Shai Dardashti Delivers a Question to Warren Buffett
Former value investing blogger turned private capital manager, Shai Dardashti shared the details of his latest opportunity to meet Warren Buffett with me today. In his email to me, Shai shared the following story:
[Sham Gad] called me up late Wednesday night (i.e. a week ago) to let me know that he’d be meeting with Buffett on Saturday morning per the Q&A meeting — and also had invited Warren Buffett over to a reception to be hosted by the University of Georgia on Friday night, got word that Mr. Buffett would try his best to attend (!), and told me I’d be welcomed to be a guest of UGA.
Buffett only allows college students from the schools he invites to participate in the Q&A he holds at Berkshire offices — so I knew in advance I wouldn’t be able to attend any “official Berkshire” parts of the… trip. With that said, there mere opportunity to shake Mr. Buffett’s hand at the event hosted by UGA on Friday evening was well worth the 1,000 mile commute.
I flew out to Omaha on 48 hours notice to deliver a letter I wrote to Warren Buffett. I figured I’d have no more than 10 seconds of Mr. Buffett’s personal attention, and wanted to make the most of every moment in his company.
Mr. Buffett and I indeed shook hands, he put the sealed letter in his coat jacket, and I eagerly await his response. Mr. Buffett had been offering students the chance to take a picture holding onto his wallet. It was Shabbat so I jokingly suggested to instead whisper a “stock tip” — no that it’s any more appropriate, in hindsight. (The “tip” was just to follow the GEICO approach to large scale acquisitions — and over time buy Iscar in small chunks – eventually owning the whole thing.)
During the discussion, Warren Buffett also shared an amazing value stock discovery he made in 1950. I just linked to Shai’s write up of Buffett’s 1950 value discovery over at Value Investing News. Shai also shared a copy of his amazing letter to Warren Buffett. In his letter, Shai asks just one question:
At the Q&A I arranged you told me that today (May 23, 2005) you were “85%
Graham and 15% Fisher.”If you were today 20-something years old, again looking to allocate less than $10 million, and free to allocate capital into well over 8,000 opportunities (before even considering anything overseas), would your Latticework of Mental Models primarily be searching for:
a) Situations reminiscent of 1957 – akin to Daehan Flour Mills, or
b) Situations reminiscent of 1987 – akin to Moody’s Corporation?
Wow, what a great question! The lead up to that question was just as interesting and highly informative. I encourage you to read the whole letter.
I hope Shai receives a response from Mr. Buffett. My guess is that Warren Buffett will recommend primarily searching for situations similar in quality to Moody’s Corp (MCO). What do you think Mr. Buffett’s response will be?
Boy that was one heck of a letter. I too often ponder the same question that he did about the two approaches. On top of these two, I understand that the young Buffett often participate in “work-outs” — risk arbitrage, special situations… etc. Given the size of BRK, I don’t think he’s interested in peanut size profit from special situations these days.
My guess would be, that if Buffett had only a few million to manage, he would invest in the very small, very cheap”Daehan Flour” companies. Either that, or small/unknown special situations (like going privates). There’s a lot less competition in these areas.
javasoy and Max, thanks for mentioning special situations. I think Buffett might actually have 3 categories of investment styles. His third approach is to take advantage of special situations. I’ll email Shai to see how he fits Buffett’s special situation investing into the “latticework of mental models” that he discusses.