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Berkshire Hathaway Vice Chairman Charlie Munger said that Berkshire stock is a 'pretty damn good bet' and that it's unlikely the company will be broken up for 'a long, long time.'

Speaking at the annual meeting of the Daily Journal (ticker: DJCO), Munger, the company's chairman, said that 'With all factors considered and with Berkshire buying in its shares when they are reasonably priced, Berkshire is a pretty damn good bet for shareholders to hold for the long term in the future'it works pretty damn well.'

Munger also said: 'Berkshire won't be as good as it was in the past, but will be OK considering how poorly everything else is going to do.' The Daily Journal 's annual meeting is being live-streamed on CNBC on Wednesday afternoon.

Asked by CNBC anchor Becky Quick why other investments will fare poorly, Munger said: 'Because valuations are starting higher and government is so hostile to business.'

https://www.marketwatch.com/articles/berkshires-mu...

Charlie was fantastic today, I'm deeply in awe. It's a must watch in my view.

Speaking of Charlie, is this quote reported on Twitter really true?

"Charlie Munger: 'I regard Alibaba as one of the worst mistakes I've ever made.'"
https://twitter.com/trengriffin/status/16259334241...

Not that I necessarily disagree with the notion, but the quote seems to be a bit implausible at first blush.
Mr Munger usually has pretty firm conviction about his decisions.

(note also who replied to the tweet)


Yet again on the notion of his staying in character, National Post gives this quote:
"Munger says he used 'a little bit of leverage' for recent investment in alibaba; says most people should avoid leverage but not everybody..."

Yet another snipped also from the Post:
'I think people who oppose my position are idiots,'
Now, that one has the ring of truth to it.
Good on him--I too am never at a loss for an opinion.

Jim

"Charlie Munger: 'I regard Alibaba as one of the worst mistakes I've ever made.'"
https://twitter.com/trengriffin/status/16259334241...

Yes, he said that and words to that effect in a variety of ways.

He also, said when asked about insurance, words to the the effect that, I self-insure. Any smart person with means would do that. When Becky asked if owning multiple insurance companies that was his response...to which he said he's not going to tell it differently just because he's in the insurance business and it would be good for Berkshire.

Charlie was the reason I made the decision to pull the trigger to buy Berkshire in 1995. He'd always tell the truth.

CNN quote:

Munger on China and crypto
Munger was also asked about some of Daily Journal's investments in China, particularly in light of the suspected Chinese spy balloon controversy and the country's crackdown on many of its homegrown companies.

Munger said he remains optimistic about China's economy, but conceded that Daily Journal's investment in Alibaba was 'one of the worst mistakes I ever made.'

'I never stopped to think [Alibaba] was still a retailer. It's going to be a competitive business,' he said

https://edition.cnn.com/2023/02/15/investing/charl...

Speaking of Charlie, is this quote reported on Twitter really true?

"Charlie Munger: 'I regard Alibaba as one of the worst mistakes I've ever made.'"
https://twitter.com/trengriffin/status/16259334241...

Yes the quote is correct. He continued: 'Thinking about Alibaba I got charmed by their position on the chinese internet. I didn't start to realize that they are still a god damn retailer. It's gotta be a competitive business. It's not gonna be a cakewalk for anybody.'

Just started watching it. Why is he munching on cookies and talking with his mouth full?! Great image.

<<He continued: 'Thinking about Alibaba I got charmed by their position on the chinese internet. I didn't start to realize that they are still a god damn retailer. It's gotta be a competitive business. It's not gonna be a cakewalk for anybody.'>>

I kind of agree that retailer is not a good business in general. However, BRK also invested in Amazon, and Munger himself is a big fan of Costco. So Ain't there some exceptions?

Charlie Munger also has very high praise for Greg Abel. It begins at about 2:11 - 2 hr 11 min mark. There is more praise for Greg Abel at the very end. Highly recommend listening to Charlie's remarks about Greg. It's a WOW.

https://www.youtube.com/watch?v=9VVPO3KWj3A

Lethean

Is there a transcript available of the meeting?

It takes much less time to read the relevant parts and skip past the time waster bits the watching the whole video.

