Other[Music][Music][Music][Music] Welcome everybody. Um today we have the privilege of chatting with Monish Priy who's an absolute legend in the value investing community as you all know. Um we have a huge turnout for this event. Um we're also super thankful to AlphaSense for sponsoring this and and just helping us um you know put this all together. Uh Monish, great to see you again. Um I think this is the third or fourth time we've we've done one of these with you. Um although the second time that we've we've done it from your your new library which I'm always excited to see in the background. Um I wanted to start off with um something that I know is near and dear to your heart. Um and that is Berkhire. um uh you know Greg Ael is taking over I think January 1st and I I think in the past you've said that you almost view Birkshere stock as
Questionerthat you almost view Birkshere stock as a almost a placeholder for periods of a almost a placeholder for periods of a almost a placeholder for periods of time when you don't have um a big you time when you don't have um a big you time when you don't have um a big you know investment idea or high conviction know investment idea or high conviction know investment idea or high conviction idea to put fresh capital into. And I'm idea to put fresh capital into. And I'm idea to put fresh capital into. And I'm wondering if you still feel that way and wondering if you still feel that way and wondering if you still feel that way and if if um you know kind of the the the if if um you know kind of the the the if if um you know kind of the the the the passing of the torch to Greg at all the passing of the torch to Greg at all the passing of the torch to Greg at all changes your your thoughts on Berkshire changes your your thoughts on Berkshire changes your your thoughts on Berkshire as um you know as an alternative to the as um you know as an alternative to the as um you know as an alternative to the S&P 500 um you know or as a placeholder S&P 500 um you know or as a placeholder S&P 500 um you know or as a placeholder I guess for those of us who are more I guess for those of us who are more I guess for those of us who are more involved in active investing.
Greg AbelYeah. Well Diva it's always a pleasure great to be here for our annual banter. It's very here for our annual banter. It's very here for our annual banter. It's very wonderful wonderful wonderful and yeah, you know, regarding Greg and and yeah, you know, regarding Greg and and yeah, you know, regarding Greg and Berkhire, so the baton actually was Berkhire, so the baton actually was Berkhire, so the baton actually was passed a few years ago. So Greg actually passed a few years ago. So Greg actually passed a few years ago. So Greg actually from a practical sense has been running from a practical sense has been running from a practical sense has been running Berkhire for quite some time. So Berkhire for quite some time. So Berkhire for quite some time. So Warren had passed over all of the wholly Warren had passed over all of the wholly Warren had passed over all of the wholly owned companies to be under Greg a few
Questionerowned companies to be under Greg a few years back. And that's, you know, the thing is that's where most of Berkshire is. And uh there a few things that Warren is still handling you know like public portfolio and so on and those are going to get passed on in the next 6 months or so. So from a practical point of view we've already seen Berkshire running under Greg's leadership for some time and we haven't noticed any difference. You know the baton got passed and u we didn't even notice anything. And I think that as we look at the situation today you know Burkshire in many ways is like an index. It's like investing in an index fund. But I think today it's actually a better index to invest in than the S&P. You know, in the past, like I said, like you mentioned, I've thought of it as a placeholder, but actually it's a better vehicle. I mean,
Questioneractually it's a better vehicle. I mean, now we have passive investing is more than half of all investing in the US. And one of the negatives with passive investing, we still don't see the extreme impacts of that is that you get this lemming behavior where a few stocks, you know, get money allocated to them regardless of fundamentals because they're in the index. And so that's why we see some of this MAG 7 stuff and all of that going on. But yeah, I mean, I think given Burkshire's large cash position, modest valuation, relatively young leader, it's a good place to be.
QuestionerIs his ethos the same? I mean, I I guess I mean, there are different people. I I hear your point that he's been there for a while and you haven't noticed a difference, but do you uh I mean, Buffett himself is a unicorn and so obviously tough to replicate him exactly. Um, so as far as kind of making
Questionerexactly. Um, so as far as kind of making new big bets, do do you feel like his ethos is is the same or if it's different, how is it different?
QuestionerWell, they're different leaders. We will never have another Warren Buffett. I mean, that's one and done. Okay. Just like we're never going to have another Jesus. Okay. So, so Warren Mer and all of those I mean that's you know that's the leaders of the church. You know that's just not going to change. You know Charlie used to say that Greg has some important qualities that are superior to Warren and he never really expanded on that. You know he never really kind of went on to explain what those qualities were. But one of the big differences between Greg and Warren is Warren has always been very handsoff on the subsidiaries. You know, he's a delegation to the point of abdication, right? So these subsidies are left on
Questionerright? So these subsidies are left on their own. Greg is a lot more hands-on. So he is interested in some type of optimization and some sort of oversight into making sure that these very large wonderful businesses in Berkshire are getting to their potential. So Warren for example never pursued synergies between the different subsidiaries. Greg actively pursues that. Greg actively has the different CEOs interact and meet with each other and all of that. So there is a lot more rolling up your shirt sleeves and you know diving into the individual businesses and so I think that we may see somewhat better performance coming out of the existing subsidiaries. I think where Warren stands almost unrivaled is basically in the deployment of capital right so he is just exceptional though he did make mistakes you know not being aggressive enough in
Warrenyou know not being aggressive enough in 2008 and 2020 and so on so forth. Greg I think may do better in those periods. And the one final area where Greg has a big advantage is the US grid and the US energy footprint needs a huge step function and investment because you know we got all the AI and data centers and all of that happening and it's a mindboggling number in terms of how much needs to go in and Burkshire would be kind of the perfect company to leverage that because they have a very large subsidiary in energy. The negative is that there's been issues recently where a lot of liabilities have been passed to utility operators through the court system. You know, the California fires and so on, bankrupting utilities and such. And so Berkshire actually was actually blindsided by that. And so they're going to look for a lot more legal protection on that front. But I
Questionerlegal protection on that front. But I think that's a big opportunity for them.
QuestionerThat's really interesting. I mean, this almost sounds like a little bit of a Tim Cook vers Steve Jobs question. And but if it ends up being that Greg is more of a Tim Cook kind of a great operator, that's that's obviously not a bad outcome for for B.
WarrenWell, he's also a very good capital allocator. I mean, one of the things is Tim Cook is not an innovator. Tim Cook is not Steve Jobs. Okay? And if we look at Apple since Steve Jobs, effectively there's no innovation because Apple is a very unusual company. Innovation was always concentrated in one person. It was just driven down. It's very different from a Google or Meta or Microsoft and so on. It was very singularly concentrated in the case of Apple. And that's why Apple's always been a company with very
QuestionerApple's always been a company with very few products and very exceptional products because, you know, it was one guy driving it basically. I think in the case of Berkshire, Greg Abel is definitely more of an operator than Warren is, but he's an exceptional capital allocator as well. Not no one will be as good as Warren Buffett, but Greg is extremely smart about the capital allocation and making quick decisions and all of that. So, uh you mentioned Mag 7. I have to ask you um of the seven names, you know, you have on one extreme Tesla, which has, you know, you could argue declining sales growth on the car front, lots of competition, but lots of promise with robo taxis, which is this like somewhat crazy future that you know that that you know maybe is a few months away, maybe is a few years away, who knows? On the other hand, you've got Google, which uh you
Questionerhand, you've got Google, which uh you know is an incredible franchise, incredible brand. Um historically thought of as a monopoly, but now people are calling that into question and you're seeing that in the stock. Have you I know like you know Mag 7 isn't your thing per se, but have you looked at any of the names? And I spot like Google because it's, you know, trades at the lowest multiple, arguably a submarket multiple, um, you know, uh, trades cheap relative to the S&P and to the group. Um, just curious if you've looked at it at all given kind of the last, you know, five or six months.
