YouSaid · the spoken record

John Spears

lines on the record: 112
first: 2022-12-25
most recent: 2022-12-25
sittings or episodes: 1
sources: podcast

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“Type thing. They had good years and bad years, but they still developed a bigger pile of money than the index, at least pre-tax, at least pre-tax, yeah.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Well, you get used to it. It's been a good business. I'm very, very grateful to have been in the investment management business for a long time. I'm terribly fortunate. But that's just what it is. You can't beat an index fund by being one. You have to be different. And we've done studies. We did a 20, I think it was a 27 year study where we took all equity mutual funds that were listed, I guess, by Lipper. And at the starting gate, let's say for every hundred of those equity mutual funds, there were only about 50 at the end of the 27-year period of time. And of those 50, about, I think it was about maybe 25 or 30 percent had beat the S&P 500 over that 27-year period. And the ones that beat it tended to beat it in about half the years. It wasn't a real, real consistent.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Does and especially, I think, a weirdo to do it commercially as a business because you do have people abandoning you in the lousy periods. That's just part and parcel to being in the business and doing what you do with your own money for other people. It doesn't always work. It doesn't always beat the market. It doesn't always generate what everyone wants, which is excess returns.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“But it should Exactly. No, they can't. It's just not how people think about it. They don't have sort of the faith or the basic idea that you own a bunch of things that are worth a lot more than their current market quotations and that you think things will work out well, work out well for you, that you'll make money and make sense, seems low risk, but they don't have that faith. People just want those excess returns. They want to have a bigger pile of wealth over a period of time that comes from excess returns. You know, obviously over a long period of time, one, two, three percentage points of annualized excess return results in what most investors want over a period of time, a bigger pile of money, a bigger chunk of wealth to do whatever they want to do with it at some future point in time”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Bought it much, much higher. The growth rate is fabulous. It's a fabulous business. But is the price right? I don't have that much confidence in being able to project really, really high rates of growth going far out into the future. I just have a hard time with that. I have much, much easier time understanding what we do. And again, myself, I'm investing my family wealth and I don't want to lose it. do the best I can.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Rolling 10 year periods and what's lagging in 70%. And so it's part of it is the way you flip these things around. But I think that for me, none of us knows exactly what's going to happen in the future. And if it was as simple as saying that the S&P would just continue to be outperforming value as much as it has, we should all just give up the value school and just do that. But I think that that's an unlikely thing. And again, going back to you're investing your own real money, your own wealth. And do you want to take that bet? Or do you want to stay with something that makes a lot of sense to you and has worked on average over a long period of time? And again, it's real money. It's real money. I could go out and buy Amazon stock or I could, you know, could have.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, now if we did an update of these studies, I don't know, and we looked at them year by year. I don't know what the result would be. It used to be the case, well, it was the case with a number of our own track records, and we have some data where we've looked at, I think, one year, three year, five-year, and 10-year rolling returns versus index versus an index return versus a benchmark. And it used to be the case. It may still be the case that in about 70% of the 10-year rolling periods, Bleedie Brown's stocks would beat the benchmark, would beat the particular benchmark. And 30% of the time not. Now you can flip it over and say, look at the benchmark, and you could say that the benchmark was only beating the Tweety return in 30% of the”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“So if we look at it, it just makes sense. And I think it's going back to, I think as an investor, it's very, very helpful to do something that makes sense to you, to stick to your knitting and do that.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think in the long run, I think it has worked, but it doesn't work all the time. And our approach has not worked all the time. And we certainly, as a value investor in the last few years, the S&P 500 has been incredibly difficult to beat, to add excess return, to add value above what you can get for almost no fee to invest in these index funds. It's humbling. But I think that the value approach will continue to work. And certainly the value approach with the added aspect of C-suite, top executive insider purchase has worked on average extremely well in these empirical studies, whether it will continue to do that, who knows, but”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Good competitive positions, and they're not necessarily that cheap right now, like Heineken. It doesn't punch you in the face as a bargain. It's probably over 20 times earnings. Nestle, we've owned a long time. Diageo, the liquor company. So we've got there. We're kind of riding with the business. So we've got a few of those.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Indeed, indeed, we'll even hold on to some things. I mean, Berkshire Hathaway taught us. I remember, oh, it's terrible thinking about it, that I would way, way back, decades ago, I would do updates, updated valuations of Berkshire Hathaway. And it was really more of a book value type valuation. And I remember suggesting to one of our clients who had a lot of Berkshire athlete stock that maybe maybe you should diversify a little bit. And I've always regretted that. But it just shows that business growth is important. I mean, obviously business growth is important. You can own a business that's privately held. And if it's generating a lot of cash and if the sales are growing, the earnings are growing. It's a growing asset. So we have a number of things that we bought cheap that we thought had reasonably good growth prospects compared.