in Toronto. Wonderful company. Prem is a very clear, candid writer. Tells it like it is. Not every year is great. Buy and hold that. you look back, it’s been a very successful business and investment over decades and decades.

[00:11:52] Lawrence Cunningham: Another one I featured in that, book, it was called Credit Acceptance Corporation, not a household name, but a very important player in the funding of automobile purchases, make, making loans, supporting the market for loans, especially to people who might not otherwise be able to get loans.

[00:12:12] Lawrence Cunningham: Just, again, it’s an interesting business and the leadership is just, you know, clear or candid. I could go on and off. I’ve got, it is a competitive advantage. It’s a small number who stand out in this way, but it’s still, it’s not 10, it’s 30 or 40. You can check out Dear Shareholders if you want or other of my books discuss other examples.

[00:12:34] Kyle Grieve: Yeah, that book Dear Shareholders is awesome. I have it as well. I highly recommend it. It’s just, it’s a really good compilation where, you know, you, basically just found all the interesting tidbits and, this, and you went back in history, right? Like I really, enjoyed what you talked about with Roberto Goizueta and Coca-Cola that those, it was really, well done.

[00:12:53] Lawrence Cunningham: Oh yeah, he was an artist and went through, again, Coca-Cola is always seen as this wonderful company, nothing is inevitable about it, I mean, and Inverter did a great job steering through some challenges, focusing, very focused on it. on owner interest, on shareholder value. He minted concepts around that idea and wrote clearly about them.

[00:13:16] Lawrence Cunningham: That’s a real master. 

[00:13:19] Kyle Grieve: So there is an interesting passage in your book about how Warren distinguishes between growth and value. So you wrote, quote, many professionals make another common mistake. Buffett notes by distinguishing between growth investing and value investing. Growth and value, Buffett says, are not distinct.

[00:13:35] Kyle Grieve: They’re integrally linked, since growth must be treated as a component of value, unquote. the interesting thing here is that Buffett wasn’t originally focused much on growth in his investing process at the beginning. He was laser focused on value. So I’m interested, can you discuss some of the major influences that helped him evolve from being, you know, a very, value-focused investor to being more of a growth, quality focused investor that he is today?

[00:14:01] Lawrence Cunningham: Yeah, it’s a, it’s an interesting evolution. I think Warren learned, one key thing about Warren is, And about a lot of your listeners probably, they believe in learning, they believe in getting new information, developing new knowledge, adapting as the hand they’re playing changes, or as the card game changes, and that’s what Warren is, I think, trying to get people to appreciate, the importance of evolving.

[00:14:26] Lawrence Cunningham: And his early phase was mostly, thanks to his professor, his teacher, Ben Graham. the father of, call it value investing if you want, but the idea that you should pay a price that is a deep discount from the value you’re getting. Ben Graham called that the margin of safety, because from the error, so try to be super careful in what you pay.

[00:14:51] Lawrence Cunningham: and Warren, took that idea literally in his early decades. in an application called cigar butt investing, meaning that, you know, you could buy just the last little bit of a cigar and if you get it for cheap, you could make a big buck, you know, from that. And in terms of the influences that evolved him away from that, one was Charlie Munger.

[00:15:13] Lawrence Cunningham: I mentioned his business partner beginning in early seventies, late 60s. And Charlie thought that’s an attractive approach if you’re in it for the short term and or if you’re just buying a bunch of small things. Buy them cheap, okay, you’ll make some money and move along. But he said to Warren, you know, if you’re, thinking you’re going to be in this enterprise for decades and decades, for, you know, half a century.

[00:15:41] Lawrence Cunningham: That’s not going to work. You’re going to want things that will last over decades and decades. You need a whole big giant cigar, maybe a cigar box. You can’t just have this, but, and he said, you know, if you’re going to do that, You’re not going to find lots of those little cheap things running around. Munger encouraged Warren to think about growth, to use that phrase, but it was really about, think about the durability of a business, how it can grow, be sustained, over very long periods of time.

[00:16:14] Lawrence Cunningham: And so he wanted them to focus on the intangibles, the moats, the competitive advantages, customer franchise, brand loyalty, and be willing, you know, you still want a margin of safety. He didn’t give up on that idea, but be willing to pay a little more for value, for qual excuse me, for quality. And so that was a primary influence, you know, Charlie sort of sitting there and coaching.

[00:16:38] Lawrence Cunningham: And the second influence intellectually was the book by Phil Fisher came out in around 1958. So it’s sort of, sort of popular as Charlie’s book. Given Warren this advice, Phil’s book was called Common Stocks and Uncommon Profits. And it had this sense of what we would now probably call quality investing, which was, look, okay, don’t overpay for things.

[00:17:00] Lawrence Cunningham: Don’t violate Ben Graham’s margin of safety principle, but don’t take it to cigar butt extremes. You can pay up for value. And that’s why I call that quality investing. I think, so the nicknames growth investing and value investing, I think they got a little dichotomized, you know, and sort of a false dichotomy.

[00:17:18] Lawrence Cunningham: And that’s what Warren was just, trying to crack these slides. They’re not really, alternatives that you’re doing value investing. Yeah. You want a margin of safety, but when you’re making the valuation estimate, you’re going to include some, you know, what’s the growth prospects and. So I, just, I like quality investing as a way to capture that, combination.

[00:17:38] Kyle Grieve: So you wrote, quote, since 1978, Buffett has always written his letters with a specific purpose to attract what he calls quality shareholders. Those who buy large stakes and stick around neither thoroughly diversified indexers nor short-term traders. So I’d like to rewind back to March of 2000. At this period, Berkshire Hathaway had reached a multi year low of 41, 300, down from a high of 80, 900 just a few short years earlier.

