The Ledger, every show

“That whole notion, and we've talked about this before of buying wide moat businesses cheaply, I think is flawed today because everybody's trying to do the same thing.”

“We began to wrestle with that whole idea of what is important with a competitive advantage, and part of that was it wasn't about the absolute size, it was about the direction of that competitive advantage.”

“The firms that have failed have been the ones that have taken on massive amounts of debt in order to finance the buyout of the founder, and that's fine as long as everything's going well, but when it's not, inevitably the younger people who have all the debt t…”

“What we concluded is the best way to transition wealth is the founders have to be generous. The founders ultimately have to take a significant haircut in order to make sure that the company continues to prosper.”

“And what we learned because of our mistakes of significantly underperforming the market is you've got to stay focused on the direction of the competitive advantage because everybody's business, I don't care who it is, every organization, you're either getting …”

“I can tell you that in the last 20 years, I've probably done that Seven or eight times where I've just built around somebody that was weak, as long as Mike said, they weren't toxic to the culture.”

“So we've chosen to basically sunset Kurt. That means for the next seven years, he will receive his dividend every year for the next seven years. And then that will retire into treasury and it'll be accreted to everybody else.”

“Our business worships At the modeling of discounted cash flows on businesses, and everyone thinks the magic is in the DCF, and very, very little of the magic is there. That's just a tool, and that tool's only as good as the input. So, from my perspective, I th…”

“It's probably less than two percent of the work that most people do on our firm. As I said, like them, passionate, good track record, probably high probability of success going forward.”

“And that's one of the lessons I think that I've learned over the last 30 years is the competitive advantage of just crunching numbers doesn't exist anymore. Maybe 30 or 40 years ago it did, but not today.”

“I think one of the reasons that active managers underperform consistently is because everybody's doing the same thing. They're all approaching the market from the same perspective. What we have found is more times than not, if you're just looking for high qual…”

“There is a one-to-one correlation between the direction of the ROIC over a five-year period of time and stock performance. You know, so if you break the market down into five quintiles from the top quintile where they have the most rapidly rising ROICs to the …”

“We prefer a company, frankly, that would have maybe five years ago had a four percent ROIC growing to five, six, seven, eight. That's a much better investment. Than a company that's at a 12% ROIC that might be stagnant over that period of time and not growing.”

“If you think in terms of it being an outsourced R&D company, our argument would be those types of businesses deserve higher multiples, because what they ultimately do, they start at the low end, they're a very low cost part of the process, but then they kind o…”

“Most people spend 95% of their time crunching numbers, running DCF models, which by the way, has zero competitive advantage, because you have thousands upon thousands of people doing the same work.”

“So we looked at all active managers in the database. There were 2000 that had at least a 10 year track record. And of those 2000, 50% of them beat their respective markets, whether it's EM, small cap, bonds.”

“For the most part, managers don't do anything different to justify an active management fee. Most managers are all about protecting their assets. So they're going to run a hundred stock portfolio. They're going to buy the high quality, wide mode business selli…”

“Kurt came from an engineering background, so he was trying to quantify a subjective process, and he saw everything through numbers, and if you ask Kurt now, he'd say, even though I'm an engineer and I get numbers, and it's not about that, the competitive advan…”

“You know, there's a lot of, you know, you still have the cross ownership of shares. You know, you still have a very paternalistic society and paternalistic companies. They're not very transparent, so it's very difficult for us to find names for that reason in …”

“I think it's great that outside the U.S., you don't see guys making 30 or forty million dollars while their CFO makes 500,000. You just don't see that. You see a lot more reasonable equity payouts and or salary payouts in those companies, which I like a lot, b…”

“Emerging economies, They operate a little differently than a lot of European and North American countries. And things that we would see as being kind of under the table are just normal.”

“How many years ago, 1520 years ago, there were a bunch of multi-billion dollar momentum shops and I can't I can't really think of one right now that is still in existence.”

“Most individuals still chase money. They still chase performance. We tell them all the time, look, if we've done particularly well, we completely understand you taking money away from us and why don't you put it into a, you know, a strategy, like maybe a value…”

“It's probably a great time To build a long, short hedge fund.”

“You make sure you don't fire any of your good young talent because you do want to live to fight another day, but you take the income hit all at the principal level.”

“The time when you really see Whether the culture is healthy or not is when performance suffers, and inevitably performance is going to suffer in a money management firm.”

“One, the single hardest position to hire for in a money management firm is research. Because at the end of the day, you don't know if that research analyst is really any good. Typically, they don't have a track record, they don't have an extensive body of work”

“The moment they start bringing down your stars is the moment you've got to move.”

“The most rapidly growing companies, although they're kind of sexy and fun, they ultimately, they can be massive destroyers of capital.”

“But you look at the financial metrics of Costco, they're twice on every metric what goes on at Sam's Club. You know, same store sales are four or five percent at Costco. There may be one or two at Sam's Club. Sales per square foot at Costco, a thousand bucks, …”

“You want people that are highly accountable, probably think a certain way, more linear, because it's all about delivering an, you know, an on-time product in an efficient, cost-effective manner. So in, like, Canadian National or Canadian Pacific Railroads, you…”

“We'd argue that It's a way better idea to buy companies that sell products as these people get richer. That's a beautiful tale, and that's not going away for 15 or 20 years.”

“Because in difficult periods of time, if you can own the company that isn't constrained by the financial markets, And can allocate their capital into the spaces where their weaker competitors cannot. What you find is that, that really, those companies hold up …”

“Running a large cap US domestic portfolio, you underperformed dramatically for five years. You get fired by pretty much all of that four billion dollars in assets.”

“That five-year record's phenomenal, but even after five years, we literally had three million dollars in the portfolio.”

“We had a whole different client base with the domestic strategy than we ultimately had with the international strategy, because we could not go back to the consultants and the allocators that we had raised money for. On the domestic side and then turn around a…”

“Founder of the company, Jim Senegal, owned a lot of shares, but never made more than 300,000 dollars a year.”

“As a result, we've grown from two hundred million dollars to twenty six billion dollars in assets under management.”

“So for 20 years, from, actually 22 years, from 76 to 19 98, the firm never grew over two hundred million dollars. Never.”