Category: Buy and Hold

Woodstock for Capitalists ’22

We are now less than 48 hours away from the 2022 Berkshire Hathaway Annual Meeting, aka “the Woodstock for Capitalists.” The meeting begins Saturday morning at 6:45 am (pacific) 8:45 (central) and it can be viewed by clicking this link: https://www.cnbc.com/brklive22/

I regret I won’t be traveling to Omaha this year. I’ve been to several meetings since 2001 and the Berkshire AGM is always a fun event. In addition to hearing Warren Buffett and Charlie Munger live, there are countless events happening around town (Nebraska Furniture Mart Bar-B-Cue), the Friday night Borsheim’s reception, etc.

Then, there are the “Berkshire company” displays and booths in the exhibit hall offering shareholders tremendous value on everything from boxer shorts (Fruit of the Loom) to gourmet chocolates (See’s Candies), kitchen utensils (Pampered Chef), air compressors (Campbell Hausfield), car insurance (GEICO), Buffett Books (the Book Worm), cowboy boots (Justin Brands) and luxury manufactured homes (Clayton homes). It’s festive and the booths are staffed by midwestern sales staff who know their craft.

You never know who you’re going to see. “That’s Bill Gates eating a Dilly Bar.” “That’s Susan Lucci buying jewelry at Borsheim’s.” “That’s Bill Ackman at the microphone.” “That’s Lou Simpson…” RIP

There are receptions hosted by other reputable investors and Berkshire disciples including the Markel brunch reception at the Marriott on Sunday morning. See: https://youtu.be/F_OnccXU8ZU  One of these years I will have the pleasure of meeting Tom Gayner – the Markel sage from Richmond, VA.

Whitney Tilson will host his annual cocktail reception on Friday night https://www.eventbrite.com/e/whitney-tilsons-cocktail-party-before-the-berkshire-hathaway-annual-mtg-tickets-308282921517  

This AGM will be the first since 2019. The COVID pandemic prevented a live event in 2020 and 2021. I suspect regular attendees will be happy to see everyone again.

If you’re not able to attend, you can still get yourself out of bed this Saturday morning and hear two of the world’s brightest investment minds.     

More information, visit the Berkshire https://www.berkshirehathaway.com/news/apr2622.pdf

Wal-Mart: Satisfaction Guaranteed

For those wanting to sharpen their business and investment acumen, there are few better activities than reading the stories of business owners and entrepreneurs who’ve gone before. Today, I finished reading Sam Walton’s book, “Made in America.”

Walton completed the book prior to succumbing to cancer in 1992 so it’s thirty years old. But, with $572 billion worth of sales (TTM), Wal-Mart is still dominating the world of retail (Amazon sold $469 billion, COSTCO had $196 billion). That their culture still thrives is a testament to their founder.

The book is packed with all the “down home” wisdom you might expect. It’s a bit of a look into an America from a bygone era, but full of insights from one of America’s greatest retailing promoters and entrepreneurs.

Walton had 10 immutable rules for success. They included:

  1. COMMIT to your business. Believe in it more than anyone.
  2. SHARE your profits with associates. Treat them as partners.
  3. MOTIVATE your partners (money & ownership is not enough)
  4. COMMUNICATE everything you can with your partners.
  5. APPRECIATE everything you associates do for the business.
  6. CELEBRATE your successes.
  7. LISTEN to everyone in the company.
  8. EXCEED your customers expectations
  9. CONTROL your expenses better than your competitors.
  10. SWIM upstream. Ignore conventional wisdom.

Found it interesting how candid Walton was about numbers and ratios. Mark up on all goods was typically 30% and head office expenses were never to exceed two percent of sales. Office staff were well  versed in the benchmarks.

Running a tight ship meant shareholders benefitted along with customers. Had an investor bought 100 shares at the IPO, they would have cost $1,650.00 IF those shares were simply held and never sold, by the time the book was written, those same shares would have split nine times (2:1) and had a worth of $3,072,000.00 That’s a compounded annual growth rate of 45% per annum and it doesn’t include dividends.

I was curious what those number might look like today. The stock split three more times in the 1990s (but not since). Left to grow unhindered, those same 51,200 would have become 409,600 shares (no dividends).

Today Wal-Mart closed at $154.24 /share. Those initial 100 shares would now be worth $63,176,704.00, fifty years later. That’s a compounded annual growth rate (CAGR) of 23%.

That’s quite a legacy to leave your friends, family and associates. And, it’s a great example of why buying and holding a proven winner is a prudent investment approach.