[00:18:05] Kyle Grieve: it would appear that during bubbles, even quality shareholders are willing to dump their quality businesses to chase returns in other stocks. I’m interested in knowing if you think that Warren has been able to improve on his ability to retain quality shareholders since then, or do you think that the right kind of bubble is just going to negate the positive effects of quality shareholders?

[00:18:26] Lawrence Cunningham: Oh, no, you’re absolutely right about that. Look, being a quality shareholder, by which Buffett has defined them, and I’ve redefined it as a long term and focused investor, having those two characteristics is fiendishly difficult. And it was hard in 1978. It was maybe even harder in 2000. I think it’s even harder in 2024.

[00:18:49] Lawrence Cunningham: You know, in terms of being long term, even then there was pressure to meet a quarterly result. There was pressure to just human behavioral pressure to see returns faster rather than slower. So it was hard to be patient then. But then, you know, imagine take 2000, the internet period, the pace of, daily life, changed.

[00:19:10] Lawrence Cunningham: You started to move into, you know, you could very quickly just, click and purchase goods that’d be delivered the next day from, across the world. And we’ll forward into 2020, social media just delivers everything instantaneously. The piece of innovation is extremely rapid, you know, social media intensifies this sort of instantaneity of stuff and that, that’s bound to affect people’s patience and investing to the idea of let’s find this nice little business and maybe after 3, years, it’ll be this wonderful, super duper business being able to do that.

[00:19:48] Lawrence Cunningham: It just, it’s gotten harder. I think it was hard then. I think it’s harder now. So, being patient, okay, that, that product, the quality shareholder, there are going to be fewer people who are able to do it. And then on the focus side, in 1978, there, there weren’t really any index funds. Jack Bogle had begun talking about it and writing about it a little bit in college around that time, but they were really incubated the next decade or two and then took off.

[00:20:16] Lawrence Cunningham: really in the last, since around 2000. And so now you have gobs and gobs, you know, trillions and trillions of dollars. You know, massive percentages of the total market capital are deployed through index funds where no one’s picking a stock, picking a basket, maybe, and then the purchases and sales are simply done as the market basket, amounts change.

[00:20:38] Lawrence Cunningham: And so no one’s picking this one of Berkshire stock. They just, they have to buy the class B because it’s in some index. So again, so the proportion of investors who are focused has declined. And even the ones who aren’t. Officially indexed. There’s a lot of closet indexing. So they 80 stocks.

[00:20:59] Lawrence Cunningham: So you’re right. The percentage of the shareholders of any company that are quality shareholders has declined massively since 1978. as short termers and indexers have, risen. And that’s certain, it’s even been true of Berkshire Hathaway. That said, it’s been less true of Berkshire Hathaway than any other company.

[00:21:20] Lawrence Cunningham: We crunched the numbers on the types of shareholders in Russell 2000 or so, and Berkshire is, way at the top, in terms of proportion of its overall shareholder base that are, you know, long term in focus compared to the short termers and the indexers. It has a lot of those. less than others. And, I think Warren’s education, his, letters, that, that audience is a big part of.

[00:21:45] Lawrence Cunningham: He has consciously cultivated that cohort and they have, they’ve responded large. Again, I’ll be the big index. There’s some big chunks of perks here, but he has, I think, succeeded in attracting a disproportionate share of that shrinking base. And you could see it, you know, you could see it in Omaha at the annual meeting, see it on podcasts like these.

[00:22:10] Lawrence Cunningham: He has led a large group of investors who, are inclined to be patient and focused and has, I mean, his current letter actually said the shareholder list, he’s got 3 million accounts. And I haven’t, broken them down this year, but I would say the overwhelming majority of those are quality shareholders.

[00:22:32] Kyle Grieve: So Warren has commonly referred to helpers in the investing industry who he does not hold in very high regard. So he understands very well that many of these helpers are offering their services for high prices yet offer little to no value. To reinforce his point, he wagered 500 grand, over a decade to investment professionals who could beat the results of a low cost Vanguard S&P fund.

[00:22:55] Kyle Grieve: So none of the five funds came even close to beating the index. I’m interested in knowing why do you think Warren has taken responsibility himself to show investors that buying index funds is a rational choice? And do you think he just does this for his amusement? Or is it you know, something that’s part of his DNA?

[00:23:12] Lawrence Cunningham: I think it’s part of his DNA. I think you’re exactly right about that, Kyle. And the helpers label that’s, he’s got a wonderful essay. One of the essays in the essays of Warren Buffett is about the helpers. it, it actually, it features a, another cool naming of, he imagines a family, a single family that owns all of.

[00:23:29] Lawrence Cunningham: Corporate America, and he calls those family the got rocks, old fashioned way of, you know, rich people. And, he is got them with, you know, just this enormous capital base, that they get the hand down generation to generation. And if they just did that without paying any anything out of it, it would be this gargantuan number.

[00:23:48] Lawrence Cunningham: but what happens is, after the one generation, do a little better, so they hire some people to help ’em do a little better and actually subtracts costs. incurs fees, it actually doesn’t make them any better. So the next generation tries to hire some additional people to try to explain why they aren’t doing so well.

[00:24:06] Lawrence Cunningham: And that doesn’t help. But the next generation decides to get some additional helpers to figure out why the help isn’t helping, and It’s an amusing parable. And you’re right, it displays his passion. for this, critical, you know, it’s criticism of the asset management or fund industry that he is passionately critical, where overall the fees are higher than the value conferred.

