“We like businesses that drown in cash,” Charlie Munger said at the Berkshire Hathaway shareholder meeting over the weekend, uttering the Munger-Buffett Mantra. When asked what kind of business they would buy during this “credit crisis,” Munger said businesses with tangible assets that “sweat” cash.
“We like ideas where you don’t have to carry to three decimal places,” Buffett chimed in, “simple ideas in which the bargains are apparent.”
Berkshire bought PetroChina back in 2002, for example, when it was a $35 billion company that Buffett thought was worth $100 billion. Buffett bought the stock having done nothing more than read the annual report. With that big a gap, it doesn’t matter whether the company was worth $80 billion or $120 billion. There was a wide margin of safety. The best ideas are obvious, and great precision is not required.
“If someone walked in here and weighed 350 pounds,” Buffett suggested, “I might not know he weighed 350 pounds, but I would know he was fat.”
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment