Lessons from this meeting:
Read Everything, Ignore Management Hype, Wait for the Fat Pitch
All the actionable insight comes from public filings—10-Ks, annual reports, periodicals—so dig into the data. Skip management projections and face-to-face roadshows. Then pounce when the “fat pitch” shows up.
Intrinsic Value Is Key but Terribly Fuzzy
Value = discounted future cash flows—include built-in declines (e.g., pipelines facing competition) up front. Don’t wait for the haircut to show up later; bake it into today’s calculation.
Derivatives & Optionality Magnify Tail Risk
Complex hedges accentuate “six-sigma” shocks. Match mortgage optionality with care, know your counterparties, and never trust anyone who claims they can model true extremes.
Float & Cheap Capital Aren’t Free Money
Insurance float is just another source of funding—underwrite every policy like an investment, sit out soft markets, and price risk vs. return.
Circle of Competence & Ignore Macro Noise
Fed moves, bubbles, GDP forecasts—none change a business’s cash‐flow power. Stay within your expertise, demand a wider margin of safety for anything else, and always ask, “Would I hold it if markets closed for five years?”
Rigorous, Conservative Accounting: Depreciation & Pensions Matter
Depreciation is real cash outlay—calling EBITDA “bullshit earnings” isn’t a joke. Pension assumptions and goodwill write-downs must reflect economic reality, not accounting gambits.
Opportunity Cost Beats “Cost of Capital”
Rather than chasing textbook WACC, weigh each use of capital against all your alternatives. Maintain a hard hurdle (≈10 % pretax) across interest-rate regimes.
Deploy Capital Heavily in Proven Winners, Then Reallocate Excess
When you find a great business, load up: good ideas are too scarce for small stakes. Any excess cash beyond its reinvestment needs should be redeployed elsewhere in the portfolio.
Philanthropy Is a Moral Duty
Hitting the jackpot of birth in America imposes an obligation to give back: leave heirs “enough to do anything, but not enough to do nothing,” and send unearned wealth back to society.
Keep It Simple—No Insider Favors or Bloated Comp Plans
Don’t lean on friends for introductions. Executive pay should mirror business economics with minimal structural tinkering—no consultant-driven complexity, no retirement mandates, and no cross-subsidized targets.
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