[00:24:33] Lawrence Cunningham: And there’s a great book he, by a guy named Fred Schwed, back in the 30s, I’m, not sure exactly when it was published, it’s a classic, and the, title is, Where are the customers yachts? You know, he’s, like walking, down the yacht. All the bankers, all the helpers are traveling in these wonderful boats and, look, do the customers have a boat?

[00:24:56] Lawrence Cunningham: So why is Warren, you know, I think it is in his DNA. He is by nature a very thrifty person. You know, he doesn’t pay extra for anything. And that would certainly, you know, even a hamburger, but that would certainly include a financial advisor or a merger broker or a consultant. At Berkshire, they don’t use, they use very few of those, helpers.

[00:25:22] Lawrence Cunningham: I mean, they have a law firm to help them with taxes, regulations, and acquisition agreements. They have an accounting firm to audit the books and maintain the internal controls, but they’re otherwise. He’s extremely reluctant to use, to pay fees and that’s just part of his, personality. I think, you know, DNA and also being from Omaha, just Nebraska, the middle of America, very thrifty culture.

[00:25:47] Lawrence Cunningham: So I think that’s a big part of it. And then the related part is he does care deeply about his investors. And again, they started out as friends and family partners. And he looked out for that, you know, any penny that he paid was a penny come out of their pocket, and he still feels that way about Berkshire Hathaway in this, you know, half a trillion dollar company that they pay, you know, a 1 percent fee for this acquisition.

[00:26:14] Lawrence Cunningham: He feels like that’s coming out of the pockets of all my shareholders, of all the Berkshire shareholders, and he treats his money like theirs. The company’s money like it’s their money because it really is. So he just, so it’s DNA and then it’s cultural with it within, Berkshire Hathaway. And I think that basically explains almost all of it.

[00:26:34] Lawrence Cunningham: I would also observe that you know, when he’s in that Got Rocks SA, he’s talking about the overall industry for sure, but then he singles out a couple elements of it, including private equity. And that’s fine. I’ve seen them charge me. He’s I get that. But one, the cynic or the counter, the people in that community might say, look, Warren is just being a competitor.

[00:27:00] Lawrence Cunningham: So we’re trying to buy the same companies he is. And you know, he wants to say, look, if you come with me, we’re not going to charge you board fees or strategy fees or consulting fees. We’re lean and mean and thrifty. Those PE guys are going to charge you money at every step of the way. So there’s maybe one small part, you know, it’s, You know, Berkshire is a very attractive home for sellers of businesses, and one reason is they don’t charge fees, but I think that there may be some, you know, Warren is, in addition to all the other things we’ve been talking about, he is a consummate salesman, and he’s always selling Berkshire Hathaway in every market that it’s in, and one of those markets is competing with private equity for businesses, and to emphasize that’s a costly bunch of helpers, You know, it’s consistent with Berkshire’s own, interests, you know, and on just, if I can finish your question, Kyle, the attractiveness of index investing, because that’s the place in the essays where he’s talking, where he’s got the got rocks story is about, you know, why ordinary investors in America are better off.

[00:28:02] Lawrence Cunningham: with a cheap index fund, with an index fund that doesn’t charge any of those, fees or charges, you know, extremely low fee because they’re not doing anything. They’re just buying the basket. There’s no advice. There’s no strategy. There’s no consulting. What he’s explaining why an index fund is good to most people because it’s cheap.

[00:28:21] Lawrence Cunningham: You know, you get the market return and no, no, real cost. Whereas, you know, if you’re, hiring a stock ticker to give you all this help, don’t expect much. that’s the context in which he’s discussing that. And I take him at his word. I think for decades he has advised ordinary people that are not, that don’t have the time or the ability or the inclination to study businesses in order to intelligently select stocks.

[00:28:48] Lawrence Cunningham: He’s been advising them for decades, just buy an index and he calls them the rocking chair investor, the armchair investor. You don’t have to do anything quite well because America is a prosperous country and an economy. So he’s, and I think he absolutely stands by that advice. At the same time, he has invested enormously in educating people about intelligent stock selection.

[00:29:12] Lawrence Cunningham: So he knows people. Even if they index a lot of their portfolio or net worth, they’re going to be picking stocks too, and he’s fine with that. He encourages that. I mean, he wants people to buy Berkshire Hathaway stock and then wants them to hold it. I think it’s an interesting thing about Warren that, he, is an advocate for index funds, but at the same time, he’s educating people on stock pick, on a complete investment philosophy.

[00:29:39] Kyle Grieve: So one area that you touched on with that response was just paying fees for M&A so obviously, you know Berkshire Hathaway is a very acquisitive company. They’ve done tons of deals for their subsidiaries And I think part of his competitive advantage is, you know, he’s not, and this kind of just goes into what you just talked about all these hidden fees and these, these helpers is that when he makes a deal, he doesn’t need to have an army of people coming in there that he’s paying to help make a deal.

[00:30:07] Kyle Grieve: A lot of times he just goes and meets the owner, shakes their hand, bang, it’s done. I mean, that has to be a major competitive advantage for them in Berkshire Hathaway. 

[00:30:17] Lawrence Cunningham: Absolutely. I think the principle of autonomy that Berkshire authors that offers that is that managers of the Berkshire businesses get to call their own operational shots in product mix, pricing, employee policies, retention, bonuses, promotions.

[00:30:38] Lawrence Cunningham: Expansion, contraction, you know, it’s really all up to them. There’s some limits on, you know, the retirement plan or deploying large amounts of capital. But so a manager who likes that independence, that ability, that autonomy prizes. Berkshire as a home. And that’s really been the path for a lot of the Berkshire acquisitions.

