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Questionermoish welcome back hello Divia how's it going good good good good I noticed your background is uh the new library so I'm very excited that uh you're able to use it for this interview all right we aim to please that's great is that is that Warren Buffett and Charlie behind you that's Warr and Warr buff behind you right there that is war yeah we had the same bus maker make both the bus and I sent one of those to Warren and he was really excited to have his bust at the booker headquarters so cool so cool um so I guess it's been a while since we last chatted it's funny the last time we talked we had discussed among other things meta and one of the things you had said was you know I think when we chatted it had crashed down from like 380 down to 220 or something like that
Questioner380 down to 220 or something like that on its way all the way down to $90 and you had said that you know it'd be an easy double from current levels which at the time was like $200 you know lo and behold it has doubled and then some since then but I wouldn't say it was an easy double definitely had I think Mark did a really great 360 180 can say where he really tightened up the expenses I mean meta is a great platform you know I think it's got a great franchise great platform they had a kind of country club attitude to spending you know and there was a wasn't that much discipline around when you have a great business like that you don't necessarily need to watch your pennies and it's amazing how they like turned on a dime and actually tightened up all the expenditures and the layoffs and basically got the ship pointed in the right direction and I mean then you
Questionerthe right direction and I mean then you had the cash flows just show up you know so it was awesome to see that yeah I I mean I I've I've written about this couple you know numerous times and I they are the fastest pivoting company I think I've ever seen I I I can't think of a single business that has pivoted as quickly at at anywhere near this scale as often as meta has so I remember in the depths of bad news when the stock was at it was like $88 a share the The Wall Street Journal put out a headline you know stating that they were going to reduce their employee base and fire like I think it was 11,000 people at the time and as soon as that happened you know the stock started moving I think that day it might have been up 8% or so but you know it took a while I think for people to realize that they weren't just paying lip service to cost cutting but
Questionerpaying lip service to cost cutting but that there was you know a fundamental change in terms of just the company being permanently leaner and a complete change in the philosophy of Mark you know in terms of what sort of was possible with a smaller team and like over the months and you know the years you know over the last two years he's kind of set on numerous time numerous occasions that you know he just feels like a leaner meaner team is better and it's coincided with his uptake of Brazilian Jitsu I don't know if you've seen seen a lot of that but he's he seems to have Incorporated this idea of lean you know um Behavior to his personal life um you know with with some of the fighting that he's been doing um and it's starting to obviously percolate through the rest of big Tech and now people are calling for Google to do kind of the same thing and you know really
Questionerof the same thing and you know really kind of cut the fat you've seen some of it in Amazon but I mean what's your take on which of these companies has the most kind of operational leverage within it and and and also maybe as a coraly have the most room to improve from a cost standpoint
Questionerwell I think I think Amazon runs a pretty tight ship as does uh Microsoft I would say that in my different visits to alphabet headquarters that's definitely a country club I would say that they've done some I mean I think that some of the Google employees I've spoken to they don't feel secure in their jobs in the sense that the layoffs have come very suddenly they've actually gone after some very senior people in who they've cut but I think there's a lot of fat there to be cut I mean that's that's an incredible another incredible set of franchises
Questioneranother incredible set of franchises with search and Android and YouTube and all that so yeah I mean I think that the company where Top Line is equal to bottom line you know in effect basically like where there's no expenses to speak of is Microsoft you know Microsoft just a incredible machine I mean you know when you see their revenues go up and like 80% or something will drop to the bottom line it's really I think Satya and and his team I think they've always had great execution even when they've had you know they've been doing really well they haven't had a lot of meat or or fat on the bone if you will they've run L lean but yeah I think alphabet has a ways to go but by the same token maybe that's an argument to own alphabet low hanging fruit for them absolutely that's right yeah I mean they actually trade at a multiple that's more in the low 20s
Questionera multiple that's more in the low 20s versus you know take a Microsoft kind of mid to high 30s for yeah but there's a there's a little bit of a difference I mean I think that Microsoft is such a strong recurring Revenue business you know the the the recurring nature I think the The Meta franchise is awesome but but it's at the end of the day it's a it's an advertising franchise and on the on the Microsoft side it's very critical part of Enterprises that that revenue is not not going anywhere you could argue that it's higher quality
Questioneryeah I've heard that argument and I think it's more like earning stability is is kind of the if you're going to pay a premium multiple for it you you kind of you can you can argue for that yeah I do think there's something to be said for meta being and you know I think this applies to Google and and and Amazon's been picking up on this as well being
Questionerbeen picking up on this as well being kind of the you know the distribution channel for corporate enterprise Enterprise as well as small business like if you want to reach an audience you got to go through like one of these channels yeah and also it used to be that you know half your advertising worked and you didn't know which half and that's gone you know I mean that was that was old adage with with advertising like you know there was so much waste and the thing with platforms like meta you don't have that waste because you have such a direct relationship what you're spending and what you're seeing come out the other end and the ability to pinpoint that is really powerful and I think that's a core part of what their franchise is yeah now one of the other things you said previously indifference to the metaverse or maybe skepticism
Questionerto the metaverse or maybe skepticism towards the metaverse now that conversation has shifted to AI so it's not really about the metaverse so much um now as it is about AI how do you think about that Visa the mag s or or kind of these you know kind of these these Blue Chip names do you have a viewpoint on who's best position to take advantage of that
QuestionerI would say that Microsoft you know has historically been a great cloner it has not been a great innovator but they're acceptional at cloning sometimes it takes them 10 versions to get it right or 15 versions to get it right but they get it I would definitely put them in the winners Camp just because they're so good at the execution I mean I mean what I'm saying is the company has woken up to the potential for AI and they're doubling down in a big way I would put them near the top I I would say that obviously
