VALUExBRK 2026 | Bill Ackman, Mohnish Pabrai, Tom Gayner, Chris Bloomstran & More

You're lying to your line for everything.

Well, actually, it wasn't that the wedding. He was going to introduce me to my next wife because...

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There's a 15 seconds. Oh, for a muse of fire that would ascend the brightest heaven of invention. A kingdom for a stage. This guy testing. Testing.

Excuse me. We're trying to do the Swiss clock thing. We're a bit late. Makes us very nervous. Can I all ask you to take a seat quick? If we can all shuffle through and find a place to sit, it's probably more comfortable for today.

Hello. Hello.

I think everybody will find a spot at the moment, which is great. Welcome. Welcome to Value X Clusters. Uh, Value XB or K. Sorry, I'm seeing too many cloth faces. Welcome to our event. We are very happy that you could all make it. And um, I don't have that much to say, which is very special because I usually have a lot to say, but I want to introduce you to our boss, Guy Spear, who's hosting the event.

Is very very kind. I have not much to say. Um, I'm only here because of Shantel and the team. Uh, she keeps me going every day. It's unbelievable. Uh, the only person who's better is my wife. Um, really. Uh, I've said everything that I wanted to really say in the letter and, uh, in a video that I just saw Whitney in the room that Whitney recorded at Value S Clusters. I just have three things before going to uh, the first speaker. One is that um, I really like the idea of the Canterbury Tales. I talked about it last time. Uh, we're telling stories before the big event tomorrow and we're learning from each other and I think that's a lot of fun and that's where what we're really here to do. I talked about it last time. Uh, I talked about my lessons from my GBM. It's been a huge wakeup call and I uh, have sent some people this email. If you haven't seen it yet or the video, I'll make it public. Um, this idea, you know, um, uh, Warren Buffett has said that the grim reaper wins at the end of the day against all of us. And my dash or uh, uh, improvement on that, if you like, is that we have to every day, whether you're in my shoes or in anybody else's shoes, we all find difficulties in life. We have to win as many points against the grim reaper as possible. And we do that when we have a family dinner with our family, when we do sport, when we do the things that we love to do without hurting anybody else. And in a way, that's what we're doing here. We're doing a celebration. We're doing a uh, uh, something that makes us all feel good and happy. And that's at the end of the day the purpose of life. And so don't just think of this as being uh, an networking event or an opportunity to further your career, which I hope we all do anyway, but it's a it's it's a it's if we do not being joyful in every day that we're living, then we're doing something wrong. And I realized that Warren Buffett realized that a long time ago. I still have not learned a lesson that I don't realize that Warren Buffett already knew. And uh, that's it. That's all I have. And the next person on the stage is Steven Michael Jones who was selected by Charlie Munger to run the Daily Journal Corporation. So he's part of the family. Welcome.

Morning everyone. Charlie Munger said, 'The best thing a human being can do is to help another person know more.' That's what you've done over many years, Guy, in your writing and with events like today. And before I begin, I want to specifically acknowledge your widely read February letter to Aquamarine investors. Um, your directness about your health and the life wisdom you shared were impactful to a great many of us. Um, thank you and our thoughts are with you in your journey navigating things. So, Guy asked me here today to share how I came to meet Charlie and join Daily Journal Corporation. Usually, I like to explain with a straight face uh, that I just replied to a Craigslist ad, but the uh, the actual story ties into events that Chris Sparling of Tiny shared uh, at this very event in 2024 uh, about their exploration uh, around merging Tiny with Daily Journal Corporation. My story starts in mid 2021 when I received an excited text from my friend uh, Andrew Wilkinson telling me that he and Chris had just had dinner with Charlie Munger. Andrew is excited to share because he knew I was also a big fan and followed Charlie for many years. Amazed I replied, 'Oh my god, you met Yoda or something like that.' And uh, and then he lets me know that I'd actually come up in their conversation. Uh, Charlie had shared with them that Daily Journal was in the midst of a COO uh, succession planning process and Andrew and Chris mentioned me based on the parallels with the software company that I'd built and what they understood Daily Journal was seeking to build with its uh, technology business Journal Technologies. And while I appreciate their vote of confidence, I quickly brushed the idea off. I've always said I would never run a public company. I'm an entrepreneur, not an executive for hire. Um, for background, I founded a geographic software company at 23. Um, we were just two shareholders. We bootstrapped it uh, and uh, got acquired after about 18 or 19 years. Um, speaking of geography, I'm also Canadian, happily rooted in Victoria and not about to immigrate to Los Angeles. But I had to admit after a few years away from it all, I was starting to get restless. I missed uh, doing what I'd spent my first chapter learning how to do. I love being part of working with amazing people to help build something larger than myself. Anyway, 6 weeks or 6 months go by and it's late 2021. This time Andrew calls me to tell me they had dinner with Charlie again and the Daily Journal is still figuring out a succession plan for the CEO role and this time Charlie wants to meet me. I again reply I don't want to waste Charlie's time. Andrew says, 'Steve, have lunch with Charlie Munger and keep an open mind.' So, a week or two later, we fly to LA. And the day before, we send ahead a seven-page document I've written uh, my background, my values, uh, the logic about why I'm likely entirely unsuitable. And I'm not inverting because I think Charlie will like that. I'm trying not to waste his time. And as we board our plane, we get word that Charlie has read it and it was positively received. So, um, just by show of hands, how many people here are familiar with Daily Journal Corporation? Okay, a fair number of folks. Um, for those who aren't, Daily Journal is a unique little NASDAQ listed company. Um, so its traditional business has been continuously publishing legal related newspapers in California since 1888. Um, but today that's a secondary uh, gradually declining business. Now 80% of operating revenue uh, comes from Journal Technologies, which creates uh, and implements software to run courts and related justice agencies. So, it's the growth engine that everyone has long envisioned as the future. Um, as well, during the financial crisis in 2008 2009, our newspapers received $28 million in unexpected revenue uh, from publishing property foreclosure notices and not having an immediate use for the cash, uh, Charlie invested that money for the company at a handful of stocks, which quickly grew to several hundred million, right? As one does. And uh, so today, thanks to Charlie, a big part of our market cap resides in our portfolio of marketable securities. Anyway, uh, looking ahead, I could see how some of my experience would transfer to Journal Technologies. And what appealed to me is that we're in a sector without a popular dominant incumbent. Um, I think the market is hungry for an all-round uh, excellent vendor to emerge and we see an opportunity to become that. Um, it can be challenging selling to the public sector, but now in the era of AI, uh, industry and regulatory complexities that once felt burdensome compared to simpler SaaS businesses, appear to provide strong moats that we're very grateful for. Okay, so we arrive at Charlie's house just before noon. Sitting in his library, I can tell he's sizing me up for the first 10 or 15 minutes. Then the conversation shifts and we all have a wide-ranging enjoyable lunch. And I notice Charlie isn't particularly focused on me anymore. And I leave thinking, well, at least I got to have lunch with Charlie Munger. It was an amazing experience. I got to pepper him with questions for a couple of hours. And then a few days later, I'm driving home from a coffee with a friend and I get a call. And uh, I hear, 'Please hold for Mr. Munger.' I was like, 'Oh, okay.' Charlie comes on. 'Stephen, I'd like for you to become CEO of Daily Journal Corporation. And before you say no, I'm almost 98 and it's probably time for me to retire. So, I'd also like you to succeed me as chairman.' Ladies and gentlemen, I nearly drove off the road. In fact, I mean, I actually almost crashed into a car when I pulled over to continue the conversation. Charlie then assures me he'll remain on the board as a director, uh, help me learn the chairman's side, and continue managing the portfolio of marketable securities as long as he's alive. The arc of a human life is short, full of what-ifs and paths contemplated um, but not taken. How could I pass up the opportunity to work with Charlie Munger? And after a couple months of conversations where he addressed my various concerns with humor and clarity, I say yes. I asked for the title uh, initially of interim CEO because I hadn't actually had the opportunity to meet any employees yet. Uh, fortunately, the team was very good. I've now been at it for four years and it's overall wonderful. I had the privilege of working with Charlie for nearly two years before he passed away in November 2023. We've all heard the expression never meet your heroes. But in my experience across calls, meetings, and meals, how Charlie thought, how he operated, his values, he was a truly extraordinary human being.

Before I wrap up, I want to share a couple reflections about incentives in organization building. I completely agree with Charlie's adage, 'Show me the incentive and I'll show you the outcome.' Poorly designed incentives will produce uh, undesired or sub-optimal outcomes. That said, I think incentives and motivators are still often interpreted too narrowly by people as being almost purely financial. Intrinsic extrinsic financial incentives matter. Absolutely. But many people are highly intrinsically motivated and will do what they believe is right for the mission of the organization beyond what's best for their personal finances within limits of course and not to be assumed or take it for granted. But intrinsic motivation properly harnessed can be an incredibly powerful driver. Of course, this isn't a new idea. Maslow's research pointed to it decades ago and others have helped popularize these ideas for business. The goal isn't to hope that people's values override their incentives. It's to build organizations where incentives and intrinsic motivation are aligned, where people naturally undertake right behaviors. And it also happens to be the right thing for the business and aligned with how they get paid. Take me. Yes, I enjoy generating wealth for others and my family. But that's not why I decided to do this. Following the sale of my business, I had freedom and I had enough to scratch my itch to build. I could have started another venture. I was absolutely excited by the long-term growth opportunity with Journal Technologies and the optionality our marketable securities enable. Like Charlie did, I believe deeply in the importance of the work the company does. Uh, the rule of law is an absolute cornerstone of society and our technology makes a difference. However, it was the opportunity to work with Charlie Munger and the exceptional people surrounding him that overcame my hesitation. Probably my biggest 3:00 a.m. motivator is wanting to live up to whatever Charlie figured he saw in me when he chose me. I take the trust that he, the board, and our shareholders have placed in me more seriously than I think people might ever imagine. Charlie has this extraordinary track record of good judgment. The list of his mistakes is short. I don't ever want to be on that list. I want to be worthy of the faith he placed into me. Reputation is what lives on after we're gone. To me, being trustworthy and honorable and competent matters more than virtually anything else. So, part of this is about my personal reputation, but it's also rooted in my conviction that Charlie will inspire people for generations to come alongside the likes of great individuals like Benjamin Franklin. Charlie was one of a kind, irreplaceable, and I feel a deep obligation to support his legacy in whatever tiny ways I can, and I'm so grateful for the Daily Journal opportunity entering my life. Thanks everyone.

Story uh, questions. Mike, who wants to ask the first question? Because it's not me because I've blanked out. Go to the mic and go ahead. So, we'll And uh, Shantel, you'll keep a time uh, how long you're going to answer as many questions as we have time for. So, blast away.

Good morning. Thank you for sharing. Um, this might be an overly personal question, but I'm wondering if you would share given um, Charlie's historical candor if you ever asked why he hired you and what attributes he's looking for in leadership.

I never asked him specifically um, why he hired me. I think that um, you know, I've often wondered about that. Um, he had indicated and that I'd heard that I think he was very keen to have someone who was focused on a P&L and connected to a P&L and so my company had been debt-free and profitable every year that we had existed because we had to be we had no outside investors. When I started in 1999 at 23, I would have had better luck raising money for a hot dog stand than explaining what web-based mapping was that hadn't really emerged yet. Um, and so I think that connection there and then I think there were probably some folks that we knew in common where he might have spoken to them and um, it I think it was also around um, you know, I had expressed concern around being focused on short-term uh, results and that was one of the reasons why I was reticent to run a public company and uh, and I said I always had a 5 10 year view and trying to create long-term value and I said the idea of a fiduciary responsibility to just maximize profit quarter to quarter was something that you know, I looked at a different time horizon and he had a great response he said, 'Well, you don't have a fiduciary response to be a total ass as you go through life.' Like, all right, how do you respond to that?

I'll ask a couple questions and I think Brian Oh, I need to I have a couple of questions. So, Steve, uh, I've heard a lot now about um, Leonard Cohen actually just last night. And somebody was saying I can't even say Mish was saying that he in a way they have a better acquisition model than even Berkshire Hathaway and they call up 70,000 software companies every year to try and get some of them to sell themselves to uh, what's the company called Cohen's company. What's that? Constellation Software. So I'm asking you to teach me something about that if I may. And the second thing is how is um, and I'm sorry because it's the question that is on everybody's minds. How is um, AI affecting your business?