[00:31:01] Lawrence Cunningham: Someone who still wanted to run the business and run it their way, you know, didn’t want some of the other anxieties. Either it was a public company, they don’t want that reporting anymore, like Clayton Holmes. Or it’s a family company and they’re kind of at an inflection point with a generational shift or facing that.

[00:31:18] Lawrence Cunningham: So they want to curate a home for the next generation. And so that’s been a real attraction of sellers to Berkshire it. There are other companies who are, who have mimicked that, but, it’s a real, it’s a real plus. And on the flip side, I’m not against private equity. I think they do a fabulous job, but they, do tend to intervene more.

[00:31:38] Lawrence Cunningham: you know, and part of what they’re offering is. And the other thing about Berkshire is they don’t have anybody that they could send in to actually make those changes if they were me. Warren is sitting in Omaha with a couple dozen mostly financial people. He’s got some business geniuses who can troubleshoot, but that’s not their preferred approach.

[00:31:57] Lawrence Cunningham: They like an existing business. It’s run really well. and just will, be able to continue to perform and maybe even grow as a result of the Berkshire affiliation. You know, private equity, they have tools and people who can diagnose problems and help fix them. And, that usually, and very often includes managerial leadership, but could be the product mix and the customer base and, everything else about a business.

[00:32:23] Lawrence Cunningham: And, what they’re selling or what they’re offering is, quite different from what Berkshire is offering. And in some ways that. They end up sometimes competing for the same business, but ideally, most of the sellers would be at home in one setting and less at home in the other. 

[00:32:40] Kyle Grieve: So Warren Buffett listed a few lessons in one of the essays that you shared in your book that he and Charlie learned over 25 years.

[00:32:47] Kyle Grieve: So one of them really stood out to me and this was a quote, after 25 years of buying and supervising a great variety of businesses, Charlie and I have not learned how to solve difficult business problems, unquote. So then he went on to say, you know, they’re trying to win by stepping over one-foot hurdles rather than seven-footers.

[00:33:04] Kyle Grieve: So I’d love to know some examples of when Warren has attempted to stray from this strategy and how he came ultimately to this conclusion of jumping over one-foot hurdles. 

[00:33:13] Lawrence Cunningham: It’s a great passage. Yeah, and he was reflecting. It’s a great essay because it was a couple of decades ago, but it was still after 25 years of working.

[00:33:23] Lawrence Cunningham: of making purchase decisions, both in individual stocks and in whole companies. And, you know, I think overall the record is very strong. They made way, way more wise capital deployment. decisions than stupid ones. But nevertheless, one of the lessons is to learn from the stupid things you did. And he’s, in that essay, he’s diagnosing, it’s one of the things we did, and this again contrasts to private equity, Warren thought, you know, I personally, Warren, I’m not good at solving difficult business problems.

[00:33:55] Lawrence Cunningham: maybe there’s some geniuses in private equity who are, but I’m not good at that, it’s really hard to do. And neither is Charlie and so our best strategy, instead of trying to buy those turnarounds and fix them, we’re going to try to avoid them and try to just get the simpler ones. And Charlie had a wonderful quote along these lines too.

[00:34:15] Lawrence Cunningham: They thought very much alike, but Charlie said, that when she goes through life, it’s more important just to make a few good decisions and avoid making the stupid ones. And it’s often harder to avoid making the stupid ones and stupid in this context is those seven footers. You know, and I mean, Warren, he’d have a list.

[00:34:35] Lawrence Cunningham: I think there’s a list in that essay of some of the seven footers that had difficult business problems that he couldn’t fix and maybe weren’t even fixable. Yeah. The original classic was his acquisition of the original Berkshire Hathaway business, which was a dying textile business up in Massachusetts, you know, at a time when the beginning of globalization and of making fabrics and textiles.

[00:35:01] Lawrence Cunningham: abroad and shipping them around the world, including to America. So that you just, couldn’t have the pricing power. So it was a dying industry. He dug, he stuck with it, but there, and he also had the union, group to deal with. And so it was just, it was maybe a doing business and he tried to keep it alive for God, at least a decade.

[00:35:22] Lawrence Cunningham: And he realized he couldn’t, he finally shut it down. So it was a terrible business. And then he learned a big lesson. Another one though, I mean, but you didn’t learn it immediately or permanently because then, maybe a decade after that, he bought a shoe company called Dexter Shoe and actually a similar, horizon facing it, where you just shoe companies, you could manufacture the same shoe in Asia, bring it back across the oceans for a fraction, a tenth of what it would cost to do in New England.

[00:35:52] Lawrence Cunningham: So he learned a lesson again, and in that one, in that transaction, it wasn’t just a big business problem. He couldn’t jump over, but he also used Berkshire Hathaway’s stock to buy Dexter, and so just year by year he saw, as Berkshire’s stock increased in value, and that shoe company deteriorated, and he saw how much he wasted.

[00:36:13] Lawrence Cunningham: another big, seven-footer that I think he missed, he didn’t really see, I think Charlie did, was Jen Ray. One of the biggest acquisitions I’ve ever made, even now, I think it was 27 billion around 1998 or so, so these would be much bigger numbers now, but Warren obviously was attracted to its, wonderful book of business, and reinsurance, it was a large global carrier, a player in that, field, abundant float at appealing costs.

[00:36:43] Lawrence Cunningham: Charlie was concerned. He said, I, but they’re also writing all these derivative contracts, these hedging instruments. They look too complicated to me. I can’t, I don’t understand them. I don’t see. And that feels like a risk. You know, it feels like a potential 7 footer, not positive. It’s a 7 footer, but it doesn’t look like a 1 footer.