WarrenOh yeah. Well, the MAX 7 are such a central part of the economy and they are unusual in the sense that they are very large and still growing at ridiculous rates. I mean, we normally don't see, you know, huge companies growing at spectacular rates, but they're still pulling rabbits
Warrenrates, but they're still pulling rabbits out of the hat. You know, Mer used to say about Elon, never underestimate a man who overestimates himself. Um, it actually took me and I still don't fully understand that sentence, but that sentence actually comes from Charlie's experience with these people who are, you know, outliers, extreme outliers. So, I would never count Tesla out, you know, just because I think when you get someone like Elon all in on something, it's like, you know, there are no boundaries. So, it's really And I I certainly don't count them out. I just um figured given your tilt in terms of Well, what I'm saying is that I mean from my point of view, it's difficult to invest in something like Tesla, especially difficult to invest in something like Tesla in anything resembling a 10% or bigger bet in my portfolio. It would
Questionerbigger bet in my portfolio. It would kind of veer towards a speculator since simply because Elon gets distracted. You know, he goes and runs the government for a while and he's got so many things going on. But probably a mistake on my part. I think that not being long Elon is probably a mistake but you know we've made a lot of mistakes like that. I would say this that company like Google faces real challenges in its core business. Now they've got you know I if you look at something like the YouTube franchise I mean that's just so spectacularly mind-blowing that you know it's it's a lot it's a rock not going anywhere. And of course, Android also is great, but I'm just saying that search search is threatened in a way that it wasn't threatened a few years ago. And Google has woken up to this. They're fully focused on it. They'll probably come out okay, but it's not the cinch
Todd Combscome out okay, but it's not the cinch that it was a few years back. So, to me, the Google multiple being low isn't really a strong signal that one should go out and buy the stock. The one that I really think is, you know, as close to bulletproof as you can get is Microsoft. I think because Microsoft is so embedded in the enterprise and because enterprises are like aircraft carriers, they cannot, you know, turn on a dime. They can't suddenly say, "Oh, I'm going to use someone else for search tomorrow." You know, we can make a decision 5 minutes from now to never use Google search and not even think about it again. But you can't do that with a lot of Microsoft products. Those are just so deeply entrenched and embedded and Satya is such an exceptional leader. And so to me, of course, Microsoft the multiple is higher. And it's interesting. I think it
Questionerhigher. And it's interesting. I think it was like two years ago or yeah I think was like two years ago or yeah I think was like two years ago or yeah I think about two years ago where I was in Omaha about two years ago where I was in Omaha about two years ago where I was in Omaha and Friday night usually Munger used to and Friday night usually Munger used to and Friday night usually Munger used to host a dinner for you know friends host a dinner for you know friends host a dinner for you know friends family and some Burkshire managers about family and some Burkshire managers about family and some Burkshire managers about couple hundred people and Gates would couple hundred people and Gates would couple hundred people and Gates would always show up for that and two years always show up for that and two years always show up for that and two years back or 3 years back Mer's back or 3 years back Mer's back or 3 years back Mer's daughter-in-law pulled me aside and said daughter-in-law pulled me aside and said daughter-in-law pulled me aside and said Monish I don't want you to freak out but Monish I don't want you to freak out but Monish I don't want you to freak out but you're going to be sitting next to Bill you're going to be sitting next to Bill you're going to be sitting next to Bill and she said because she did all the and she said because she did all the and she said because she did all the seating for the for the dinner she said seating for the for the dinner she said seating for the for the dinner she said the reason I seated you're next to Bill the reason I seated you're next to Bill the reason I seated you're next to Bill is because I know you won't ask him is because I know you won't ask him is because I know you won't ask him anything. You won't ask anything of him. anything. You won't ask anything of him. anything. You won't ask anything of him. I said, "Oh, that's the furthest thing I said, "Oh, that's the furthest thing I said, "Oh, that's the furthest thing from my mind." He said, "Exactly. I know from my mind." He said, "Exactly. I know from my mind." He said, "Exactly. I know that." So, I get seated next to Bill for that." So, I get seated next to Bill for that." So, I get seated next to Bill for like 3 hours. Okay. And we're having a like 3 hours. Okay. And we're having a like 3 hours. Okay. And we're having a great conversation. So, I played a game
Questionergreat conversation. So, I played a game with him. I said, "Bill, I'm going to mention stocks and you tell me whether you're going to go long or short or indifferent." And he said, "Yeah, sure." So when I mentioned when I mentioned Apple, his reaction was that and you know this is a guy who used to be in Burkshire's board and you know he's with Warren and all of that. So he said, well, you know, that's a very weird company. And what he was basically saying is it's all so heavily concentrated in these few products, right? I mean, if you really think about it, I mean, what Open AI is trying to do with Johnny IV coming in, right? Is take the brick out of our hands, right? So if you take the brick out of our hands, where is Apple? And I mean that's where they what they're trying to push towards is you can't make a better brick, you just need to take the brick
Otherbrick, you just need to take the brick out, right? And it's weird to go around out, right? And it's weird to go around out, right? And it's weird to go around with a brick actually, even though it's a nice slim brick, but it's weird to go around. So it somehow needs to get integrated into us. Well, that's why spending billions on glasses and other wearable tech. Uh so if we ever get down that path where the brick gets threatened threatened threatened then you have a problem right Apple has then you have a problem right Apple has then you have a problem right Apple has a problem then because they don't have a problem then because they don't have a problem then because they don't have Steve leading them to take them to the next paradigm. I have a concern whether next paradigm. I have a concern whether next paradigm. I have a concern whether Apple can get to the next paradigm. So that was Bill's case he said well it's a that was Bill's case he said well it's a that was Bill's case he said well it's a weird company right I mean that's the way he took put it to me and he wasn't way he took put it to me and he wasn't way he took put it to me and he wasn't bullish on you know putting a big bet on bullish on you know putting a big bet on bullish on you know putting a big bet on Apple while his best buddy is all in on Apple while his best buddy is all in on Apple while his best buddy is all in on Apple of course he's lightened up. So I Apple of course he's lightened up. So I Apple of course he's lightened up. So I think when you look at these different think when you look at these different think when you look at these different businesses, Tesla probably what the best
Questionerbusinesses, Tesla probably what the best thing is you know have a small allocation just because Elon is there and you know things can happen. Google I would say falls into the two hard pile. Apple falls into the two hard pile. Meta is a juggernaut you know I mean it deserves something. Last time we talked about Meta it was at Yeah we I mean I never bought it but it was a great call. It was I think it was $100. No, I think you and I think at the time you said it was an easy double. Oh yeah, it was easy double. I mean the thing that was a great valuation and I think that Meta is different in the sense that we have Zuck at the helm and he's a smart guy, you know, and he's shown an ability to be an chameleon. I mean, you can't pin him down and say this is Zuck, you know, and so I think he's still a learning machine and all of that. And I
Questionerlearning machine and all of that. And I mean if you just look at Meta, you know, their acquisitions, they just mind-blowing what they've been able to do. I mean only Google with YouTube can kind of rival that in any way. And so Meta, yeah, Meta is not at the Elchipo price it was a few years back, but firing on all cylinders. I think Microsoft firing on all cylinders going to be there. So that's that. Yeah. I mean on price like when you look at a Microsoft you know I think it probably trades 30 to 35 times earnings something like that. Um it's high Meta is a lot cheaper but you know call it probably but it's the thing is that recurring revenues sure yeah yeah yeah is is a really really powerful thing to pay up for. So my question is I mean you've said this also before that you know you're better off owning a name that has long-term growth ahead of it so you
Questionerlong-term growth ahead of it so you don't have to get too fussy about the specific multiple at which you purchase in you know your entry point. Um you know is there uh but at the same time like I don't think and correct me if I'm wrong I don't think you own either of those two names um within I I have no mag seven. That's incredible. So, uh, but I'll just go go a little further, Diva, so you can kind of see kind of where I'm coming from. And I was thinking about this the last few days is in uh 2023, I made a bet on metallurgical coal, somewhat different from the Mag 7. Okay. And in 2025, this year, I made a bet on offshore oil drillers, also somewhat different from the MAG 7. Okay. Now, I never thought about it in these terms, but when I look back on these bets, even though the decisions are made completely independently, not looking at one versus the other or any
Questionerlooking at one versus the other or any of that, they're in very different spaces.
