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go through that strategy and go through how it works and when you come you know maybe you'll override that portfolio manager or not but what what's the checklist you kind of go through so we look for very high quality businesses what we describe as simple predictable free cash flow generative dominant businesses a business that Warren Buffett would describe as having a mode around it right if you if you believe that the value of anything Financial is the present value of the cash you can take out of it over its life well you need to know how much cash is going to generate over its life so it's a business quality to us is the single most important Criterion for determining what's interesting because if we can't predict the cash flows we don't know it's worth we don't know it's worth we can't invest and we figure out what it's worth figure out how good the business is how predictable will this cash flows be from a railroad or a Spirits company or a real estate company a shopping mall business uh and then we say okay well where's the trading and if there's a wide gap between price and value you can buy for 50 cents it's worth a dollar twenty and then we're going to take a hard look and try to understand why it trades at a deep discount and uh once we understand the reasons we decide well these things that we can solve you know or can we in light of the situation uh the circumstances can we be influential in changing these these levers that can cause this valuation discrepancy to narrow and is this a business that while we're causing the valuation discrepancy to narrow we can also perhaps contribute to the valuation growing if those things are true we found something that looks quite interesting for us and um usually this investment philosophy does it take a week a month three months to do the research a year I mean you have 10 names what how long it depends I mean one of the best investments we've ever made it took us four hours to do the work I was during the financial crisis which was that Wachovia Corporation so um was on my BlackBerry uh eating breakfast The Brooklyn Diner in front of my building and the story went across the uh I was just you know Wall Street Journal headline Reuters headline excuse me went across saying um that Citigroup to acquire the Wachovia banking subsidiaries for two dollars in Citigroup stock stock was halted this was kind of an interesting transaction because they're buying the subsidiaries for Citigroup stock I think it's interesting what happens to the holding company so I went back to the you know kind of went upstairs to the office and you know cracked open the 10K and another member of the team Mick Maguire uh he and I worked on it and uh what was interesting is the Thousand page 10k of Wachovia Corporation I think 900 Pages were on the banking subsidiary there was fewer than 100 pages on the holding company and by buying the banking subsidiary city was leaving a holding company which had cash um you know in Wachovia Securities A.G Edwards they had paid six seven billion four to six months before um Evergreen asset management and they were taking a 27 billion dollar loss on the sale of the subsidiary and uh it also had a liability called non-cumulative Perpetual preferred stock which if you ever want to have a liability in your life this is the single greatest liability to have it's a it's a form of equity where you never have to pay a dividend and when you don't pay them they don't accumulate and the worst case is they get a couple directors on the board and you say hi to them each meeting and you have this very interesting I said look this could be the our Berkshire Hathaway and uh the end of the day we figured the ass you know in four hours would be determine the holding company was worth at least 11 to 14 cash a tax refund that you could carry back the 27 billion dollar loss recover cash taxes have been paid you have this cash vehicle you know Wachovia Securities which is a you know good wealth management business you'd own A.G Edwards another interesting asset you these are businesses you know well and the stock opened after it was halted at a dollar eighty four so we said look it's worthy you know 11 to 14 a dollar eighty four we bought 42 of the volume for the next four days and then it was acquired by then Wells came in and put in a topping bid of seven dollars in Wells Fargo stock which wasn't actually a topping bid but the Wells Fargo deal did not require government assistance right so I think Sheila bear left I remember that I actually interviewed Sheila
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