Andrew Kilpatrick author of “Of Permanent Value: The Story of Warren Buffett
”, was kind enough to give me some time to answer some questions the latest news regarding Warren Buffett’s possible successors, and his book. Below is our conversation:
I have to get started with the biggest story of the past several days. What do you think about the Todd Combs appointment it seems he has a very short track record? Does any of this surprise you?
The choice of Todd Combs was surprising. Had not heard of him but that doesn't mean that he's not terrific. It seems that he will fit perfectly in the low-key, no-glory Berkshire culture. As far as photos of Combs, the only one to surface so far is his high school photo, for heaven's sake. It seems Combs' "circle of competence" will be financial services which are a big factor within Berkshire which holds such stocks as Wells Fargo and American Express. When you see that Buffett and Combs have bought into such companies as U.S. Bancorp and Goldman Sachs, you see some similarities. On a more important note, it's what they both did not buy during the 2008 and 2009 financial crisis. Neither was tempted by AIG, Lehman, Citi, Fannie or Freddie.
Any idea how much is "substantial" for Mr. Combs?
Think Combs will start with smaller amounts to invest and then work toward bigger numbers. As you know, Lou Simpson is retiring as the investment guru for GEICO so it's possible Combs would start by doing some of Simpson's work. I don't know that, but it seems to be a possibility.
Anything else that you would like to add about Combs?
In the end, Berkshire probably will have several investment managers.
The whole story with Li Lu also seems bizarre. Charlie Munger said about Li Lu “in my mind it is a foregone conclusion”, Buffett and Li Lu never mention a word and then Lu announces he will not be taking the job the day after the story about Combs breaks. Any thoughts?
I don’t know why Li Lu decided to stay where he is.
There was a third person the job was offered to who did not accept the position. Any insight into who this might be?
I don't know who the third person under consideration was.
Do you think the job was rejected due to salary or a different reason?
I doubt this job would be rejected by anyone for pay reasons. It will surely pay well, and far beyond that, it's a high honor to be entrusted with the job. Bet a lot of people would do it for virtually free.
On a similar note do you believe that the salary of Buffett’s successor will only be $100K?
The CEO succeeding Buffett probably will make a lot more than 100k a year. The person might be paid for performance in some way. Then again the next CEO might take the 100k to set a Buffett-like example. Anyone coming into the job will already be rich.
Finally, any thoughts on how (if at all) this relates to who will be the future CEO. Is David Sokol still the front runner?
David Sokol seems to have the pole position to win the CEO job but anything can happen. Buffett also has expressed complete confidence in Ajit Jain and Tony Nicely.
Back to yourself and your book. Can you tell us a bit about your background? What inspired you to write the book, were you a Buffett fan for a while already?
I went to Washington and Lee University and was in the Peace Corps and the Navy before becoming a reporter in Birmingham, Alabama. I became interested in business late the game. Started going to the Berkshire annual meetings in the mid-1980s and was immediately struck by Buffett and that this was the best business story in the known universe. Started writing the first of the books in the early 1990s about the time the Salomon crisis unfolded.
How many editions of the book are there? Why are there so many different ones?
Afraid to say that there are about a dozen books, all revised and expanded versions. Sounds suspiciously like I haven't gotten the story quite right yet, doesn't it?
Is this a trick question? As an old reporter, am sort of a nut that everything be up to date, practically on a daily basis. The revisions are written to keep the story as fresh as possible. I retired from the brokerage business at Wells Fargo on July 1 and am working full-time, you guessed it, on a new edition for 2011!
There are a lot of books about Buffett. What do you think makes your book so unique?
Of Permanent Value is different in that it is self-published which has the advantage of having exactly what I want in it and the disadvantage of being hard to sell. I can say with pride I'm both the writer and the shipping clerk.
You just came out with a new edition; does it contain a lot of new information that was not in previous editions?
Yes, there's a lot new (Berkshire's Burlington Northern acquisition, for example,) in the way of both text and photos and much was re-written. I cut and add all the time, every day.
Did you plan for the book to be 2000 pages?
To the 2,000 pages exactly, I plead guilty. The book really did naturally come to within a page or two of that. Did I cut or add a page to make a nice round number? Yes.
Who do you think would benefit best from reading it, someone who never heard of Warren Buffett or someone very familiar with value investing?
Think the book might be best for a reader who is new to the story. But even experienced investors underestimate Buffett's genius.
Thanks so much for your time.