OtherMhm.
QuestionerThere's a commonality to them, which I didn't even realize till after I'd made all the bets. The commonality is that we've got like kind of four positions. All four of them went through bankruptcy restructuring and all four of them basically clean out came out with pristine balance sheets. All the debt was restructured and converted to equity. And these businesses are businesses historically that were always heavily levered. They're just very capital intensive businesses. So to have a minor which is debtree is like an oxymoron.
OtherYeah. Okay.
QuestionerIt just doesn't exist. And these four businesses were all debtree. Okay. Not only were they debtree when you looked at anything resembling replacement cost of their assets. In the case of the offshore drillers, one could argue that they
Questionerdrillers, one could argue that they might be trading at 10% of replacement cost. Okay, one tenth. So now we know that the holy grail of investing is to invest in capital light businesses that generate really high returns on equity. When you have a business which needs a lot of capital, but you got these capital assets without paying for them, then in my book they start looking like a capitalite bet. And in fact, that's probably what drew me in is when I look at the return on equity of these businesses. It's spectacular. And the reason it's spectacular is because, you know, the assets would cost maybe 10 or 20 billion and you got them for 2 billion. Let's talk about the the metallurgical coal group first. So, um I don't know if you want to start with Warrior, but I I I I hear your point on replacement cost. Um, I'd love to hear how, first of all, how did you learn
Questionerhow, first of all, how did you learn that that there was this, you know, uh, this this extremely, um, large discrepancy between the cost of building, you know, let's say the mine today versus what what maybe they spent originally to build it. But if you could just walk me through your your um your warrior thesis on a simple level, um, that'd be super interesting. I I have a sense I know where you're going to go, but I'd love to hear you out on it in the last and you know, I'm not in the stock tip business, so you know, this is just a discussion. I'm not asking people to go buy the stock. In fact, I think you shouldn't buy the stock listening to some talking head. Not a good idea to do that. I think it's a great example of your your philosophy.
QuestionerYeah. So, in the last two years, I spent a lot of time with miners. I spent a lot
Greg Abela lot of time with miners. I spent a lot of time in the mines thousands of feet below the surface. spent time at the coal terminals watching the trains getting loaded and ships getting loaded all of that and even made a trip to Mongolia to see one of the largest surface mining metallological coal operation which was spectacular that was a great trip and uh so I you know I feel like last couple of years I've been drinking from a fire hydrant and still a lot to learn but it's been great so if you look at a business like warrior I visited them a few times and a wonderful actually truly exceptional management team coal miners are just the best people you know They feed you well and they are what you see is what you get. It's just awesome. And anyway, so in the case of Warrior, their mines are some of the best metallological coal mines in North America. They have amongst the
QuestionerNorth America. They have amongst the lowest cost of production. They have two big advantages. So their mines are in Alabama, southern Appalachia. Okay? And their mines are not that far away from the port. Coal is a commodity that is very expensive to transport because it's very bulky. You don't get paid much per ton and the transport cost per ton can be very high. So logistics with coal becomes extremely important in order to you know have a business that can actually make money. And Warrior does something known as long wall mining. You know there are two ways to do it. You can ask God Google about this. you know, long mall mining versus room and pillar mining. Long wall mining is basically the most efficient way to have an underground coal mine where you're basically have these huge blocks of coal and you're you know having a sheer go
Questionerand you're you know having a sheer go end to end and it's all very automated.
Questionerend to end and it's all very automated.
Questionerend to end and it's all very automated. So Warrior's cost of production for very
Questionerhigh quality metological coal and
Questionerhigh quality metological coal and
Questionerhigh quality metological coal and metallological coal is only available in
Questionermetallological coal is only available in
Questionermetallological coal is only available in like half a dozen countries around the
Questionerlike half a dozen countries around the
Questionerlike half a dozen countries around the world in any kind of sizable quantity to
Questionerworld in any kind of sizable quantity to
Questionerworld in any kind of sizable quantity to be exported. So they produce very high
Questionerbe exported. So they produce very high
Questionerbe exported. So they produce very high quality coal. They produce it at a very
Questionerquality coal. They produce it at a very
Questionerquality coal. They produce it at a very low cost and they've got rivers that can
Questionerlow cost and they've got rivers that can
Questionerlow cost and they've got rivers that can take them to the port which is they can
Questionertake them to the port which is they can
Questionertake them to the port which is they can barge the coal down and they've also got
Questionerbarge the coal down and they've also got
Questionerbarge the coal down and they've also got multiple railroads. Whereas uh some of
Questionermultiple railroads. Whereas uh some of
Questionermultiple railroads. Whereas uh some of the other miners they basically got one
Questionerthe other miners they basically got one
Questionerthe other miners they basically got one railroad servicing them and it's the
Questionerrailroad servicing them and it's the
Questionerrailroad servicing them and it's the railroad that makes all the money
Questionerrailroad that makes all the money
Questionerrailroad that makes all the money because they've got a monopoly on the
Questionerbecause they've got a monopoly on the
Questionerbecause they've got a monopoly on the transport. So in fact when you look at
Questionertransport. So in fact when you look at
Questionertransport. So in fact when you look at Burlington Northern which Burkshire
QuestionerBurlington Northern which Burkshire
QuestionerBurlington Northern which Burkshire bought one of the first trips Buffett
Questionerbought one of the first trips Buffett
Questionerbought one of the first trips Buffett Mer and Gates made after they bought
QuestionerMer and Gates made after they bought
QuestionerMer and Gates made after they bought Burlington Northern is they went to the
QuestionerBurlington Northern is they went to the
