The Berkshire Beat: December 6, 2024
All of the latest Warren Buffett and Berkshire Hathaway news!
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It’s been a fairly quiet week on the Berkshire Hathaway front — everyone must still be in a food coma after the holiday — so permit me a slight detour down memory lane.
Last week, ABC’s 20/20 news program aired a special documentary about the making of Mary Poppins in celebration of the Disney classic’s 60th anniversary.
What, pray tell, does this have to do with Warren Buffett and Berkshire Hathaway?
Quite a bit, actually.
Once upon a time, Buffett (briefly) owned 5% of The Walt Disney Company in his investment partnership — and Mary Poppins was a big reason why. The movie was a huge box office smash in 1964 and 1965 — bringing in close to $30 million of profit in its first year.
Wall Street, being Wall Street, did not see this as yet another example of Walt Disney’s consistent ability to delight the masses — but, rather, fretted that the studio’s earnings were now inflated beyond reason. The Mary Poppins craze would not last forever and there did not seem to be anything of similar quality coming down the pike.
As such, when Buffett started poking around, DIS 0.00%↑ as a whole was selling for just $80 million. But, before plunging in $4 million of his partnership’s money, he wanted to see for himself what all the fuss was about.
“I remember I went to see Mary Poppins at a theater on Broadway and 45th at about two in the afternoon,” he once told a group of UNC students. “I’ve got a little attache case and everything and I’m going to see Mary Poppins. I got up to this woman at the ticket booth and I said, ‘I’ve got a kid around here someplace that I’m taking [to this movie].’ (Laughs) I was [really] going to see if I thought this thing could be run over and over again in the future.”
The mid-thirties businessman — flying solo — probably drew some strange glances at the Loews Theater that day. But what he saw up on the screen convinced him that Wall Street had it all wrong. Sure, the theatrical run of Mary Poppins would eventually come to an end — but, like most Disney movies, it could be re-released every few years to an entirely new audience of children.
Buffett would later compare this to being “like having an oil well where all the oil seeps back in”. He then traveled out to Burbank to meet Walt Disney in person — and that powwow sealed the deal. Buffett Partnership Ltd. was in for $4 million.
A year later, in 1967, he exited the position with a ~50% gain for his partners. I’ve always wondered if the sudden death of Walt Disney in December 1966 led to the (relatively) quick sale. Or maybe he just had something better to do with the money.
Well, anyway, if you find yourself watching that Mary Poppins documentary on ABC, now you know the small — but pivotal — role that film played in Buffett’s career.
The latest news and notes out of Omaha…
Warren Buffett keeps right on giving. On Tuesday, he converted four more Class A shares into 6,000 Class B shares — and, then, donated 6,382 of his accumulated B’s (worth ~$3 million) to an unnamed charitable organization. This comes hot on the heels of his $1.15 billion gift to four family foundations last week. All told, Buffett still owns 206,359 Class A shares and 951 Class B ones.
Coming Soon: A new book by The Science of Hitting — “Buffett and Munger Unscripted” — is now available for preorder ahead of its January 21 release. In it, Morris presents the most valuable insights from the last three decades of Berkshire Hathaway AGMs. Can’t wait to read it!
Forest River CEO Pete Liegl’s obituary makes me wish that we got more information about Berkshire Hathaway’s many talented managers. After all, in many cases, these are the men and women who impressed Warren and Charlie enough to be acquired by Berkshire in the first place. Buffett does an admirable job in shining the spotlight on these star performers in his annual letters and meetings, but it would be nice to get to know them even better — without having to wait for the obits.
In Liegl’s case, he battled spinal meningitis as a child — even reaching the point of receiving Last Rites. Later, when he couldn’t find any show space to sell the earliest Forest River RVs, he set up shop under a lamppost and made his first sales there. Back in those days, the units were built inside an old factory with cardboard desks and birds flying around overhead. Talk about your humble beginnings. Above all, Liegl was a grinder. He claimed to work “half days” — by which he meant 7 a.m. to 7 p.m. 💔 Pete will certainly be missed…
Chris Mayer, author of 100 Baggers, told Quartr about the massive influence Buffett and Munger played in his own evolution as an investor. “My dad worked for GEICO for a long time and met Warren Buffett,” he said. “I heard all the stories, such as when Buffett met with Lorimer Davidson on a Saturday morning and so on.” (Davidson provided the college student with a crash course on the insurance industry — and GEICO in particular — that has paid innumerable dividends during Buffett’s life.) Mayer walked much the same path as Buffett as an investor — starting with a Grahamian focus on cigar butts and inexplicably cheap companies before shifting to the wonderful-businesses-at-a-fair-price model of Munger.
Mayer also notes that reaping the rewards of a “100 bagger” is not so much in the buying as in the holding. “You have to hold on a long time, through ups and downs, through long stretches where the stock goes nowhere. All the while, you are assaulted with new ideas, people telling you to buy this, sell that, [and] the drumbeat of economic data and other noise. The bigger challenge may not be finding a business that becomes a 100 bagger. The bigger challenge may be holding onto it.”
Speaking of learning from Buffett and Munger, investor (and maybe future New York City mayor?!?) Whitney Tilson shared his own experiences this week. “I eventually realized that the most important things I’ve learned from Buffett and Munger go well beyond value investing,” he wrote. “They fall under the category of what Munger called ‘worldly wisdom’. It’s not rocket science (as Munger liked to joke: ‘If it’s trite, it’s right.’). Work hard, become a ‘learning machine’, have high integrity, develop good habits, be nice to everyone, marry the right person and maintain a strong relationship, and so forth.”
🤑 Dividend checks keep rolling into Omaha. This week, Berkshire collected $16 million in quarterly dividends from Kroger and $4.9 million from Visa. And, I’m sorry to report, I missed Louisiana-Pacific’s $1.6 million dividend from last week — so let’s throw that one on the pile, too.
For the time being at least, Apple remains the largest holding in Berkshire’s stock portfolio. So a new interview with CEO Tim Cook is always of interest. (Selfishly, I wish he had been asked for his reaction to Berkshire selling so much AAPL 0.00%↑ stock this year, but beggars can’t be choosers.) Cook sounded especially bullish about the tech giant’s many health initiatives. “It’s clear to me,” he told Wired, “that if you zoom out way into the future, and you look back and ask what Apple’s biggest contribution was, it will be in the health area … I’ve gotten so many notes over time from people who would not have survived had it not been for the alert on their wrist [from Apple Watch].”
On Apple’s custom silicon: “It’s a huge enabler [of our success]. We’ve always believed we should own the primary technologies that our products are built on.”
On the future of iPhone: “We see the smartphone lasting a very long time.”
On smartphone addiction: “I worry about people endlessly scrolling. That’s the reason we do things like Screen Time, to try to guide people. We support people putting limits on themselves … My fundamental belief is if you’re looking at your phone more than you’re looking in somebody’s eyes, that’s a problem.”
On retirement: “I’ll do it until the voice in my head says, ‘It’s time,’ and then I’ll go and focus on what the next chapter looks like. But it’s hard to imagine life without Apple.”
Thank you for the shoutout!