[00:37:00] Lawrence Cunningham: Warren went forward with it anyway, and Charlie was right, it had extensive derivative products that blew up and cost a fortune, and it cost, it took years to unwind, every year in Warren’s letter during that period, it’s about a six year period, he’s, you know, classifying the cost in money and brain damage.

[00:37:23] Lawrence Cunningham: And so again, I mean, you could, fix it. It wasn’t just a series of bad business decisions and set of business problems, but, it took a enormous effort. So I think, you know, it’s a nice out, analogy too, that it might be fun and exciting to try to hit those seven footers. And some people may be really good at it.

[00:37:41] Lawrence Cunningham: Again, in the private equity world, you know, you have to know your strengths and fixing businesses just isn’t one of his strengths. And even, you know, he’s, there’s a little bit of modesty in there because he certainly owned businesses that had challenges and that through selecting the right managers, they were fixed.

[00:37:57] Lawrence Cunningham: But he’s right, you know, obviously it’s, it is a lot easier if you can find the one footers. 

[00:38:02] Kyle Grieve: So looking at the opposite end of the spectrum is obviously the one footer. So I’m interested in knowing, you know, obviously there’s probably tons and tons of one favorite footers that he’s crossed, but in your opinion, what are the investments that just made the most sense to Warren Buffett that have obviously been some of his basic, biggest successes that we know about today?

[00:38:20] Lawrence Cunningham: I think, you know, it’s the, See’s Candies, Chocolate Confectioner with deep brand loyalty and, therefore some, significant pricing power, GEICO, the car insurance company that had built out a wonderful underwriting, discipline and staff with the very thrifty, very, cost conscious disciplined group.

[00:38:45] Lawrence Cunningham: It maybe wasn’t a one footer because they didn’t face problems, most insurance companies do. maybe it’s a two footer. It’s hard to find the, you know, the one footers even in, is his case. I mean, you might count Dairy Queen, Justin Boots, Acme Bricks. I think in Clayton Holmes, maybe that’s a two footer because they, face business adversity of various kinds because of the markets that they serve people who with at the lower end of the net worth or income matrix.

[00:39:17] Lawrence Cunningham: So they, they encounter challenges in that business. I think the key. If I rephrase his kind of test and say that you need to have a good business, kind of doesn’t have that many problems, maybe it’s a two footer, one footer, then, you really have to have a good manager who is capable of handling adversity when it comes.

[00:39:38] Lawrence Cunningham: And I think that’s one of the maybe derivative lesson of What he’s talking about here is, he knows that he personally is not gifted at solving thorny business problems. And so he tries to avoid, that’s one of the reasons for the autonomous structure at Berkshire. Warren really knows, you know, he’s really not good at pricing insurance.

[00:39:58] Lawrence Cunningham: But he knows that his head of insurance, Ajit Jain, is, so he just has Ajit do it, and tries not to second guess him. He’s really good at picking jockeys, but not actually riding the horse. And I think that’s a big part of what he means when he’s, reviewing that lesson that he and Charlie were on.

[00:40:19] Lawrence Cunningham: They’re really good investors. They’re not particularly good managers. 

[00:40:24] Kyle Grieve: So Buffett had a really good quote on share repurchases, which was this. So quote, my suggestion before even discussing repurchases, a CEO and his or her board, Should stand, join hands, and in unison declare what is smart at one price and stupid at another, unquote.

[00:40:41] Kyle Grieve: I’d love to get your input on why this seems like such a hard task for the majority of corporations to execute on. 

[00:40:48] Lawrence Cunningham: It’s troubling because it should be fundamental. That statement there should be so well known. So ingrained that you don’t have to have the standing commitment that, that he encourages, you know, in this sentence that you quoted, it’s in a essay that it’s 10 pages on the rationality of share repurchases and the idea that rationality depends on the price, like anything, You could over or underpay for anything, including a company in its own stock.

[00:41:21] Lawrence Cunningham: And if underpay, that’s good for the continuing shareholders. If you overpay, that’s bad for them. It’s fundamental. Why do we need a op a, you know, to have that gathering. I do think a significant reason, part of the problem is insufficient appreciation of the, basics of capital allocation. In American C suites and boardrooms.

[00:41:47] Lawrence Cunningham: Capital allocation is, it’s a fundamental concept. I think every business person ought to know it cold and every director ought to know it cold so that we don’t, have to again, have that scene of unity. But what I’d like to see them do is. And while any, director before assuming the board seat, be able to recite the basic ABCs of capital allocation.

[00:42:10] Lawrence Cunningham: It’s simple. Every dollar in this company ought to be put to its best use. And there are only three or four uses. One is reinvesting in the existing businesses. Another is acquiring new businesses. And then the third or fourth is paying dividends to shareholders. and or repurchasing the stock. And that’s it.

[00:42:29] Lawrence Cunningham: That’s the mix. And they’re not necessarily exclusive. You can do all of them and it’s not necessarily linear, but you should evaluate each of these deployment avenues and then determine what’s the best allocation mix. And that’s what every director ought to think that way, ought to know that. And every executive should too, but not all of them do.

[00:42:52] Lawrence Cunningham: A lot of executive capital allocation is a concept that’s taught in. finance and ingrained in the finance function in a corporation, investors know a cold your, listeners would, but you know, not all CEOs come up majoring in finance or through the finance ranks. They, may be great at marketing or product development or management leadership, or, there may be scientists, good at research and development and getting approvals and stuff like that.