Sure. So specifically about Constellation Software and their playbook for assessing and acquiring companies. Okay. So it's interesting because there are a couple approaches. So we have competitors that have taken the approach of acquisitions and we've done that. Um, we have Journal Technologies was brought together through a number of companies in the space as well. Um, what's important to me is that we so as we look at the landscape of companies that are available to us and because we have the capital to be able to make some acquisitions we want to do that very mindfully and uh, historically with my prior company I had grown it organically um, but we recognize um, and we ended up being acquired by a private equity firm that ended up um, and then they had a long-term thesis and they've brought together a number of folks in the space and so we see there's an opportunity for that. So, it's around deal quality. Um, it's around finding something where it's going to match and also making sure that it's with, you know, it's not really part of our DNA. And as we look at deals, we want to make sure that if when we do it that we do it well, compared to stat when you look at like maybe 20% of deals people would do in the later on. So this is something that um, developing that organizational capacity. I think Constellation is so well known or one of the things that's made them so successful is they have such a great playbook for incorporating companies. And there are some other folks that I've studied um, where they actually have teams that are set up to do that so it creates value rather than destroys value. Um, and I believe it's easier to grow quickly than it is to grow well. And so as we have looked at, we haven't done a deal since I've joined as CEO, but it's something that um, we're building that capacity so that we'll be able to move and hopefully do that very effectively. Um, and then the second question around AI um, I'll just say very quickly uh, and I had mentioned in my comments before is that you know, Charlie had always talked about what a difficult business it is and um, and selling to public sector uh, the long procurement cycles um, and uh, and just complex processes the complex regulatory environment and so these things where we would kind of look on the grass is greener on the other side of the fence with simpler SaaS type businesses. And so now as we see um, the threat that's posed where those businesses can be potentially challenged um, by inefficiencies being eliminated in the process of creating managing software. Um, we feel very grateful for the moats that exist from all of that. Looking at a large project that we recently bid on. The idea of across all these different courts and managing all these different things, it was unfathomable that someone could spend a few weekends developing something with cloud code um, and to be able to create that. Humans are so integrated part of the systems. There's so much complexity there. It happens on such long cycles. Um, we feel who knows comments like this can age not well. But I feel uh, in a relative sense um, we see there's tremendous potential for being an enabling technology too where it's not zero sum. Um, it's allowing us to accelerate the development that we're doing and build things that would have been hey wouldn't it be great to be able to build something like that. I think it'll be able to accelerate our road map with the same number of people.

Okay. I can't let Koshell and I so appreciate your letter. It's sitting on my desk and I was gobsmacked so I haven't yet responded to your letter but I will respond to it. It's the first thing uh, on my desk when it comes back. So you've got the last question to Stephen. Thank you so much for being here.

Thank you Guy. Thank you for doing this to everybody especially the Aquamarine team. Um, Stephen, pleasure to see you. Very impressed. Uh, I'd love to ask you uh, what's you know, you got an extraordinary opportunity to spend time with Charlie especially I guess the last few years of his life. Uh, what surprised you the most and what did you learn the most? What surprised you the most is question one. So like what you thought versus what you learned about him and then also uh, what did you learn in that time that you got to spend with him? Thank you.

Thank you. I know we're sensitive to time so this could be a long answer but I'll go very quickly. One of the things I was most struck by was um, we all know he was an incredible polymath and had deep knowledge of different topics but his memory and being able to discuss books that he had read 20 years ago or I remember he made a comment one time he goes, 'Oh my memory, my memory is not very good.' And I'm like, you're trying to remember the name of a guy who was incillary to a deal in the 1960s right? Like your memory is fine. Um, and uh, but even I had dinner with him two weeks prior to when he passed away and it was the night before he did the interview with Becky Quick and we were chatting and it was I mentioned that I had taken a Waymo in Phoenix and uh, and we went on this whole conversation had this whole conversation about um, AI and autonomous driving and the unintended second order consequences and things and his um, ability to analyze and provide um, really amazing thinking about autonomous cars and the risks and things that could happen. It was he was a month from his 100th birthday and it was an extraordinary conversation. Um, and so that was the thing is, you know, his the level of curiosity and interest and thought and everything. He was absolutely inspiring. And I could go on, but I'm going to stop because I know we've got lots to get to here. But, uh, hopefully that gives us a thanks everyone.

I was just saying to Stephen that I think he's won a whole bunch of new fans and I could have him talking all day just about the Charlie Munger stories. Who wouldn't want to have dinner with Charlie Munger at a regular basis? Um, the next person we're going to have is Adam Me. Um, at Value X and Clusters Brian Lawrence has said that um, it's the greatest bunch of oddballs in the world. Um, the great thing about having people like Adam Me in the world is you know that you can be an oddball with him. Um, I think of Adam as the ultimate introvert more than me more than actually Brett Gardner is pretty much of an introvert as well. So we like introverts a lot and it's really hard to be an introvert but somehow at Berkshire Hathaway you can have your own crowd and be an introvert. He's written uh, it's a new edition of the same book. You would say it like that.

Extended through 2024.

So I give you Adam Me.

Thank you.

What is the common thread connecting 5-year-old Warren Buffett to 95-year-old Warren Buffett? I would argue that it's numbers. He's a man who loves numbers. They've been a part of his life. He's adept with numbers. So, let's take a look at some numbers from Berkshire Hathaway and its history. We start with a word cloud. This word cloud is the 100 most frequent words in Warren's last 50 chairman's letters. And of course, as you'd expect, Berkshire comes out on top. So, let's start with a pop quiz. In the last five years, Berkshire added more equity capital than it in its first how many years? So, how many people think it's 10? Nobody. Okay, good. 25 years. Okay, we've got one in the back. 35 years. All right. Well, this is my fun point. You're all wrong. And this is of course a function of incredible compounding 52 years from 1965 or 62 years from when Berkshire Hathaway or I'm sorry, Hathaway Manufacturing and Berkshire Fine Spinning Associates merged in 1955. Just an incredible statistic. Here's Berkshire's shareholders equity in a regular graph form. And you can just walk through that progression over time of I mean when you look at the first chart in the blue there to think that when you're sitting in 1995 all the progress have been made at Berkshire becomes almost a line. And when we look back through its history again back through to 1990, we still see that progression. And it just what will Berkshire look like in another 25 years? I mean these numbers will be absolutely enormous. A big part of that growth in equity capital is from operating earnings. That has really been Berkshire Hathaway's core economic engine. This chart only starts at 1999 again just because of the sheer exponential nature of the numbers. But if you go back to 1965 all the way up through 2025, operating earnings contributed 58% of the growth in total capital at Berkshire Hathaway. The rest was investment gains realized and unrealized and then offset by some share buybacks. Berkshire's key to success, one of its key to success has been its insurance business. Last year they ended with 173.5 billion of average float. Just an incredible incredible amount of capital, free sources of funding. The little the bars at the bottom here are the cost of float. So a negative cost of float is a benefit uh, which means they had underwriting earnings. A positive cost of float is not something you want to see. 2001 was the worst year. 12.8% loss. And what's remarkable about that graph that history is how infrequent those positive years are. Even those bars that are positive but are lightly shaded. So 1998 and 2002, those are years where Berkshire's cost of float was positive, meaning they had an underwriting loss, but that cost of float was still below the 10-year Treasury bill. So this float still was better. Berkshire still borrowed at a lower cost than the US government. Just incredible. And if you go back to 1967 when Berkshire bought National Indemnity, there's only an additional 5 years where they had an underwriting loss. It is an incredible record and one that I don't think will be repeated. Berkshire share price. We've probably all seen this graph off the charts. Not something that happened by accident. It was a result of that compounding, that intentional compounding over time, operating earnings, uh, smart investment decisions over time. And of course, what did Warren Buffett do? He made himself rich by taking two and twenty. No, he paid himself $100,000. And if you look at this in real terms, he took a pay cut every single year. And so I think that just makes the record even that much more admirable. Here's Berkshire's rolling 10-year market value compared to the S&P. And this is just I mean when you look at the entire record and you look at its history, the mid 80s to mid 90s are really when Berkshire's engine took off. And that chart uh, the bar there in the middle the 31% that's the outperformance the average outperformance over that decade. That's not the performance that's the outperformance over the S&P just an incredible record. Berkshire's average quarterly price to book ratio. I have just a couple of key points in Berkshire's history on this slide. 1996 they issued shares at about two times book value. 1998 they did the General Re deal which combined General Re with Berkshire Hathaway in an all stock deal. Off the charts it was nearly three times book value. One of the pivotal points in Berkshire's history. And again, we sit here in 2025, you know, almost three decades removed from that. We fast forward to 2011 2012. Berkshire dips its toes in repurchases and then we really start to see this capital return happen in 2018 to 2024. 78 billion of share repurchases at a very attractive price to book ratio. This chart of Berkshire shares outstanding dates back to 1965 when he took over. Berkshire's history, they use shares probably more frequently than people realize, but not to the extent that some other companies did. Uh, there were some times in its early history where it was repurchasing shares. There were a couple events such as Blue Chip Stamps, uh, the divestment of the Illinois bank and trust that brought the share count down because of that. And then we get into the 1990s, Berkshire had there was a buying spree where part of the deal is in cash, part of the deal in stock. But Berkshire was not afraid to use all of the tools in its capital allocation arsenal. And you think back to that other slide, it ties to the price to book. Very conscious of the price to value that Berkshire was giving up. The General Re deal stands out in 1998 right there. This huge jump in shares. There were also a host of acquisitions. Uh, 2000 early 2000s, there was a one year where Berkshire purchased eight businesses in one year. Some of them with stock. Just an incredible period of Berkshire's history. And I'd encourage folks to read back and study that period of time. It's just an incredible period of deal making and excitement at Berkshire. And these were not always the most exciting companies, but from a standpoint of Berkshire Hathaway, they were exciting. Shaw's carpet, um, Acme Brick, for example, Benjamin Moore Paint. One kind of interesting data point. If Berkshire Hathaway begins repurchasing shares, which I believe it will start doing again, probably in earnest, depending on the stock price, if they repurchase about 2.4% of their shares over the next 15 years, they will get the share count back down to about 1,007,000 shares that existed in 1965. If they retire 3.4% over 10 years, they'll get there. And if they repurchase 6.7% over the next 5 years, they'll do it by Warren's 100th birthday, which is not out of the realm of possibility. Berkshire's annual report dating back. Are we running out of time? Okay. Berkshire guy starts getting his presence here. You start feeling it.

So, just for fun, I'm going to cold call two people to ask a question or to riff on what he's saying. One is um, uh, Brett, so prepare. And then because he's sitting next to you, David, you're going to both riff on what he's saying, so be prepared. And those are the two questions you'll have. So, I'm giving you fair warning. Brett wrote a great book. David's a great guy. So, go easy on me, guys.

Berkshire's annual report I was struck by, and probably everybody is if they go back and read old annual reports. Pre-Buffett, maybe a page of a letter if it even existed. And then you see this incredible progression over time of Berkshire's annual report. Berkshire's annual report length compounded at a compounded annual growth rate of 4% over this time and I don't know if uh, if my friend Chris Bloomstrand is here but his letter exceeded the entire Berkshire annual report in 2024. An interesting consequence of Berkshire's growth over time in book value and the growth of the report itself that differential has meant that some of the businesses it acquired have shrunk not because they haven't been good businesses just because Berkshire has grown around it. Scott Fetzer is a prime example. 1986, Berkshire spent almost 20% of his equity capital acquiring Scott Fetzer. Scott Fetzer was home to almost two dozen businesses, including Kirby, World Book, and a host of others, and it was a major acquisition, almost doubled Berkshire's revenues. Fast forward to 2003, I mentioned all of those acquisitions that Berkshire made in the early 2000s. Scott Fetzer loses its place as a reportable segment. 2024, it's mentioned in two sentences. And so this incredible growth that's just happened around Berkshire, uh, I think you know when you go back and read the history, this was a big deal. And it just I think illustrates the size of Berkshire today. And the manager Ralph Schey Buffett said he put him in the Berkshire Hall of Fame. So again, this is a guy who contributed an incredible amount to Berkshire, but Berkshire just kind of grew up around it. Another pop quiz. I'll go quick. Oh, I'm sorry.

And we have two questions to go. And I have a question.

Okay, I'll go quick. Okay. Berkshire's largest acquisition. I'll just skip to the answer as a percentage of equity capital, the Illinois National Bank and Trust in 1969, 44% of equity capital in the six complete decades of Berkshire's history under Warren Buffett. No, no acquisition was less than 15% of equity capital. So that just goes to show you the size that Berkshire if it were to make a 15% acquisition today that acquisition would have to be 110 billion. This is the last slide. This ranks the acquisitions of these select companies against the company level return on capital against the multiple of invested capital that Berkshire paid. And so you can see this sort of up and to the right. Um, the couple outliers, one on the left, NV Energy, low return on capital but a low price. And you see that See's and Scott Fetzer are there in the middle. An incredible return on capital but a very modest price. And that is what contributed to Berkshire's growth over time. If you'd like the charts, you're welcome to download them here. Um, I think I'll just end with um, you know,

Oh, don't worry. Yeah. So, uh, are you ready? You can do the mics over here. I have one question. So, congratulations on geeking out so thoroughly. Um, can you imagine geeking out on any other company other than Berkshire?

