It's interesting how un-Buffett-like the purchases of Combs and Weschler tend to be. While Poolcorp and Domino's both have great financials, they're both at ~30x earnings, and they're not exactly fast-growers. I'm not sure I can remember a time when Buffett paid that sort of multiple for a company - maybe BYD? But clearly that was a different kettle of fish.
On the one hand, Buffett has the pick of the litter when it comes to choosing his successors for the investment operation, and he's emphatically expressed his confidence in both of them (and they both seem to me like very smart guys with the right philosophy). On the other hand, they've both underperformed not only the market but also Buffett himself, despite having a much larger investment universe, and have shown some slightly erratic behaviour (eg. ULTA). And I'm not convinced these recent purchases at a very attractive price, though maybe they're more profitable than they look. I'm curious to hear your thoughts.
One other thing. I've heard some people saying it's looking more like Abel is going to lead the investment operation post Buffett, rather than Ted & Todd - is there any truth to this? (is it a public markets vs whole-company acquisitions split or something?)
Hi Matt - I can’t speak for Domino’s Pizza and/or Pool Corp. (I’m not overly familiar with either from an investment perspective), but I do agree that there has been some unusual action in some of the smaller holdings. Like the quick reversal on Ulta. Of course, Buffett has done the same thing (TSMC) and his constant tinkering with the Chevron position certainly seems un-Buffett-like, but those are definitely the exception to the rule with him.
It’s one of the reasons I wish Berkshire would say who makes each investment. Last year, most people thought it was either Ted or Todd who bought Paramount stock, but it turned out to be Buffett after all. I’d rather know exactly who is buying each stock so we can judge each person on his merits and not always be guessing who to assign blame/credit.
At Berkshire’s AGM in May, Buffett did say that, if it were up to him, he would put Greg Abel in charge of capital allocation when he eventually takes over as CEO. No one knows exactly what that means — whether he will be directly overseeing Ted and Todd’s investment activity or if it’s just an acknowledgement that everything will fall under Abel’s purview as CEO. I didn’t personally take it as a criticism of Ted and Todd, but his comment was pretty vague and could be taken either way.
It's interesting how un-Buffett-like the purchases of Combs and Weschler tend to be. While Poolcorp and Domino's both have great financials, they're both at ~30x earnings, and they're not exactly fast-growers. I'm not sure I can remember a time when Buffett paid that sort of multiple for a company - maybe BYD? But clearly that was a different kettle of fish.
On the one hand, Buffett has the pick of the litter when it comes to choosing his successors for the investment operation, and he's emphatically expressed his confidence in both of them (and they both seem to me like very smart guys with the right philosophy). On the other hand, they've both underperformed not only the market but also Buffett himself, despite having a much larger investment universe, and have shown some slightly erratic behaviour (eg. ULTA). And I'm not convinced these recent purchases at a very attractive price, though maybe they're more profitable than they look. I'm curious to hear your thoughts.
One other thing. I've heard some people saying it's looking more like Abel is going to lead the investment operation post Buffett, rather than Ted & Todd - is there any truth to this? (is it a public markets vs whole-company acquisitions split or something?)
Thanks!
Hi Matt - I can’t speak for Domino’s Pizza and/or Pool Corp. (I’m not overly familiar with either from an investment perspective), but I do agree that there has been some unusual action in some of the smaller holdings. Like the quick reversal on Ulta. Of course, Buffett has done the same thing (TSMC) and his constant tinkering with the Chevron position certainly seems un-Buffett-like, but those are definitely the exception to the rule with him.
It’s one of the reasons I wish Berkshire would say who makes each investment. Last year, most people thought it was either Ted or Todd who bought Paramount stock, but it turned out to be Buffett after all. I’d rather know exactly who is buying each stock so we can judge each person on his merits and not always be guessing who to assign blame/credit.
At Berkshire’s AGM in May, Buffett did say that, if it were up to him, he would put Greg Abel in charge of capital allocation when he eventually takes over as CEO. No one knows exactly what that means — whether he will be directly overseeing Ted and Todd’s investment activity or if it’s just an acknowledgement that everything will fall under Abel’s purview as CEO. I didn’t personally take it as a criticism of Ted and Todd, but his comment was pretty vague and could be taken either way.