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“And insiders were buying its CEO, chief financial officer, and directors, other directors were all buying the stock. I bought some with my own account. There were great concerns about Morgan Stanley not being able to revolve its financing. And it was, you know, it was Wild Times for financial businesses at that period. But I thought, well, it's way below tangible book. They've got an investment management business that generates a lot of money that's not an asset-intensive business. So I bought some less than tangible book and it was 20 bucks a share. I had around 30 tangible book. Went to 12, bought some more. Not enough. But anyway, that's the kind of thing. We bought Jeffrey's group not too long ago when the CEO bought about 10,000 shares at 17. Book was around 34. We'll buy some of these things. It's had an”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“I think our first more of an earnings based stock was a cran company that Chris Brown and I discussed called Binnie& Smith, which was book value. It had no debt, good earnings power. We were paying a very low, maybe four times earnings. And it was eventually taken over probably a double what we had paid. But it was a decent business. It was a good business. So we've become much more interested in some characteristics of better businesses, businesses that generate a lot of free cash flow, et cetera. But we still will buy things that are deep discount to book type stocks where we think that the dead asset, the net tangible asset value is real. I remember in my own case, when Morgan Stanley in around 2008, 2009, in that period, the financial crisis was selling at 60% of tangible book value.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Indeed, yes, indeed. I would say that Benjamin Graham appreciated qualitative factors that can determine the earning power and the valuation of a business. But in his book, Security Analysis or the Intelligent Investor, he didn't really go into how to assess qualitative factors. He was much more quantitative. And when he wrote the books that he wrote, it was much more of an asset-based business economy. So tangible book value was a very important measure and working capital. And we learned we've learned a lot from reading Warren Buffett, from reading what Charlie Munger has said and written about qualitative factors. So we use that. We graduated from being an investor in net current asset stocks to”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“If you don't have that and your stock is going down, you could get into a tizzy. You'd be quite nervous. But you're more at ease. You're more at peace with some knowledge that your business is likely to be worth a lot more than what you've paid for it.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Businesses. This is what a cement manufacturer. Look at cement manufacturing acquisition deals and look at multiples of enterprise value to earnings before interest and taxes, EV to EBIT or enterprise value to earnings before interest taxes, depreciation and amortization, EBITDA. So those are that they're really two prices. There's the prices of the business and that would be a multi-million dollar transaction price, a very serious price. And then there are these little ditsy 100 shares at a time that people take seriously. And so we having this independent figure in mind when buying a stock and deciding when to sell it has been enormously useful and has kept us away from some of the emotional behavioral aspects of investing.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“I think it has been just the whole idea of valuation of a business and that valuations, real world valuations can be much higher than stock market valuations. A transaction, 100 shares of some stock at a price is not necessarily representative of the value of the entire company, yet companies are valued through these quotations, through fractional ownership interests in real businesses are taken as serious to us the real serious value is the value, let's say an acquisition value or a liquidation value of the highest and best value for a particular company. And for us these days, mostly it's using comparables, using acquisition comparables, doing investment banking type appraisals of”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Of a stock that an activist might stir things up with, but I learned that he had about 25% of his investment partnership in Hudson Pulp. And I just, he had kind of a diverse, a bunch of little things over here, and then this barbell over here with Hudson Pulp. So he had courage to do that. I wouldn't do that with my net worth.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“He was a very interesting investor. He stuck to his knitting. He always bought stocks below net working capital or at or below tangible book value. He felt very comfortable with that approach. To the best of my knowledge, he never really interviewed management. He would look in value line or maybe look in the Moody's manuals, S&P manuals for cheap stocks. And he was quirky about his diversification. He would own a lot of stocks. He might own a hundred stocks, but if he found one that would decline from its original price, he would often just keep buying and buying and averaging down his cost. And I learned at one time there was one stock he owned Hudson Pulp Company, which was a paper making company and also owned Timberland, et cetera. And it was a controlled company. You couldn't buy control in the open market, couldn't tender for it or anything like that. So it was not a place.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Well, Walter also was an employee of, he was an investment analyst working for Benjamin Graham at the same time as Warren and Tom Knapp. And Walter had great energy. He kind of run up and down the hallways and stuff. He'd run to the trading desk and he was a very frugal man, lived very, very below his means. And he had office space in Tweety Brown, and we didn't charge him. We didn't charge him any rent, but he had essentially in the early days he had an office about the size of a closet. In fact, Chris Brown used to talk about the water cooler was in the closet beyond Walter's chair and desk. So to get to the water cooler, Walter would have to push his chair in so he could get.