Cnbc is featuring snippets of the meeting all morning. Munger made it very clear he's very bullish byd. He said, byd is raising prices in China, Tesla is cutting prices to compete. He says, Byd is the best thing he ever did for brk and it's way ahead of Tesla in China. Byd has a huge footprint to expand capacity in China. Apparently Buffett is the seller,why? But, let's see if he's asked, why is brk aggressively selling byd? If that fact doesn't come up, that would be a huge disservice to retail investors.

Barron's recap, '' Berkshire Hathaway Vice Chairman and former Daily Journal chairman Charlie Munger said at the publishing and technology company's annual meeting that Berkshire stock is a 'pretty damn good bet, and he wouldn't count on a break up of Warren Buffett's conglomerate soon.

Munger said: 'I don't think it's at all likely that it will be broken up for a long, long time.' Buffett opposed breaking up Berkshire. Barron's recently wrote that shareholders could benefit because the sum of Berkshire's parts could be worth more than the stock price.
Munger, a longtime Costco Wholesale director, praised Berkshire's competitive advantage but acknowledged its high valuation. The stock trades for 40 times trailing earnings in its fiscal year that ended in August 2022.
A longtime cryptocurrency critic, Munger said China's President Xi Jinping was right to ban digital currencies. As for the U.S., 'so many people believe in this crap, and the government allows it.' He called those advocating for cryptocurrencies 'idiots.'
On longevity, Munger, who is 99, said he doesn't exercise 'on purpose,' saying the only time he did was when he was forced to do so in the Army. 'This is the key to longevity,' Munger said, munching on See's Candies peanut brittle. The company is owned by Berkshire.
Munger also said artificial intelligence is 'not going to cure cancer,' and he called California unfriendly to business because of high state and local income taxes. He opposes President Joe Biden's proposal to raise the tax on stock buybacks to 4% from the current 1%, adding that he's a Republican.''

"He says, Byd is the best thing he ever did for brk and it's way ahead of Tesla in China. Byd has a huge footprint to expand capacity in China. Apparently Buffett is the seller,why?"

Becky asked Charlie why Berkshire was selling certain stocks (banks, BYD) while he was not. He replied that the main reason was that California has onerous capital gains taxes. He then went on a rant about how California was trying to drive out businesses and billionaires...and was largely succeeding.

Thanks, but I'm not sure that makes it clear? Would munger be selling byd if he lived in a cap gains , tax free state?

<<He continued: 'Thinking about Alibaba I got charmed by their position on the chinese internet. I didn't start to realize that they are still a god damn retailer. It's gotta be a competitive business. It's not gonna be a cakewalk for anybody.'>>
...
I kind of agree that retailer is not a good business in general. However, BRK also invested in Amazon, and Munger himself is a big fan of Costco. So Ain't there some exceptions?

An unkind person might suggest that his stated concerns about the limitations of retail as an investment sector might be a bit of a deflection from the elephantine issue in the room, being jurisdiction risk.
His BABA position (and its true value) isn't risky or underwater because Alibaba's retail operation is succumbing to cut-throat competition, it's because of political issues.
But he can't say that, for a variety of potential reasons.

A kinder person would say nobody hits every ball, and everybody has a few losers.
Not always one's biggest swing of all time, but still.

Jim

Thanks, but I'm not sure that makes it clear? Would munger be selling byd if he lived in a cap gains , tax free state?

Munger pointed out that he already sold some of DJCO's BYD shares for "prices higher than the current price," which was well covered at the time by expert DJCO portfolio sleuth wabuffo (primarily on twitter now but many here will remember Bill from the old boards). (his macro / money supply analyses are well worth keeping up with)

So even with the California state tax layered on, Charlie was still a seller at that price.

Buffett or Abel are selling some of the BYD in Berkshire Hathaway Energy on valuation. Maybe they will sell it all, maybe they are only reducing the size of the position. Maybe they need the money to repurchase Walter Scott family estate shares, who knows.

Charlie was quick to point out that it was over 50x earnings and it was not a cheap stock.

"Would munger be selling byd if he lived in a cap gains , tax free state?"

Probably not. Remember that Charlie has more faith in the rule of law in China than Warren probably does. Charlie said that BYD had gotten pricey. It didn't make sense to sell because of high state taxes. Perhaps Warren looked at rising tensions between US and CCP and the high valuation and decided to lighten up (BYD). Buffett dumped TSM for a reason.