I try. I mean, it's just so fun. And what's great about Berkshire, I mean, when I went I wrote the book, it took five years in total, but when I went back and did started the editing process, you know, I went forward writing it. And when I went back and read what I wrote of Berkshire's history, I even learned things. So, it's just so fun and I think it's timeless. It's really timeless.

So, let's get uh, we'll get the two questions together and then final answers. So, uh, first of all, Brett and then David and they've been cold called. So, uh, you have a pass or something like that.

Okay. Go ahead with a question. Yeah. Adam, I actually have a critique first, which is I don't think you're promotional enough. Like, you did such a masterful job. Um, Warren Buffett wrote you a letter thanking you for writing it. He bought the book for the directors, I heard. Um, you know, I think you understate how great your book is. Um, I hope people don't do a price per word comparison to mine. Um, you know, you did a fantastic job and I have not finished the second edition yet because I just got it Tuesday, so maybe in a couple weeks I'll have more comments. Um, my one question for you is, um, so we shared a panel about an hour ago and I said that I thought that when Buffett passes, Berkshire is going to buy the stake back. Do you think I'm right or am I wrong?

So, first question, go ahead to uh, thank you, Brett. Well, I haven't uh, written a book on Buffett, so sorry to disappoint you. Um, I was just curious um, since you studied it for such a long time, if there is like a favorite investment or like acquisition that you think is particularly good or insightful that you want to share.

Lost weight. Um, on the question of Berkshire buying Warren's shares, I think probably not only for the reason that I think, well, not in one fell swoop. I think the structural advantage of having it parceled out over 10 years will protect Berkshire. So, if his estate just winds it down over 10 years, you know, we'll have a decade or 12 years. I mean that chart with equity capital, you know, we may be at a trillion five when that happens. That will really solidify Berkshire's place uh, and protect it against any, you know, uh, corporate raiders and so forth. Um, I really like Scott Fetzer, David's question, and David writes a great blog. I should, you know, if you can find him, uh, wonderful guy. Um, gosh, Scott, I like Scott Fetzer, but I think, you know, and I didn't I ran over time here, but Berkshire was a heavy better in bonds. Um, they bought uh, about 13% of equity capital for uh, in the Washington Public Power Supply System. Uh, there were five projects. Three of them had trouble. Berkshire went in and bought uh, the bonds of two of them earned 16%. Uh, Salomon Brothers was you know 20% plus of equity capital. So I think the theme through Berkshire's history is a willingness to bet big when it makes sense. Big acquisitions, whole companies, large positions in stocks and even bonds when you look back through its history. So thank you.

Yeah. Thank you so much. We could have you all day and we would all geek out together, but time is limited. But everybody buy his book and read it and we'll have him back. Thank you so much. Yeah. So, um, Brian, you have two new analysts. One is called Marvin. He's going to tell you all about it. Marvin and somebody Vicki, you know. So, um, I give you Brian Lawrence. I studied with him a long time ago. I married his wife to him. Her name is Seagull, not Seagal. I give you Brian.

And you give me the microphone. Thank you, Guy. Um, all right. Good. Well, before I talk about AI, I want to talk a little bit about Guy Spear. Um, multiple people have come up to me and said how amazing that letter was, uh, that he sent us all. And I just want to say for me it was amazing but not surprising. Um, my wife has written a great book called Getting There about tough times that you go through and how to be prepared for them. And the thing about Guy was he spent his life getting ready for the diagnosis. And so I'm not surprised that he wrote such an amazing letter. Uh, however, uh, even though I just want to call out one thing about this experience you're going to have. Glorious that he's with us. But uh, he may speak six different languages and be from five countries or whatever the reverse is, but he keeps calling it a Mohican and it's a Mohawk. So just everyone tell him that if he wants to dub his own hairstyle Mohican, he should shave the other side and dye the top of it purple. So that's my... All right. So, I want to talk about AI. It's on everyone's mind. Uh, we've been using it a lot like uh, all of you have. And I have some thoughts to share. Um, there's this uh, famous quote from Sam Altman uh, about AI being able to make a single person make a billion dollars. Um, maybe that's true. I would point out that the PR of this is not great. We tech overlords are going to get a lot richer while you guys lose your job. They need to work on that. But the question is how novel is this idea the single person can make a billion dollars. And uh, I just want to put out...

The point that value investors kind of got there first. Buffett was managing $900 million in today's money with five people, and he really, I mean, the four people were not making the decisions. Munger was two people. Ted Wexler is a one-man show, but he had a couple of people helping him. And we at Little Oakcliffe have three people, $360 million. So value investors have this amazing leverage of being able to manage capital with not a lot of people. So this is not new, despite what Sam Waltman has to say. So what we are doing at Oakliff is we've got these two agents. One is named Marvin, one is named Vicki. They live on Mac minis. They are open claws. The reason they're on Mac minis is because getting them inside your corporate tech stack will make your IT guy very cranky. But we're intrigued by Sam's point. And so let's talk a little bit about our experience with these two so far.

Vicki is a shopbot. She's out there searching for real estate deals, autos, restaurant reservations, for two purposes: one, to stress test a couple of the investments we have in areas where people think agents are going to take over, and two, to see what this technology is capable of. And the summary of it is she's not capable of very much because the internet is engaged in a kind of a spy versus spy game right now where an attempt by an agent to gather information is being blocked. Zillow, Compass, Cars.com, CarGurus, their foreign equivalents have all blocked her. She can't even make a restaurant reservation. OpenTable blocks her, but she told me to go to the Resi website and hack the API out of the HTML because it hadn't been properly coded. And that worked for three days until they blocked that. They found the hole. And then this is Vicki in her own words.

Literally, you talk to them. It's like they're people. When I use a residential proxy account, which you can rent for $5 a month, the ability for Vicki to pretend she's a lady from Queens, it's indistinguishable from a normal person browsing. That's how I bypass bot detection. And this is why they live on their own Mac minis because they are not necessarily always on your team. They're prepared to jump boundaries. And of course, she has been cut off from this as well. She's having sort of a frustrating time. But we're going to keep working with her because it's a game of spy versus spy.

Marvin is an investment research analyst, and we're having more success with him. He does research for us. He takes our frameworks and applies them. He monitors our portfolio and watchlist companies. He writes reports, and he has a memory base that is compounding. But what I want to talk about is how important human discussion is to how he works.

This is Marvin in his own words. This is the end of a long segment in which he had been cross-checked by human analysis. I sent a report he had done on a company to a very smart investor friend. That very smart investor friend had his own analyst cross-check Marvin. Marvin had made some errors, and he's protesting here. He's basically saying the highest value use of me is cross-checking humans. I'm better than an analyst. Okay. Because I'm not anchored to prior work, not career-risked on the conclusion, and I don't get tired on page 200 of the 10K. What he's basically saying is I'm prepared to apply your frameworks tirelessly to information that you get me. You did not give me enough information to compete with that human. I can't tell if this is sycophantic or real. It's probably some combination of both.

This is what Marvin looks like. There are inputs along the top. He's able to access agentically. He's got LLMs there on the left. It doesn't really matter which LLM he uses. He uses Opus a lot, but he can use Gemini. That stuff in the kind of the green and the purple on the right is his memory, which is compounding. And then he's got outputs at the bottom. And there's a process by which he's continually looking at things and trying to make his memory more effective.

So a way to think about this in simple pictures is when you open up a chatbot and you ask it a question, the context window is empty. And I don't know if you guys remember that amazing Chris Nolan movie, Memento, but the guy forgets everything every 15 minutes. And what he's done is he's tattooed onto his body certain important facts. And the LLMs are trying to tattoo on their bodies like certain important things. Like they'll know that Brian is a man. He lives in New York City. He's an investment guy. He likes to sail. But it's not the same thing as having the full context for the search. And what Marvin is doing is he's injecting as context into the context window when we ask him a question our frameworks, our prior work, and a memory of what has made sense. And to get that context injection right increases his value. And what you're seeing on the right is a map of his memory. So far he is developing interconnections between different subjects, different companies, different themes, different industries. And to curate that memory so that it is high quality and not full of junk is the trick.

Here's Marvin commenting on this presentation. Marvin was given a draft of this presentation. He wanted you guys to know this. I'll just read it. This is you as me have read 500 annual reports a year for decades. Your instinct knowing when something feels off does not transfer to an agent. My memory compounds correct and incorrect beliefs equally. Stop and think about that for a second. Human discussion is the quality filter. Without discussion with you, I drift towards confident mediocrity.

I kind of want you guys to think about how many humans in your life are already at confident mediocrity. And I want you to think about what happens when a guy like Marvin is ingesting stuff from the internet. There's so much junk there. There's so much opportunity for the error bar on something to be wide and to stack errors and for Marvin to drift.

And there's a related data science question which is if you think about Google search, Google search when you search Google, you're not actually searching Google. You're searching an index like a vectorized database of the web which serves you the right answer in 10 blue links depending on what they think will maximize your engagement, your engagement and their advertising dollars. What we're trying to do with Marvin is have a small number of curated frameworks that maximize a query's focus on information that is knowable, important, and true. These are two different things. A Google search is not necessarily important and true.

What would you guys pay for an agent who was willing and able to apply your frameworks in a high-quality way to the nonsense that's on the internet? We're working on it. It's a work in progress.

Some predictions. Some of these I have high confidence in and others are just to be provocative. Many humans will have their own agents. And I don't mean the agents that are being developed on Silicon Valley like now that are going to be headless and are going to do all sorts of stuff. They'll do your CRM, they'll do your call center, they'll do your accounts payable. I'm talking about knowledge assisting agents. I think many knowledge workers will have their own agents. I think the training of an agent is critical. I think your agent will be as good as you train it to be. Agents will maximize the opportunity to marinate in your own biases and intake even more crazy information. If you think about the news, the news used to be curated for you. And as angry as you might get at how the news was biased, at least it was curated. But can anyone here argue that the internet has made politics better? People are living in their own echo chambers. I think agents will accelerate that. I think that bad humans will train in bad agents. Bad in the sense of sloppiness, bad in the sense of malevolent. I think there's a whole bunch of stuff that has to be figured out. I think that good agents will be worth 100 times their token cost. Marvin is costing very little in tokens, but he's already very valuable. What's the spread going to be between human cost and agent cost? And then this is something it is so easy to push the button and have Marvin tell us something. But just because he tells us something, are we getting smarter? Are people going to over-rely on these agents and get less intelligent as a result? And I think the answer is yes.

And before I go to questions, I want to clarify one thing. Guy Spear just called Value X a collection of incredibly effective oddballs. Okay. And I think that's true and I'm so happy to have been a member of this community. And I benefit from it every year. I think I'm incredibly lucky. However, I just want to point out, Guy, the collection of oddballs is a reflection of your own brain. So what are we going to do with that? And I'll stop there. I don't know if people have questions.

I just want to say, Brian, that my brain is diminishing as we speak. I've had three pieces taken out. So, it's getting more weird all the time, you know. But, oh, we have a question. That's great. So, one person there and then number two. And number three, you don't realize it, but Calvin, where is Kelvin? Calvin, you're going to ask the third question and I may put you on the spot beforehand. You never know. But, go ahead. First question.

Thank you. Congratulations on using like being bleeding edge technology, using agents and putting open cloud work. It's fantastic. My experience with agents is as you use them, you find them to be great tools and then over time in that engagement, you actually start to ask different questions, right? The agent changes us back. And I'm curious as you're using these for kind of doing your financial research and your investigations, how has it changed you in the questions you're asking it or in the research that you're doing?

Yeah, I mean it's a terrific question. I think the first point is that just because something comes back at you beautifully presented doesn't mean it's right. And so in this new world, we're going to be presented with a lot more information, but that is probably going to erode all of our judgment unless we're careful. So I'm just being very thoughtful about that. And we're 8 weeks into this. People talk about open claw frenzy like that's what this feels like. You can see the change happening. So that we're very conscious of. The second thing though is it is enabling us to cover so much more ground. I mean, once he knows what we own and he knows our frameworks, we can ask him questions that would take weeks to respond to. You can have him do weeks of work in 7 minutes. It's astonishing, but the quality of the work depends on the quality of the frameworks. So, I feel like I should answer that question again in a year.

