So long Mr. Munger
15 May 2024
Omaha 5.00 am. It's raining and cold. Clearly not a weather to wait outside and yet... This is the 3rd year that I've come to the depths of the United States to attend the mass of Berkshire Hathaway which has always been run by its two high priests, almost a hundred years old. And this year, there's only one left. Munger left last November.
6h00. The queue gets longer, including a guy in a t-shirt who will remember the Nebraska weather.
9h00. Buffett takes the microphone, with emotion, of course. After forty years of sharing the stage with Munger, the emptiness is felt, almost cruelly. But after that, he continues: 7 hours of presentations and questions that he can easily swallow - the same goes for his Coke and caramels. At the age of 94.
Part of the secret of making an investment is to do it for a long time. Between 1965 (when Buffett took control of Berkshire) and 2023, the share price rose by an average of 20% a year, compared with 10% for the S&P 500 (dividends reinvested).
In practical terms, this means that ten thousand dollars invested in the S&P 500 in 1965 became three million dollars and the same amount invested in Berkshire became... four hundred and forty million !
That's probably what the Berkshire AGM is for, still in 2024: to remind ourselves that investment is a long-term process. At a time when quarterly guidance is almost unavoidable and the casino mood remains on the markets (see graph below), going against the general mood is one of the advantages we, fundamental investors, still have.
GameStop action (x5 in the last 48 hours) - Source : Investing.com
In 41 years' time, Munger's lessons will still be valid. This one in particular:
"It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent."
Market and portfolio focus
Behaviour:
This week the fund gained +0.66%, while the CAC40 gained +3.29% and the S&P500 +1.85%. Our main contributors to this performance were Ouster (+0.36%), Teleperformance (+0.22%) and Pernod Ricard (+0.20%).
Lines:
As for the lines in our portfolio, there are a few changes this week.
We decided to take Vipshop out of the portfolio in view of the risk of devaluation of the renmimbi, which was too high for a 100% Chinese business.
Duolingo's results were moderately well received.
New developments at GenAI added another layer. As a result, the share price fell by more than 20%. We took advantage of this to strengthen our position. It now represents 0.9% of the fund.
Finally, we took a 0.5% stake in Affirm Holdings, a buy now, pay later payment company. Its CEO Max Levchin (co-founder of Paypal) has what it takes to disrupt this industry, one of those with the highest gross margins.
Have a great week,
Antoine
Disclaimer
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