저자: WarrenBuffett,CharlieMunger—제목·설명란기준추정,질의응답참석자다수 · 외국인
요약 보기
버크셔는 '명백한 기회(no-brainer)'를 기다려 인수하며 장기 경쟁우위와 신뢰할 경영진을 중시한다. 사업 이해는 짧은 시간에도 가능하며(커스텀 액자 사례), 긴 실사보다 판단력이 중요하다. 전문가 실사를 거친 대기업 인수 10건 중 대부분이 실패했다는 사례를 들어 과도한 실사의 한계를 지적. See's Candy 인수 사례처럼 장기 소비 브랜드의 지속성을 높게 평가했다. 특정 자산에 대한 단기 가격 예측 발언은 없음.
다듬은 글
I mean, if you think about it for 30 seconds, you the economics of the industry will sort of make themselves manifest to you. And we've bought all these businesses taking practically no time in doing it. On average, they've worked out wonderfully. Why is that? That's a good question. The answer is we wait for the no-brainers.
And we have the patience to to uh wait. It would tend to be a business that for one reason or another we can look out 5 or 10 or 20 years and decide that the competitive advantage that it that it had at the present would last over that period. And it would have a trusted manager that would not only fit into the Berkshire culture, but that was eager to join the Berkshire culture.
Greetings from Germany. My name is Norman Rintrop. And my question is concerning that what you were just describing as smelling. And I mean, you told us in former shareholder meetings, if management loves money, do not invest. If they love what they do, preferably if they come tap dancing to the office every day, and all other things are right, then invest.
That resonated to me very good with the biblical truth that not money itself, but love for money is the root of all evil. And the principle that once made Prussia the largest of all German kingdoms, namely the ethos of doing a job for its own sake. When you tell us in this year's report that you buy a company after talking to the owners for no more than 90 minutes, I'm wondering what kind of um is it the wisdom of um experience, just like it described it, or do you do more background work before talking to the owners for 90 minutes?
What's the process like? Do you do background checks? Or do you talk to competitors? Do the other people in headquarters do that work for you? How does this whole thing work? Well, it's a very good question, and and it all of the things you suggest might well make sense. I mean, talking to competitors, talking to ex-employees, talking to current employees, talking to customers, talking to suppliers, all of those things Phil Fisher laid out in a book over 40 years ago, and we have done a fair amount of that over the years, but Charlie would have behaved exactly the same way I did on the on the company you're referring to.
I got a call from Craig Ponzio in December on a Monday. It was about a uh a company that made uh custom picture frames. I'd never heard of the company before. I'd never heard of Craig before. I didn't talk to him on the phone much more than 15 minutes. He's a very He'd be here today if his wife became seriously ill, or at least we hope we hope it's not serious, but at least there was a a problem last night.
But, Craig talked to me maybe 20 minutes. And you can tell when I mean it it It's just all the difference in the world. Uh and he laid out what the custom frame how other custom frame picture business works. And it's not complicated. I hadn't thought about it for 10 seconds in my whole life up till then.
You know, I've had some pictures framed. Uh And I get around. And uh but it's not hard. I mean, if you think about it for 30 seconds, you the economics of the industry will sort of make themselves manifest to you. There are 18,000 or so framers in the country. It's a It's a It's a small business. So, you're dealing with thousands of people.
Now, what's important to those thousands of people that you're dealing to? They're They're doing $250,000 or $300,000 of business a year, and they have customers who come in periodic like I have mine come in once every 3 months or every 6 months and say, "Here, I'd like it framed." And they may ask me about what kind of frame I want, or I may leave it up to them.
It's It's a It's a service or operation to a very great degree. And Craig built something starting with in 1980 or so with 3 million of sales, he built an organization that became enormously responsive to these 18,000 or so framers. They call on those people five or six times a year. They get 85% of the frames to those people the next day when they order them.
That's what counts in that kind of a business. You know, it's not an You're not supplying the big three with auto parts. You're not There's all kinds of things that give it a distinctive economic characters. Well, Craig told me about that, like I say, in not more than 20 minutes. And he told me the price, and he told me the capital it was employed, and he gave me some a few figures.