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Just And so Invest in history. Indeed. I think he might have been paying $10 a share or something for his stock in Berkshire Hathaway.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Our card for Warren Buffet, and Berkshire Hathaway bought 100 shares at this price, this price. And I think one time we joked, Warren, we'll send you back the transaction cards if you send us back the shares.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Tell us the story. It's so remarkable. Howard was well regarded by Warren Buffett as a person who could keep a secret, a person who was very, very trustworthy. And Howard was a wonderful person, but a person of fewer words than many people. He was a bridge player too. He could remember lots of things very, very quickly. And so he was very good at this game of this business of accumulating shares and companies and being very quiet about it. And so Warren trusted him. So nearly all of the, maybe all of it, maybe all the shares of Berkshire Hathaway that Warren Buffett owns were accumulated using Tweety Brown as the broker. And we used to keep track of the transactions before computers by writing down every transaction on a card. So we had a”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Also, work side by side with Warren Buffett, and so did Walter Schloss. And when Warren decided that he did want to live in New York City, he wanted to work in Omaha, he stayed in touch with Ben Graham, certainly with Ben Graham, but with Tom Knamp, and another one of my partners, Ed Anderson, who has also passed away. Ed New Warren through working for Charlie Munger for a few years out in California. And so that's how Ed came to Tweety Brown.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“It was transferred through actual delivery of share certificates from one office to another. And then people would put those certificates in a vault. So I think there was a convenience factor that Ben Graham could place orders to buy and sell stocks with Howard Brown at Tweety Brown. And that was an original connection as far as, as I recall the history. And of course Warren Buffett was working as a 20-some year old, as an analyst for Benjamin Newman Corporation, which was sort of an early kind of a hedge fund or an incentive. Somehow the Graham Newman Fund was a percentage of the gain kind of a deal like current hedge fund structure. So Warren was working there. Tom Damp, one of my deceased partners.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“And he'd send out postcards saying, I'm willing to buy shares of Smith Manufacturing at $10 a share. If you want to buy Smith Manufacturing for me at $11 a share, I'll sell them to you. So he did this kind of thing. And it was, I guess, a prosperous enough little business. And he added one of his partners in the business, Howard Brown, the father of my two longstanding partners, deceased partner Chris Brown and my current partner Will Brown. And Howard was just a great guy and he made markets in the pink sheet stocks. He was really sort of a step above Mr. Tweety. And it turned out that Benjamin Graham had his office in the same building. And at that time, stocks were not the ownership was not transferred through the depository trust company.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Sure, sure. The firm was founded in 1920 by Forrest Tweedy, who was a real character, and he would go to the stockholders meeting of some very closely held companies that traded in the over-the-counter market. It traded the people who were not my age. Stocks used to trade just by phone calls between different brokers, market makers. Forrest Tweedy developed a business of market making in a mail order way. He'd go to Smith's Manet Manufacturing, he'd learn, he'd get a”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Yes, yes. I like the idea of having a community of interest, of helping, of helping people with their finances, with helping people become more prosperous, wealthier. And yeah, he was a great example. He was a kind, caring man. And so I admired that. I wanted to have that sort of a reputation.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Nine months, I decided this just was not for me, and I probably would have been fired if I had not decided that it was not my cup of tea.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Securities, and I got a number of them, my few clients, into that stock. It eventually worked out just fine. I think it eventually was taken over by maybe Payne Weber company in a deal. All the shareholders got book value. But anyway, I was not a very successful salesperson. And I did not like the kind of, to me, seem like a high pressure sales organization where they had a chart that was like a horse race and they'd show the broker with the who's leading in the horse race with the highest commissions. And at that time, there could be secondary offerings where the insiders were selling their own shares and the commission on placing those shares with your clients was a higher percentage commission than what you would get buying 100 shares of general motors, et cetera. It just didn't smell right to me. I didn't feel very comfortable with that. So after about...”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Gave me a desk and a phone and said, go out and cold call and meet people that had money and make a lot of commissions and you can get part of the commission and we'll get part. So I started trying to do that. And I was just so young. Most of the people with money have accumulated money as they've aged. So I was trying to meet owners of businesses that might be 50 or 60 years old. I was frugal. I took people out to lunch and I was just so dumb. I waited until hopefully they would pick up the check. Not right. Ridiculous. Anyway, I did meet a few people and I explained my value-oriented approach. And I found a stock that was a closed-end investment company. I think it was called the Abacus Fund that was selling at about 66% of its cash.