Questionerthe top I I would say that obviously Google has had a lot L of strengths in this area for a long time but they don't have the execution discipline and the intensity of of going after the way Microsoft does it's a no-brainer for me that with the partnership that Microsoft has that they've got a PO position here you think that that sethan Adella is on a personality level maybe a little bit more ruthless versus a c pay like what is it that because you know you hear this in the news about how Google's kind of dropped the ball on on this AI Trend I'm not sure what to make of it because I feel like they have incredible technical expertise across the board and they you know they use AI a lot with search but there does seem to be a personality difference between the management team at Microsoft and when I've heard sinder speak and he's done
QuestionerI've heard sinder speak and he's done Congressional testimony you know you see him with at conferences and whatnot he comes across as maybe a little bit more relaxed but I'm just curious if you have any thoughts into that quite accidentally I didn't expect this but quite accidentally when I was in Omaha in may I usually go for a dinner that Charlie would invite me to there's a lot of whoo who who show up at the dinner they seated me next to Bill Gates so so I was quite a quite a surreal situation where I had had dinner with Bill and of course his son was sitting next to him and I chatted about all kinds of things with him for about two and a half hours we talked a lot about many of these areas and I even played a game with him I said look I'm going to mention a company you tell me if you want to go long or short you know and he said he said yeah no problem you know so I I
Questionersaid yeah no problem you know so I I said yeah no problem you know so I I said you know Amazon he said long you said you know Amazon he said long you said you know Amazon he said long you know and I said Google he said short and know and I said Google he said short and know and I said Google he said short and then then Apple he paused he said look then then Apple he paused he said look then then Apple he paused he said look basically Apple's a situation where they basically Apple's a situation where they basically Apple's a situation where they don't really have R&D in the way we we don't really have R&D in the way we we don't really have R&D in the way we we would most of us would understand it so would most of us would understand it so would most of us would understand it so he mentioned that Microsoft has had he mentioned that Microsoft has had he mentioned that Microsoft has had Microsoft research Labs forever right Microsoft research Labs forever right Microsoft research Labs forever right and I also pointed out to him then that and I also pointed out to him then that and I also pointed out to him then that nothing has come out of Microsoft nothing has come out of Microsoft nothing has come out of Microsoft research Labs ever you know that is been research Labs ever you know that is been research Labs ever you know that is been that has been of any use so he actually that has been of any use so he actually that has been of any use so he actually was quite agreeable to that even though was quite agreeable to that even though was quite agreeable to that even though that statement probably didn't make him that statement probably didn't make him that statement probably didn't make him happy he said look we have two kinds of happy he said look we have two kinds of happy he said look we have two kinds of research at Microsoft we have the Ivory research at Microsoft we have the Ivory research at Microsoft we have the Ivory Tower Microsoft Labs which is like a you Tower Microsoft Labs which is like a you Tower Microsoft Labs which is like a you know academic bunch of phds you know know academic bunch of phds you know know academic bunch of phds you know whatever doing their thing and you have whatever doing their thing and you have whatever doing their thing and you have your opinion on that that's fine and your opinion on that that's fine and your opinion on that that's fine and then we have of course development and
Otherthen we have of course development and then R&D TI to development and he said that has been really effective so that's the engine which has the more you know bread and butter Engineers who are the masters of cloning right so basically Google has always had a huge leg up on the pure research for a very long time and they've done a really good job the transition from the real research from this in very Innovative Research into a bit a business is not not something Google has been able to pull off too many times they pulled it off for search but then after that if you look at it YouTube was an acquisition Android was an acquisition and many of their other bets are just wild you know like there's like a free-for-all spending but nothing has really come out the other end Microsoft on the other hand doesn't take flyers you know when they see that something is
Questioneryou know when they see that something is gaining traction and they don't they may put some people on Microsoft Research into it but but I don't think Bill and Company and Satya and Company count on those guys they they pull in people who are more you know died in the world development Engineers with some research background and those are the guys who pull the teams and things through so I think that from an execution point of view I just think that it's just a lean mean fighting machine it's it's really exceptional and they will be able to do this and they've done this repeatedly when the Paradigm has changed the Paradigm has changed on them so many times if you think of Microsoft I know it's like a nearly a 50y old company I mean I think this year is like year 50 for them 48 sorry they're 48 years old now it's like really old you know so but
Questionernow it's like really old you know so but you know for a 48y old business with all the paradigms they've jumped through they look like a young company you know they look like a really young executing company it's just got some great DNA on that front yeah they're not they're not resting on laurels actually on a on a related note and this this transitions to some of your other Investments somebody asked on the topic of Topline Revenue increases going straight to the bottom line the almati airport in kakon of your Turkish holding Tav airport seems primed for dutyfree as well as potential air and passenger fee increases that may go straight to the bottom line there's a pavlovian response to macroeconomic news how do you think about their tav's valuation lately do you ever double down on bets that are 10% you you obviously make large bets so have you have you
Questionermake large bets so have you have you doubled down there or what's your what's your take on that
Questioneryeah let me just give you some back background I think so that people can kind of understand uh the business a little better the almadi airport was an acquisition that Tav did in the middle of covid when passenger traffic was Zero it was like basically you're buying this airport when there are your revenue is zero basically they got the deal of the century in terms of what they paid most of these airports that come up for privatization are Bots they build operate and transfer which means you get a concession for like 25 years or 30 years or 50 years and you pay the government something for that concession and after that 25 year period it goes back to the government and so you are a a tenant if you will milking the the situation for you know two or