I knew in talking to him that he had a deal that made sense, you know, and I said, "When can you come in?" That was on a Monday. He said, "I'll be there Wednesday morning." And and uh uh he came with Steve McKenzie, who is here today and who I encourage you to meet, and I think they got there at 9:00 and they left at 10:30, and we'd shaken hands.
I was hoping to see Craig at the today or tomorrow, but uh I won't because of this illness, but I haven't seen Craig since. You know, I mean, we made the He got his money. He knew he was making a deal. He had a reason why he wanted He wanted to sell it to somebody that would be sure to close, that would be a good owner, where the people who work there wouldn't be worried because he was leaving.
He was leaving with a lot of money, and you know, people he wanted to be sure A lot of people leave with a lot of money, and they leave the employees behind, and they don't care what happens. But But this guy cared, and I could tell that, and that that's a big plus with me. So, you know, I have not been to their headquarters yet.
I plan to be to their headquarters. Steve, I apologize. Uh the uh uh but I understand what the business is about. And you can most most good businesses you can understand what they're about in a very few minutes, unless they're kind of business that you can never can understand what they're about. I mean, there are other businesses you if you spent years on them you you still wouldn't understand what the hell's going on.
I don't know which one of which American auto company is going to do the best 10 years from now. And if I spent all year talking to dealers for for Ford and Chrysler and General Motors, and I talked to suppliers, and I talked to people who are driving their cars, I still wouldn't know anything about what it's going to look like 5 or 10 years from now.
But I know that you can't crack our custom uh picture frame business. I mean, you cannot figure out a way to call on those 18,000 people that are in that business and figure out a way to divert their business to to you when you can't offer a frame as good as ours, and you can't offer service remotely like ours.
So, it's a good business. And then the And And Craig was 100% up I mean, he told me exactly what he wanted to receive for the business. He wanted cash. You know, that fits us. Uh and there's nothing complicated about it. I mean, you can drag it out for a long time, but what would be the sense of it?
I mean, it's going to going to make a deal, you're going to make a deal. Surely. Yeah, it it if you stop to think about it, the ordinary result when a big publicly held corporation buys another corporation is that maybe 2/3 of the time it's a terrible deal for the buying corporation. And yet the people have taken enormous time doing it.
And we've bought all these businesses taking practically no time in doing it. On average, they've worked out wonderfully. Why is that? That's a good question. The answer is we wait for the no-brainers. We're not trying to do the difficult things. for those. And yeah. And we have the patience to to uh wait.
And then we're so peculiar that that there actually are a good number of businesses in America where they prefer selling to us than to other people. That's very helpful. I just saw a review of a major company. It made 10 acquisitions in a recent 5-year period. Every one of those 10 acquisitions was preceded by due diligence and all the bologna they go through.
And they probably had an investment banker's book and everything. Not one of the 10 uh in 2001 lived up or was even close to the expectation uh of the presentation that was made at the time of purchase. In aggregate, the 10 earned 1/4 of what they were projected to earn in 2001. In other words, the projections were were for four times the actual earnings.
And these were companies with strategic This is a company with a strategic you know, acquisition department with loads of people to go over the due diligence with inv- investment bankers {quote} helping them {end quote} all along the way. You know, and 10 out of 10 failed miserably. And you know, you have to ask yourself how can you produce that?
Cuz the world didn't go to hell during that period either. I mean, it was that was not a time when we went into a great depression or anything of the sort. It's It's They They were getting They were buying what was getting sold to them. And it was fulfilling some things that the management myths that the management had about itself.
And managements have many myths about themselves. Um and it isn't that complicated if you just write wait for the fat pitch. And the fat pitch doesn't have to be somebody else doing something dumb or anything like that because they people don't do that. The people who come to us come for a good reason.
I mean they they they they they usually want a transaction that A they they want one that's sure to close. They want if if a deal is made and they want one that will leave the people happy that are at the business. When it was announced at Johns Manville, I believe that that Berkshire was the buyer.