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“It was indeed a time of the nifty 50 stocks where. None of that made sense to me. I just thought the opportunities buying bargains, I could understand it. It made sense to me. But going back, I was very fortunate to join Hornbill and Weeks Hemp, Illinois, a New York Stock Exchange member firm with an office in Philadelphia in their stockbroker training program. They looked at my kind of quirky background, my educational background and background as developing this little business, selling Christmas cards and things like that. And I guess obviously they decide they take a chance on this weirdo. And so you had to be at age 21 to legally be a registered representative, to be a stockbroker. So I took the test. I was the youngest person to ever take the New York Stock Exchange, registered representative test. And I waited around for a while. And at age 21,”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Indeed, he was sort of a quantum. I mean, he'd talk about buying a group, a basket of stocks selling below current assets net of all liabilities senior to the common stock, and also including the deduction of preferred stock. And if you could buy those, it's two-thirds of that net, net current asset value, you tended to make money. And he did. I mean, it made a lot of sense to him. He didn't really study each company that carefully work. And we've done that sort of thing too, especially in our early days when we manage less money.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Of the stocks that were in the cheapest two decibels of price earnings ratio beat the market, had exceeded the S&P 500 by more than 10 percentage points. So those are fabulous results, but there's definitely statistics. There's skewness. You don't have all of them winning and you have some very, very, you might have in that sample something with a 400% return and then something with a 80% loss. It's not Nirvana, but it's pretty damn interesting.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Them out when they were buying value stocks, when they were buying stocks that if you ranked stocks on price earnings ratios, if you rank the top executive of a universe of their only top executive purchases, then you rank all those stocks on price earnings ratios and sort them into deciles. The cheapest stocks on PE ratio tended to have the best excess return, the best alpha, you know, more than 10 percentage points on average, but that doesn't mean that any librarian or that we can just assume that all of those stocks work. They don't. I mean, I think with our US study, 75% of the stocks that were in the cheapest two deciles of price earnings ratio had some gain, but 25% had absolute losses. And then of the whole universe, 65%.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“On average, if you bought all of the ones that they bought over time, you tended to beat the market. And the market was defined as the S&P 500 in the study that I did, or the firm did, using the U.S. market as the universe and using companies with at least a $500 million inflation-adjusted market capitalization. So they were mostly bigger companies, the kinds of companies that other academics said insiders don't tend to do that well. A big company, efficient market theory and all that. Well, what we found studying the U.S. market is that insiders C-suite insiders, top executive insiders such as the CEO, president, treasurer, chief financial officer, chairman of the board. They tended to beat the market by a much greater”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“I think that's right. Yeah, independent learner, independent learner. I think I learned better through reading than through, for example, going to a long lecture course. So I just found it to my liking to be an independent student. I'm still an independent student of investing. I still read investing related books. I read academic studies about different stock market approaches such as copying insiders or buying into companies that have bought back their own stock. And I'm still doing today empirical work right now on copycatting C-suites or top executive insider trades for companies not only in the United States but throughout the world. And it's interesting. They tend to beat the market.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“And I was in a hurry. I was in a hurry. My mother, my mother, you know, said, Johnny, do you want to pump gas the rest of your life? She was just very upset about it. But it turned out that they had a very, very luxurious retirement as a result of investing with Tweety Brown.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“I was kind of inclined to do that for a while, but thank God I did not do that. But anyway, so I was determined to learn accounting and finance and somehow make money and get in business. And my parents, when I first dropped out of Babson after nine months at the school, I'd been getting A's and B's. I was doing fine. But I just felt twitchy. I had this energy to get into business and do something.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think the answer, I think I was really just interested, I was so focused in a way on pursuing this investing course that I just didn't want to take the time to study all the other things. And also I had a kind of a weird way of looking at things as a result of studying people that had become successful in business and had become wealthy. Many of them were immigrants. Many of them were college dropouts in some instances even high school dropouts. Thank God my parents didn't allow me to do that.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Price that the business would go for, you could buy into some companies at half that, and really their financial capacity, what a leverage buyout firm could do in acquiring that, they could finance more than the stock price per share. They could go to a bank and borrow more than the stock price per share. Those kinds of things made sense to me. It was sort of like a bond or a you had bond capacity or financing capacity of the business that was more than the stock price. So in a theoretical see-through way, you were kind of like buying a bond, but you didn't have a maturity date, you didn't have regular interest payments, but you had that margin of safety based on the price that you were buying, the price that you were getting into the enterprise in that was equivalent to the margin of safety that a bond on that company would have. I don't know whether that's at all clear, but that was the idea.