#64 Brett Gardner: Buffett's Early Investments

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Nov 12, 2024

Brett Gardner, an investment analyst at Discerene Group and author of 'Buffett’s Early Investments,' dives into Warren Buffett's lesser-known ventures from the 1950s and 1960s. He shares insights on Buffett's early decision-making process and his transformative investments, including his strategies with Marshall Wells and Disney. Gardner highlights the impact of mentorship from Ben Graham on Buffett's approach and discusses the long-term value philosophies that shaped successful investments. Personal anecdotes flair the conversation, making investment history engaging.

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ANECDOTE

Early Investing Journey

At age 16, Brett Gardner began investing after reading investment classics like The Intelligent Investor and The Snowball.
His early value investing approach was influenced by Ben Graham and Warren Buffett classics.

INSIGHT

Buffett's Early Challenges

Buffett's early investments were not always easy wins and had significant risks.
The myth that he had it easy is false; even Buffett had to research and analyze deeply to get comfortable.

ANECDOTE

Selecting Buffett's Investments

Brett selected 10 Buffett investments based on document availability, uniqueness of insight, and story interest.
He avoided well-covered cases to provide a fresh narrative on Buffett's development.

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Poor Charlie's Almanack

The Essential Wit and Wisdom of Charles T. Munger

Charles T. Munger

Peter D. Kaufman

Originally published in 2005, Poor Charlie's Almanack is a collection of eleven talks delivered by Charles T. Munger between 1986 and 2007. Edited by Peter D. Kaufman, this book draws on Munger's extensive knowledge across various fields to provide a framework for rational and rigorous approaches to life, learning, and decision-making. It is renowned for its sharp wit and rhetorical flair, making it an essential read for investors, entrepreneurs, and anyone seeking to enhance their wisdom and critical thinking skills.

Security Analysis

Benjamin Graham

David L. Dodd

First published in 1934, Security Analysis is a seminal work in the field of finance that lays the intellectual foundation for value investing. The book, written by Benjamin Graham and David L. Dodd, distinguishes between investing and speculating, emphasizes the importance of thorough financial analysis, and introduces key concepts such as the 'margin of safety.' The sixth edition includes commentary from leading Wall Street money managers and a foreword by Warren E. Buffett, who has praised the book for its enduring relevance in modern markets.

Titan

The Life of John D. Rockefeller, Sr.

Ron Chernow

This biography by Ron Chernow provides an in-depth look at John D. Rockefeller, Sr., the founder of Standard Oil and one of the most influential figures in American history. Drawing on unprecedented access to Rockefeller’s private papers, Chernow reconstructs Rockefeller’s troubled origins, his single-minded pursuit of wealth, and his profound religiosity. The book also delves into Rockefeller’s philanthropic efforts, including his generous donations to the Rockefeller Foundation, the University of Chicago, and Rockefeller University. Chernow’s narrative synthesizes Rockefeller’s public and private lives, revealing a complex and multifaceted individual who was both a ruthless businessman and a devoted philanthropist. The book captures a pivotal moment in American history, documenting the post-Civil War shift from small businesses to giant corporations and featuring cameos by notable figures such as Ida Tarbell, Andrew Carnegie, and J.P. Morgan.

Buffett's Early Investments

Brett Gardner

This book delves into the early investments of Warren Buffett, analyzing ten significant investments he made in the 1950s and 1960s. Using the same documents Buffett used at the time, the author reveals the inside stories of how these investments transformed, including the transformation of Philadelphia and Reading from a declining coal company to a diversified conglomerate, the first formal investment with Charlie Munger in Hochschild-Kohn, and the risks faced in the 1966 investment in Walt Disney. The book also covers investments in American Express, British Columbia Power, Cleveland Worsted Mills, Greif Bros, Marshall-Wells, Studebaker, and Union Street Railway, providing insights into why some investments succeeded while others did not.

Good Strategy/Bad Strategy

The Difference and Why It Matters

Richard Rumelt

In *Good Strategy/Bad Strategy*, Richard Rumelt clarifies the distinction between effective and ineffective strategies. He argues that a good strategy is a specific and coherent response to overcoming obstacles, harnessing power where it will have the greatest effect. Rumelt debunks elements of 'bad strategy' such as equating goals, motivational slogans, and financial targets with actual strategy. He introduces the 'kernel' of strategy, which includes a diagnosis of the challenge, a guiding policy, and coherent action. The book uses diverse examples from business, nonprofit, and military contexts to illustrate these concepts and emphasizes the importance of analytical rigor and focused effort in strategy development.

Damn Right

Janet Lowe

This book provides an in-depth look at Charlie Munger's life, from his early days to his significant contributions to Berkshire Hathaway. Written by Janet Lowe, it draws from extensive interviews with Munger himself, his family, Warren Buffett, and other business associates. The book offers insights into Munger's business strategies, his personal life, and his evolution as a corporate strategist and exceptional citizen. It is organized thematically and includes a timeline in the appendix to help navigate the complex history of Munger's career.

The snowball

Warren Buffett and the Business of Life

Alice Schroeder

This book provides an unprecedented look into the life and investment philosophy of Warren Buffett. Written by Alice Schroeder, who gained unparalleled access to Buffett and his inner circle, it delves into the complexities and paradoxes of Buffett's life. The book covers his work, opinions, struggles, and triumphs, and highlights key principles such as intrinsic value, margin of safety, and long-term perspective. Buffett’s legacy is not just his wealth, but the principles and ideas that have enriched people’s lives.