Got round to listening to the whole thing. You also need context given the conversation and questions jump around quite a bit.

I took the following...

-China is good value still, bang for your buck. No change here.
-Political risk too hyped. China will not be invading Taiwan anytime soon.
-President Xi has done well in the past and will continue to do so. Complimentary.
-Outlook for the US poor due to valuations, BRK will do OK relatively speaking and won't be broken up. Very complimentary of Greg Abel.

BABA specifically, he made a mistake buying on the projections envisaged which have eroded and at the end of the day it's a retailer and competition and margin pressure may be a bigger issue than envisaged.

Own emphasis...

It is and it isn't. I dont see it as like Amazon or Costco at all. It's an ecommerce platform and business services company that helps the population with B2C and C2C transactions. What I like about Alibaba is the profitability without the infrastructure capex, compared to say Amazon breaking even on 500bn of sales. Alibaba takes trading commissions. JD.com is more like the Chinese Amazon.

Alibaba is also a spawner with many off shoot businesses like Alipay, cloud etc etc.

A great listen all round and I've learnt a great deal.

Happy holding BABA, Tencent and Prosus still and would rather hold BABA over Amazon or Costco at 40 PE

Charlie Munger also has very high praise for Greg Abel

This was very reassuring, as 1) I had found a couple of Greg's replies at the 2022 Berkshire AM to be disappointingly vague corporate-speak, leaving me with some new misgivings and 2) Charlie not only speaks his mind, but he arguably has had less high-profile character misjudgments over the years than has Warren.

So finding that Charlie has sincere, high praise for Greg makes me feel better about the post-WEB/CTM era.

-- sutton

(added to my quotation file yesterday:
"'We need more honor, not less'
'If you're just not crazy, you have an advantage over 95% of the people'
' Charlie Munger 15 Feb 23 Daily Journal Annual Meeting

sutton...this is just an opinion, my Norfolk Southern stock that I hold is an inherited thing all the way back through my grandfather, that's 82 plus years.

But anyway Norfolk is dealing with really bad train wreck and CSX just had one too. Precision railroading? I think it went too far. Significant negligence? Yes, yes, and more yes.

As far as operating ratios I know many here were really disappointed that Greg hasn't addressed that. Let's just say I'm not one of those complaining or concerned.

I think over time these cut employees, cut cap ex, cut lines, cut everything you can and borrow to buyback stock at any price- the higher the more? I think Burlington has a superior model of operations by a long shot.

And over time I think it will show up in the success of Berkshire.

I remember the concern expressed about Greg Abel after the Berkshire annual meeting last year. I was concerned, too. Therefore, it was really great to hear Charlie praise Greg at the DJCO annual meeting yesterday.

These are my notes - Charlie's comments about Greg:

Becky said that the questioner asked for Charlie to share some important things about Greg Abel and share examples of his being a learning machine.

Charlie answered that:

Greg is sensational at being a business leader. Both as a thinker and a doer.
He is also sensationally good at smoothly getting things done through other people.
He's a very remarkable human being and Berkshire is very lucky to have him.

He's also a tremendous learning machine. You could argue that he's as good as Warren in learning all kinds of things. The interesting thing about Greg is that there are some things he is better at than Warren is. And Warren knows that and he just keeps dumping things on Greg. Everything that Greg can do better and that's a lot.

And so the system at Berkshire is working ptetty damnn well.
We're very lucky to have a 92 year old sharp as Warren ... and very lucky to have a chief executive like Greg. Greg is very remarkable.

Greg is trusted by the utility regulators and rightly so. He is trying to run all those ultilities as though he's the regulator. Now how many people think that way? But it's a smart way to think. Why not please your ... why not have it done the way you'd want it done if you were on the other side of the transation. How can you fail if you treat other people the way you'd like to be treated yourself? It's the Golden Rule. Of course it works.

Question: Who are some of the people you looked up to and most admired? What about them made them so special?

Answer: Jim Sinegal at Costco ....
Greg Abel ....
The guy who ran TTI ....

You can listen to the detail of those named above at the yahoo link provided. Comments on those 3 men are very near the end of the interview.

and he called California unfriendly to business because of high state and local income taxes.