Questionerthe the situation for you know two orthe the situation for you know two or three decades or something Tav thethree decades or something Tav thethree decades or something Tav the almari airport was an outright purchasealmari airport was an outright purchasealmari airport was an outright purchase they own it forever they own it for thethey own it forever they own it for thethey own it forever they own it for the next thousand years they don't have tonext thousand years they don't have tonext thousand years they don't have to pay anyone anything anymore and part ofpay anyone anything anymore and part ofpay anyone anything anymore and part of the deal for them to get their airportthe deal for them to get their airportthe deal for them to get their airport was that they wanted to put inwas that they wanted to put inwas that they wanted to put in a new international terminal which isa new international terminal which isa new international terminal which is going to actually go live in about sixgoing to actually go live in about sixgoing to actually go live in about six or eight months they've been building itor eight months they've been building itor eight months they've been building it I visited that airport in 22 and theI visited that airport in 22 and theI visited that airport in 22 and the almari airport is a very unusual airportalmari airport is a very unusual airportalmari airport is a very unusual airport in the sense that I don't know of anyin the sense that I don't know of anyin the sense that I don't know of any other airport in the world where insideother airport in the world where insideother airport in the world where inside the airport some of the real estate wasthe airport some of the real estate wasthe airport some of the real estate was sold so for example the the currentsold so for example the the currentsold so for example the the current duty-free operators in the currentduty-free operators in the currentduty-free operators in the current terminal own that space inside theterminal own that space inside theterminal own that space inside the terminal even though Tav owns theterminal even though Tav owns theterminal even though Tav owns the airport and Tav today at that airportairport and Tav today at that airportairport and Tav today at that airport gets zero duty-free Revenue now what Tavgets zero duty-free Revenue now what Tavgets zero duty-free Revenue now what Tav is doing is it went and talk to those
Questioneris doing is it went and talk to those guys saying Hey listen can we do a deal and the price was so high they said okay you keep the dutyfree it's okay when the new terminal comes up which is happening in 8 months all the international moves to the new terminal and all the dutyfree automatically goes to the new terminal which means that Tav will now Own 100% % of the duty-free and the people who had those duty-free shops in the old terminal which will become a domestic terminal can basically go pound sand they'll convert them probably to coffee shops or something you know so it's like there nothing and yeah and just to tell you just to uh show you how dutyfree works just in case of some of your listeners are dutyfree affectionados when you go to some you know dutyfree shop and there's a $100 bottle of Johnny Walker or shivas or something the
OtherWalker or shivas or something the Factory gate price of that liquor is $25 to $30 okay so what you're paying $100 for which would cost even more in your home country the factory gate price is $25 $30 the airport operator charges 40% of Top Line as their rent to the dutyfree operator so Tav has its own subsidiary which runs a dutyfree shop so what tab will do is it'll bring in its own subsidiary as a tenant that tenant is 50% owned by Tav so 40% of all the duty-free Revenue will come to Tav as rent that Johnny Walker bottle $60 is left for the dutyfree operator who pays about $30 for it $25 or $30 they have $10 or $20 in expenses to run the place and they make a 10% margin the airport operator the duty-free part of the business is an incredible business every flight every international flight that comes in on average about $1,500 gets
Questionercomes in on average about $1,500 gets spent amongst all those passengers on dutyfree and the airport operator ends up with about $600 per flight as their fee which if you divide it by let's say 100 passengers or something it's like $6 per per passenger the terminal fees which is also what they charge for international which normally is about 7 or 8 or $9 per passenger currently in Kazakhstan that number in almari is like 3 or 4 that is being bumped up about 20% a year by Tav they they're not taking it to eight in one shot but it's going up so basically if you think about the per passenger Revenue the international per passenger Revenue which Tav is going to get when the new terminal is up it'll be like something like $6 per passenger from dutyfree and probably another five or $6 from the passenger fees which used to be three so what used to be $3 per
Otherthree so what used to be $3 per passenger will soon be $11 on its way to about $15 the other thing that has happened is that the the traffic at almari the the passenger counts they just actually today released some numbers the 2024 passenger count and aircraft movement numbers are about 40% higher 30 or 40% higher than 20 2019 which was the last year preco when things were normal so they they are basically getting an airport in 24 which is 30 40% larger in size in terms of Passenger throughput and aircraft movement almari is also the only one of the only airports where Tav does the fueling they don't have the fueling rights at the other airports it's very unusual for the airport operator other the fueling it's like you have a monopoly Gap gas station for like 500 miles and that fueling business has like a 40% margin it's beautiful okay and and all these flights from Russia
Otherand and all these flights from Russia and and all these flights from Russia got diverted and whatever so the long got diverted and whatever so the long got diverted and whatever so the long and short of it is the tab the entire and short of it is the tab the entire and short of it is the tab the entire company used to have a market cap which company used to have a market cap which company used to have a market cap which was 600 to$ 800 million us just the was 600 to$ 800 million us just the was 600 to$ 800 million us just the almari airport is probably if they almari airport is probably if they almari airport is probably if they wanted to put it on sale in a few years wanted to put it on sale in a few years wanted to put it on sale in a few years would go for I don't know 3 to 5 billion would go for I don't know 3 to 5 billion would go for I don't know 3 to 5 billion and they have 15 15 other airports and they have 15 15 other airports and they have 15 15 other airports besides almari so we are long and strong besides almari so we are long and strong besides almari so we are long and strong with no plans to lighten that and the with no plans to lighten that and the with no plans to lighten that and the current market cap is 600 million market current market cap is 600 million market current market cap is 600 million market cap used to be 600 it's moved up it's cap used to be 600 it's moved up it's cap used to be 600 it's moved up it's approaching about two billion now but approaching about two billion now but approaching about two billion now but but it's still very low it's very low but it's still very low it's very low but it's still very low it's very low for the size and scale and and you know for the size and scale and and you know for the size and scale and and you know Turkey just dropped all visa Turkey just dropped all visa Turkey just dropped all visa requirements for US citizens their requirements for US citizens their requirements for US citizens their tourism business is through the roof tourism business is through the roof tourism business is through the roof 2020 for numbers are looking like about 2020 for numbers are looking like about 2020 for numbers are looking like about 30% higher than 23 all the Turkish 30% higher than 23 all the Turkish 30% higher than 23 all the Turkish airports are on fire I mean they're just airports are on fire I mean they're just airports are on fire I mean they're just doing exceptionally well yeah and all