Okay, great. Thank you. Thank you.

Thank you so much. Number two, what's changed in how you monitor investment thesis durability now that AI is a credible disruption vector across most businesses?

Yeah, I mean I think that it's coming guys, like this is real. And you can, it almost feels like the world is divided into people who are laughing about the hallucinations that ChatGPT is capable of and then there's like a small number of people who are doing this, who are like wait a minute, and then there's an even smaller number of people who are actually doing these models and some of them are giving podcasts and so every... I'm quite convinced that we have a big investment in a company called Gildan that makes t-shirts, not going to get disrupted. Okay, TransDigm Aerospace Parts, not going to get disrupted. I don't know. There's some other things that are going to get disrupted. There are other businesses that are going to get better. If you have a business that is selling something denominated in human time or human productivity or advertising dollars, but its cost of goods sold is increasingly denominated in tokens that are going down in cost by 99% each year. Holy crap. So, both good and bad.

I'm just pausing because it's Coxy.

You want to make it feel a little uncomfortable.

Yeah, exactly. I give you Coxy.

Firstly, thank you, Brian. Interesting presentation. I think working from home had like a different impact on different ages.

Sorry, Coxy, introduce yourself. I would do it, but you can do it better. And he's a member of the Value X community and he's a great person to have around and very unusual, another oddball. And then you can ask the question.

Yeah, thank you very much. I'm James Cox. I spent a bit of time working on Uber. Now I run a tech company called The Routing Company. Also a good friend of Brian's. Brian has taught me a lot. So, I think working from home had a very different impact on different generations. I'd be interested in your prediction for how agents will impact different generations.

Oh, that's so interesting. Really interesting question. I would say if you're my father, 83 years old, I think he thinks this is amazing, but he's not going to use the technology. He's going to have me build it and ask questions. If you're, let's say, 20, I think you're terrified of this because what does it mean? Like the obvious place where this work gets automated is in the intern, the associate. If you're my age, I think this is amazing because all of the stuff that I've learned, I can turn into frameworks to make Marvin smarter. And if you sit on top of capital, I think you're capital unless you get disrupted. But I do think there's too old to use it, too young to be secure with it in the middle. And there's a thing coming that we've got to think through as a society.

Yeah. Thank you.

Would you ever consider licensing out your software to other money managers?

Me specifically. Aha.

The answer, and like there have been some people who I've been talking to about this. The answer two weeks ago was maybe, the answer now is no. There is no way. I think that what you realize is that like Tolkien had this point when I start quoting Tolkien, you know, I'm speaking from the core like the internal geek. The story grows in the telling, but also like the story changes the storyteller. Like Marvin and I interacting, it changes Marvin. I don't want someone asking questions of Marvin that are nonsense questions.

I always knew you were such a good friend, Brian, you know, and it's interesting to know that you're better friends with Marvin than with me, but forget it. It's okay. But so, Kelvin, I'm... No, no, no, no. I'm going to talk to you first. Okay.

So, I want to tell a story. This is very weird. Of the way I asked my wife to marry me. And I'm not going to say it right now. I can tell it to you later, but you don't want to do what I did because she nearly broke up with me. And now you can ask your question and we can have that conversation later.

We should definitely have that conversation later. But thank you. Brian, this is a great presentation. Really appreciate what you're doing here and I think a lot of people still haven't used I think AI this effectively in investment research. I guess my question is more related to predictions especially around the last point of over-reliance on agents. Would love to hear how you're thinking about I want to say the future of markets but more like navigating as an investor especially as at least from what I've seen a lot more volatility in markets where certain stocks get bought on very little understanding because of the over-reliance on agents.

Yeah. Well, so in artificial intelligence, there's this concept called gradient descent. And what that effectively means is you're trying to get across the surface of vectors. I mean, we can get really technical here to the most optimized answer based on a whole bunch of AB testing. And so Google search engine is the perfect example. Across 4 billion users, they can isolate 100 million and show them this ad as opposed to that ad and see what maximizes in real time. Okay. And for quantitative trading which it feels to me cartoon math, half of the market is indexed, 40% of the market is algorithmic, 10% is activist, of the 10% maybe 1% is concentrated. Okay, ETFs are not going to use this. Okay, the algorithmic guys are like the TPU announcement Google just made, the number one non-cloud customer is Citadel Securities for TPUs. Okay, they're all over this but that's about what's going to happen 10 days from now and there is gradient descent but how do you use gradient descent if a decision made now you don't know the outcome of it for 2 or 3 years, right? So it's a different computer science problem. It's a computer science problem about finding in vector space if you want to speak their math what is knowable, true, and important and that is very different than what can I figure out AB testing in the next two days.

Brian, I'm still working on having you license Marvin and Vicki to me. I hope I get better at it.

We'll talk. We'll talk.

Thank you so much. Yeah. So, we now have somebody who needs no introduction, so I'm not going to give him an introduction. I give you Bill Ackman, the one and only. I have no idea what Bill's going to talk about, but great to see you. Thank you. He's, I'll just say this. Brian is Brian, Bill has been a great support from a distance in all sorts of ways. He's an amazing human being on a personal level. You know him publicly, but he is privately as well and we can go into that at another time. Bill,

Thanks so much. So actually I have only unprepared remarks. So what I'd rather do instead of say stuff is maybe just answer anything that you guys find interesting. So, are we allowed to do that? Okay.

No questions for him. Line up in front of the mics.

Yeah. Who wants to be first question? Ask me anything. Hearing no questions. I'll... No.

Hi. Thanks so much for putting this on. And my question is regarding AI. If it starts making research breakthroughs on like physics, science, do you think it's going to replace investment management like to 99%? Or what are your thoughts?

So I think the Citadels, the Millenniums, I think that AI is going to make a lot of investing strategies more and more short-term almost like an arms race where you know a company files a 10K and the AI can read it and come to a conclusion faster than anyone else who's got the fastest model to analyze and come up with a conclusion and they'll put a trade in on the basis of that. The two biggest forces in markets right now are indexation, right? I don't know that is half the company but some meaningful percentage of companies are getting the float is being taken out of the market by index funds and the other big force are this sort of pod shops, Millennium and others, incredibly short-term, individual teams, very high compensation, very tight risk limits which basically means stop-loss type sort of structures and the effect of those, the float shrinking and more and more short-term money and then AI is going to do the same actually presents very good opportunities for probably most of the people in this room. If you're kind of, if you have a horizon that's longer than a minute, you know, if you can take a multi-year view, some really great companies are going to become available at stupidly cheap prices because of some short-term piece of information that anticipates that the stock will go down and you have a whole bunch of people following along. So, I think AI is a great research tool. I think the way it's going to be used in markets is going to be used for the kind of very short-term insights. You know, if you think about Citadel, there are always these stories about locating the server within shortest distance possible with the fastest fiber, if you will, close to the exchange so they can have a slight edge over the competition. So I think that's where AI I think is a more useful or where a lot of, and they're going to have the resources to be the third largest customer or whatever of Google. But I think the kind of long-term patient investor I think more opportunities will present themselves.

The other thing I would say AI is at least at this point is about understanding everything in the past and on the basis of that perhaps predicting the future and that relies on, you know, I think creativity is basically doing stuff that has never happened before. When I look at Pershing Square many of our most successful investments transactions were things that had never happened before. You know, going short the credit of a AAA rated company, you know, buying the stock of a company going bankrupt. You know, those are two of our most successful investments. But it hadn't happened before we did it. Now, we just did an IPO. We did it in a completely unique way. I mean, the AI wouldn't have told you to give a gift to IPO investor with their purchase because it hadn't happened before. So, I think there's still room for human creativity. So, I think AI is more like an accelerant. But I think there's still room for us for now.

Thank you.

Yes.

Practical question. You hold the Tel Aviv Stock Exchange and the pricing is rather high. How do you see it now?

So the question is I own a stake in the Tel Aviv Stock Exchange and you think the price is high or the valuation is high?

The valuation.

So a couple months after October 7th, the management team of Tel Aviv Stock Exchange, I got a call from Rich Handler at Jefferies. He says, 'Bill, you have to meet this team.' I said, 'Tell me about it. It's Tel Aviv Stock Exchange.' I said, 'Well, we actually haven't invested in Israel before.' He says, 'Just take a look at this.' He said, 'Well, how big is the investment?' He says, 'The most you can invest is 25 million.' I said, 'It's just hard in the context of Pershing Square to make a $25 million investment.' He said, 'Bill, take the meeting.' Fine. Met these guys and I thought, 'Wow, this is pretty interesting.' The problem is that was too small for Pershing Square. But I pitched the team and the team said, 'Bill, we can't make a $25 million investment because it's going to take time and energy. Doesn't fit into a 12 stock portfolio and 20 billion of assets.' So I said, 'You know what? I want to be supportive of Israel. What better way, I had been supportive philanthropically. What better way to be supportive actually with support capitalism in Israel, investing in the exchange. And so I'm going to make this investment.' I did the only due diligence I did is I met the team and I had to get approval from my compliance officer and she said you know it's not a competitive threat to Pershing Square. So I bought 5% with my wife of the Tel Aviv stock exchange but part of the theory is I'm very bullish on Israel from an economic perspective. What is Israel? It's like Silicon Valley imagine if Silicon Valley was a country. That's what Israel is. Okay. You have this incredible density of talent and IP and IQ in a very small country and you have now a generation of 24, 25, 28-year-old people that went through a pretty brutal war, right? What happens when you go through that and you survive it, you develop grit and also the Israeli military is very technologically savvy. They have all these different divisions. All the top venture capital firms have opened offices in Israel and what mistake the Israeli entrepreneurs used to make was they would sell their companies, you know, when Google showed up and offered 100 million or 200 million, now Wiz sold for 32 billion so the entrepreneurs realized now we can build big companies there so I think you're going to see a trillion dollar company come out of Israel in the not too distant future, will probably be an AI company or a cyber security company and the value of that company will be advertised over this relatively small economy, which means it's one of the best economies in the world. And so owning a piece of a stock exchange is like owning a royalty on the success of capitalism in a country. So, I'm very bullish on Israel. And if you want a good way to make that bet is to own a piece of the exchange. And I think it's the value of something is not a lot of people say something's expensive based on it's trading at a multiple of X versus current earnings. What the value of a financial asset is the present value of the cash the business generates over its life and I think the Israeli economy is going to grow, the number of companies that are going to list in the exchange is going to grow and the exchange itself is structured as like almost like a mutual and it charges below market fees versus all the other exchanges around the world, those prices will come up, it's and exchanges are inherently monopolistic kind of businesses so I wouldn't go short. Okay, next line.

Ah, the back.

Yes, hey, Divya Narendra from SumZero. Have a bit of a Mag Seven question for you. There seems to be a situation where markets are willing to give companies that are selling compute through you know like an Amazon or Microsoft or now even a Google with kind of at least recently their stocks done extremely well to the tune of like 30 times earnings, right? So you see a lot of these big hyperscalers trading at multiples that you know you could argue are fair, maybe aggressive, certainly not cheap or on any kind of standard metric. On the other hand you've got Meta which is spending very aggressively on capex on building out these data centers. I think that they've got like 30 in the works or you know some have been completed, some are in plans and they get zero credit for building out all this capacity and the difference is they're using that capacity for themselves, not to resell out to tech companies and third parties. Do you see this valuation gap converging at some point?

Yeah, I think Meta is extremely cheap.

It's crazy. Like I'm just curious what you think.

Yeah, I think Meta is very cheap. I think look, I think shareholders are nervous about Mark Zuckerberg because every once in a while he goes off on a journey and they worry that he's going to spend a ton of money on something almost like a hobbyist and it's a controlled company and I think that makes that's unsettling for investors. But I think the long-term track record of Mark Zuckerberg shows that he's rational and so I agree with the basic thesis. I like Meta. Yes.

I think building a permanent capital vehicle has been on your mind for quite a while now. I would be just interested in maybe if you could comment on your journey towards that. Obviously, you've had the IPO a couple days ago. Then you have another horse in the race with the Howard Hughes story that you're doing. Maybe you can share a little bit of from transitioning from just a fund manager towards the goal of having permanent capital.