Far be it from me to point something out to Charlie, but California has the 5th fastest growing GDP in the country, and the 5th highest per-capita GDP in the US, a remarkable number given the tide of low-wage/low income people arriving across their southern border.

https://www.statista.com/statistics/248063/per-cap...

https://worldpopulationreview.com/state-rankings/g...

In 'non-per capita' numbers it is by far the largest economy in the country, half again larger than either Texas or New York, which come in at #2 and #3 respectively.

https://en.wikipedia.org/wiki/List_of_U.S._states_...

As Lincoln said when people complained about General Ulysses Grant's love of the drink, 'I'm going to find out what he drinks and send a case of it to all my generals.'

"Far be it from me to point something out to Charlie, but California has the 5th fastest growing GDP in the country, and the 5th highest per-capita GDP in the US, a remarkable number given the tide of low-wage/low income people arriving across their southern border."

Et tu Gavin?

While low wage and low income people are streaming in from the south, higher-wage/higher income people are streaming out to the east(sounds like a formula for long term success):

"Demand for equipment out of California, Illinois and New York remained strong in 2022, as more people opted to leave areas of the West Coast, Northeast and Midwest. California and Illinois ranked 50th and 49th, respectively, on the U-Haul Growth Index for the third consecutive year, meaning those states saw the greatest net losses of one-way U-Haul trucks.

https://www.uhaul.com/Articles/About/U-Haul-Growth...

"California has been a net exporter of businesses for at least three decades. A Rose Institute analysis of data from the National Establishment Time Series (NETS), a widely used private sector source of U.S. business data, shows that 5,581 businesses moved to California and 9,767 left from 1990 to 1999. Similarly, from 2000 to 2009, 16,672 businesses moved here and 24,016 left. From 2010 to 2019, 23,057 businesses moved to California and 31,490 left. From 1990 to 2019, 44% more businesses left California than moved here."

http://s10294.pcdn.co/wp-content/uploads/2022/12/K...

"California lost a total of 352 headquarters in the period January 1, 2018, through December 31, 2021, and the departures are accelerating as more relocation plans move to implementation. The breakdown by year and monthly averages, shown in Table 1 indicates that the 2021 total of 153 ' which average 12.8 per month ' is more than double the 2020 full-year loss and significantly above the 2018 and 2019 monthly averages. And as we describe in Section 11, our count is almost certainly biased downwards significantly, because relatively small businesses ' those that do not attract media coverage or that are small enough to avoid filing compliance reports ' are extremely difficult to detect.

https://www.hoover.org/sites/default/files/researc...

Maybe, just maybe, Charlie knows whereof he speaks....

From today's Whitney Tilson Daily, a link to the transcript from Charlies Daily Journal Corp Annual Shareholders Meeting 2023.



For me , this was the most memorable reply from Charlie to the question,

" What are some of the most important things that we need to know about Greg Abel? "

Charlie Munger

"Yeah, well, Greg is just sensational at being a business leader, both as a thinker and as a doer. And he's also sensationally good at smoothly getting things done through other people. So he's a very remarkable human being. And Berkshire is very lucky to have him. And, and he's also always has a tremendous learning machine, you can argue that he's just as good as Warren is learning all kinds of things. And one of the interesting things about Greg is there's some things he's better at than Warren is, and more knows that, and he just keeps dumping on to Greg, everything that Greg can do better. And it's a lot. And, and so the system at Berkshire is working right now. Well, we're very lucky to have a 92 year old is as good shape as Warren anyway. And we're very lucky to have us, a chief executive like, Greg, Greg is very remarkable. Greg is trusted by insurance regulated by utility regulators, and rightly so he is trying to run all those utilities as if he were the regulator. Now, many people think that way. But it's such a smart way to think."

https://steadycompounding.com/investing/djco23/

ciao

"Et tu Gavin?"

LOL

Greg is trusted by insurance regulated by utility regulators, and rightly so he is trying to run all those utilities as if he were the regulator. Now, many people think that way. But it's such a smart way to think."

My view is this is why BNSF is not doing precision railroad or whatever it is called. Berkshire is putting a higher premium on customer service than trying to squeeze out the last pennies of profit.

I thought this before Charlie's comment about Greg - but it was good to see him make the comment.

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