Questionerdoing exceptionally well yeah and all their International passenger revenues are very high so company's executing really well firing in all cylinders it's a very good management team yeah basically that almari airport that they bought for 400 million including the capex which was 2/3 Finance at like 4% 30-year fixed was just an incredible deal what percent of your total portfolio is turkey now rough it's I think probably more than half it's not more than half because I put money into it it's more than half because it's Ras used to be like you know 16 million market cap and it's about 30 times that now and and such so it's moved up I haven't checked lately because some of our us bets have done very well as well but like 50 60% probably at this point but still very undervalued speaking of your us bets what's your favorite us name now in in the portfolio if you
Todd Combsname now in in the portfolio if you looked at I mean I don't like to talk about what we what we own so much but if you looked at our last 13f filing which is only our that only shows our us positions it only had coal so basically we had some coal bets that showed up on that filing and we'll have another filing that will show up in another week or something for our year end numbers but yeah we had a pretty extreme mispricing on the Cal front and so and a lot of things were misunderstood about it so we went into that so basically metallurgical coal which is what is used to make Iron and Steel we will be using that 50 60 years from now because there's really no substitute and those stocks were trading at like two times earnings they were doing massive BuyBacks and so on at two times earnings doing BuyBacks at two or three or four times earnings is really good for your
Questionertimes earnings is really good for your health and your wealth wow how did you did was that something where you knew about the coal industry from the past or how did that hit your radar in the first place
Questioneryou know I don't have any original ideas Dava everything is cloned from somewhere like my buddy Bill Gates he also has no original ideas you know we're very similar that way I'd seen a filing by David Einhorn where his largest position this was in first quarter of last year so that that filing came out middle of May May 15th or something and his largest position was a company called console Console Energy which is a big thermal coal producer I just basically wanted to answer one question for myself I said why is David Einhorn so hot and heavy on stupid coal you know and so I went down a rabbit hole to try to answer that question and
Otherhole to try to answer that question and I emerged from that rabbit hole massive Co bet because it was just such a no-brainer and one of the things about coal is that you know I don't have any endowment money or anything in my fund but if I had some of those guys in the fund they would have exited because of all the ESG mandates and so we have a lot of irrational kind of behavior in terms of what people can and cannot invest in which leads to mispricing of some of these Securities that makes a lot of sense did you talk to David Einhorn at all I didn't speak to him I just basically went in and just said okay let's try to understand what is going on and I and I'd seen some commentary he had made his complaint was that these companies that he's buying that are really cheap from a valuation perspective because of all the you know emphasis on the big seven Tech Etc they
Questioneremphasis on the big seven Tech Etc they are kind of left by the wayside right no are kind of left by the wayside right no are kind of left by the wayside right no nobody's really interested in these companies and he was kind of moaning and groaning in some of these public comments of well how do I get paid you know how do I get paid when I own these names when no one's interested you know the answer was you get paid when they when they buy back stock valuations are very low and console is an interesting company because they forward sell all their production at least a year in advance so we already know for example in 2024 even though it's a commodity we already know within a band what their cash flows in 24 are going to be because they've already sold it they've already said what the prices are we already know what their costs are and they're like that's a business which says that 100% of discretionary cash flow they cancel
Greg Abelof discretionary cash flow they cancel the dividend is going to BuyBacks so we had a company that had a 1.8 billion market cap last year that not of 600 million in earnings last year you know pumped into BuyBacks so that's very ENT are you you still involved with or invested in India energy exchange are you still still in that one or I think what I'm finding is that we're finding more things that make a lot of sense in the US and in places like turkey India is a company with some great Tailwinds but also it's not a cheap place we have some great businesses and great franchises there but some of the valuations are pretty heavy so we've been net sellers in India and net buyers in the US when you look at something like tab airports and you look at something like almari that's a big aha moment because you look at an airport like that and look at what kind of what
Questionerlike that and look at what kind of what kind of cash flow that asset can produce and you look at the pricing of that asset you know it just doesn't make any sense when I see these big price and value Deltas for reasons that I can understand like in that case there was you know the whole issue was turkey and you know who wants to buy an airport in Kazakhstan and all these other things that are going through people's minds I think when you get to those anomalies then you can you have a basis to do something so I think metallurgical coal is an anomaly in terms of where it's priced and what it's worth I think the large car dealerships are anomaly about where they're priced and where they what they're worth and I think turkey's an anomaly like that right so I'm basically Mish anomaly PAB that's who I am do you feel the same about the auto oems so
Questionerfeel the same about the auto oems so like the GM Ford like company that have not you know gotten the EV Credit in the way Tesla has and are still selling or like a Toyota I think the oems the oems are a really bad business and the reason they are bad business is that if Tesla makes a 10% margin so in the end in the end we will all be driving EVs and that transition may happen in 10 years or 20 years or whatever you can debate that but that transition is going to happen when whenever that transition happens in mass if the margins of a company like Tesla are like 10% then the margins for a company like Ford and GM will be negative because the execution here is so much better so I think that most of these players go up against Tesla except companies like byd maybe the Koreans will have a very hard time making any kind of profit margin so I would not be
Charliekind of profit margin so I would not be surprised if in the end the Fords and GMs of the world really have a tough time they may even become terminal because you know if you have a negative margin and the ice cars are gone that's a really tough place to be and I think when you have Elon you know who is an anomaly when you have someone like Elon that you're competing with the only thing you should do is go find something else to do it's not good for your health or wealth to compete with El and then you know we have Chun Fu Wang at byd in China Chang Fu Wang is Elon to the power of Elon when you have to compete with Elon and Elon squared or Elon to the power of Elon you definitely want to take your ball and go home go find something else to do so yeah the auto oems I think long run they have some difficult times ahead now on Turkey we didn't we didn't we didn't get to uh