[00:43:24] Lawrence Cunningham: And they just haven’t encountered this idea. Of capital allocation. Likewise with board members, they’re chosen for all sorts of skills. The skills I just mentioned. Maybe they’re good at marketing or branding or, leadership or, coaching. They may be good at helping others, fellow executives prosper.

[00:43:42] Lawrence Cunningham: They may be good at science, government regulations, or shareholder relations, or these days, you know, climate science or cyber security. And may not have given, had exposure to finance or capital allocation. I like Warren’s, you know, meeting, let’s have 12 people say what’s good at one price is dumb at another price.

[00:44:01] Lawrence Cunningham: I’d also like them to say, before I take the CEO job, I can state the ABCs of capital allocation. Before I join the board, I can state the ABCs of capital allocation, and then, you know, and it shouldn’t be terribly hard, and I’ll stop there, Kyle, but I think, you know, this question of the repurchase, it’s a relatively simple idea, and has been obscured, and the simplest idea is the one he’s making there.

[00:44:29] Lawrence Cunningham: It’s good if you, it’s a good investment if you can buy it low. Not a good investment if you buy it. 

[00:44:35] Kyle Grieve: So another problem that we run into, especially this happened a lot during the beginning of COVID was companies basically just borrowing money to buy back shares. So I’m just interested in knowing, you know, if you were to look, if you were, let’s say you were on a board of an imaginary company and the company proposed to do a buyback, what would you look at specifically on a balance sheet to make sure that it would make sense then and that you’re not putting undue risk just in the sake of doing buybacks?

[00:45:04] Lawrence Cunningham: I’d think about the buyback decision as analogous to the dividend decision. And, you know, they’re both deployments of capital back to the shareholders, slightly different route. You know, one is it’s optional to the holders, the other is everyone gets the payment. But I’d think about whether to do it, or the capacity to do it, in, for buybacks, the same way I would about dividends.

[00:45:29] Lawrence Cunningham: That is, what would happen after giving effect to this distribution, Do we have some, you know, and think about my capital allocation matrix. Do we have sufficient liquid resources to not only meet our obligations as they come due, but maintain our existing competitive position and sustain it as we wish to do, and do we have sufficient capital resources to seize acquisition opportunities?

[00:45:55] Lawrence Cunningham: that might come our way or we expect to come our way. So if we have sufficient capital to deploy for those two allocation avenues, then one of these allocation avenues, dividend or buybacks. would be prudent. And then I don’t really well understand the idea of, let’s, incur it, let’s borrow money to effectuate this.

[00:46:17] Lawrence Cunningham: I, think this is a question of pulling the capital of its own, not incurring debt in order to do it. One of the 

[00:46:27] Kyle Grieve: most powerful quotes from the book on intrinsic value was quote, the speed at which a business success is recognized furthermore is not that important as long as the company’s intrinsic value is increasing at a satisfactory rate.

[00:46:39] Kyle Grieve: In fact, delayed recognition can be an advantage. It may give us the chance to buy more of a good thing at a bargain price. So as anyone who follows Berkshire knows that he likes using book value to kind of track the intrinsic value of Berkshire Hathaway. But if we look at other companies such as Apple, which is obviously a business that Berkshire owns a lot, It doesn’t quite work out the same way.

[00:47:02] Kyle Grieve: you know, I just did some quick math on it. In the last decade, Apple’s share price is appreciated at about 17 percent compounded annually, but book value is actually decreased by a compound annual rate of 0. 01%. So it basically hasn’t moved. obviously in the case of Apple, looking at earnings per share or free cash per share is going to be a better proxy for tracking that intrinsic value of the business.

[00:47:24] Kyle Grieve: So my question for you is, how does Warren differentiate between which, quantitative metrics he’s going to use to track the intrinsic value of a company other than of course Berkshire 

[00:47:34] Lawrence Cunningham: Hathaway? I think he says often in, in the essays that the ultimate valuation is intrinsic value. That’s good. Which is, it’s easy to say.

[00:47:44] Lawrence Cunningham: It’s that. the discounted cash flows that the business or the investment will generate from now to the end of time. okay, that’s easy to say, but it’s very difficult to map out what those cash flows are, and then to determine the right discount rate. intrinsic value is the, thing, but it can’t be, it’s unlikely even two people would agree on any given investment that this is the intrinsic value.

[00:48:07] Lawrence Cunningham: And so all we have are indirect approximations or tools. that can help probe or test one’s estimate. And book value is one. You mentioned earnings per share, free cash flow per share, or others. We could, tinker with all those, make an adjusted book value, or adjusted earnings per share, or free cash flow defined in, in different ways, or just cash flow.

[00:48:33] Lawrence Cunningham: We could look at market price. And could be there at the moment or over, over a, period. and this Munger always talked about having the right tool for the job. He imagined that we all have a toolkit. We have a toolbox with lots of different tools in it. And that we need to pick the right one. And so these, are valuation tools and, what will work, what will be most useful and reliable in an estimation will vary with, the business.

[00:49:01] Lawrence Cunningham: He had a wonderful joke. He said, he must have said thousands of times in his life. He said to the man or to the person with a hammer. Every problem looks like a nail. And he said, that’s a really stupid way to solve a problem. So I think it would be incorrect to think, I will always use book value as my tracker or always use free cash flow, or even say something like, I’ll use book value for an old fashioned industrial company and free cash flow for, you know, a, modern tech company with no tangible assets, you know, might be directionally okay, but still you’re, not quite finding the best tool.

[00:49:37] Lawrence Cunningham: for the job. And I think what, you know, what, with Warren and Book Value, you know, even for Berkshire, I mean, he still, I think, uses it for lots of purposes, but a few years ago, when it was, he, and in the essays he talks about how, you know, look up and telling you, Like Kyle just did for decades that I’m going to, the first sentence in every annual report from going back to the seventies was our gain in book value or our loss was X.

