Opinion
Russo: Refusing Defense AI projects threatens Google's science-driven leadership
“Well, the moment you say that you're not going to have an AI business that has an involvement with some aspect of the Defense Department, particularly if it's defense-oriented, and you say that we just won't touch it because of our values, the moment you stop …”
Assertion Not checkable as stated
Russo: Alphabet CEO Larry Page no longer shows up to work
“At a time when, by the way, Larry Page no longer shows up. To work.”
Disclosure
Russo: Firm avoided Facebook because its engagement relies on unsustainable conduct
“And I haven't involved capital with Facebook, because within Facebook, though they are probably even more indispensable than Google in terms of programmatic advertising, part of the appeal has been the length of time and the height of passion that people exert…”
Prediction Didn’t hold up
Russo: Google's top-line revenue growth will exceed 20% over coming years
“It's well over 20%.”
Opinion
Russo: The ideal cash flow conversion ratio for compounding businesses is zero
“You can imagine from my perspective, my ideal cash flow conversion ratio is zero. That means that we have a button. And at some level, Google stands out on that. They have zero because they have the ability to plow all that money back into moonshots. Unfortuna…”
Assertion Not checkable as stated
Russo: Philip Morris CEO expects $1 billion in savings from big data
“Even Philip Morris, when I met with the CEO in Switzerland in September, suggested that they'd have a billion dollar savings potential over the next several years. And when I asked him what it sourced from, he said, big data.”
Prediction Not checkable as stated
Russo: Berkshire's Acquisition Advantage Will Endure if Operating Autonomy Persists
“And so long as all of the infrastructure that I described within the Berkshire model as they operate, Remains. I think Berkshire will have the ability to drop people from similar businesses down the road over time. The moment that they break from that process …”
Opinion
Russo: Open-Ended Wildfire Liability Is 'Game Over' for Electric Utilities
“You also have the prospects of PG&E where there's a generalized belief that it'd be a nice thing if there's a forest fire to have the utility take on all of the liability of consequential damages after a fire. So long as their power station was responsible for…”
Opinion
Russo: Berkshire stock already prices in a Warren Buffett departure discount
“I think there's already still a departure discount, so I think the markets already carries with it the secret that Warren is 88 years old.”
Insight
Russo: Interfering with subsidiary autonomy would vastly diminish Berkshire's value
“If you get a sense That there's a wholesale rejiggering of the lines of reporting, or that people have to fire 10% of all their staff, or any kind of change that impinges upon that promise, it'll vastly diminish the value of Berkshire going forward.”
Disclosure
Russo's firm prefers holding quality businesses over moving to cash
“We don't rush to cash when we feel like something's been fully realized in its recognition for its value. We believe that our investors hire us to invest the money, and we're comfortable with the businesses more so than cash.”
Insight
Commitment bias helps long-term investors ignore short-term Wall Street noise
“All of the pitfalls of behavioral finance and the study about why people make predictable but irrational decisions when it comes to equities, so much has to do with equities in a relatively near term. And then over a relatively longer term, if you're right on …”
Disclosure
Russo trimmed Wells Fargo stake on rallies to fund other investments
“And for that reason, as it's moved up, we've been using it as a source of cash to make other investments. As it pops up, we have been selling it. We have cash to go off and do other things. Just recognizing that it's probably doesn't have the reinvestment rate…”
Disclosure
Russo: Gardner, Russo & Gardner adds Google as new portfolio position
“Well, it's Google and it's Googled now.”
Opinion
Russo: Amazon possesses a winner-take-all advantage in per-unit distribution costs
“Now, Amazon has kind of first mover advantage and probably a winner take all advantage in terms of the distribution cost per unit. That's something I completely missed. I mean, that, that notion that they are actually delivering more packages now, faster and w…”
Opinion
Russo: Juul's rise has increased business risk for Philip Morris
“I now know that with Juul's ascendancy, there is more risk to the business than there was when it was at a 120, and the product that they tried to launch was delayed, has consequences.”
Insight
Russo: Business superiority is driven by people first, incentives second, brands third
“We're actually buying long-term stakes in businesses that are or are not superior based on people first, incentive second, products and brands third. And it's nothing to do with names and spaces.”
Insight
Russo: Dedicating excessive time to final 20% of research is just procrastination
“In the search, very quickly in an investment, you get 80% of the weight of the outcome. And how much you dedicate for the remaining 20% can often be an excuse for inactivity rather than the requirement for the last piece.”
Insight
Russo: The Only Investor Advantage Is Non-Taxation of Unrealized Gains
“The government only gives you one advantage As an investor, and that's the non-taxation of unrealized gains, and so you better do something about that”
Insight
Russo: Compounding Growth Requires Owner-Minded Managers Over Self-Interested Agents
“Anybody who reinvests on your behalf is your agent, and it's really hard to succeed in business if your agent is self-interested rather than has your interest at heart. And so that was a really important insight is that you need something that can grow, and th…”
Insight
Russo: Ceremonially gifted luxury products command massive price-inelastic demand
“It was a ceremonially given, so it had massive price inelastic demand, and it was global.”
Insight
Russo: Family-controlled firms fail when leadership goes to sleep at switch
“It was family controlled, and so the ability to invest for the very longest term, and in their case, they sort of let the ball drop, and of course, that's the risk with moving from Warren's early comments about making sure you have a Interested agent managing …”
Opinion
Russo: Berkshire's IBM Failure Paved the Way for $40B Apple Position
“And sure enough, IBM was a complete dud. However, it allowed for them to begin the journey to technology, and sometime later, instead of a six billion dollar position in the dud, IBM, they have a forty billion dollar position in Apple, and they were willing to…”
Assertion Not checkable as stated
Russo: Berkshire restricts direct investor research chats with subsidiary heads
“You really can't go to Ajit and say, let's have an afternoon chat about how we're doing in reinsurance business, because there are a lot of factors. Everything is relatively channeled through the proper conduit.”