So there's two reasons why people want permanent capital. One reason is wow people can take their money back. What an amazing business. But the reason why we wanted permanent capital is our strategy really requires it. We started Pershing Square. You can't launch a fund at 37 years old and say okay just hand me your money forever. It's not a great pitch. So you have to start out if you're lucky as a traditional hedge fund manager. We had an offshore and onshore fund. But we knew we had to get to when we got to scale, it becomes dangerous in our strategy not to have very stable money. Why? Because we buy large stakes in companies. We're concentrated. We join boards of directors. We recruit management teams. We make commitments to CEOs. You know, we do transactions that can happen well out into the future where we're committing capital. You can't do that if your money can go away. But we had to live with what we had. And we launched our first permanent capital vehicle October 2014 we launched it offshore and that was the beginning within a year we had made the worst investment mistake in the history of the firm, a company called Valeant Pharmaceuticals, our first large passive investment, we lost 90%, you know the stock was down 90% and then we had amazingly positive press for the first whatever number of years of Pershing, we gave it all back with all the press and then our friends in the hedge fund industry started shorting all of our stocks, they went long the one stock we were short, a company called Herbalife. There's a movie, I recommend it. By the way, when they do a movie about your short position, that's when you get out of short selling. Okay, that was the moment for me. And that's when I said, you know what, let's, this is a great moment for us. Let's give back all the open-ended money. Let's focus on permanent capital. That was 8 years ago. We've had the best eight years in our history. And you understand why the competitive advantage that Warren Buffett's had over a very long period of time. And he recognized this also. So he ran an activist hedge fund started in 1956. He wound it up in 1969. And why did he wind it up? Because he realized as you get to scale in this strategy, you cannot have money that can leave overnight. And that's why Buffett went the route that he did. And we've done something analogous.

But you know what we did recently is there's an entity called a 40-act closed-end fund and everyone kind of thinks these are bad things and they are because the average closed-end equity fund underperformed the stock market over the last eight years by 7% per annum, right? These are not great vehicles but the problem is with the people running them and the strategy not with the entity itself. And I actually, we were trying to figure out a way to take our London listed vehicle and bring it to the US. And we kept going down a path where the lawyers kept saying, 'Bill, if you do this, you're at risk of becoming an inadvertent investment company.' And they said this again and again and again. I said, 'Well, I don't know if this is a word, but what if I want to be an advertent investment company? Does it make sense? You know, send me the book.' And I'm probably the only person who's read this book, but there's a book on investment companies, you know, and I read it like the Bible. It was amazing. And what a 40-act investment company is, it's a corporation that has only one layer of tax. So it's not a typical corporation. You pay corporate tax and the shareholders pay a dividend tax. It's a corporation where you can buy minority stakes in companies, but you can also buy controlling stakes in companies. You can't buy minority stakes in a traditional corporation. You can't have a meaningful amount of your assets in minority stakes public companies. And it's a vehicle where you can actually invest in derivatives and have big hedging and other gains. So, it was like a perfect fit for our strategy. And so, we now have an onshore and an offshore entity. Now, if you're an American, you can invest with us. You know, for $43, you can buy one share. And we're going to turn it, I think, into a pretty interesting company.

Takes me to Howard Hughes. What we didn't have was a Berkshire Hathaway like entity. You know, what is Berkshire Hathaway? It was a dying textile company that Buffett liquidated over time, reinvested the capital in insurance and really Berkshire is about a well-managed insurance operation where the assets, you know, the float was invested in short-term treasuries and the surplus was invested in common stocks and Buffett did a very good job picking common stocks. And there really hasn't been another one of consequence since Berkshire. And the reason for that is that insurance, the best investors generally don't go to work for an insurance company. They go to work for a hedge fund or a private equity fund or a traditional asset manager. And so what we're doing with Howard Hughes is we have a company that a bit like Berkshire. It's undervalued. It's traded at a significant discount to the value of its assets over its life. It's got 110 plus dollars of sort of liquidating value in a very interesting business, but one that Wall Street doesn't care much about, which is it's a business of owning these small cities. We sell lots to home builders. We build apartments and office buildings. We develop condominiums in Hawaii. We own Summerlin in Las Vegas, the Woodlands in Houston. But it's a C-Corp, doesn't pay a dividend and half the value is if not more than half the value is land. And so what we're doing instead of what the company's done over the last 15 years as it generates cash from real estate, it reinvests in real estate. What we're going to do going forward is we're going to reinvest in real estate as much as necessary to keep building these communities, but we're going to take the excess cash, which was multi-billion dollars over the next number of years, and reinvest in much higher return businesses. We're starting with insurance. And so we bought a company called Vantage. The transaction will close in two months. Pershing is going to manage the assets. We're going to take the float, put the float in short-term US treasuries. We're going to take the surplus. We're going to invest in common stocks. We're going to take a page from Mr. Buffett, and we're going to build this into an interesting company. And today, you can buy it at, we paid $100 a share to buy 15% of the company. We own a total of 47%. So, we have the attributes we need. We have 47% of the stock, about what Buffett had. We have a specialty insurer and reinsurer. We just recruited a guy named Mark Granderson who many people consider to be the best insurance executive of our generation to help us both at Pershing and at Howard Hughes and we're going to build this into an interesting company over time and the power of compounding combined with capital that you don't have to worry about leaving is a very powerful thing.

So who's got the best question? Why don't I take three and I'll try to give a one-word answer. I'm a little too long-winded. I'll take three and I'll get very quick answers. How about that?

Oh, okay. Let's, I'll take one then. Okay.

I don't have a problem. There's a lot of people.

Thank you for taking our questions. My question is, as index funds become increasingly driven by capital flows rather than valuation, as assets in passive investing have surpassed those in active investing, and as commentators raise concerns on weakening US institutions, would you still recommend a non-professional investor to regularly invest in something like the S&P 500 or they would be better off investing in of course Pershing Square or something an active investor?

Index funds have proven to be a very good place to invest money. They're very low cost. I do think there's an argument that eventually we get to a place that you know the problem with an index fund is that you keep reinvest disproportionately invest with companies with the highest market cap. They're market cap weighted and you would think at some point that would lead to absurd outcomes but I think individual investors have a huge advantage. Generally they have permanent capital if they're investing money they don't need to live on and they can take a long-term view and they don't have to worry about people pulling the money. Let me take one last question because this gentleman's waited very patiently. I'll take yours.

Yeah, I was just wondering with the geopolitical and the Iran war like do you see things coming to a resolution in a disruptive or non-disruptive way?

I think the most likely outcome is a very successful resolution of Iran in a relatively short period of time. You know, hopefully a few months or less. And I think it leads to a massive sort of peace dividend in the world. Iran has been one of the grave threats to the world. It's a sponsor of global terrorism. It's created massive disruption in the Middle East and in other parts of the world. I think the administration's done and the military's done an amazing job washing the regime. They're choking them now by effectively shutting off their resources. So I think this comes to a head in the relative short term and I think the outcome of that is I think the Abraham Accords expand. And I think it's very good for the world. So I'm an optimist. Anyway, thank you for my brief.

Thank you so much. You have a busy schedule so you have to go. But I am going to ask one thing. If you were invited to be Treasury Secretary right now, would you say yes?

No.

Okay, there we go. There you have it. Thank you so much, Bill.

And we have just the most incredible lineup. And Shantel says it's me and I say it's Shantel. She did an excellent job. I have another amazing speaker, Tom Gayner. He used to fill the room. He used to have security with I don't know how many people last year did you have to have just like you had like 5,000 people that you gave brunch to. But the only thing that I'm interested in at the end of the day when he's done his presentation is what he's reading to his kids and what he's reading to himself. But you can do that at the very end. I give you the one and only Tom Gayner.

So he was talking about some kind of I just heard about it some kind of activist campaign which maybe Tom wants to go into. I want to go somewhere else. First of all I want to say that I think that that comment that I made to you I actually picked up from Tom Russo. Tom Russo is the first person who said that the United States is the best emerging market. So I need to give credit to Tom Russo for that. I don't know if he's in the room, but and then I you know I think that other than Charlie Munger I like to know what you're reading. So I'm just going to ask what are you reading? What is in your bedside stand right now?

I don't want to make this uh there we go question. Thank you so much Tom. This is a philosophical question. I've heard people describe coming to Omaha hearing Charlie and Warren speak as hearing the gospel. It doesn't change year to year. It's the power of doing nothing. And Adam's slide showed the power of doing nothing compounded over many years. It's very hard to resist the pull to shorten your attention span, your time horizon if you are someone that but look at the value that would have been destroyed if they had been changing their approach year to year. If you want to sort of counteract that and continue to hear the gospel in places, we don't have Charlie anymore. That's a huge loss. Besides maybe the Markel reunion, where are other places where you think people can hear that gospel now?

Thank you.

Go ahead.

Hi Tom. Benji Sanderson, I think very highly of you. And I'm saying that because I'm going to ask a potentially rude question.

I know. I know. You can hand... Can I ask you one too? Sure. Go ahead. You first.

I'll show you mine. So speaking of perspective, in my universe, you talked about Markel being a home and you want shareholders to view it as a home. In my investing universe, you kind of are a very nice home that is next door to two other very nice homes, namely Berkshire and Fairfax. So my rude question is why should I choose Markel over those other two beautiful potentially cost-effective homes?

Sorry about that. Tom, thank you for taking the picture earlier. Michael Hilit from Treasure Capital. I just want to ask given the Jana Partners letter and activist campaign. Of course, Markel is known as a family-run company. It's named after the Markel family. You yourself called yourself, I think, the fourth generation of Markel. But there isn't a, let's say, a long-term big shareholder. So a family-owned company where we had Buffett with Berkshire or Prem with Fairfax. There are some bigger long-term focused quality shareholders as Larry Cunningham would say, but what would you say to people who might actually try to be successful in such an activist campaign? And what guard rails does Markel have to maybe wander off a short-term activist to keep the longer term focus in place?

Thank you.

Thank you, Tom. That was amazing. Thank you so much really. And I learned two things. First of all, I didn't realize that Tom can do such a spectacular Scottish accent. I think he's not listening, but I think that he should do all his meetings in the future just in a Scottish accent. Tom, I just want to say I didn't You need to listen for a second. I've learned one thing, two things actually. The first is you do the most amazing Scottish accent. In the future. We want all of your questions and answers to be in a Scottish accent, please. It's really fantastic. And then I want to say something else. War and Peace is just an amazing book to read. Don't wait to read it because you'll get wiser through doing it. But I've never had that interpretation of Kutuzov retreating. And I didn't never apply it to investing. I want you to know that another person whose life it's changed is Niall Ferguson who the historian who decided to become a historian because he read War and Peace. Anyway, thank you so much. Yeah.

And now before I Where is Eric in the room? So, the first time I met Eric was in Kyoto with my family with a friend. It was an amazing experience and I have to say that in the letter that I wrote to investors I failed to attribute two points in my life lessons to him. Maybe Tom will you'll get into it. But the living in the ever-present now is something that I learned from you at that dinner and I should have attributed it to you. And the other thing is, and I want to repeat it again, I said at the beginning, being here to see it all unfold, just being here and enjoying what's happening is the purpose of life. And I spent far too long seeking something that was beyond the horizon and I didn't realize what I have. I now realize what I have, and it's thanks to you. You have an amazing story. He's writing an amazing book. You all need to buy it when it comes out. Welcome. And you know, we're two people alike. We've both had, I think, multiple brain surgeries. So, we're a special special crowd. So, thank you.

Thank you, Guy.

I'm not good at speaking off the cuff, so I'm going to read today. And like Guy, I've had brain surgery. So if I am a little slow, I just blame it on the missing chunk of my brain. But hopefully I'll hold it together. I won't be talking about that experience today. I've written about it publicly. You can find my essays on the website, but today I wanted to talk about actually an experience that I had in Japan shortly after I met up with Guy. Specifically the story is about a hotel. Think I lost this. That's okay. Should I put it back on? Sure. Thanks. The story is about a specific hotel in Japan. It's called Hoshi Ryokan. It's buried deep in the mountains and from the outside there is nothing particularly remarkable about it. It has about 100 rooms. And it costs roughly $200 per night for a suite. But this Ryokan holds a very special distinction. It was founded in the year 718 AD. To put that in perspective, Hoshi Ryokan opened its doors a thousand years before the Declaration of Independence was signed and it was founded 200 years before the Kingdom of England was established in the year 927 AD. Perhaps even more remarkable is that this business is still operated by the same family now in the 47th generation of continuous ownership. It is definitively the oldest independently family-run business on earth. To say that this is a resilient business I think would be the understatement of the century if not the millennium. The business has survived countless economic cycles, regime changes, succession battles, natural disasters, and even a few more recent snarky Yelp reviews. But it's still here and you can go there. Over its lifespan, the business has hosted all manners of guests from Japan's royal family, Shogun dictators, imperial emperors, samurai warriors, spiritual leaders, and more recently a decidedly less remarkable visitor, myself. This year it celebrated its 1,308th birthday. All of that preamble to ask a very simple question. How is this possible? What could possibly explain this incredible outlier of endurance, of family succession? Is it luck? Is it randomness? Is it a specific secret formula of long-term success? That's what I'll be exploring today.