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Sure, sure. Well, look, obviously, if you had looked at the balance sheet of Paul Hardeman Company, really it didn't have much. I don't know whether it had much debt. I don't recall. But it was basically the tax loss carried forward. There was not a more esoteric asset than actual cash buildings, accounts receivable, profitable business, profitable sales base, those kinds of things. It just did not have that. I had made money in those kinds of stocks. I understood them. I understood the theory of doing it, the model. It all made sense to me. It seemed like it offered a margin of safety. I used to think that you'd find something that didn't have much leverage and you'd figure out that the real value of the business, if it was sold, if you acquired it or if a competitor acquired it, they'll likely”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“He was not a He was there flawed, but he was not a rich man. And I. I was sort of surprised years later when he invested fifty thousand dollars of his pension profit sharing, his IRA with Tweety Brown. And fortunately, it was a very successful investment. It allowed my parents to retire very, very nicely.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“About the disadvantages of borrowing money to buy things and being better to be prudent and careful. Anyway, I didn't follow his advice. I mean, no one would lend me any money, which was a blessing. That stock crashed. It just was terrible. It pretty much wiped out most of the $10,000 that my investing had built. And so, I mean, it was a punch in the face at an early age. Better than at age 74. I don't want to go there.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Across a company called Paul Hardeman Company, which had an enormous tax loss carry forward. I forget what it was per share, but it was a big number in relationship to the stock price. The stock price might have been three bucks or something like that. And I thought I was just going to get fabulously rich buying this thing at three. They'd build some empire buying companies. And I went and went up to New York and met with a lawyer who had bought control of this company with a large tax loss carried forward. Anyway, I recommended that my father buy it and I tried to borrow money from one of my father's friends who always took an interest in me and was a frugal guy who invested in stocks and owned real estate also on a farm or two out in Ohio. Anyway, this guy thankfully did not lend me any money and he wrote me a very kind letter to talk.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“Framework. Talk about that. It did. It did. At that time, there were a number of companies, conglomerates, companies that would own different businesses, and a number of them had been formed using sort of a Shell corporation that had tax loss carry forward benefit, i.e. that the whole idea was if you bought a profitable tax-paying business through this corporate entity that had a large tax loss carry forward, you could shelter the pre-tax income of the business that you acquired. You pay no income tax on it. And at that time, the corporate tax rate was around 50%. So you sort of have, assuming it was a cash generative business where the cash flow was equal to the earnings, you'd have double the earnings that you could get your hands on in cash flow. So there were a number of companies that built conglomerate businesses through acquisitions. And I happen to...”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“That seemed like a good deal. So I started doing that and those initial investments with that basic framework in mind worked out extremely well. And I was not a diversified investor at that time. I didn't know much about that. But my first few bets were good in $1,000 became worth about $10,000. I don't know what that is today in today's dollars.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“I really started with what's considered to be the hard book, the Bible of investing. And he has a section, he has a part of the book on balance sheet analysis. And I came to the conclusion that you could buy bargains in the stock market. You could buy a company, even a company that has more cash net of debt per share than the stock price. So I'd also seen some research on stocks that had the biggest percentage moves and they tended to be lower priced stocks. So I thought that I would try to find stocks at $5 a share or less that were selling below their net cash. So in theory, if you and I could buy the whole company, we could get our money back from the cash in the balance sheet and the till, and then we'd have the sales base, the earnings base, the property plan and equipment, goodwill for free.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“The book was originally, as you know, I think, published in 1934, first edition. And anyway, I just started going chapter by chapter, and there were accounting lessons as well with the book. And I'd send in my answers to questions, assignments, and get a grade back and then do it again.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT
“With Should be emphasized, right? I played hockey without permission. So I wanted, I had my priorities set. So I went up to New York on the Amtrak train and spent about 45 minutes with Mr. Allen and asked him to describe his feel for stocks, his feel for investing, that Time magazine had described as almost magical. How do you get that? And he said, it's just a feeling when you know you're right when you've got sort of conviction, you're comfortable, you're right. And then he gave me advice on educational path forward. He said that, you know, accounting finance, accounting's the language of business. You should know everyone who's an investor should know accounting. And he recommended a course that was taught at the New York Institute of Finance on security analysis. And it was a correspondence course. So I immediately signed up for this. And it happened to be based on the book Security Analysis by Benjamin Graham, Dodd, and Coddle.”
2022-12-25 · We Study Billionaires · RWH019: Winning the Long Game w/ John Spears · IDENTIFIED FROM THE TRANSCRIPT