[00:50:04] Lawrence Cunningham: And he stopped doing that. I’m not sure when, maybe five years ago. And he said, I just built book value. It’ll be useful for a lot of things, but it’s less useful than it used to be. Partially because our mix of owned businesses and equities has changed a lot. The accounting that goes into determining book value.

[00:50:22] Lawrence Cunningham: For those two different buckets are different. And also we’ve been doing lots of buybacks and that’s going to actually increase intrinsic value per share, but decrease the book value per share. So for all these reasons, he said, I’m not going to use that as the primary tracker anymore. It’s still useful for lots of purposes, but that tool, you know, so he had to adjust for what purpose that tool was still useful.

[00:50:44] Lawrence Cunningham: And you know, we can probably go through sort of company by company or, investment by investment and think, what is the best tool or how will Buffett determine the best tool for the job, but it is, I think that’s probably the key thing, right? That I don’t think he thinks there is some universal metric for every, context.

[00:51:04] Lawrence Cunningham: You know, and my own thinking on this is that it’s most useful to, to, approach the valuation estimate in a, few different ways and then draw some sort of a implicit consensus among them and then rely on things like, okay, I need to have a margin of safety and, or, okay, I, have some reasonable grounds to estimate that there’s growth, there’s high quality, that there’s good corporate governance, and therefore I can pay up.

[00:51:31] Lawrence Cunningham: So I think it is a, it’s an excellent question. And I think it takes that whole toolbox. 

[00:51:37] Kyle Grieve: I really loved how you dedicated a lot of pages in the book to retained earnings. So I think retained earnings are one of the most underutilized line items on a company’s balance sheet. And you know, that one number tells you just so much about what management has done with the money of shareholders and their ability to create value with that money.

[00:51:55] Kyle Grieve: So Buffett said many years ago that quote the five year test should be one during the period did our book value gain exceed the performance of the S&P and two did our stock consistently sell at a premium to book meaning that every dollar of retained earnings was always worth more than a dollar. If these tests are met, retaining earnings has made sense unquote.

[00:52:13] Kyle Grieve: So I’m just interested in knowing If you can discuss how Warren has used retained earnings and you know, he, doesn’t, he hasn’t talked about it in, in quite a few years. So I’m just interested in knowing, kind of like you just said, with book value, is he still using that kind of internally in his own mind, but not necessarily sharing it with shareholders?

[00:52:29] Lawrence Cunningham: It’s a great question. And that passage instantly appears. It’s on page 23 of the essays and it, comes from the owner’s manual, the Berkshire Hathaway owner’s manual that he published in around 1998. which contains 14, 15 owner related business principles. It’s very short, it’s sort of like a constitution, you know, for a country.

[00:52:54] Lawrence Cunningham: So here in the essays, it’s just six pages and it’s essentially the first six pages of the book. So that, when that happens, that’s number nine. And I would say, to take your last question first, that yes, you know, he still believes this approach or this perspective is a way to test the value of an incision to retain a dollar, to retain each dollar.

[00:53:16] Lawrence Cunningham: I think my answer would be yes, because I think if he changed it, he’d be very explicit to change it in here. in fact, he also says in that same passage that, hey, I’ve been saying this for decades, but I realized in 2009, it has to be, as you just said, a rolling five year average. It can’t be static because you might, miss it, but you should be looking at this over, five years.

[00:53:41] Lawrence Cunningham: What are you getting at? You know, it’s, a real fun, it’s a fundamental thing, like you say, okay. Retained earnings are an overlooked feature business because it’s inherent compounding, right? It’s the manager is keeping that dollar and it’s redeployed. It’s not being paid out. is being redeployed in that business.

[00:53:57] Lawrence Cunningham: And so you’re going to automatically, you should automatically get some compounding out of that. And so what Warren is saying is the only way I’m going to keep, it’s only rap, it’s only fair for me to keep that dollar is if I can do more with it than you can. And that’s what he’s trying to get out. And then, you know, how do you figure that out?

[00:54:17] Lawrence Cunningham: But that’s the intuition is we will, and, look, he’s also defending Berkshire’s historical policy of not paying dividends. It has done a lot of repurchases and we’ve discussed that a little bit, but it’s never paid, it paid one dividend once in 50 plus years ago. So, it’s got this policy of retaining its earnings.

[00:54:38] Lawrence Cunningham: And so in this passage, you know, he’s trying in this constitution, he’s trying to say, you know, and I’m only going to do that little only going to keep doing that is if, the company can do better with the dollar than you can. And then he tries to give this two-part test that you explained that, you know, compares the, you know, and he’s very, explicit that he’s, saying when he measures what I can do with it, versus what you can do with it, it’s whether you shareholders get at least a dollar of market value.

[00:55:06] Lawrence Cunningham: Right, and so he compares our book value to the market premium to our book value, and he compares it, our change in book value to the return on the S&P. So he’s trying to have a market reference for his own performance. And to me, going back to your very first question, the candor here, right on the opening pages is, here’s our policy and here’s our breakpoint.

[00:55:33] Lawrence Cunningham: And what’s wonderful about that. what’s special about that is not everyone explains that, you know, if you open lots of CEO letters and you’re, not going to have a test at all. I mean, the better ones will at least say, look, there are four different things we could do with the capital.

[00:55:48] Lawrence Cunningham: And one of them is dividends or buy back the stock. And here’s how we think you, you get some very good companies who do that, but tons of them do not. And even among those who do that, the break point test that he’s giving is far more informative.