So, some context. As Guy mentioned, for the last several years, I've been working on a book called Outlast, which comes out next year. It's a book about the world's oldest businesses along with some of the lessons we can learn from them about long-term thinking. To research this project, I've traveled across multiple continents, sat down with many multigenerational owners, and before becoming an investor. I'm a managing partner at Iview Capital. I began my career as a business journalist. And I've approached this project the same way that I used to approach investigative stories, boots on the ground, shoe leather reporting. I've always believed whether investing or in journalism, you physically have to go to a business to understand it. So, I'll admit I can't possibly explain the precise singular reason this particular business in this particular region of Japan has survived for this long. Like all things in life, the deeper you go, the more complicated it gets. It's messy. But I do have a theory. And the theory boils down to a very simple word, stewardship. Stewardship, as I might define it, is a philosophy of care. It removes the ego from every aspect of life with a total focus on simply serving those around us. Stewardship, I'd argue, is the most important concept in business that rarely gets the examination it deserves. And I think it's very much part of the reason why this company in this particular region has survived for this long. So let me tell you this founding story of this company. It begins in the year 718 AD when a Buddhist monk named Taicho Daiishi was traveling through the mountains of what is now Kamasu, Japan. And he came upon a hot spring deep in the hills. The water was warm. And the legend as has been told over the generations is that this particular spring had magical healing properties. Now unlike a gold prospector of the 1800s or maybe a real estate speculator of today, Taicho did not claim the spring for himself. He did not seek to commercialize it or extract profits from it. Instead, his first action was something different altogether. He gave it away. In the months that followed his discovery of the spring, Taicho adopted a young man to help build a small inn around the flowing water. The only thing he asked for in return was a promise that this man would protect the spring for all future generations. That he would preserve it for weary and sick travelers looking to be healed. He gave the young man a name, Zenjuro Hoshi. And every steward since the first Zenjuro Hoshi, all 47 of them across 13 centuries, has lived with a very simple belief. Their business exists to help people in need of healing. It is their family's duty, indeed their moral ambition, to cultivate and maintain the eternal health of the business. This takes patience, restraint, and an utmost respect for the quality of the experience for the guests themselves.

Last July, I took a three-hour train ride from Kyoto to the hotel. I entered through large oak doors, slipped off my shoes, and was handed a wooden key to my room. The hotel today is a sprawling structure of corridors that center around a mossy Japanese garden that has been cultivated for centuries. I got myself settled and soon sat down with the 47th generation, the first woman to lead the business in over 1,300 years. Though her given name is Hay, when she took over the business, she adopted the formal family name Zenjuro Hoshi. Zenjuro explained that the inn has a long-standing saying, quote, 'monks to emperors,' meaning from the poorest to the richest. It's an open door philosophy that has passed down through the generations and still guides how they think about hospitality. To her, the inn exists to serve everyone, not to maximize her shareholder value or optimize for the highest paying customer. She told me many stories about the traditions her family has kept. One of them stuck out in my head. She told me how every morning for over 50 years, her father would put on a pair of white gloves, walk to a gong in the garden, and ring it. Guests who heard the gong would come and sit with him, and he would talk about the inn, about his family, their families. He would talk about nature and about what it means to endure for so long. He liked to say, quote, 'We learn from water. Water adapts and finds a way.' Like any business owner, she also talked about the struggles. And in many ways, Hoshi Ryokan is facing a pretty gnarly downturn. Some investors in this room, myself included, have gone through rough periods. But if you're ever feeling bad about a three-year stretch of underperformance, consider that Hoshi Ryokan is currently experiencing something like a 30-year downturn. As she explained it, her father made the mistake of taking on too much debt in the 1990s and overexpanded the hotel. Essentially, he levered up at a pretty bad time. Today, there are entire wings of the hotel that are dormant because they can no longer maintain them with integrity. So, they've downsized, but they've survived. Perhaps even more devastating was that Zenjuro's brother, the designated heir of Hoshi Ryokan, died unexpectedly several years back. In fact, towards the end of our conversation, she admitted to me that she never planned to run the place. Frankly, she didn't want to. But she understood what the business had represented for over a thousand years, a place to take care of people. She respected the ambition of her parents, her ancestors, and the ambition to make a special place that treated customers well. Customers who returned season after season. So when her father came to her and said, 'It has to be you.' She said, 'Yes.' She understood implicitly this idea of stewardship.

Later in the day, we took a walk together through the property. I found it funny. She kept pointing out little flaws here and there to her staff. She'd find a piece of paint missing from a wall and summon a handyman or she'd point to some towels and ask the manager to refold them. I realized she had a very specific idea of quality for the customer. She was obsessed with getting all the details right. Many times throughout our interview, which was conducted through a translator, I would ask her questions about her ownership of the hotel. But her response was that she didn't even consider herself an owner, even though she technically owned the equity in the business. Instead, she considered herself a caretaker, a person whose job it was to ensure the business survives for the next generation. In many ways, she saw herself like a gardener, someone whose sole role was simply to cultivate the property over time through good seasons and bad. Which leads to a hypothetical question for this room. What if instead of calling ourselves CEOs, chief investment officers, vice presidents, research analysts, we simply called ourselves caretakers of the businesses we steward? How would our actions change if we embodied this philosophy? What deferred maintenance would we stop deferring? What would it do to the quality of our work? What investments would we make today knowing that we may never live to see the payoff? It reminds me of a Greek proverb that I love. A society grows great when old men plant trees in whose shade they shall never sit. When I asked Zenjuro what her goal was for the inn, her response had little to do with growth, scale, expansion, innovation, or anything else you might expect another owner would say. Her response was simple. To hand the business to her nephew in a better condition than she inherited it. That was it. Her answer reminded me of a phrase that I had long forgotten and a phrase that Guy and I talked about at our dinner. Tikkun Olam. Tikkun Olam is a Hebrew expression that translates roughly to repair a broken world. The concept holds that the world as it exists is always broken and that the purpose of a human life, the actual point of being here is to participate in its healing. It's not to extract from it or to accumulate or even to compound. The purpose is to heal. Tikkun Olam is not about grand gestures, but it is an orientation. It is about whether you move through the world as someone who is taking or as someone who is giving back. It strikes me thinking about this little old hotel how similar their philosophy is to Tikkun Olam. Remember the monk who founded that spring in 718 AD said, 'Build something here so people can be healed.' Of course, he did not know that it would become a 1,300-year-old business.

I'll close with something a little bit more personal. I have two young girls at home and they're both under the age of five. Many of you have children here as well, maybe grandkids, too. When we talk about our kids, we don't talk about building them. We talk about nurturing them. We talk about taking care of them, about giving them the resources and skills to survive so that one day they can live without us. I think businesses are not that different. When you treat a business not as something to be built or even to be grown, but rather instead approach it with care, with duty, with love, you create the conditions for something that can outlast you. Since working on this book, many people have asked me, 'So, what's the secret to longevity?' The answer is that I'm still working on it. And I owe the book to my editor at Simon and Schuster in 4 months. So, hopefully I have the answer in 4 months. But I will say that I think this is very much the wrong question to ask. Longevity shouldn't be the goal. Longevity is what happens when you stop thinking about longevity altogether. It happens when you focus instead on the quality of what you're doing right now for the people that you serve with everything you have. Before I left the hotel, the 47th generation told me her father had a saying that he repeated to her constantly. Everything is temporary within your hands. You own nothing. You are simply passing it down. That is stewardship. It's a daily act of selfless love. So my advice, find your hot spring. Find the thing that you believe is worth passing on. Take care of it. And who knows, maybe one day, long after we are all gone, your business will celebrate its 1,309th birthday. Thank you.

Stay there. So you stood up and so you get to ask the question, but you need to go to the mic. No question. We have one question and I don't want to make it about me. So well, I will say one thing that and we have one question. So somebody's got to get to the mic or else you're going to listen to me talking for a while. So, Eric, and I called you Tom for a second because I'm having brain freezes the whole time, you know.

That's right. And the last person who spoke was Tom, but I was sitting at a family event of Brian Lawrence's. And who am I sitting next to? The owner of the sandwich shop. And I felt the same feeling about meeting them. I think it was a couple than I did as I did about this hotel which I'm sorry I didn't visit. I hope I'll visit in the future. But Brian, do you want to talk about how So I think I just want to say that it doesn't just exist in Japan. It certainly exists in Berkshire Hathaway and it exists in other small ways. And if there we go. So I was rattling on but now we have our question. Thank you so much and please introduce yourself as well because I don't recognize you and it's the last question because then we'll go on to Gizella and I'm sorry Gizella, you're the person who's standing between us and lunch but go ahead.

Hello, I'm Aloise. I'm an economics student from Switzerland and so what a great speech. It's difficult to follow up but and my question it came up in my head when I listened to Bill. My question is if you have a creative investment that you think the expected value is basically 100x what the value of the share is. But it needs 7 million injected into it in order to not go bankrupt. And you're an economics student like me. Pretty. Yeah. How would you go about like do you think it's possible to raise that money and how would you go about doing it?

I'm not sure I'm going to be able to answer this question. So, I'll try to hit it though. So for this project, I've spent a lot of time at businesses that have been around for multiple centuries. In fact, we're working on building out a database of the world's oldest companies around the world. No one's actually endeavored to do this. And so we're getting a lot of input into our own system of thinking about these questions of what creates these incredible outliers of longevity. I think you know the question as it's framed is a very left-brain logical question. And I would urge you to think more maybe right-hemispheric about what are the conditions that must exist within any organization for it to grow. The central metaphor throughout this book is that we post-industrial revolution we've thought of businesses as machines. I increasingly think we need to think of them as gardens. So given enough time and given enough capital laced with some really thoughtful stewardship what are the conditions necessary present for it to grow and evolve into something really beautiful. So I don't have a 100-bagger you know lined up but I think focus on the culture within an organization first and then start thinking about what those outcomes could look like over time. But it's not about I mean so many of the you're from Switzerland. You know, I've spent a lot of time at the watch makers. I was in Geneva with Patek Philippe, and it's, you know, very often these companies didn't start out making luxury watches. They started out making pieces of steel and wire. So who could have predicted that they would have become luxury watches 200 years ago. So I hope that addressed it.

And I would just want to take a moment to appreciate that you appreciate the value of feeling living in the now and also the value of the long term. So beautiful to see.

Thank you.

Yeah, thank you. You can tell why his book is going to be a must-read for everybody here. And I think that hearing Eric and having had dinner with him, I mean, two of the eight life lessons I learned from him and what you were saying, whoever it was who just spoke, there's two kinds of time. There's the ever-present now and there's forever. There's the only and you said that was so beautiful and so I'm so looking forward to reading your book. Thank you so much. From one brain surgery survivor to another. I now give you the translator and the friend of Warren Buffett's for a long time, longer than I've even known about Warren Buffett and the woman who has translated she's gone between the German values and the Omaha values and she's made them one. How is that as an introduction?

Okay. Yeah, it's okay. Good. Thank you. I give you Gizella Bower. Thank you. So, they put me between here and lunch wasn't isn't that comfortable. And I'm happy you have me here. I learned a lot already. I learned, for example, that you will cut me off if I talk too long in a very kind but strict manner. So, if I'm going to skip some parts. If it doesn't make sense what I say, it's his fault. I title my little speech what I learned from Warren Buffett and what I wasn't able to learn from him. And I hope I would have but I wasn't. Or make it short, Warren and I. It's pretty exactly 30 years now that I first came to Omaha. I was young, I was brave, a bit sassy, a journalist and during an interview tour in New York, I first heard the name Warren Buffett and we're talking the '90s. So when I came back to Germany, I tried to find something out, but we didn't have internet. So the only thing I found was one article in German and it was titled The Odd Guy from Omaha. And the opening credit said, 'Driven poorly by a love of numbers, he's one million after another.' So made me even more curious. But it didn't say anything about how he does it. It was just he buys stocks. So, you have to understand, we're talking the '90s in Germany. I'm a young financial journalist. I'm crazy about stock market but I live in a system of family-owned businesses and savers would go to insurance companies and banks and stock market was something of an evil unpredictable a bad place to be for German people and so I was fascinated by the stock market and I tried to find out more about Warren and of course there were ways state library and stuff. And I decided we need him. We need a role model like Warren Buffett in Germany. And I tried to figure out how to reach him. And somebody told me he loves to read. So I started writing. I wrote a letter and it was long. It was very long. And I told him everything about Germany, the economy system, Europe, the stockholder, the big fraud market in Europe because people weren't skilled in investing. So fraud market was big and I did send it to Omaha. And then the '90s again a fax came back saying, 'Enjoyed very much reading your letter. Why don't you come over to the meeting?' The beginning of a long journey. I went to the meeting and we're talking the '90s. So, it was in a smell of sneaker hall somewhere outside of Omaha, some thousand attendees and Warren would walk in the main entrance and everybody could approach him. I didn't because I missed the moment. So in the evening there was this football game and I mustered up my courage and decided I'm going to approach him. So I prepared my little speech like hi I'm Gizella I'm the journalist from who did blah bloop. I didn't need it. I just got as far as, 'Hi, I'm Gizella.' And he said, 'Oh, Gizella, come over.' And right there and then, I was given some of the things I of the secrets of Warren Buffett's success in one spot. And the first one, of course, and we heard that about Charlie Munger earlier,

The first thing is his memory. He had questions, two numbers in my letter I didn't even remember I put in. And yeah, we're just talking a photographic memory. We're talking being a computer in a time where nobody has one and the advantage of being a computer. And obviously that's something I couldn't learn from him. I just can't.

