The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 66 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 1 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
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 …”
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.”
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…”
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…”
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.”
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 …”
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…”
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.”
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.”
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.”
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 …”
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…”
Russo: Gardner, Russo & Gardner adds Google as new portfolio position
“Well, it's Google and it's Googled now.”
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…”
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.”
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.”
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.”
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”
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…”
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.”
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 …”
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…”
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.”
Russo: Buffett's Guidance Keeps Berkshire's Investment Failure Rate Far Below Peers
“You know, as Warren always says, the goal is to know what's important and knowable, and by channeling the conversation to what's most important and what's most knowable, I think the strikeout ratio at Berkshire is way lower than any other company because they'…”
Russo: Regular Insurance Renewals Increase Exposure to Broad Market Pressures
“Usually when you're in the market and you're renewing on a regular basis, you end up being more exposed to the general broad market forces that they have enjoyed not succumbing to for most of the life of Berkshire because they never have to swing.”
Russo: Tax deferral of unrealized gains is investors' only government break
“The government only gives you one break as an investor, which is tax deferral of unrealized gains.”
Deep-value investing fails if the underlying asset value does not grow
“Cause it's not enough to find a 50 cent dollar bill, Warren realized, if the dollar value didn't grow. Because to recognize that discount, you'd had to somehow close it, and your internal rate of return depended entirely on how quickly that happened. And so if…”
Russo: Jack Daniel's retains loyalty and pricing power despite competitor discounts
“Jim Beam, three dollars off per bottle on a special promotion won't dislodge a Jack Daniels drinker, which gives Jack steadier demand so they can plan their production more wisely and their aging. It gives them pricing power because they can withstand that thr…”
Firm's Weetabix investment compounded at 21% over 25 years without debt
“Over a 25 year period of time when we owned the shares, before selling them into a takeover by a private equity firm, I think they compounded at 21%. Never had any debt, just the steadfast growth and the profitability through reinvestment and cash buildup.”
Many investors avoid family-controlled companies due to succession and control risks
“Because most investors have no interest in, in, in risking their capital in a family controlled company when they have no way of controlling or in many instances knowing what the outcome will be, and they can't know whether the firm has an idiot uncle or a was…”
Philip Morris's IQOS captured 25% of Japan's market in 18 months
“And as a result of those spending years, they developed a product that once launched, 18 months ago, has captured nearly 25% of markets in Japan, the first market it launched to. They've converted two million cigarette smokers to users of one of their new prod…”
Public managers inevitably cut long-term R&D to meet quarterly EPS targets
“If there's any attempt to do so, and you've committed to four dollars and 25 cents of earnings per share, the moment something goes wrong, you're going to cut the vital spending that's forward-looking. And, you know, it's the old story about the urgent trumps …”
Low turnover works because portfolio companies actively transform themselves internally
“Because most of what's in the portfolio is vastly different than it was five years ago, or what, or will be five years from now, because the companies are buying and selling all the time, and so we feel like we're less, less needful of doing that, because our …”
Long-term minority holding enables richer insights on strategy and succession
“I say we get the benefit, I do believe, of insider insights, which are helpful in creating kind of the framework around which we review and we analyze the businesses that we own. They're not insider information because that's obviously privileged, but you know…”
Investment committees require managing people rather than just asset allocations
“It's a whole different skill set, because I'm managing not only that, those allocations and those investments and the breadth across different continuum, but I have to also then manage the committee members, obviously, who, Whose, whose participation you solic…”
Russo predicts Wells Fargo will massively increase share buybacks and dividends
“But the payout is going to increase massively to both share buyback and to dividends because they know now that they cannot redeploy capital given their size.”
Patience pays off as slightly senior colleagues frequently leave their jobs
“What he failed to realize is the people who are just a little bit older than him have a very high probability of leaving.”
Russo: Firm avoids direct crypto and cannabis, gaining indirect exposure instead
“I probably won't make an investment in either of those, though our portfolio companies, whether it's MasterCard using blockchain technology, Or Wells Fargo using blockchain technology. Our portfolio companies will be involved.”
Russo: FedEx stock halved while simultaneously serving and competing with Amazon
“Now, one of the ironic stock declines over the past several weeks has been Federal Express, which has dropped from two 60 to a 150. And, you know, they're trying to serve Amazon at the same time, compete with it. And its share prices collapsed to nine times th…”
Russo: Investors must remember that stocks do not know who owns them
“I think one of the things that Charlie Munger has said over the years, I thought very valuable in managing the portfolio is number one, the stock doesn't know you own it. Number two, you don't have to make back your money the same way you lost it.”
Russo: Berkshire subsidiary MiTek has probably grown 25x since acquisition
“And it probably has grown. 25 times the business that existed when they bought it”
Berkshire Subsidiary MiTek Used Phantom Stock That Increased 1,000x
“They had an interesting phantom stock arrangement. They created a phantom share. Called a share of my tech within the company. And Warren referred at one point an annual report that had gone up a thousand times.”
Russo: Buffett insisted Berkshire subsidiaries compete instead of trading internally
“Warren insisted over the years that companies had to compete for the business, that the internal crutch of a natural demand to Clayton homes for the Acme bricks threatened over time to lead to less than market tested outcomes because each of them knew that the…”
Russo: Buffett never forced Berkshire retail stores to accept American Express
“American Express is part of the portfolio, and Borsheim's had, and Nebraska Furniture Market had MasterCard, and Visa, no American Express, because obviously each of them said, the premium's just not worth it for us, and Warren never insisted that they migrate…”
Russo: Berkshire's Insurance Edge Is Preserving Capacity for High-Premium Risks
“And then on specific risks, he consults with Warren, the best risk adjuster in the world. And together, you have this ability not to swing for endless pitches, endless countless pitches they don't swing. But when they do swing, it's the big fat one. And so it'…”
Russo: Olympus Re collapsed after Hurricane Katrina from concentrated regional risk
“I remember after Katrina, where they survived with barely a nick relative to the kind of crushing consequences that even Jack Byrne suffered with White Mountains, and then they had something called Olympusry. And it was blown up. They aggregated too much risk …”
Russo: Berkshire wrote post-Katrina reinsurance for one year then pulled back
“And Berkshire survived, and then they wrote the next year, and at premiums that were massively higher, and they wrote lucky, and so they kept all the premium, because it was an event-free year. And then they didn't write the next year”