To purchase the latest edition of the book on Amazon.com click on the following link-Of Permanent Value: The Story of Warren Buffett
http://www.valuewalk.com/
”, was kind enough to give me some time to answer some questions the latest news regarding Warren Buffett’s possible successors, and his book. Below is our conversation:I have to get started with the biggest story of the past several days. What do you think about the Todd Combs appointment it seems he has a very short track record? Does any of this surprise you?
The choice of Todd Combs was surprising. Had not heard of him but that doesn't mean that he's not terrific. It seems that he will fit perfectly in the low-key, no-glory Berkshire culture. As far as photos of Combs, the only one to surface so far is his high school photo, for heaven's sake. It seems Combs' "circle of competence" will be financial services which are a big factor within Berkshire which holds such stocks as Wells Fargo and American Express. When you see that Buffett and Combs have bought into such companies as U.S. Bancorp and Goldman Sachs, you see some similarities. On a more important note, it's what they both did not buy during the 2008 and 2009 financial crisis. Neither was tempted by AIG, Lehman, Citi, Fannie or Freddie.
Any idea how much is "substantial" for Mr. Combs?
Think Combs will start with smaller amounts to invest and then work toward bigger numbers. As you know, Lou Simpson is retiring as the investment guru for GEICO so it's possible Combs would start by doing some of Simpson's work. I don't know that, but it seems to be a possibility.
Anything else that you would like to add about Combs?
In the end, Berkshire probably will have several investment managers.
The whole story with Li Lu also seems bizarre. Charlie Munger said about Li Lu “in my mind it is a foregone conclusion”, Buffett and Li Lu never mention a word and then Lu announces he will not be taking the job the day after the story about Combs breaks. Any thoughts?
I don’t know why Li Lu decided to stay where he is.
There was a third person the job was offered to who did not accept the position. Any insight into who this might be?
I don't know who the third person under consideration was.
Do you think the job was rejected due to salary or a different reason?
I doubt this job would be rejected by anyone for pay reasons. It will surely pay well, and far beyond that, it's a high honor to be entrusted with the job. Bet a lot of people would do it for virtually free.
On a similar note do you believe that the salary of Buffett’s successor will only be $100K?
The CEO succeeding Buffett probably will make a lot more than 100k a year. The person might be paid for performance in some way. Then again the next CEO might take the 100k to set a Buffett-like example. Anyone coming into the job will already be rich.
Finally, any thoughts on how (if at all) this relates to who will be the future CEO. Is David Sokol still the front runner?
David Sokol seems to have the pole position to win the CEO job but anything can happen. Buffett also has expressed complete confidence in Ajit Jain and Tony Nicely.
Back to yourself and your book. Can you tell us a bit about your background? What inspired you to write the book, were you a Buffett fan for a while already?
I went to Washington and Lee University and was in the Peace Corps and the Navy before becoming a reporter in Birmingham, Alabama. I became interested in business late the game. Started going to the Berkshire annual meetings in the mid-1980s and was immediately struck by Buffett and that this was the best business story in the known universe. Started writing the first of the books in the early 1990s about the time the Salomon crisis unfolded.
How many editions of the book are there? Why are there so many different ones?
Afraid to say that there are about a dozen books, all revised and expanded versions. Sounds suspiciously like I haven't gotten the story quite right yet, doesn't it?
Is this a trick question? As an old reporter, am sort of a nut that everything be up to date, practically on a daily basis. The revisions are written to keep the story as fresh as possible. I retired from the brokerage business at Wells Fargo on July 1 and am working full-time, you guessed it, on a new edition for 2011!
There are a lot of books about Buffett. What do you think makes your book so unique?
Of Permanent Value is different in that it is self-published which has the advantage of having exactly what I want in it and the disadvantage of being hard to sell. I can say with pride I'm both the writer and the shipping clerk.
You just came out with a new edition; does it contain a lot of new information that was not in previous editions?
Yes, there's a lot new (Berkshire's Burlington Northern acquisition, for example,) in the way of both text and photos and much was re-written. I cut and add all the time, every day.
Did you plan for the book to be 2000 pages?
To the 2,000 pages exactly, I plead guilty. The book really did naturally come to within a page or two of that. Did I cut or add a page to make a nice round number? Yes.
Who do you think would benefit best from reading it, someone who never heard of Warren Buffett or someone very familiar with value investing?
Think the book might be best for a reader who is new to the story. But even experienced investors underestimate Buffett's genius.
Thanks so much for your time.
To purchase the latest edition of the book on Amazon.com click on the following link-Of Permanent Value: The Story of Warren Buffett
http://www.valuewalk.com/