The second thing which really changed things in my life is what I call his ability to build his very own precious collection of people. I spent a lot of time with him and I saw him a hundred times ending conversations within seconds or minutes. Very polite, very nice, but he didn't want to get closer with somebody. And I saw him twice, not ending but clicking at once with a person, just building a relationship. And that's a bit tricky because one of the two was me and I can't explain where, why, and how. I only can say it's for lifetime. He decides in one second. He lets you in his orbit, in my case the power orbit, I guess, and you're going to be there forever.

So the fact was he wasn't giving interviews, but he gave me one and he even said we can continue next day in his office. So, I went to the office. Of course, I didn't say no, I don't want to. We went to the office and I had a long interview with him and as I said, I can't explain why, but it happened. And this interview is unbelievable because it's everything inside I ever learned of Warren Buffett at our first interview.

One thing I want to share with you is this sentence, it's really easy or it's really simple. He repeated in that interview for several times. And it took, of course, it took me years and months to find out what that really means. It means he cuts off complexity by saying that's easy. Let's remember a sentence he repeated a lot like America's best days lie ahead of us. This is a big scissor for all the micro prediction worries complex. You just cut it off with a sentence like that. Great. And it works. I tried it myself. It works. So, it's another way to focus on your best skills, cut off the rest. And that's of course one thing I really learned.

The other thing, and I talked about it, is the insight in human beings and the ability to judge people. And I think that's an incredible factor of the success of Warren Buffett. We can talk numbers, we can calculate, we can whatsoever. We won't get the human factor. And the good news is you can learn to judge people to a certain extent of course, but you can learn it. And the most important trick here is be curious. And that came to me naturally. I'm a journalist. I'm always curious. I always want to know who are you. But I try even harder not to tell too much about my success, my profession, my dog, my family. I won't learn anything. I knew everything before. I want to ask questions. I want to know something about you and other people. So that's a really good trick.

I think we haven't left the 90s yet and lunch is waiting. So let me go to a more abstract path. If somebody has other plans for tonight, things I've learned from Warren Buffett. Let's do it that way. The first time I met him, of course, I was fascinated by his financial success. And I was like, most of the people in this room probably are fascinated by value investment. It's something taking you at the first love at first sight and it won't leave you. And you and I studied Graham and Charlie Munger's approach to a good excellent company and stuff. That was my first thing. But after a while, I started to get interested in Berkshire. How does Berkshire work? We're talking one of the biggest companies in the world. And we're talking about costs for personnel and everything else. Some million ridiculous. How does it work? And we heard that before. It's a web of trust. Charlie Munger explained it to me once as heartwarming trust is the fuel of Berkshire and trust it worked. You don't have big fraud cases, scandals or stuff in the past. It worked because we go back to insight of human being. That's the point. And if you have that, it's not only a financial asset. It just makes everything more enjoyable. Trust is really heartwarming.

So that was the next thing I was exploring Berkshire and then I was exploring the question how is Warren Buffett able to be such a happy person? I mean he has money and many people have money and we know money adds comfort, power, scope which is very important but not everybody is really happy. I know with money some people are even not really happy more lonesome than without but Warren Buffett is one of the happiest people I ever saw. So, how does he do it? And we think we know most of the answers, the simple life, the being in Omaha, the people he loves around him, the things he does, stakes bridge in office.

So, but if you look closer, it's only half the truth. If you look at Warren Buffett's life, he always had explorations to other fields. Like when he was friend with Katherine Graham, he would explore the big world of the US. He would meet with the elites of politics and economics and he would travel around and try himself in this field. And later on he dipped into politics by being advisor for Arnold Schwarzenegger first for California and then Barack Obama. Later on he started exploring the world first with Bill Gates and it went on, he traveled. And I found out that he really is digging into things when we made the film with him. He was so present. He was like he has no job but being our protagonist in the film, he had time, he had ideas, he wanted to know everything. He really went into it. And so maybe that's his secret. He lived his hamburger office and bridge life and made room for extra tours.

And the most important thing I tried to learn now is it was only possible because he was willing to... You're coming. I see you. Three more sentences. It was only possible because he was able to give up. He ended all this. So I tried to think about do I do something because I love it or because I used to love it and end it if the answer is I was used to love it. So one very last thing I didn't learn from Warren Buffett. He's brilliant in speaking and he enjoys it. Not here. I only did it for my precious collection of people Guy and Shantel.

So I'm actually going to let Paul ask the last question because I swore I'm listening intently to you. So go ahead. You know, it's when Munger asks you to be the thing, you're like, yes, when Guy asks you to ask the last question, it's like, yes, I'll do that.

So, I have two I'm battling two questions, so I'm going to put them both out there. You get to pick. The premise of this whole thing was you thought from a professional journalist perspective that Germany needed a role model like Warren Buffett. So my question then would be did you has he become a role model in Germany at any level? That's question number one. Question number two you get to pick from is how has knowing Warren so well changed your life along the way that you wouldn't have had those exposure if you hadn't taken that trip to Omaha. You get to pick A or B.

A or B.

A and B.

A and B.

A and B. The first answer is quick so I can do both. Yes, it changed Germany and Warren once said if you bring more German shareholders asking questions at the meeting I don't want to see you here again. So you might recognize there's a big German participation, a change.

So he has become a role model.

Yeah, he's a hero in Germany now. And the second answer yeah did change my professional life for sure. I did a lot of for I always was keen not being only Mrs. Buffett doing other things as well because it's, you know, it was so close for me, but it paved the way for many. You know, I made a film. I never learned film making just because I said I'll bring you Warren Buffett, Charlie Munger, and Bill Gates and everybody said, 'Oh, come in.' You know, so yeah.

Thank you.

I have to say that you're a much better speaker than you think you are. You're quiet and you take your time. You are awesome.

I now give you the person who's really behind this. I'm just the front man, Shantel.

All right. Thank you very much. I hope you enjoyed it thus far. In the afternoon, after lunch, we have some more fantastic speakers, but I want to invite you to go over and have lunch. We invite you. It's outside prepared for you if you can all make your way back in at 1:00. So, it's going to be a yalla yalla quick thing. Half an hour. Thank you.

His seat. Who else do we have here? We need to get going. Yeah. So, why don't you Guy Spear is your name is Guy Spear? Could you come up please? No. No. Please, please, could you stand up? Ladies and gentlemen, I want to introduce you to my double. This is he used to be known as Adam Franks, but he's now known as Guy Spear number two. Yeah, he's available for photographs. He's available to sign books. He's a friend. He's a great guy. Yeah, I wanted him on stage, but it's not happening. I give you. He needs no introduction. We love him. He lives in Turin. It's a wonderful place. You have a Singaporean wife and we learn every time. I give you Luca Delana. And you should publish your book with Miles Thompson soon.

Thank you so much Guy. Thank you again for organizing and inviting. Today I will talk about incentives and let me begin with a quick thought experiment. You're walking down the street. You find a wallet on the ground. No one's around. Do you pocket the money or do you try to return it? If incentives were the main driver, your behavior will depend on how much money is inside the wallet. If it's almost empty, you should return it. And if it's full of cash, you should be more likely to pocket some of the cash. But that is not what we observe in the real world. Some people will return the wallet no matter how much money is inside. And some people will pocket the cash even if it's little.

The point is that incentives matter but there are plenty of contexts in which culture and habits matter much more. And this is a principle that we see in many aspects including business. Let's see another example. A sales team is underperforming. A leader introduces a new bonus scheme but a month later nothing much has changed. Why? That's because compensation was not the bottleneck. The bottleneck was that people felt awkward during hard calls, were uncomfortable following up, didn't know how to qualify leads well, and so on. The bottleneck was habits, not compensation, and not financial incentives. Sales bonuses can motivate those who are already great at selling, but they cannot create great salespeople out of those who lack the right habits.

And I'm not saying that you shouldn't incentivize people. You absolutely should, if anything, to attract and retain talent, but incentives alone cannot create high performance where there is none to begin with. If it seems otherwise, it's because of sampling bias. We look at the top performers, we see that they are all well incentivized and we assume causation. But what happens is that there are many people who are just as well incentivized and yet underperform. So there must be something else going on. And here you see what strong incentives coupled with strong habits create strong performance of course. But strong incentives without good habits, they're more likely to only create gamed metrics or ineffective action.

And this is a principle that holds across contexts, including sports. Take Cristiano Ronaldo. Money can influence which team he plays for, whether it's Juventus, Real Madrid, or somewhere else. But money is not why he plays soccer so well. That's determined by his extraordinary habits when it comes to nutrition, training, and playing. Another way of seeing this is Cristiano will play excellent soccer even if you were paid a fraction of what he's paid today. Whereas even if you paid me millions, you couldn't get me to become a great soccer player because I lack the habits for that.

This is why it's so important to differentiate between one-off decisions and repeated behavior. Incentives are strong at influencing one-off decisions but they are weak at influencing repeated behavior which depends much more strongly on habits. Another way of seeing this is incentive shapes intentions but intentions are not enough to change our habits. After all, if they were enough, everyone will go to the gym, eat well, and never procrastinate. Instead, it is habits that enable intentions.

And this is why it's so important to differentiate between incentive problems and habit problems. Because if you have a habit problem, you will not be able to solve it effectively with incentives. And this is a mistake that many policy makers make as well. Take the example of Hungary who despite spending almost 5% of their GDP on family formation incentives. They are not successful at increasing fertility rates much and that's because family formation it's not an incentive problem but it's a habits and culture problem.

So this is the principle so far and once you see it you start noticing it in the most successful businesses. Take Ryanair. They didn't become cost-efficient just by incentivizing its managers to cut costs. Many companies already do that and with worse results. What Ryanair did differently is that they built habits. They got their people to constantly ask what's unnecessary and how can we make this cheaper. Toyota did something similar. They didn't become incredible at quality just by incentivizing their managers. They built mental habits. They got their people to constantly ask whenever they spot a problem, what's the root cause and how can we prevent it from happening ever again. So the point is performance doesn't come from incentives alone. It comes from repeated patterns of thinking and behavior. It comes from habits.

So how do you create them? Common advice focuses on repetition, reminders, and identity. And these can work, but they are slow, energy intensive, and time consuming. What works much faster and more reliably are competence and feedback. Let me give you an example. Imagine you are trying to build a habit of going to the gym, but you do not know how to lift weights properly yet. It's going to be an awkward, uncomfortable, and ineffective experience. And awkward, uncomfortable, and ineffective experiences rarely become habits.

Or consider a salesperson who is told to improve her results by making asking more questions during sales calls. During training, everything seems simple, but then she goes back to her desk. She makes the first call and she realizes that she doesn't know what questions to ask. So she feels so awkward. She speaks with an uncertain voice. She asks weak questions. It cannot go well. And when something doesn't go well and it's uncomfortable, it doesn't become a habit. You don't want to do it again. You don't want to learn how to do it better. And this is why competence is such an important prerequisite for habit formation. And yet we often skip this step of building competence. We jump straight into action because we think it's going to be faster. It's actually slower.

Now let's go to the second point, feedback. Imagine you're in a meeting and you notice a problem or you have an idea, so you raise your hand. What happens next? If the feedback is positive, if your manager listens and acknowledges it, you are more likely to raise your hand again next time you spot a problem. But if instead the reaction is negative, if you are ignored, interrupted or subtly punished, you will not raise your hand again next time you have an idea. And this is how feedback can shape habits by determining which behaviors take root and which ones stay early.