Questionerwe didn't we didn't we didn't get to uhwe didn't we didn't we didn't get to uh discuss race sauce any change in yourdiscuss race sauce any change in yourdiscuss race sauce any change in your views on the company or it's still justviews on the company or it's still justviews on the company or it's still just one of these long-term kind of uhone of these long-term kind of uhone of these long-term kind of uh stories that you plan on sitting on forstories that you plan on sitting on forstories that you plan on sitting on for many years to come
Todd Combsmy view of the peoplemany years to come my view of the peoplemany years to come my view of the people who are running Ras and the quality andwho are running Ras and the quality andwho are running Ras and the quality and nature of the business I've been anature of the business I've been anature of the business I've been a shareholder now for almost 5 years youshareholder now for almost 5 years youshareholder now for almost 5 years you know made the bet in 2019 and we haven'tknow made the bet in 2019 and we haven'tknow made the bet in 2019 and we haven't made any changes you know we we wouldmade any changes you know we we wouldmade any changes you know we we would like to hold that for as long as we canlike to hold that for as long as we canlike to hold that for as long as we can my perspective on the business themy perspective on the business themy perspective on the business the quality of the assets the quality of thequality of the assets the quality of thequality of the assets the quality of the people running it how good they are haspeople running it how good they are haspeople running it how good they are has only gone up every year I think it'sonly gone up every year I think it'sonly gone up every year I think it's it's an exceptional set of assets reallyit's an exceptional set of assets reallyit's an exceptional set of assets really smart capital allocators I have neversmart capital allocators I have neversmart capital allocators I have never seen them in the last 5 years make aseen them in the last 5 years make aseen them in the last 5 years make a singlesinglesingle mistake I I just haven't seen them domistake I I just haven't seen them domistake I I just haven't seen them do anything dumb and the other thing whichanything dumb and the other thing whichanything dumb and the other thing which is really great about turkey is that we
Todd Combsis really great about turkey is that we had these very crazy monetary policies coming out of erdogan's government Etc but after he got re-elected he put a new team in place and that new team is really an exceptional team and they basically have raised interest rates interest rates now are in the in Turkey are in the mid 40s and they are taking a sledgehammer to the way they should have and so probably in another year or two they already starting to see some green shoots on that front in terms of inflation is really hard to get back under control once it gets wild and crazy but they're going after it pretty aggressively so I think their the policies they have in place are working quite well so turkey may actually you know all these investments in Turkey had made was assuming that the macro never improves you know the bets worked
Otherimproves you know the bets worked because you like for example tabbecause you like for example tabbecause you like for example tab airports is listed in Turkey butairports is listed in Turkey butairports is listed in Turkey but Kazakhstan Mar has nothing to do withKazakhstan Mar has nothing to do withKazakhstan Mar has nothing to do with Turkish monetary policy you know it'sTurkish monetary policy you know it'sTurkish monetary policy you know it's just a it's like it's just the baby gotjust a it's like it's just the baby gotjust a it's like it's just the baby got thrown out with the ba bath water if youthrown out with the ba bath water if youthrown out with the ba bath water if you will so I think that there there may bewill so I think that there there may bewill so I think that there there may be some real Tailwinds because at somesome real Tailwinds because at somesome real Tailwinds because at some point it looks like in the next year orpoint it looks like in the next year orpoint it looks like in the next year or two the actual monetary situation willtwo the actual monetary situation willtwo the actual monetary situation will be a lot better and if we ever getbe a lot better and if we ever getbe a lot better and if we ever get people coming back to Turkey the foreignpeople coming back to Turkey the foreignpeople coming back to Turkey the foreign investors and institutional investorsinvestors and institutional investorsinvestors and institutional investors then some of these names these are thethen some of these names these are thethen some of these names these are the most Blue Chip names you know these aremost Blue Chip names you know these aremost Blue Chip names you know these are the ones that people will want to ownthe ones that people will want to ownthe ones that people will want to own but we don't need that to happen it itbut we don't need that to happen it itbut we don't need that to happen it it would still work even without that Iwould still work even without that Iwould still work even without that I think that the good news with turkey wasthink that the good news with turkey wasthink that the good news with turkey was that we could because it was so cheap wethat we could because it was so cheap wethat we could because it was so cheap we we went after the very best assets andwe went after the very best assets andwe went after the very best assets and these are kind of iconic Monopoly type
Questionerthese are kind of iconic Monopoly type assets like you know we own the coke bottler we ownn the largest beer company we own the best airport operator in the region and we own very Prime Warehouse assets all across turkey so these are just great assets have you speaking of kind of hard assets have have you looked at all into like the the real estate industry in the US commercial real estate where there's been a lot of you know a lot of turmoil anything in that space where you feel like there's maybe been a potential dislocation you know
Questionerwell I think I think you have to you have to segment it I think the the office vacancies I I think what the number they read is something like 20% 20% is a ridiculously high number we didn't see that during the financial crisis we haven't seen those types of vacancy rates in offices in the US for more than three decades you have to go
Questionermore than three decades you have to go really far back to to get that so it's nuclear winter in the office Market in the US we are seeing some signs of some real distress in some of the banks smaller Banks who were wild and crazy lending to these people like I think New York Community bankor you know the stocks Been Under Pressure I haven't looked at it but I think that the exposures because what happens at some point is the landlords just you know hand you the keys and move on you know and then the bank is left high and dry you know they can't they can't sell it they can't do anything so we went through a big crisis a few decades ago where they formed resol ution trust Corporation to try to move some of these commercial assets you know and get them kind of basically kind of like a chapter 11 process if you will so I think office