[00:56:08] Kyle Grieve: One of my favorite points of emphasis that Buffett talks about when assessing a manager’s performance is to look at their achievements, not necessarily in terms of, you know, total shareholder return, but in terms of return on equity. When you pair a business that doesn’t require much leverage with a manager of a business who has a track record of having a high and sustainable ROE, I mean, that’s a pretty clear indication that they’re skilled at capital allocation, which you obviously discussed a lot this episode.

[00:56:32] Kyle Grieve: So there are businesses that do exist that incentivize managers on capital efficiency metrics, but it seems pretty rare. I’m interested in knowing, you know, why do you think businesses utilize some of these weaker incentives such as revenue growth or appreciation and total shareholder value for incentives, which can often misalign, you know, the managers with shareholders?

[00:56:53] Lawrence Cunningham: I mean, you might have just hit it that, you know, it takes an owner oriented person or a shareholder oriented person to measure themselves based on the return to the holders. And so I’d like to see more of it. I agree with you. There are wonderful companies that do pay based on return on equity or return on investment capital or, other metrics that are shareholder level, defied.

[00:57:16] Lawrence Cunningham: Whereas growth in revenue, I mean, there are shrinkers out there, but many companies will tend to grow without the manager lifting a finger. And some growth will actually not result in good margins and good returns for the holder. So I think, you know, you should be extremely careful about incentivizing growth to grow safe.

[00:57:37] Lawrence Cunningham: A combination of a bonus of the growth and a bonus for return on equity might be optimal, some, mix, it depends on the business, it depends on its market and its propensity to grow or the desirability of shrinking, so some mix, but as, for why, I think it’s, you know, it’s an insufficient focus on, the shareholder.

[00:58:00] Lawrence Cunningham: You know, along the lines we’ve been talking about, that managers and directors, you know, haven’t all come up through the lens of the show, and I think that’s gotten even more out of whack in the past five or ten years, where lots of other interests are asserting a priority. And, I am worried that this problem will get worse rather than better, but I do applaud those who focus on, as you do on, return on, equity and like to see more of that.

[00:58:28] Kyle Grieve: Lawrence, I want to say thank you so much for coming back onto the show today. I want to hand it off to you, let the audience know, you know, where can they learn more about you, your book. And I also, please feel free to share any public talks that maybe the audience can sign up for, Berkshire, because there’s going to be a lot of members, including myself, who are going to be attending that event.

[00:58:45] Lawrence Cunningham: Oh, yeah. thanks, Kyle. I think the best way to get in touch with me is on LinkedIn. I’m present there. I post prolifically or every day, but I put ideas up there and have conversations and followers. And so that’s probably the easiest way. And there are links there to some of my stuff. For the book, obviously here’s a picture of it.

[00:59:06] Lawrence Cunningham: I’ve got my dog here too. so you want a dog here and for that, you can buy it anywhere and I don’t need to single out a particular retailer, but Amazon has this book and has other books, including your shareholder that Kyle mentioned. So feel free to connect with me on LinkedIn. Visit the books. I, was on a show with another interviewer recently.

[00:59:29] Lawrence Cunningham: He said, Larry, it looks like you’ve written, what, five books? And I said, I’ve actually, I’ve written 20, but five of them are good. And, so this is the best one. and it’s cause it’s mostly not me. It’s mostly Warren and I just rearrange it. and visit Amazon to pick it up. I will be at the Berkshire Hathaway annual meeting in early May 2024.

[00:59:52] Lawrence Cunningham: I’ve been to most of them for past, since 1996 or seven. When I first went, it’s gotten bigger every year, more interesting. First one was, I think when I first went, 6, 000 people in a basketball stadium. Last year, I mean, 35 ish thousand in a rock arena, and all the related activities have also blossomed.

[01:00:15] Lawrence Cunningham: So back then, there was a, I was the first person to sell a book at the Berkshire Hathaway Annual Meeting. it was the essays. It was Warren’s idea. He invited me to come with my nephew. And he said, you should bring some books. You can set them up outside the jewelry store where shareholders gather and sell them.

[01:00:33] Lawrence Cunningham: I said, I did. Now, lots of things are sold at the Berkshire Hathaway AO meeting from cowboy boots to Coca-Cola’s and, lots of books. And so I will be at the, a good place to say hi to me. If you’d I will be at the bookworm. That’s the bookstore that has a concession inside the annual meeting.

[01:00:54] Lawrence Cunningham: It’ll be open Friday and Saturday, and I’ll be there almost all day, Saturday, in and out of the meeting. So please, say hi. I’d be happy to. He sells books at a discounted price. I’ll be there, you know, signing copies of this one. For those who are coming, if you got another minute, for those who are coming a long distance out of town and get into Omaha on Thursday, there should be a lot of Australian guests and from the East.

[01:01:20] Lawrence Cunningham: There is a wonderful annual event called the Berkshire Summit, that’s hosted by Bob Miles, a friend of mine, Berkshire author, great guy, and he’s the empresario of this gathering, where there’s a different theme each year. This year the theme is going to be Charlie Munger, who passed away in November, so a tribute to his life, his contributions to Berkshire, so I’ll be speaking at that on Thursday morning, get in touch with Bob.

[01:01:47] Lawrence Cunningham: I’m at a lot of other events over the weekend, so I’ll be around, so feel free to say hi if you’ve been with Kyle and are inclined to say hi, I’d be happy to speak with you. 

[01:01:59] Kyle Grieve: Okay, folks, that’s it for today’s episode. I hope you enjoyed the show, and I’ll see you back here very soon. 

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