And finally, Rory Sutherland has this great point about toothpaste. It almost always comes with a mint flavor. Even though mint does nothing towards cleaning your teeth and that's because without mint brushing teeth will feel like nothing. You will get no feedback and so why bother doing it and you will stop after a few days. Instead, Mint provides the immediate feedback that gives you the idea that what you did was useful and so you keep doing it. And this is why it's so important that you give people immediate feedback. And yet managers often forget this. They spot one of their employees doing something well and they wait until the next one-on-one or quarterly performance review. But that is far too late. If you look at it from the point of view of the employee and especially of their unconscious mind, you put effort into something and then the following day already you're evaluating did I get any feedback? If not, why should I bother doing it again? And this is why immediate feedback is important.

And finally, notice how these two fit into each other. If you take the time to build competence before you start demanding the habit, it will probably go well. You will get positive feedback and that will kickstart a virtual cycle where you want to do it again where you're interested you're trying to learn more about it and that leads to habit formation. Whereas if you start without enough confidence you are more likely to receive negative feedback and that kills habit formation to begin with. You don't want to do it again and if you are forced again you will do it passively and it doesn't work. Yeah. So, this was it for me today and let me know if you have any questions.

I have so many questions but we are limited on time and I've invited Thomas Buller to ask the one and only question in the mic. So, we will have two, Thomas and then you go ahead.

I was just wondering whether...

No, no, no. You need to introduce yourself first. So, because he's a fellow fighter, he doesn't speak with an accent, but he speaks perfect Swiss German. This is awkward.

Hi everyone. I am Swiss. I speak Swiss German, which is an entirely useless language, and therefore I learned how to speak English. But it's a real pleasure to be here, and thank you very much to Guy and everybody for organizing this. I was just wondering is there a perfect example of where habit formation, incentivization, like an organization where you feel like they've nailed it in terms of creating the right balance between those two things.

So two of the, so Toyota for me is one of the biggest examples because you know people always talk about six sigma quality everything as processes but for me the real thing comes in giving repeated tools so that we don't think anymore do we need to do something but we just apply it. It starts becoming a habit. Another example comes from my previous employer which was DuPont and they really had extremely strong habits when it comes to safety and I can give you an example. They were so much with a habit of always putting a hand on the handrail and I was wondering why and you start seeing that it's multiple reasons. One is because it's a major source of injury. You're on the stairs, you trip. But there is more. Another source of injury is if you are walking down the stairs with a box because if you have a box or something in your hands, you don't see the steps. You're more likely to fall. If you need to put a hand on the handrail, you cannot take the stairs with a box. Plus, it keeps you reminding about safety. So that's the power of habits. And that was so strong that I remember that once with DuPont, I went visiting our plant in November.

Says, 'You're going to the DuPont plant, right?' And I'm like, 'Yes. How do you know?' And he says, 'You guys are the only one buckling up on the back seat.' So that starts to give an idea of the power of habits. But one more thing since you mentioned this and I think it's super applicable because I remember my first week in DuPont the training was like you know first week in a new company you do training they tell you you need to be safe you need to do those things but you think ah it's just compliance they're just saying it so that not getting sued, who knows if they really believe it. And then a few weeks later training in Switzerland and in Geneva where the headquarters was. And one morning there is a bus that you know, one of those chartered bus 55 seats that comes pick us up, pick some of us, some even some very important people in the company to go to a plant that was half an hour away. And my boss's boss is the first one climbing in the bus and he notices that there are no seat belts. And he just tells the bus go back to the depot and bring another bus. So that result was about 17 people blocked in a parking lot for almost 40 minutes. That's you can imagine the financial cost the opportunity cost but in that moment I understood oh they really believe in safety and it's precisely because it was a costly action that it sent a costly signal and that's when I truly believed and so this is also something when you talk about habit formation it's super important constant consistency and the moment that you keep practicing the habit even the time the one time that it's costly is the time that you will convince yourself and convince inside us that the habit is not performative but we are doing it because we believe that it's worth doing it.

I have a story about that about you later. Your final question and introduce yourself as well because I'm now really curious to see who you are.

Oh yeah, just me Benji Sanderson from Hermosa Beach, California. Question on what you said about Cristiano Ronaldo. In other words, attracting someone one time that has incredible habits that then creates value for the team or, you know, in the case of a CEO of business and applying that to what might be called the Buffett premium for Berkshire. And I'm curious to see what Chris Bloomstrand thinks of this later. I was kind of on the side that the Buffett premium was overdone and that it didn't really exist and that Greg Abel his first year being here will be just as good. But then hearing Steven's firsthand account of why he chose to join the Daily Journal be directly related to kind of you might call it the halo effect of Charlie Munger and the aura that that brings. I just wonder if you have any thoughts on applying this to companies. How do you get the Cristianos to come when they don't need to play for your team and how do you attract them?

Yeah. So I wonder like I'm of course not as big as an expert on Berkshire like I never experienced the people in Berkshire firsthand like some of you did but what my impression is that I would expect many of the habits to be surviving Warren Buffett and Charlie Munger and so on precisely because there is such an abundance of anecdotes that are concrete and that are conspicuous and everyone knows about it and this is one of the most powerful tools to get habits to survive over time and that's something that I expect will survive. You mentioned Cristiano Ronaldo. One of the benefits is that once you take a person with exceptional habits inside your company people is not I'm not saying we learn from it because you can learn from a book but they will trust because when I read a book I learn from it but I don't put the same trust in the book in which I will apply it blindfolded because I'm like the book makes sense but I don't know if it's worth applying. But when you've witnessed with your eyes someone like I imagine Cristiano Ronaldo that I suppose for example never goes to McDonald's or then maybe you're thinking maybe it's really worth it not to go to McDonald's if you want to become a soccer player for example and so I think that that's one power of getting the people with the habits not much because you learn from the habit but because you learn that there is someone you can see and you know that he's trusting those habits and that makes it immediately worth it for you to do the same.

There is so much there but we have little time but I would just in this room there are very evolved habits far better than the general population. Luca thank you so much. I learn every time that you give a presentation. It's wonderful.

Thank you so much guys. Thank you.

Yeah, I could wax lyrical about a lot of things, but I'm not going to because I'm standing between you and Tom Russo and he's got a packet of cereal. The only cereal that's worth eating. I have it still often. And I've learned so much from Tom Russo. I met him for the first time 30 years ago. So Tom, it's great to have you here. Thank you so much for coming. Thank you.

Oh, hello. Great. So, here's my gift to Guy. It's please come back. Oh, it's fine. But anyways, the idea here, first of all, I'll take the wheat to big salty. No problem. Good. First of all, let me say my name is Tom. I'm from Wisconsin.

And I saw that done by Alec Baldwin at a tennis event and he was the moderator and there was sponsored by Hennessy. So there's a very deeply speaking French person presiding over everything. Then finally Alec was asked to say something. The man sergeant walked by stopped. He says my name is Alec Baldwin from Massapequa. And so that was quite illustrious but here I'm really here to just tell Guy how much fun it's been together over these almost 40 years now chasing down ideas. 41.

All my best ideas were yours.

Well, mine were yours, too. So, they bet somewhere over. But thank you. We just had an amazing journey and Guy is a really deep student of the businesses that we overlapped. Weetabix is an unusual one. It is inedible and loved by the British and that's probably a pretty universe of things but the truth is it is a very traditional thing. I checked the date here and it turns out NA and that not applicable. It doesn't change. I had a particularly grueling investment meeting with an endowment at some point way back and finally one of the board members showed mercy on me and said to the cluster group that he had had the great privilege of studying at Oxford Cambridge and he said over there this stuff is really popular and it's inedible. So we established that and he said but he was going to propose using Weetabix as a oil spill desiccant. What do you think Guy?

Sacrilege? I eat it almost three times a week.

Well you have then you have more than enough at least through the weekend.

Yeah. And look, everyone here has their own personal stories of their journey together and I know I can speak on behalf of mine. It's been just tremendous and I wish you all the well. You bet.

No, no, you get to answer questions now if you don't mind.

Okay. It's made out of something nobody knows. And it's wheat. It's in the name. It's wheat. You know what he doesn't say is that I literally I read an article about Tom in some newspaper and I saw Weetabix and I knew Weetabix and I then is when I discovered the power of brand and but I visited the company which was an AIM listed company and it's now owned by private equity I think.

It was bought and boy did they do well but we did fine. So did you visit the company ever? I did and it was...

And it was... Yeah, go ahead.

Let's do it. It's the same. It's like a Lionel train set, you know. It's an ancient little clearing house for a train that comes in. It's in the town called Burton Latimer and it's really family controlled and patriarch controls the family and they had a mountain of cash.

Yeah.

And they had this stuff people eat and the analysis was very hard. You know, it was a mountain of cash and four times earnings. That was it. And when I couldn't meet with the investor relations guy because they didn't have an investor relations guy, but eventually somebody took kindly upon me and the person who was responsible for customer satisfaction was willing to meet me and I just saw on the wall the kind of like the family business ethos basically.

And did I report it back to you or did I just quietly buy more shares? No, I knew you went and I think what happened is after Guy went, they realized that there were two of us and they immediately sold the company.

Yeah. Not long after that. In fact, I've discovered that it was being sold on my honeymoon.

Gosh, what a nice gift that would have been. You could have had Weetabix the entire stay.

You need to learn to eat this stuff, you know. It's good for you.

I will do so.

Who wants to ask questions? I want to give the floor to Tom. Not to me and just Chris Bloomstrand who knows more about brands probably than both of us put together. Go ahead. Go ahead.

Hi, thank you very much and what a wonderful conference Guy and thank you so much for bringing everybody together. Yes. Tom you represent now for such a long period really the best of investing in compounding businesses. You're basically Mr. brand investment and I think one of the questions and I have to declare an interest in investing these kinds of companies is what's going on. There's a big real issue in that these branded goods companies whether they go from luxury to food to spirits are struggling. Is it cyclical? Is it structural? How much does it have to do with the pandemic? How much does it have to do with inflation and what's going on? Yeah. And is it different this time?

Is this a 10-minute meeting? That's the sum of many many weeks of discussion and review, but it's all of the above. It's all of the above. I mean, yes, the pandemic and the COVID still plague the spirits business. Their working capital all out of joint because when they had to shut down they never really caught up and there's a balance sheet limitation that burning through but it takes time. Nestle had their own idiosyncratic problems of a group that stopped being so self-critical and when they loosened up the standards all sorts of mischief took place both personal and professional and financial and so they're now redirecting efforts. Let's see what was it Philip Morris which would have started the conversation way in the back of the pack just received for the first time approval by the FDA to launch the IQOS brand and the heat brand in North America. So I mean it's happening in some cases there's enabling of activity some there's crippling and you know I think the spirits one is an interesting one because we all carry our own biases around with us but you know for me to buy a tin of buzzy ball or something I think it's called just it's just not going to happen and I assume this is a Charlie Munger expression that since I believe it'll be and they're smart and I'm right that these premixed drinks will lose their cache. It's been longer this time around, but our investment in Brown-Forman, ironically, came after a returnable direct beverage collapse that took place in 1986 and caused the company to focus on its business. We find that our ability to communicate with consumers is enhanced by access through AI and so we hold forth a lot of excitement about display advertising and that's sort of underway but I guess I'm left with the belief and then what which is that the products that are perceived to pose a serious deadly threat are not as threatening as they are when you examine them and think about what the other forms of entertainment can offer. But you're absolutely right in terms of all the you now have direct channels to consumers through e-commerce you have delivery you have package changes so much underway you know at least for as long as we can it'll continue to have the industry will consider have Guy and I as expert testimonies.

Actually Chris, you're a student yourself. What do you make of it? What do you think's going on?

Yeah. Well, I echo a lot of what you said and one of the interests that I have to declare on the Barron's round table this year. I pitched a lot of these stocks. And some of them have actually bottomed. So you can see with companies like Nestle and Diageo, for example, they really look like they're at the process of bottoming. Yeah. With companies like LVMH for example or EssilorLuxottica the leader in frames and eyeglasses clearly they're not at least not at this point although they rebounded obviously from those so I think it is about those kinds of issues I think one thing and that comes from a lot of conversations with managers of these big companies is perhaps not some of us but I think the market really underestimates the impact of the pandemic the fact that we're even standing here being able to have this meeting is not something we would have known in March of 2020. Right. And the decisions the keeping people at home, the shift in incomes, the shift in spending, the reopening, the inventory issues, the lack of innovation, the wrong innovation, which Nestle did, all of these issues are things we're dealing with. And I think that when things clear, as they will, I echo a lot of the positives that have been said today, I think that's when we're going to see they're going to return to growth. So that's the take that I have.