Questioner11 process if you will so I think office my suggestion and perspective is to justmy suggestion and perspective is to justmy suggestion and perspective is to just stay away you know it's it will take astay away you know it's it will take astay away you know it's it will take a long time because we had a secularlong time because we had a secularlong time because we had a secular change in how people work it will take achange in how people work it will take achange in how people work it will take a long time I mean the USlong time I mean the USlong time I mean the US population the growth rates are reallypopulation the growth rates are reallypopulation the growth rates are really low so we used to as a country becauselow so we used to as a country becauselow so we used to as a country because you know immigration is not solved andyou know immigration is not solved andyou know immigration is not solved and all this thing if the if the country wasall this thing if the if the country wasall this thing if the if the country was growing at something like 1% a yeargrowing at something like 1% a yeargrowing at something like 1% a year which it used to do then eventually thiswhich it used to do then eventually thiswhich it used to do then eventually this space would get you know chewed up andspace would get you know chewed up andspace would get you know chewed up and we would get back to some kind of normalwe would get back to some kind of normalwe would get back to some kind of normal situation I don't know if even 5 yearssituation I don't know if even 5 yearssituation I don't know if even 5 years or 10 years from now whether the officeor 10 years from now whether the officeor 10 years from now whether the office Market it'll definitely be less theMarket it'll definitely be less theMarket it'll definitely be less the vacancy rate will go down but it mayvacancy rate will go down but it mayvacancy rate will go down but it may still not be healthy so I think that'sstill not be healthy so I think that'sstill not be healthy so I think that's that's a nuclear winter for long time ifthat's a nuclear winter for long time ifthat's a nuclear winter for long time if you look at some other areas like Iyou look at some other areas like Iyou look at some other areas like I would say like home builders I thinkwould say like home builders I thinkwould say like home builders I think that's that's a much more promising area
Questionerthat's that's a much more promising area to look at because what has happened with the home builders is that many of them are getting religion like NVR you know NVR was the poster child which did so many BuyBacks and the stock went from I don't know $10 to 4,000 over the last 30 years or something and many of the others like py and some of the other guys are following that Playbook now I think home building is a much better area I haven't made any bets there yet but basically they don't really have a overhang we're likely to see interest rates come down and we don't have a lot of housing stock and such so that once we see interest rates go down the home building industry maybe be doing even better than it is today I think in the office Market in the US you kind of have to avoid some of the office stuff you kind of go more residential and then kind of take it
Questionerresidential and then kind of take it from there but it's not a sector I'm playing in right now shifting gears a little bit do you have any views on the upcoming presidential election in terms of how that might affect your portfolio or kind of sectors you might be looking at
Todd CombsI wish I had better choices you know I think the the range of the range of candidates no the I mean I would just say that you know we are the leaders of the Free World We Are The you know carrying the torch of democracy and you know I mean I love the United States one of the most amazing thing about the United States and the founding fathers and the kind of form of government they set up is it's basically bulletproof and you see that you know this the the craziness that goes on in Washington and the economy still does well and everything still going running
Warrenwell and everything still going running and working it's thanks to the founding fathers but I think it's a sad state of affairs in Congress it's very sad state of affairs with the candidates on both sides and I wish there were better choices so it's just I mean the just the US is doing so well with you know just moras and you know complete deadlock in Washington just imagine what we could do if we actually had somewhat half functional government you know it would just be night and day so On a related note on a related note we were talking to the winkl BOS Brothers earlier today and they were they were complaining about the fiscal situation in the United States and you know I I was saying that you we we've been talking about debt for decades and you know when will we come to a point where the government will actually have to grow up and re in costs
Questioneractually have to grow up and re in costs do do you have any thoughts on that Ido do you have any thoughts on that Ido do you have any thoughts on that I mean do you feel like we can continue tomean do you feel like we can continue tomean do you feel like we can continue to mass deficits year after year at themass deficits year after year at themass deficits year after year at the scale that we are without anyscale that we are without anyscale that we are without any repercussions and how do you put a arepercussions and how do you put a arepercussions and how do you put a a duration on how long it can last well
Warrenit's a much bigger problem at higherit's a much bigger problem at higherit's a much bigger problem at higher interest rates that we have now and Iinterest rates that we have now and Iinterest rates that we have now and I think that it's not good for athink that it's not good for athink that it's not good for a civilization to uh test the limits youcivilization to uh test the limits youcivilization to uh test the limits you know the the US has pristine credit weknow the the US has pristine credit weknow the the US has pristine credit we are borrowing in our ownare borrowing in our ownare borrowing in our own currency we're never going to have acurrency we're never going to have acurrency we're never going to have a default because we we own the printingdefault because we we own the printingdefault because we we own the printing press but I think that it could causepress but I think that it could causepress but I think that it could cause issues it could I mean I think it makesissues it could I mean I think it makesissues it could I mean I think it makes the monetary policies a lot harder itthe monetary policies a lot harder itthe monetary policies a lot harder it makes it more likely that we havemakes it more likely that we havemakes it more likely that we have runaway inflation so yeah I mean I thinkrunaway inflation so yeah I mean I thinkrunaway inflation so yeah I mean I think that a small deficit deficit is probablythat a small deficit deficit is probablythat a small deficit deficit is probably okay and but I think that there needs tookay and but I think that there needs tookay and but I think that there needs to be some structural changes in the way webe some structural changes in the way we
Greg Abelbe some structural changes in the way we you know do our taxes and all of that and that requires Washington to be functional and it's not functional so it's unfortunate sort of situation but yeah I'm not an alarmist about it I think that country has a lot of strengths but I think we definitely need some grown-ups in DC there seem to be more politicians being you know kind of talking locally about the deficit problem but I I it's just it's an ongoing it's just been talked about for so many years and you just wonder like what will be the the the turning point where you know the parties actually agree to make substantive changes be it to entitlements or tax reform whatever it is or immigration even and it just blows my mind that nothing ever happens as as the problem gets bigger and bigger but anyway be it as it may lastly monish you've written extens Ely about Charlie
Questioneryou've written extensively about Charlie Munger and and obviously with his passing we wanted to just I don't know if you could tell a story about a time dinner or moment you shared with him but just if you could give us you know maybe even an idea like what he meant you and also you know some of the wisdom that he imparted on you I'd love to hear it I'm sure the rest of us would as well