QuestionerBurlington Northern is they went to the Powder River base in Wyoming becausePowder River base in Wyoming becausePowder River base in Wyoming because that's where Burlington Northern made sothat's where Burlington Northern made sothat's where Burlington Northern made so much money with transporting coal andmuch money with transporting coal andmuch money with transporting coal and these guys went and wanted to take athese guys went and wanted to take athese guys went and wanted to take a look at that facility because it was solook at that facility because it was solook at that facility because it was so so they didn't own the coal mines butso they didn't own the coal mines butso they didn't own the coal mines but they basically owned the coal minesthey basically owned the coal minesthey basically owned the coal mines because they were the only toll bridgebecause they were the only toll bridgebecause they were the only toll bridge to get your coal anywhere you wanted itto get your coal anywhere you wanted itto get your coal anywhere you wanted it tototo And so basically, Warrior is low costAnd so basically, Warrior is low costAnd so basically, Warrior is low cost producer, cheap transport to the port.producer, cheap transport to the port.producer, cheap transport to the port. Once you get to the port, then coal isOnce you get to the port, then coal isOnce you get to the port, then coal is easy to transport anywhere in the world.easy to transport anywhere in the world.easy to transport anywhere in the world. So pretty much in almost any environmentSo pretty much in almost any environmentSo pretty much in almost any environment you can imagine, Warrior will be makingyou can imagine, Warrior will be makingyou can imagine, Warrior will be making money because they're so low in themoney because they're so low in themoney because they're so low in the they're so low on the cost curve. Sothey're so low on the cost curve. Sothey're so low on the cost curve. So basically, you have a debt-free businessbasically, you have a debt-free businessbasically, you have a debt-free business that is extremely unlikelythat is extremely unlikelythat is extremely unlikely to ever have a money- losing year. Andto ever have a money- losing year. Andto ever have a money- losing year. And so, you know, Warrior is like, you know,so, you know, Warrior is like, you know,so, you know, Warrior is like, you know, 2 to three billion market cap, maybe 2
Questioner2 to three billion market cap, maybe 22 to three billion market cap, maybe 2 and a half billion or something. Theirand a half billion or something. Theirand a half billion or something. Their reserves are going to go for 40 50reserves are going to go for 40 50reserves are going to go for 40 50 years. They're going to have some yearsyears. They're going to have some yearsyears. They're going to have some years when they're going to produce one or twowhen they're going to produce one or twowhen they're going to produce one or two billion in cash flow. And they're goingbillion in cash flow. And they're goingbillion in cash flow. And they're going to be some years that they produce 500to be some years that they produce 500to be some years that they produce 500 million in cash flow and there's somemillion in cash flow and there's somemillion in cash flow and there's some years that they produce 300 million. So,years that they produce 300 million. So,years that they produce 300 million. So, if you're paying 2.5 billion for aif you're paying 2.5 billion for aif you're paying 2.5 billion for a business and those are the numbers,business and those are the numbers,business and those are the numbers, where do I sign? And I don't get thatwhere do I sign? And I don't get thatwhere do I sign? And I don't get that with a mag. I don't get a 3 trillionwith a mag. I don't get a 3 trillionwith a mag. I don't get a 3 trillion market cap with 1 trillion cash flowmarket cap with 1 trillion cash flowmarket cap with 1 trillion cash flow ever coming out in a single year. So, soever coming out in a single year. So, soever coming out in a single year. So, so one question I have, I mean, a lot ofone question I have, I mean, a lot ofone question I have, I mean, a lot of these um situations like this situationthese um situations like this situationthese um situations like this situation you're describing from a valuationyou're describing from a valuationyou're describing from a valuation standpoint, I mean, if you're correctstandpoint, I mean, if you're correctstandpoint, I mean, if you're correct about the fact that, you know, theyabout the fact that, you know, theyabout the fact that, you know, they could potentially do a billion in freecould potentially do a billion in freecould potentially do a billion in free cash in a given year. It's not evencash in a given year. It's not evencash in a given year. It's not even theoretical. They've done it in the
Questionertheoretical. They've done it in the past. They've done it in the past. They've done it in the past, right? It seems like you it begs the question like, well, why on earth is the stock trading where it is? I was reading um yeah, it's a four-lettered word. That's is it that simple? You're not allowed to utter the four-lettered word. So, here's another point. I was reading this conference call transcript on AlphaSense where there was some expert who was saying that people confuse metallurgical coal with thermal coal. Yeah. So, basically there's a lot of difference between thermal and metallological coal. Thermal coal is available across the globe in a zillion places at various grades, low grade, high grade, whatever, right? The extremely high grades of thermal coal kind of border on being usable for metallological uses. But the extremely high grades are very rare. Metalological
Otherhigh grades are very rare. Metalologicalhigh grades are very rare. Metalological coal sits in its own universe. And thiscoal sits in its own universe. And thiscoal sits in its own universe. And this this is one of the reasons whythis is one of the reasons whythis is one of the reasons why everything gets painted with a broadeverything gets painted with a broadeverything gets painted with a broad brush stroke. So you really have tobrush stroke. So you really have tobrush stroke. So you really have to separate thermal coal fromseparate thermal coal fromseparate thermal coal from metallological coal. We will not have ametallological coal. We will not have ametallological coal. We will not have a civilizationcivilizationcivilization without iron and steel and we cannotwithout iron and steel and we cannotwithout iron and steel and we cannot produce enough iron and steel just byproduce enough iron and steel just byproduce enough iron and steel just by recycling the existing iron and steel.recycling the existing iron and steel.recycling the existing iron and steel. So the only way you would not useSo the only way you would not useSo the only way you would not use metallological coal in terms of all themetallological coal in terms of all themetallological coal in terms of all the known processes of how to produce ironknown processes of how to produce ironknown processes of how to produce iron and steel would be to recycle steel. Theand steel would be to recycle steel. Theand steel would be to recycle steel. The problem with recycling steel is placesproblem with recycling steel is placesproblem with recycling steel is places like India and China etc. do not havelike India and China etc. do not havelike India and China etc. do not have enough scrap steel to take care of whatenough scrap steel to take care of whatenough scrap steel to take care of what their needs are. So usually it'stheir needs are. So usually it'stheir needs are. So usually it's advanced economies like the US or Japanadvanced economies like the US or Japanadvanced economies like the US or Japan which have a lot of recycling of steelwhich have a lot of recycling of steelwhich have a lot of recycling of steel going on. In the in the United States wegoing on. In the in the United States wegoing on. In the in the United States we scrap a lot of cars. We have 15 to 17scrap a lot of cars. We have 15 to 17scrap a lot of cars. We have 15 to 17 million cars a year, new cars being sold
Questionermillion cars a year, new cars being sold and probably a somewhat similar number being scrapped and there's a very efficient mechanism to get that scrap steel. Most of it gets exported to China etc. But we don't have enough scrap steel and also you cannot produce the highest grades of steel by using scrap. So basically at the end of the day you know places like India or Indonesia or Vietnam or eventually Africa and so on have huge appetites for iron and steel that cannot be fulfilled by recycling your way through it. So 50 years from now we will still be burning metallurgical coal to produce iron and steel. And and and you know this is another thing we've talked about um is that you've moved I think your own you all else equal you would prefer to buy names that you can sit on for decades um potentially forever right um sure like I
Questionerpotentially forever right um sure like I wish I had bought Microsoft when I was uh you know a pre-teen using you know Windows operating system back when there used to be like a 386 processor you know made by Intel and that could have been my one position and I'd be, you know, very wealthy just from that one, you know, trade alone.
