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go through that strategy and go through uh 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 uh 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 it's going to generate over its life so so business quality to us is the single most important uh Criterion for determining what's interesting because if if we can't predict the cash flows we don't know what it's worth we don't know what it's worth we can't invest so we figure out what it's worth we figure out how good the business is how predictable will the cash flows be from a railroad or a Spirits company or a real estate company shopping mall business uh and then we say uh okay well where's a um and if there's a wide gap between price and value uh you can buy it for 50 cents it's worth a120 well 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 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 uh 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 ever made uh took us four hours to do the work uh was during the financial crisis which was that uh wacovia Corporation so um I was on my BlackBerry uh eating breakfast uh The Brooklyn Diner uh in front of my building and there was a story went across the uh I was just you know you know Wall Street Journal headline reuter headline excuse me um went across saying um that City Group uh to acquire the wacovia banking subsidiaries for $2 in City Group stock stock was halted this was kind of an interesting transaction because they were buying the subsidiaries for City Group stock I figured hm this interesting what happens to the holding company so I went back to you know kind of went upstairs to the office and you know cracked open the 10K and and another member of the team Mick Maguire uh uh he and I worked on it and uh what was interesting is the Thousand page 10k of wacovia 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 wacovia Securities AG Edwards they had paid 67 billion for it a six months before um Evergreen asset management and they were taking a 27 billion doll loss on the sale of the subsidiary and uh it 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 uh you have this very I said look this could be the our our Brookshire hathway and uh the end of the day we figured the ass you know in four hours we determine the holding company was worth at least at least $ 11 to $14 cash a tax refund that you could you you could carry back the $27 billion uh loss recover cash taxes that have been paid you have this cash vehicle you don't wacovia Securities which is a you know good wealth management business You' own AG Edwards another interesting asset you these are businesses you know well and uh the stock opened after it was halted at a184 so we said look it's worth you know 11 to 14 a184 we bought 42% of the volume for the next 4 days and then it was acquired by then Wells came in and put in a topping bid of $77 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 y I remember that
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