WarrenI miss Charlie a lot you know I used to see him a few times a year for dinner we'd play bridge and in fact I had my last one-on-one dinner with him exactly a month before he passed away which I didn't know at that time it would be my last time seeing him and we had a great time actually his his mind was very sharp and he was always very kind he was always very funny Charlie always had the best jokes I mean he just had a huge repertoire of jokes that he would you
Questionerrepertoire of jokes that he would you know say on demand I I always have a hard time remembering great jokes but he was really good at it I remember one time a few years back we used to meet on Fridays at the LA Country Club on to play bridge and it we used to start by having lunch at the in the dining room and then we'd go play four or five hours of bridge so I was sitting in the LA Country Club dining room and across from me was Rick guran and Charlie Monger you know just just little sitting across the table from me and I told them I said you know you guys think this is just okay you know there a bunch of people having lunch before bridge but I'm sitting with two you know historic icons and you know this is like a surreal moment guy grew up in bandra in Mumbai you know sitting with you guys you know just shooting the breeze so I said you know when you guys
Questionerbreeze so I said you know when you guys were doing your deals in the 60s where you say you were shooting fish in a barrel with the water drained out what are some of the tell me about some of the deals that stand out you know they looked at each other and then Rick Goran tells Charlie tell him the story of the nurse okay and so
Charlieso Charlie Charlie goes on to say that there was a company in California where this Maverick entrepreneur had come up with auto erative that would go into an engine where if you put this kind of liquid in the engine it would seal all small leaks like it would make the engine not leak anymore and this guy basically was like a super salesman so what he used to do is he used to go to these auto mechanic shops and whatever and he'd take his gun with him and he shoot the gun into his engine block of his car and then he would pour the
Questionerhis car and then he would pour the liquid into the engine block and show the mechanics that look there's no leak and you know his sales took off like you know like people like there's no-brainer right but the guy was kind of Maverick and not a very good manager of cash flows and all that he suddenly passed away you know kind of untimely death and the business owed a lot of money to the banks and basically the business was for the most part bankrupt and so what Rick and Charlie did is they bought up all the bank debt like you know 3040 cent of dollar and they had control of the company but the Widow of the of the guy technically had the ownership of that company and they did not want to play hard ball by saying hey we own the debt and that's the end they wanted to make some small payment to the Widow to basically get a proper sale from her so
Questionerbasically get a proper sale from her so Charlie said that when the guy passed away the Widow finds out that the the guy was having an affair with a nurse he had basically in his will made the nurse the executor of his will and the Widow was going to get the title to the business but the nurse was the executor so the Widow was extremely pissed off okay and the nurse was also extremely pissed off they were both pissed off off with each other and Charlie and Rick in the middle of all this they just trying to get their kind of deal done but the women basically were not interested in cooperating so Charlie said okay I'm going to meet them and you know try to kind of pacify them and say yeah we know he was a jerk and whatever to the to the Widow and to get it done so he arranged a meeting with the nurse at the California Club the California Club is a
OtherCalifornia Club the California Club is a club in Downtown LA that's the first place I met Charlie when I first met him it's you know he used to love going to have lunch there it's a very you know Blue Blood old money kind of place and Charlie always had the same table in the dining room he'd probably eat lunch three times a week over there and the nurse was blonde and well endowed I will not use the language Charlie used on this video but let's just say it was a lot of colorful language he used and she showed up for lunch with Charlie in her nurse's uniform because she came came straight from work and the uniform was about three sizes too small okay and and so so so Charlie is saying that all the members of the California Club was sitting having lunch there they like gasped you know when they saw this woman enter and then sit down with Charlie and
Questionerenter and then sit down with Charlie and Charlie said they thought I'm having lunch with some porn star okay and so he said he said anyway I met her for lunch I pacified her then Rick and I met the Widow we pacified her just enough for the two women to cooperate get the deal done and then we moved on with that additives company this would be kind of like the stories I'd hear from them I think just we would not have a bursha haway as we know it today if there was no Charlie Monger if I don't think the market cap of bsha haway would be even 10% of where it is today without a Charlie the impact it was really one plus one became 11 he pushed Warren towards the better businesses the better people and all of that and he pushed him in a way where he never took credit you know and like he was always happy to be this partner in the background whatever
Questionerthis partner in the background whatever
Questionerso I think he had an enormous impact on Berkshire he had a huge impact on a lot of Institutions that he got involved with you know the Harvard West Lake school and then UCSB and Stanford and University of Michigan and and so on just never really wanted to talk about it know just all these great things he was doing and a few times couple of times I brought up personal challenges I was facing and he was just so helpful to me I mean just always there and just incredible advice and I I just always followed what he said and things worked really well but another time he was I give you one of the Munger jokes you know he was saying that there was this Jewish couple and they had this kid who really didn't like to study much you know his kind of grades were like pretty poor even though the parents were pretty smart and the
Otherthe parents were pretty smart and thethe parents were pretty smart and the the parents were kind of frustrated sothe parents were kind of frustrated sothe parents were kind of frustrated so they found there was a really goodthey found there was a really goodthey found there was a really good Catholic School in the area and theyCatholic School in the area and theyCatholic School in the area and they moved the kid to the Catholic school andmoved the kid to the Catholic school andmoved the kid to the Catholic school and after the move to the Catholicafter the move to the Catholicafter the move to the Catholic School the kid suddenly started doingSchool the kid suddenly started doingSchool the kid suddenly started doing extremely well in school in fact he usedextremely well in school in fact he usedextremely well in school in fact he used to come home the kid used to come hometo come home the kid used to come hometo come home the kid used to come home drop his bags and stuff and just go todrop his bags and stuff and just go todrop his bags and stuff and just go to his room and start working and math washis room and start working and math washis room and start working and math was especially hard subject in the senseespecially hard subject in the senseespecially hard subject in the sense that the kid had no interest in math histhat the kid had no interest in math histhat the kid had no interest in math his math grad used to be the lowest he hadmath grad used to be the lowest he hadmath grad used to be the lowest he had some of the best math grades so after asome of the best math grades so after asome of the best math grades so after a few weeks the parents sat down with thefew weeks the parents sat down with thefew weeks the parents sat down with the kid and they said you know we noticedkid and they said you know we noticedkid and they said you know we noticed that you know you're doing so wellthat you know you're doing so wellthat you know you're doing so well you're engaged with this all the mathyou're engaged with this all the mathyou're engaged with this all the math and everything so what changed like youand everything so what changed like youand everything so what changed like you know do you like the school they said heknow do you like the school they said heknow do you like the school they said he said you know when I went to the schoolsaid you know when I went to the school