QuestionerUm, well, I'm getting a little feels the same way. He wish he had kept his Microsoft stock. So, don't beat yourself up too much, Dia. It's okay. He must be a little annoyed that Bomber is kind of uh profited off of all of his his work, you know, starting the business. But um one of the things you've talked about in the past is mistakes you've made with respect to selling positions where maybe you're you're up 3x on a stock and you're like, "Oh, I'm up 3x on a stock. I'm going to sell and get out when really you may
Questionersell and get out when really you may miss another 20x or so of gains. How does that experience kind of impact the way you think about holding, you know,
Questionerlike Yeah. I mean, I think we are all too soon and wise too late. You know, this is the story of my life. And absolutely, it took me a long time to learn that there are very few truly great businesses and truly great compounders. Very, very few. And when you find yourself in the happy position of a partial ownership of one of those types of businesses, don't get cute by selling when you think it's overpriced or fully priced because you really don't know what that is. And so until it gets crazily egregiously overpriced and it's obvious that that's the case, if it's a great business that's still firing on all cylinders, just keep it. And what would what would be kind of that break point for uh for
Questionerbe kind of that break point for uh for for HCC? I mean, is that a market multiple or what would you say? I
Questionerwould say that none of the Mag 7 currently sit at a point that I would call egregiously overvalued. Yeah, I I I would agree on that. So, basically, if you own them, I would just keep them.
QuestionerYeah. Now, let's talk about uh I don't know if you want to do like Noble or Valaris first, but um well, they're they're they're also very similar in the sense that the last time Okay, so a drill ship, you know, which is one of these things which would today cost around a billion dollars to build. Basically, it allows you to drill deep into the ocean without really having floor kind of feet on the ground, if you will. There ships that can they've got a kind of hole in the middle to allow drilling and so on. It's really a kind of engineering marvel. So the last time of engineering marvel. So the last time
Otherof engineering marvel. So the last time one of those ships was built was aboutone of those ships was built was aboutone of those ships was built was about 10 years ago. The industry went through10 years ago. The industry went through10 years ago. The industry went through a crazy orgy of overbuildinga crazy orgy of overbuildinga crazy orgy of overbuilding about 12 or 13 years ago and then itabout 12 or 13 years ago and then itabout 12 or 13 years ago and then it went to went into a total nuclear winterwent to went into a total nuclear winterwent to went into a total nuclear winter where there was so many ships deliveredwhere there was so many ships deliveredwhere there was so many ships delivered and almost all of the players wentand almost all of the players wentand almost all of the players went bankrupt because they were so highlybankrupt because they were so highlybankrupt because they were so highly levered and rates collapsed and all oflevered and rates collapsed and all oflevered and rates collapsed and all of that. And when we look at the situationthat. And when we look at the situationthat. And when we look at the situation today, things have come back intotoday, things have come back intotoday, things have come back into balance. A lot of the older ships havebalance. A lot of the older ships havebalance. A lot of the older ships have been scrapped. Nothing new has beenbeen scrapped. Nothing new has beenbeen scrapped. Nothing new has been built. And so when you look at a companybuilt. And so when you look at a companybuilt. And so when you look at a company like Valaris and Noble and just if youlike Valaris and Noble and just if youlike Valaris and Noble and just if you were to just look at their fleet andwere to just look at their fleet andwere to just look at their fleet and say, okay, what would it cost to replacesay, okay, what would it cost to replacesay, okay, what would it cost to replace this fleet, right? Well, the cost tothis fleet, right? Well, the cost tothis fleet, right? Well, the cost to replace this fleet would be like maybereplace this fleet would be like maybereplace this fleet would be like maybe 10 times the market cap because it is10 times the market cap because it is10 times the market cap because it is trading at such a extreme end of thetrading at such a extreme end of thetrading at such a extreme end of the thing. And the second is that the
Otherthing. And the second is that the thing. And the second is that the current day rates that you get paid for current day rates that you get paid for current day rates that you get paid for drill ships and jackups and all of these drill ships and jackups and all of these drill ships and jackups and all of these does not justify a new build. So for does not justify a new build. So for does not justify a new build. So for example, a new drill ship which would example, a new drill ship which would example, a new drill ship which would cost let's say a billion and would cost let's say a billion and would cost let's say a billion and would probably take you four or 5 years to get probably take you four or 5 years to get probably take you four or 5 years to get delivery delivery delivery would require day rates in the range of would require day rates in the range of would require day rates in the range of 7 or 800,000 a day to get some 7 or 800,000 a day to get some 7 or 800,000 a day to get some reasonable cost of capital back. like reasonable cost of capital back. like reasonable cost of capital back. like make low teens return on your capital. make low teens return on your capital. make low teens return on your capital. So you would need to get about 800,000 a So you would need to get about 800,000 a So you would need to get about 800,000 a day to get a 12% or 14% return on your day to get a 12% or 14% return on your day to get a 12% or 14% return on your capital which is reasonable and day capital which is reasonable and day capital which is reasonable and day rates today are in the 400s. rates today are in the 400s. rates today are in the 400s. So basically So basically So basically you cannot go out and build a ship today you cannot go out and build a ship today you cannot go out and build a ship today and every day and every year ships get and every day and every year ships get and every day and every year ships get scrapped and so this market is coming scrapped and so this market is coming scrapped and so this market is coming into a tightness. The other thing that into a tightness. The other thing that into a tightness. The other thing that people don't realize is that offshore people don't realize is that offshore people don't realize is that offshore drilling for oil has a very low cost. So drilling for oil has a very low cost. So drilling for oil has a very low cost. So like for example in Brazil which has
Otherlike for example in Brazil which has huge amounts of offshore drilling their cost of producing oil is $ 20 to $30 a barrel. It's almost half of what it cost with fracking to produce oil offshore. It's long cycle time, high capex, but effectively when you amortize it, you get to the $ 20 $30 a barrel type price. So it's very profitable. And so basically this is a situation where these companies have no debt or very low debt. They basically have great assets and the market is gradually tightening. And if rates were to go for example from the 400s to 6 or 700 a day, I mean Valeris and Noble, I mean they would be just printing almost the entire market cap in cash every year. So that's why Monish is there.
Questioner[Laughter] Has the just curious. I mean when when we were talking about steel, I mean, so Trump's been in the news a lot of trying to revive the the American steel
Questionerto revive the the American steel industry. You would think that some of those headlines would have had maybe a somewhat more positive impact on on the stocks themselves. Are these names just is it is it a situation where there's just not enough research coverage or I'm just curious like why we're not seeing more of a positive reaction or is it just that the world sees kind of global manufacturing coming down because of tariffs that you know they don't well so sellside coverage on the metallological coal names is almost non-existent.