The halo effect

Rose, M. J.

The story revolves around Morgan Snow, a career sex therapist at the Butterfield Institute, who becomes entangled in a murder investigation when one of her clients, Cleo Thane, an expensive call girl, goes missing. NYPD detective Noah Jordain seeks Morgan's advice, and as the investigation unfolds, Morgan finds herself dressing as a call girl to get close to the suspects. The plot involves ritualistic murders, a tell-all biography, and a complex web of powerful men with motives to kill Cleo. The novel explores themes of dual identities and the blurred lines between therapy and prostitution[5].

The Crux

Richard Rumelt

Buffett

The Making of an American Capitalist

Roger Lowenstein

This book provides a comprehensive and detailed account of Warren Buffett’s life, from his early days to his ascension as one of the most successful investors in history. Written by Roger Lowenstein, the book is based on three years of research and includes interviews with Buffett’s family, friends, and business associates. It explores Buffett’s investment strategies, his long-term philosophy of buying undervalued stocks, and his role in transforming Berkshire Hathaway into a highly successful corporation. The book also delves into Buffett’s personal life and the influences that shaped his investment approach, including his mentor Benjamin Graham and his partnership with Charlie Munger.

A Random Walk Down Wall Street

Burton G. Malkiel

In this book, Burton G. Malkiel argues that stock market prices are essentially random and unpredictable, aligning with the efficient market hypothesis. He discusses historical financial bubbles, the futility of trying to beat the market through technical or fundamental analysis, and the importance of a diversified portfolio. The book also covers various investing techniques and theories, including modern portfolio theory, and advises investors to adopt a long-term, disciplined approach to investing.

The intelligent investor

Jason Zweig

Benjamin Graham

Written by Benjamin Graham, 'The Intelligent Investor' is a seminal work on value investing that has inspired millions since its original publication in 1949. The book emphasizes the importance of distinguishing between investing and speculation, calculating the intrinsic value of companies, and maintaining a margin of safety. The revised edition includes updated commentary by Jason Zweig, who provides modern examples and insights to help readers apply Graham's principles in today's market. Warren Buffett, a disciple of Graham, has praised the book as 'the best book about investing ever written'.

Brett Gardner is an investment analyst at the US-based investment partnership Discerene Group and, since about a week, a published author with his book Buffett’s Early Investments. The focus of our conversation is Brett's book, where he has uncovered a few of Buffett’s investments in the 1950s and 1960s that until now have been rather unknown.

For more info about the podcast, go to the episode page and make sure to follow us on X/Twitter. We love to hear your thoughts on what you like and what we can improve, so please give us your rating and a review. You’re also very welcome to tell us about great authors, books, and investors you want to hear on the show. Thank you! /Eddie & Niklas with team

This episode was recorded on October 9, 2024. The video was unfortunately not recorded due to technical issues.

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Episode Chapters

(00:00) Introduction by Eddie & Niklas

(01:34) Introduction to Brett

(04:21) Buffett’s Early Investments

(08:47) How the investments were selected

(15:30) Marshall-Wells: The first investment

(20:52) Philadelphia and Reading

(27:36) Walt Disney Productions

(36:10) Can Buffett compound $1 million at 50% per year?

(39:18) Brett’s current role at Discerene Group

(40:53) Two lesser-known book recommendations

(45:37) Final remarks

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Books Mentioned

A Random Walk Down Wall Street - Burton Malkiel
The Making of an American Capitalist - Roger Lowenstein
The Intelligent Investor - Benjamin Graham
Security Analysis - Benjamin Graham
Snowball - Alice Schroeder
Buffett’s Early Investments - Brett Gardner
Poor Charlie’s Almanack - Peter Kaufman
Damn Right! - Janet Lowe
The Halo Effect - Phil Rosenzweig
Good Strategy Bad Strategy - Richard Rumelt
The Crux - Richard Rumelt
Titan: The Life of John D. Rockefeller, Sr - Ron Chernow

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Companies Mentioned

AT&T
Coca Cola
British Columbia Power
Marshall-Wells
Philadelphia and Reading
Walt Disney Productions
American Express
Berkshire Hathaway

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More on Brett

Twitter/X - @brettgardner_10

LinkedIn - Brett Gardner

E-mail - brett@buffettsearlyinvestments.com

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About the Podcast

Intro episode: https://www.redeye.se/podcast/investing-by-the-books/817383/0-intro-to-investing-by-the-books

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What is Investing by the Books?

Investing by the Books was founded by Henrik Andersson, Bo Börtemark, Mats Larsson and Michael Persson. It has published hundreds of book reviews in the past 10 years and operates on a non-profit basis.

Visit the website: http://www.investingbythebooks.com/

Follow on Twitter/X: https://twitter.com/Investbythebook

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What is Redeye?

Redeye is a research-centered boutique investment bank from Stockholm. Founded in 1999, Redeye cultivates investors through timeless knowledge, a humble attitude, and a strong focus on quality.

Visit the website: https://www.redeye.se/

Follow on Twitter/X: https://twitter.com/Redeye_

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Disclaimer

Notice that the content in this podcast is not, and shall not be construed as investment advice. This information is meant to be informative and for general purposes only. For full disclaimer, visit Redeye.se