I I I understand there was a standing ovation, you know, and and then I've seen it at, you know, whether it's at Jordan's or Star Furniture. People are concerned. If you've been working at a company for 20 years and you know that the owning family is getting older and has some problems to take care of.
Believe me, they talk in the hallways about that. What's going to happen when, you know, the family sells the place and people worry about that and and to have an answer for them so that they all sleep the night that they get it's announced that the business has changed hands is means some some a lot to some owners.
And it doesn't mean anything to other owners. I don't think we've ever bought a business from a a financial operator. Can you think of any, Charlie? I can't think of one. The uh You know, somebody once defined hell in a legal system as a place with endless due process and no justice. And we're getting close.
And And similarly in the corporate world, uh if you have endless due diligence and no horse sense, but you've just described a corporate hell, at least for the people who own the business. My name is Brian Martin and I'm from Springfield, Illinois. In the HBO documentary Becoming Warren Buffett, you had a great analogy comparing investing to hitting a baseball and knowing your sweet spot.
Ted Williams knew his sweet spot was a pitch right down the middle. When both of you look at potential investments, what attributes make a company a pitch in your sweet spot that you'll take a swing at and invest in? Well, I I'm not sure I define it in exactly the terms you would like, but the the the the we sort of know it when we see it and it it would tend to be a business that for one reason or another we can look out 5 or 10 or 20 years and decide that the competitive advantage that it that it had at the present would last over that period and it would have a trusted manager that would not only fit into the Berkshire culture, but that was eager to join the Berkshire culture.
And it would be a matter of price, but the main you know, when we buy a business essentially we're laying out a lot of money now based on what we think that business will deliver over time and the higher the certainty uh with which we make that prediction, the better off the better we feel about it.
You can go back to the first one for one of the first outstanding business we bought, but it was it was kind of a a watershed event which was a relatively small company, See's Candy, and the question when we looked at See's Candy in 1972 was would people still want to be both eating and giving away that candy in preference to other candies?
And it wouldn't be a question of people buying candy for the low bid and we had a manager we liked very much and we bought a business that was paid $25 million dollars it net of cash and it was earning about 4 million pre-tax then we must have must be getting close to 2 billion dollars or something like that pre-tax that we've taken out of it but it was only because we felt that people would not be buying necessarily a lower price candy.
I mean it does not work very well if you go to your wife or your girlfriend on Valentine's Day. I hope they're the same person and and say you know here's a box of candy honey. I took the low bid. You know it doesn't it loses a little of it as you go through that speech and we made a judgment about See's Candy that it would be special and probably not not in the year 2017 but we certainly thought it would be special in 1982 and 1992 and fortunately we were right on it and we're looking for more See's Candies only a lot bigger.
Charlie? Yeah what it's also true that we were young and ignorant then and that we're old and ignorant. Yeah. Yes that's true too and and the truth of the matter is that it would have been very wise to buy See's Candy at a slightly higher price and if they'd asked it we wouldn't have done it so we've gotten a lot of credit for being smarter than we were.
Yeah and to be more accurate even even 5 million more I wouldn't have bought it. Charlie would have been willing to buy it so fortunately that we didn't get to the point where we had to make that decision that way but he he would have pushed forward when I probably would have faded. It's a good thing it's a good thing that the guy came around actually the seller was the was the grandson of a Mrs.
See's well and he Charlie is Larry See's son am I correct? Or Larry See's brother and but he was not interested in the business. And he was he was he was interested in more interested in girls and grapes actually and and he almost changed his mind. He did change his mind about selling. And I wasn't there but Rick Guerin told me that Charlie went in and gave a an hour talk on the merits of girls and grapes over having a candy company.
This is true, folks. And the fellow sold to us so that I pulled Charlie out in emergencies like that. He said We were very lucky either early the habit of buying horrible businesses cuz they were really cheap. It gave us a lot of experience trying to fix unfixable businesses as they headed downward toward doom.
And that early experience was so horrible fixing the unfixable that we were very good at avoiding it thereafter. So I would argue that our early stupidity helped us. Yeah.
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