QuestionerGot it. And the reason there's no coverage is these companies. So I'll give you an example. One of these companies whose CEO I was speaking to said to me that you know they had a 60 70 year old relationship with JP Morgan banking relationship. They've never gone bankrupt. They've always been profitable
Questionerbankrupt. They've always been profitable very profitable banking and JP Morganvery profitable banking and JP Morganvery profitable banking and JP Morgan told them we cannot have you as atold them we cannot have you as atold them we cannot have you as a customer anymore. Please find anothercustomer anymore. Please find anothercustomer anymore. Please find another bank because we have too much ESGbank because we have too much ESGbank because we have too much ESG pressure. So, this is a highlypressure. So, this is a highlypressure. So, this is a highly profitable relationship for JP Morgan.profitable relationship for JP Morgan.profitable relationship for JP Morgan. Hundreds of millions of dollars goingHundreds of millions of dollars goingHundreds of millions of dollars going through. They're not borrowing money.through. They're not borrowing money.through. They're not borrowing money. They're not going to default onThey're not going to default onThey're not going to default on anything. They're never going to be aanything. They're never going to be aanything. They're never going to be a money losing client. You're collectingmoney losing client. You're collectingmoney losing client. You're collecting all kinds of fees on letter of creditall kinds of fees on letter of creditall kinds of fees on letter of credit and all of that. Why would a JP Morganand all of that. Why would a JP Morganand all of that. Why would a JP Morgan say to them, "I don't want your businesssay to them, "I don't want your businesssay to them, "I don't want your business when I've had five decades with you."when I've had five decades with you."when I've had five decades with you." Well, they're saying it because ofWell, they're saying it because ofWell, they're saying it because of irrational reasons, right? And so theseirrational reasons, right? And so theseirrational reasons, right? And so these companies have a hard time gettingcompanies have a hard time gettingcompanies have a hard time getting insurance, getting bankinginsurance, getting bankinginsurance, getting banking relationships, getting anything becauserelationships, getting anything becauserelationships, getting anything because they are pariah. And so it's not just onthey are pariah. And so it's not just onthey are pariah. And so it's not just on the like there's sellside coverage or nothe like there's sellside coverage or nothe like there's sellside coverage or no sellside coverage. It's like when
Questionersellside coverage. It's like when they're trying to get insurance like workers comp insurance for example. So these companies are self-insuring first 10 million in claims per worker covered by the company, right? They just need someone to give them a policy because it's required by law. Effectively, they're self-insured. They still have difficulty getting insurance because there's a bunch of companies who will not write that type of coverage. And so, shy companies, same same issue. They need shorties for their minds and again they have difficulty. So, many many things that they need for their business, they repeatedly have difficulty getting. So all of that what that means is that for a new company to start in this industry or new mind or a mind that's been shut down to restart the factors to start it are so challenging that effectively we're going
Questionerchallenging that effectively we're going to see a shrinking pool of productive minds at a time of increasing demand. Now, what level of access do you typically have? Um, obviously you've been doing this for a long time to the management teams and is that something you require when you underwrite a new position? Like, so do you know the CEO of the offshore drilling companies you're invested in or the coal businesses if you haven't?
OtherWe we've spoken to most of them. We've met most of them because they're treated as pariahs. If I call, they'll take my call. Nobody wants to talk to them, right? So, so they're happy to talk to Monish. It's not needed. Uh, for most of my career, I didn't even speak to management teams. I think that for these coal names, you don't really don't need any access. I mean to me what was more interesting was the visits the site visits into the
Questionerthe visits the site visits into thethe visits the site visits into the mines and meeting the footworkers youmines and meeting the footworkers youmines and meeting the footworkers you know the the head of mining or the headknow the the head of mining or the headknow the the head of mining or the head of safety or uh someone running the theof safety or uh someone running the theof safety or uh someone running the the coal terminal that sort of thing youcoal terminal that sort of thing youcoal terminal that sort of thing you know so those guys I think were veryknow so those guys I think were veryknow so those guys I think were very valuable in terms of helping me buildvaluable in terms of helping me buildvaluable in terms of helping me build domain knowledge uh on how this businessdomain knowledge uh on how this businessdomain knowledge uh on how this business works. How's your exposure now in inworks. How's your exposure now in inworks. How's your exposure now in in Turkey? I know we had spoken about thatTurkey? I know we had spoken about thatTurkey? I know we had spoken about that on our last calls. Is that are you stillon our last calls. Is that are you stillon our last calls. Is that are you still invested in Turkey at all or are youinvested in Turkey at all or are youinvested in Turkey at all or are you completely
OtherOh, yeah. Long and strong,completely Oh, yeah. Long and strong,completely Oh, yeah. Long and strong, youyouyou so I mean basically took me a long timeso I mean basically took me a long timeso I mean basically took me a long time to figure out that you know when youto figure out that you know when youto figure out that you know when you have something good in your portfolio,have something good in your portfolio,have something good in your portfolio, you don't need to do anything with it.you don't need to do anything with it.you don't need to do anything with it. Leave it alone. We have some exceptionalLeave it alone. We have some exceptionalLeave it alone. We have some exceptional businesses in Turkey. I think they theybusinesses in Turkey. I think they theybusinesses in Turkey. I think they they we bought them at very compellingwe bought them at very compellingwe bought them at very compelling valuations and there's no need to dovaluations and there's no need to dovaluations and there's no need to do anything.anything.anything. Is this the airport operator or Yeah,
QuestionerIs this the airport operator or Yeah, the airport operator, the warehouse operator. I mean, their businesses are on fire, you know. What's the name of the airport operator? It's called TAV airports, TAV.
OtherGot it. And I mean, TAV airports basically, you know, airport operator.
QuestionerSo, in the US, all airports used to be governmentowned and government run. Okay. We now have one airport in the United States that is privately run which is Laguardia. Okay. And you know what an armpit Laguardia was before. Okay. Like you would avoid it like the plague. Okay. And now it's the preferred ramp was to go through you know the one to avoid is Newark. You don't want to go anywhere near Newark. But LaGuardia is an interesting case because the first time in the US that they've actually given it to a private operator for a long period and they transformed the
Otherlong period and they transformed the airport. So 95 96% of airports around the world are government run and government managed and maybe four or five% are private and these private run like in India almost all the big airports are all privately operated. their bot models, build, operate, transfer. And it makes all the sense in the world in the sense that the country gets a great airport without putting up any capital. Great operator runs it for a few decades, then gives you all the infrastructure back to the government for free and you go on from there. And so, Tab Airports actually is a wonderful company because it has operating leverage. When passenger traffic goes up 5% or 10% in a year, their costs don't go up. It's pure operating leverage and so over time their cash flows are just exploding. Beautiful, beautiful business. Speaking of uh of India,
Questionerof uh of India, um I think we had previously talked about the national stock exchange maybe briefly. Um and then there was an energy trading company I think you had you had spoken to me about. Uh Indian energy exchange. Yeah. Indian energy exchange. Yeah. Did did you ever uh put a position on in any of those those names?
