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Ted Weschler, Variant Perception, Charity Lunches, and Busy Berkshire
"If I can come up with one decent investment idea a year, boy that is great."
Occasionally, treasure turns up in the most unexpected places.
I certainly didn’t expect to find an incredible interview about investing and mindset on a home-and-organization podcast called “i am home”. Or that it would provide rare insights from one of Berkshire Hathaway’s top investors — a man who typically prefers to remain behind the scenes.
A few days before the company’s annual shareholders meeting, Ted Weschler spoke with NFM’s “i am home” and shared stories about his early career, spending over $5 million on back-to-back charity lunches with Warren Buffett, and life at Berkshire.
(By the way, NFM stands for Nebraska Furniture Mart, the Berkshire-owned home furnishings giant. That explains why Weschler was on the podcast.)
Weschler, along with fellow investment manager Todd Combs, will likely take over Berkshire’s massive investment portfolio once Buffett shuffles off this mortal coil. Both manage a small portion of the company’s portfolio — free of oversight and micromanagement — in preparation for the immense task ahead.
I encourage everyone to listen to the whole Weschler/NFM interview themselves, but — in the interests of saving time — I’ve pulled out the main highlights below…
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(1) Confession: I always thought Weschler bought back-to-back charity lunches with Warren Buffett to put a full-court press on the Oracle for a job at Berkshire.
The first year , Weschler was surprised to win the meal at all — and then even more shocked when Buffett called his Charlottesville office to arrange the details himself.
“[Warren] said, ‘When would you like to do it?’ and I said, ‘Well, your schedule will dictate, Mr. Buffett,’” recounts Weschler. “He really was unbelievable, because then he said, ‘I can do tomorrow night, I can do Wednesday, I can do Thursday…’ He rattled off four days in a row!”
While the first charity lunch was a whirlwind, Weschler felt better prepared for the second . He wrote out three pages of questions to wring out every last bit of wisdom Buffett had on investing, family, philanthropy, etc.
Near the end of the meal, Buffett threw Weschler for a loop by offering him a job at Berkshire. Weschler actually declined the once-in-a-lifetime offer at first because he didn’t want to uproot his young family from Virginia. Buffett countered that Weschler could manage money from anywhere and would not be required to move full-time to Omaha.
He still primarily works out of an office above a Charlottesville bookstore and flies to Omaha weekly (via NetJets, of course) to stay connected with the Berkshire team.
Weschler was doing the whole #WFH thing long before everyone else.
(2) Like his boss, Weschler loves to read. However, he believes that one of the biggest mistakes that investors make is reading the exact same stuff as everyone else.
Variant perception — or seeing things differently than the masses — is the key to success in the stock market.
“I want to be able to look myself in the mirror and say that I’m reading enough weird stuff that nobody else is reading the same stuff that I am,” he says. “If you’re just reading the New York Times and the Wall Street Journal, there’s no way you’re going to beat other people.”
Even so, Weschler makes a point to read as many newspapers and trade journals as possible. Newspapers, in particular, present readers with a random set of stories, curated by editors, that make for a well-rounded reader.
It’s all about building up a critical mass of information and data that will help you connect the dots when examining a potential investment idea.
“I read Furniture Today and Uranium Weekly,” Weschler laughs. “I’m not sure there’s a lot of people who subscribe to both of those, but you’re looking at one of them.”
(3) Berkshire got Fed-blocked during Covid. Buffett and co. took a bit of criticism for their relative inactivity during the lows of 2020’s Covid market crash. Most observers (and shareholders) expected Buffett to put Berkshire’s immense cash pile to work as the economy crumbled around him, buying stocks at cut-rate prices and lending money (with advantageous warrants and dividends attached) to blue-chip companies in need.
Basically, everyone expected Buffett to play Covid just like he did the 2008-09 financial crisis.
Not the case.
If anything, Buffett was a net seller in March 2020 — fully exiting Berkshire’s sizable positions in four major U.S. airlines. In retrospect, not his finest hour.
But, as Weschler tells it, Buffett was ready and willing to reprise his 2008-09 strategy as Covid rocked the world. The Federal Reserve, though, moved so quickly to reassure the capital markets that any intervention from Berkshire was rendered unnecessary.
“The Fed effectively put a floor under everything,” says Weschler. “The moment they did that, the opportunities that would have been there for Berkshire weren’t there anymore.”
(4) Everyone at Berkshire — Buffett included — draws energy from the annual shareholders meeting. Weschler compares the event (nicknamed “Woodstock for Capitalists”) to a big wedding full of extended family and friends.
“You’ve got this common link where, one way or another, you’re connected to Berkshire Hathaway,” he explains.
“Anybody that you meet during the weekend … you’ve got something to talk about. It’s just like at a wedding where you know that you’re somehow connected to the bride or groom — you’re somehow connected to Berkshire. It’s always fun to meet those people.”
For more on the 2022 Berkshire Hathaway annual shareholders meeting, check out my wrap-up from last week. 👇
(5) Weschler is a positive-vibes-only kinda guy. “I always feel positive,” he says. “It’s a system that works. There’s always going to be some negativity out there, but — in the world of investing — as long as you take a long-term view, we’ve got the right incentives. Particularly in the United States.”
He singles out both the encouragement of entrepreneurship and the rapid development of new technology as key factors that put America a step ahead of the rest. A little gratitude might be in order.
“Positive things happen every day, every week, every year.”
Can’t Stop, Won’t Stop
After taking a break for almost two months, Warren Buffett purchased 5.9 million more shares of Occidental Petroleum last week to bring Berkshire Hathaway’s total stake in the Texas oiler to 15.2%.
After revealing that he added $600 million worth of Apple shares to the Berkshire portfolio in Q1 2022, Buffett told CNBC’s Becky Quick that number could have been much higher. “Unfortunately, the stock went back up, so I stopped,” he said. “Otherwise, who knows who much we would have bought?”
Barron’s also did a little digging and believes Berkshire probably sold “all or most” of its $7.7 billion position in Verizon during the first quarter.
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Disclosure: This is not financial advice. I am not a financial advisor. Do your own research before making any investment decisions.