Questionersaid you know when I went to the school and they I saw that they had put thatand they I saw that they had put thatand they I saw that they had put that guy on the plus sign and I just knewguy on the plus sign and I just knewguy on the plus sign and I just knew that they were really really seriousthat they were really really seriousthat they were really really serious about math and he basically said that Iabout math and he basically said that Iabout math and he basically said that I didn't want to be crucified and so Ididn't want to be crucified and so Ididn't want to be crucified and so I just decided I'm going to focus on thejust decided I'm going to focus on thejust decided I'm going to focus on the math
OtherM you're you're one of the bestmath M you're you're one of the bestmath M you're you're one of the best storytellers in the industry so we'restorytellers in the industry so we'restorytellers in the industry so we're getting a compounding effect heregetting a compounding effect heregetting a compounding effect here between you and Charlie which is well Ibetween you and Charlie which is well Ibetween you and Charlie which is well I had to I had to take out all ofhad to I had to take out all ofhad to I had to take out all of Charlie's colorful language you knowCharlie's colorful language you knowCharlie's colorful language you know which which was which was quite yeah Iwhich which was which was quite yeah Iwhich which was which was quite yeah I can fill that in I'm sure we can allcan fill that in I'm sure we can allcan fill that in I'm sure we can all fill that fill that infill that fill that infill that fill that in
Questioneryeah it's funny because he's he he it'syeah it's funny because he's he he it'syeah it's funny because he's he he it's funny you say that he's he's happy to befunny you say that he's he's happy to befunny you say that he's he's happy to be kind of in you know the backdrop notkind of in you know the backdrop notkind of in you know the backdrop not necessarily the foreground of Berkshirenecessarily the foreground of Berkshirenecessarily the foreground of Berkshire hathway but every time he talks you canhathway but every time he talks you canhathway but every time he talks you can tell he he isn't holding back I meantell he he isn't holding back I meantell he he isn't holding back I mean I've I've seen many ask I asked CharlieI've I've seen many ask I asked Charlie
QuestionerI've I've seen many ask I asked Charlie what I I told Charlie in all yourwhat I I told Charlie in all yourwhat I I told Charlie in all your Partnerships with all the differentPartnerships with all the differentPartnerships with all the different businesses that you're in you are thebusinesses that you're in you are thebusinesses that you're in you are the dominant partner you are the typ a maindominant partner you are the typ a maindominant partner you are the typ a main main partner and the other guy is youmain partner and the other guy is youmain partner and the other guy is you know sub servant to you in some ways theknow sub servant to you in some ways theknow sub servant to you in some ways the only one which is not that way is theonly one which is not that way is theonly one which is not that way is the bushire hathway partnership with Warrenbushire hathway partnership with Warrenbushire hathway partnership with Warren Buffett so I said how could you knowingBuffett so I said how could you knowingBuffett so I said how could you knowing the personality you are how could youthe personality you are how could youthe personality you are how could you accept the role of a junior partneraccept the role of a junior partneraccept the role of a junior partner because you've never been a juniorbecause you've never been a juniorbecause you've never been a junior partner in any of the other Venturespartner in any of the other Venturespartner in any of the other Ventures with any of the other guys that I've metwith any of the other guys that I've metwith any of the other guys that I've met right
Charliehe said it was a no-brainer to beright he said it was a no-brainer to beright he said it was a no-brainer to be a junior partner to Warren Buffett somea junior partner to Warren Buffett somea junior partner to Warren Buffett some things are total no-brainers that was athings are total no-brainers that was athings are total no-brainers that was a no-brainer so he said yes even though itno-brainer so he said yes even though itno-brainer so he said yes even though it went against my natural grain I justwent against my natural grain I justwent against my natural grain I just knew that that was the right thing to doknew that that was the right thing to doknew that that was the right thing to do
Questioneryeah it's like he joined uh you know theyeah it's like he joined uh you know theyeah it's like he joined uh you know the major leagues or like a major league
Questionermajor leagues or like a major league baseball team and you know or something
Questionerto that effect that's amazing um mon this is this was phenomenal always such a pleasure to have you you know chat on some zero and tell us all your learnings
Questioneryeah amazing I I will I'll follow up with you after this but thank you again and thanks to everyone else on the call for for tuning tuning in will certainly be back next year for top stocks 2025 but uh and you know quick plug for monish even though I I know you can't talk about it um check out check out the wagon mutual fund um when youall get a chance uh Braden do you have anything else you want to add before we uh close it up
Otherno nothing else everyone uh that joined us today obviously we appreciate we hope you had fun and and found it as informative as we did um and monish thank you it's always fun always fun
Questionerthank you it's always fun always fun hearing from you and getting to hear a little bit about Charlie and your time with Bill Gates too telling nothing's coming out Microsoft it's quite a lot we should do we should do a call about conversations at the LA Country Club that could be a good like hour long or longer discussion
Warrenyeah there was some a lot of fun times I I really missed Charlie it was just surreal never expected that but it was a lot of fun you know one thing I found about Charlie which was really so different about just quickly to tell you is that he was so careful in life you know he would never take risk you know he would want these no-brainer BS Etc I noticed that when he played Bridge he was more of a gambler it took me some time to figure out once I figured it out then I would trap him because I knew that he'd kind of overbid
Warrenbecause I knew that he'd kind of overbid and kind of overplay his hand and I told him I said Charlie you can't get away with this because I know what you do you know and I can I can uh I can call you on it and so it used to be a lot of fun to play bridge with him anyway I enjoyed it and thank you guys we'll see you bye