Todd CombsWe used to own IEX. We don't own it anymore because there in the middle there was a lot of rumbling that started happening that the government was going to destroy that monopoly. It became very hard for us. We went in the too hard pile. In the end, I think X is going to prevail. It's a beautiful business, but it became just difficult for us on that front. Uh the National Stock Exchange in India, NSE, that's actually not a listed company. It's a private company and it'll probably go public in the next maybe
Questionerprobably go public in the next maybe what year or two probably and it's awhat year or two probably and it's awhat year or two probably and it's a great business. Yeah, I was reading yourgreat business. Yeah, I was reading yourgreat business. Yeah, I was reading your daughter's uh write up on it. It'sdaughter's uh write up on it. It'sdaughter's uh write up on it. It's pretty pretty compelling. Um, this ispretty pretty compelling. Um, this ispretty pretty compelling. Um, this is great. Now I guess one one thing beforegreat. Now I guess one one thing beforegreat. Now I guess one one thing before uh I want to check to see if anyone hasuh I want to check to see if anyone hasuh I want to check to see if anyone has any questions as well but we're in aany questions as well but we're in aany questions as well but we're in a very macro driven environment right nowvery macro driven environment right nowvery macro driven environment right now and people there are a lot of investorsand people there are a lot of investorsand people there are a lot of investors who are just like on eggshells uh withwho are just like on eggshells uh withwho are just like on eggshells uh with respect to rates. Um Trump's every nowrespect to rates. Um Trump's every nowrespect to rates. Um Trump's every now and then he bashes Jerome Powell for forand then he bashes Jerome Powell for forand then he bashes Jerome Powell for for not lowering rates and you know has younot lowering rates and you know has younot lowering rates and you know has you know has the interest rate environmentknow has the interest rate environmentknow has the interest rate environment at all um like had an impact on howat all um like had an impact on howat all um like had an impact on how you're thinking about portfolioyou're thinking about portfolioyou're thinking about portfolio allocation. It sounds like the the coldallocation. It sounds like the the coldallocation. It sounds like the the cold names don't even have debt so maybe it'snames don't even have debt so maybe it'snames don't even have debt so maybe it's less of an issue there but but certainlyless of an issue there but but certainlyless of an issue there but but certainly from a valuation standpoint multiplesfrom a valuation standpoint multiplesfrom a valuation standpoint multiples generally come down if rates are high.generally come down if rates are high.generally come down if rates are high. Just curious if you you've you've you
QuestionerJust curious if you you've you've you know well I think the seessaw with the tariffs is really really damaging to the US economy. I mean those are some things you don't want to change on the fly and I agree with Trump that trade should be free and fair and I also agree with him that the US didn't have the fairest deals with a lot of countries. they were taking advantage where it wasn't symmetrical. But to go in with a sledgehammer and then keep changing things every few days or every few weeks or every few hours is really very problematic. So I wish they had taken a more kind of surgeons precision approach where you know go to the large trading partners one by one and sit down with them and redo the deals without you know saying okay tariffs are 150% and now we'll sit down and talk you know that sort of thing. So, I think that it's
Questionersort of thing. So, I think that it's been very it's caused already caused abeen very it's caused already caused abeen very it's caused already caused a lot of damage, I think. And I'm hopinglot of damage, I think. And I'm hopinglot of damage, I think. And I'm hoping now the good news is that they saynow the good news is that they saynow the good news is that they say they're going to have a deal with China,they're going to have a deal with China,they're going to have a deal with China, which would be very helpful, but theywhich would be very helpful, but theywhich would be very helpful, but they really need to get the largest tradingreally need to get the largest tradingreally need to get the largest trading partnerspartnerspartners into a space where they're not oninto a space where they're not oninto a space where they're not on quicksand whatever. And that's the otherquicksand whatever. And that's the otherquicksand whatever. And that's the other problem that the partners have is theyproblem that the partners have is theyproblem that the partners have is they feel they feel the US is unreliablefeel they feel the US is unreliablefeel they feel the US is unreliable because they feel that whatever deal webecause they feel that whatever deal webecause they feel that whatever deal we come up with, it might change in 3come up with, it might change in 3come up with, it might change in 3 weeks. So that that that doesn't bodeweeks. So that that that doesn't bodeweeks. So that that that doesn't bode well. But I agree that I mean I thinkwell. But I agree that I mean I thinkwell. But I agree that I mean I think that people in the Trump administrationthat people in the Trump administrationthat people in the Trump administration need to spend more time with Adam Smithneed to spend more time with Adam Smithneed to spend more time with Adam Smith and David Ricardo. I think that someand David Ricardo. I think that someand David Ricardo. I think that some basic basic econ lessonsbasic basic econ lessonsbasic basic econ lessons are lost. And I think that a lot of theare lost. And I think that a lot of theare lost. And I think that a lot of the trade where we got to was based on Adamtrade where we got to was based on Adamtrade where we got to was based on Adam Spin and David Ricardo which is why weSpin and David Ricardo which is why weSpin and David Ricardo which is why we were doing well. Now, I agree that there
Questionerwere doing well. Now, I agree that there were unfair situations or countries taking advantage of the US and all that and yes, that should get fixed and I'm glad Trump is fixing it, but going through bull in a China shop, you know, just not the right way to do this. What's your take on the big beautiful bill?
OtherUm, obviously there's no bill yet, but it's it's certainly, you know, a big headline and um, you know, well, I'm in Elon's camp. I don't think we should have bills which increase the deficit, right? I mean, I think Elon saw firsthand how hard it is to cut, how hard and then he sees this bill which is going to add a few trillion and that just probably, you know, rubbed him the wrong way. And when he's even to get 50 billion of expense reduction is very hard, right? I mean, everyone fights you all the way. So, I think that any bill which is going to
Questionerthink that any bill which is going to not reduce deficits, not a good idea. But if uh if we do end up with a bill that creates, you know, maybe it's not 4 trillion of excess deficits, but maybe it's two trillion of excess debt. We'll see what the I don't think we can afford even $10 more of excess deficit. Yeah, I think we already are push. The thing is the US is pushing all the limits. I mean, we borrow in our own currency which gives us a lot of leeway, but really, you know, I yearn for the days of Bill Clinton when the budget got balanced and actually had a surplus. But does the the ongoing deficit um I mean, how does that telegraph into your portfolio? I mean, does it does it impact your portfolio at all or It does. I mean, I think all the tariff stuff that's going on right now, it's not so much a deficit, more the tariffs is going to create huge
Questionertariffs is going to create huge recessionary pressures globally in the US and elsewhere. So, it's not so much the interest rate. I think interest rates are benign relatively right now, but I think the tariffs, you're playing with fire there, Monish, we uh have a long chain of questions. We're not going to go through all of them. Um, one one one easy one. What are you reading right now?
QuestionerThe book I've recently enjoyed is Buffett and Munger unscripted. So this guy basically went through all the Berkshire annual meetings online which are on buffet.cnbc.com and he basically reorganized them by subject and that's a yman's effort. I mean that's a lot of effort to do that. Not easy to do. Uh maybe AI makes it easier but he did a masterful job of that. So someone had done this you know Larry Cunningham the professor at in New York had done this for all the Burkshire
Otherhad done this for all the Burkshire annual reports where he reorganized the annual reports where he reorganized the annual reports where he reorganized them by subject. So if you wanted to know what Buffett ever talked about said in what Buffett ever talked about said in what Buffett ever talked about said in his reports about inflation or about his reports about inflation or about his reports about inflation or about capital allocation or about you know capital allocation or about you know capital allocation or about you know return on equity any of these things you return on equity any of these things you return on equity any of these things you could read that. But now we can do that could read that. But now we can do that could read that. But now we can do that and the annual meeting stuff is even and the annual meeting stuff is even and the annual meeting stuff is even better than the annual reports because better than the annual reports because better than the annual reports because the annual meetings is unscripted. you the annual meetings is unscripted. you the annual meetings is unscripted. you know, he is not coming there knowing know, he is not coming there knowing know, he is not coming there knowing what questions are going to be asked and what questions are going to be asked and what questions are going to be asked and knowing what the answer is going to be. knowing what the answer is going to be. knowing what the answer is going to be. And you got Munger in there, too, who's And you got Munger in there, too, who's And you got Munger in there, too, who's throwing in his input as well. So, I throwing in his input as well. So, I throwing in his input as well. So, I think that the wisdom that came out of think that the wisdom that came out of think that the wisdom that came out of all of that and to be able to reorganize all of that and to be able to reorganize all of that and to be able to reorganize by subject, that's fantastic. by subject, that's fantastic. by subject, that's fantastic. Now, you've got a lot of Asia investing Now, you've got a lot of Asia investing Now, you've got a lot of Asia investing experience. Um, have you been bargain experience. Um, have you been bargain experience. Um, have you been bargain hunting in China at all? I don't hunting in China at all? I don't
Questionerhunting in China at all?
OtherI don't approach it that way. I I look at it more in terms of kind of I look at it bottoms up. So I look at it from a company point of view and last couple of years we found these things in the US. You know we found metal in the US and we found the offshore drillers in the US. Now they're global businesses and they're export powerhouses. You know they're sending stuff all over the place and other things being equal I prefer US governance over anything else right and so I was able to get US governance and it's difficult. I think it's very difficult from my vantage point to top what we found in Turkey, what we found in the metal and what we found in the drillers. Basically, like I said, bottoms up, we look at things that are hated and unloved or being discarded and that's where we go looking.
QuestionerHave you maintained your uh you know, I think you
Questionermaintained your uh you know, I think you had mentioned, you know, wanting to own 10 companies in equal size. It seems like you have four companies. Well, when you make a bet, we ideally want it to be a 10% bet, right? So, in an ideal world, if I'm starting out on day one and I had 10 ideas, it'd be 10% each, right? Now, what happens is that when we buy something at 2% of liquidation value in something at 2% of liquidation value in Turkey like we did and goes up, it's going to become like, you know, 40 50% of the portfolio and we're not going to trim that because it's still undervalued, you know. So basically if you are successful as an investor you are going to end up with 80% in a single position. Mhm. And one should not have that much reservation about it. If we look at the Walton family and Walmart for example when Walmart went public you know 55 years ago the Walton family
Questionerknow 55 years ago the Walton family owned about 46% of Walmart. And if you owned about 46% of Walmart. And if you owned about 46% of Walmart. And if you look at it today they own 46% of look at it today they own 46% of look at it today they own 46% of Walmart. Okay. And I mean Sam Walton Walmart. Okay. And I mean Sam Walton Walmart. Okay. And I mean Sam Walton died 33 years ago and the founder died 33 years ago and the founder died 33 years ago and the founder passing away and leaders changing and passing away and leaders changing and passing away and leaders changing and all of that. They haven't done anything. all of that. They haven't done anything. all of that. They haven't done anything. They've been running this thing the way They've been running this thing the way They've been running this thing the way Balmer does, you know, set it and forget Balmer does, you know, set it and forget Balmer does, you know, set it and forget it, right? And the dividends that have it, right? And the dividends that have it, right? And the dividends that have come out of Walmart, if you ever visit come out of Walmart, if you ever visit come out of Walmart, if you ever visit Bentonwell, you know, one of the best Bentonwell, you know, one of the best Bentonwell, you know, one of the best places on the planet to live. I mean, places on the planet to live. I mean, places on the planet to live. I mean, what they've transformed that into it's what they've transformed that into it's what they've transformed that into it's it's a biking mecca. It's a cultural it's a biking mecca. It's a cultural it's a biking mecca. It's a cultural mecca. They've just transformed the mecca. They've just transformed the mecca. They've just transformed the place. It's incredible. And that's all place. It's incredible. And that's all place. It's incredible. And that's all come out of the dividends. They've never come out of the dividends. They've never come out of the dividends. They've never sold a stock. And so basically, it's a sold a stock. And so basically, it's a sold a stock. And so basically, it's a very natural thing for entrepreneurs to very natural thing for entrepreneurs to very natural thing for entrepreneurs to be very concentrated. be very concentrated. be very concentrated. And investors need to understand that And investors need to understand that And investors need to understand that when you do things well, you're going to
Questionerwhen you do things well, you're going to end up with heavy concentration in a few businesses and that should be okay. I want to end on a on a positive note. Um, we've talked about, I guess, some of the, you know, some of the volatility with respect to the way the world's operating nowadays. I mean, what are you most optimistic about, um, from a geopolitical standpoint and and also from a a more domestic um, policy standpoint, if anything?
WarrenWell, I'm always a bull on America. You know, I think we are somewhat playing with fire when we turn away the, you know, foreign students. That's a big I mean the tariffs are a big no no from my point of view the way it's being done. Foreign students being messed around. It's a huge American export, one of the best American exports. I mean you're talking about you know uneven trade. This is a great trade
Greg Abelknow uneven trade. This is a great trade and we're turning away the tourists and we're turning away the tourists and we're turning away the tourists which is another huge American export. which is another huge American export. which is another huge American export. So I get really concerned when we start So I get really concerned when we start So I get really concerned when we start playing with the crown jewels like that. playing with the crown jewels like that. playing with the crown jewels like that. I'm hoping all of this cooler heads I'm hoping all of this cooler heads I'm hoping all of this cooler heads would prevail and we should be making it would prevail and we should be making it would prevail and we should be making it easier to get the best talent in the easier to get the best talent in the easier to get the best talent in the world in we've the United States have world in we've the United States have world in we've the United States have done extremely well with the best talent done extremely well with the best talent done extremely well with the best talent coming in. You look at the Mag 7 and coming in. You look at the Mag 7 and coming in. You look at the Mag 7 and look at you know who's running them and look at you know who's running them and look at you know who's running them and senior people in the company and all of senior people in the company and all of senior people in the company and all of that. I mean, you take the foreign that. I mean, you take the foreign that. I mean, you take the foreign talent out and there's a problem there, talent out and there's a problem there, talent out and there's a problem there, you know, and so we really need to you know, and so we really need to you know, and so we really need to leverage those strengths, pull the best leverage those strengths, pull the best leverage those strengths, pull the best talent from around the world, hopefully talent from around the world, hopefully talent from around the world, hopefully make the trade free and fair again, and make the trade free and fair again, and make the trade free and fair again, and let the country do what it does well, let the country do what it does well, let the country do what it does well, just let it rip. I think I think that just let it rip. I think I think that just let it rip. I think I think that that'll resonate with most of the folks that'll resonate with most of the folks that'll resonate with most of the folks on this call, hopefully everyone. Um,
Questioneron this call, hopefully everyone. Um,on this call, hopefully everyone. Um, Manish, this was great. What aManish, this was great. What aManish, this was great. What a privilege. Um, you know, thanks againprivilege. Um, you know, thanks againprivilege. Um, you know, thanks again for for taking the time and and uhfor for taking the time and and uhfor for taking the time and and uh imparting your wisdom to all of us. uhimparting your wisdom to all of us. uhimparting your wisdom to all of us. uh disciples of value investing and and umdisciples of value investing and and umdisciples of value investing and and um yeah it's been it's been great chatting.yeah it's been it's been great chatting.yeah it's been it's been great chatting. We we'll uh look forward to the next oneWe we'll uh look forward to the next oneWe we'll uh look forward to the next one and hopefully uh you know maybe we canand hopefully uh you know maybe we canand hopefully uh you know maybe we can do something in person uh one of thesedo something in person uh one of thesedo something in person uh one of these days as well.
OtherOh yeah, that'd be great.days as well. Oh yeah, that'd be great.days as well. Oh yeah, that'd be great. Well, I always enjoy our banter. SoWell, I always enjoy our banter. SoWell, I always enjoy our banter. So thank you so much. Absolutely. Manish,thank you so much. Absolutely. Manish,thank you so much. Absolutely. Manish, thanks so much and thank you officethanks so much and thank you officethanks so much and thank you office sense as well for for uh for sponsoring.sense as well for for uh for sponsoring.sense as well for for uh for sponsoring. Um looking forward to uh to doing thisUm looking forward to uh to doing thisUm looking forward to uh to doing this again. All right. Bye.again. All right. Bye.again. All right. Bye.
OtherHeat. Heat.Heat. Heat.Heat. Heat. [Music][Music]