YouSaid · the spoken record

Samantha McLemore

lines on the record: 110
first: 2023-04-16
most recent: 2023-04-16
sittings or episodes: 1
sources: podcast

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“Told me he thought it was a mistake, and you know he's been very complimentary of he thinks I'm well suited to this line of business. He never, I mean, he will be open about the challenges. And, you know, I remember in March of 2020 when COVID was causing the markets to crash and Bill and I are both reading like stoicism and emailing each other, you know the quotes and like dealing with it together. So it's been great to have, you know, him to go through these things with. And I learned tools to adjust and adapt to it. But I think, so that was pretty early in my career. And so Bill had always said, I'm going to make it an expensive proposition for you to decide to do anything else. And so I considered going back to get my MBA. And he was like, that would be really dumb. He's like, you're going to learn far more here. That's a really stupid thing. You're going to go pay a lot of money to go do that. So there were certain.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Well, no, I mean, that was exactly the experience again of all of the pain, of the layoffs and it impacting people's again. I have never seen Bill. I can lose my own money just fine. Like I'm totally fine with that. I have no problem with that. I know what I'm doing. I know over long term times it'll come back. So it was all the other stuff organizationally, clients, all the stress around it, the press, obviously, and what happened and how Bill was covered there. It was so public. You know, a lot of people, when they face these personal challenges, much more private, not if you're an investor that's well known. It's very public. So yeah, all of that was why I was, you know, reconsidering it. I think Bill is great about, you know, he wants people to make their own decisions. He wouldn't want to unduly influence. I mean, if I ever considered doing other things, he.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Long game, and we hope to make that up over rolling three to five year time horizons. That's our time horizon. And so that's the period over which we're assessing ourselves. And so I think I got comfort with it in many ways. But yeah, there was a period where I was not quite sure this was the correct place for me.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Failure also. I think we're playing a long game, and if we can deliver long-term outperformance for people, that's the objective. Again, no one else has outperformed 15 consecutive years. That's an unreasonable expectation. Bill would tell you that that was an accident of the calendar. If you measured it January to January, February to February, it didn't happen any other time. So, you know, that's not the right metric. And then, you know, some of these more philosophies around Stoicism and how to confront challenges and how to benefit from them and how to kind of be more stable and look, you know, we create all of our suffering more internally. I think finding some of that material and understanding that better was super helpful. And then we try to educate our investors as well in terms of what we're doing. And we can have short-term periods of significant underperformance, because we're playing.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Else that I loved as much as this job. I hadn't yet, you know, I know you have talked and written and done interviews on Stoicism, and I hadn't yet come across many of those learnings and Buddhism and these more spiritual principles on a different way to view the challenges. And so, you know, ultimately I concluded though, I couldn't find anything else. I love this work. I love learning about companies. I love doing valuation work. I think well suited to it. I think I am emotionally stable and I can tolerate losses. I can buy things down. That doesn't bother me. It does bother me to, you know, underperform significantly. But I think there's a lot of value that we can deliver by educating people, by helping them make better decisions and choices. I also think the way the markets of, and I stopped equating short-term underperformance with”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“And as a professional investor, my job is to outperform and deliver value to my clients. So at the time, I thought if I underperform, I'm failing. I'm failing at my job. And so this is a job where even if you're successful, even if you're at the top of your game, you're destined to fail for jobs of time and you're going to have to work really, really, really hard because it's super competitive. There are super intelligent, smart, capable, the most capable people you'll find in the world are drawn to this profession. And I thought, you know, Anna had a new baby. And I thought, is this what I want to sign up for? Is working really hard, you know, taking time away from this beautiful baby to fail. And so I was like, that when you frame it that way, that doesn't sound so appealing. So I did. I looked around at other things and said, is there something else, you know, something else that would be better for me? I didn't find anything.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“So, I had joined Bill again. He was a hero, a god, having done things no one else did. I had such respect for him. He was completely dedicated to the job, you know, spent all his time doing it. No one could read more voraciously, have more knowledge, you know, have had more success. And then we go through this terrible period. I mean, it could hardly have been worse. And then I had my first child shortly thereafter too, which completely changes your priorities. So at that point, I was thinking, and then as I learned,”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“You can justify, you can trick yourself in the markets a lot more. It's hard to trick yourself to believing the cookie's good for you. But in investing, you can make yourself believe, oh, there's all these problems, there's all these bad things going on. So I'm actually better off selling. But at the end of the day, I think it's mostly selling things when they're down is not a good idea. It's not a good idea. Buying things when they're really high and expensive, not a good idea. It's not that it's really complicated. It's that it's difficult to implement.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“The fact that low prices, high fear and pessimism, you know, leads to better investment opportunities. Again, it's why we think these behavioral advantages are so enduring. It's like I think of it like dieting, you know, or eating healthy. People don't not do that because they're not sure what to do. You know, they don't do that because it's hard to do. It's hard to not eat the cookie. It's not like you know, oh, I'm not sure if I should or not. No, it's like you know you shouldn't, but it tastes great and you're going to eat the cookie, right? It's like selling things down a lot. I mean, I'm taking the Fifth Amendment.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think pattern recognition, you know, again, Bill would probably tell you I don't know if I agree with him on this, but he likes to say there's not many benefits of getting older in the business. I don't know if I agree with him because that pattern recognition piece and having these experiences, you learn so much the more you have them. And as Bill says, you know, there's not many people like him who are investing through the 70s. Again, that's an asset. And I think Charlie Munger has talked about how it is a big benefit to, you know, continue. There's not many things you get better and better at as you get older and into your 90s like they are. But he said investing can be one. I think Bill's point is when you're younger, you can look at the world with fresh eyes and there's a lot of benefits to that to not people get stuck on their worldview. And it's very important not to do that in investing because things are changing all the time. It gets harder to do that as you get older. But the sort of pattern recognition piece.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Businesses were much earlier stage, but there was no reason to believe that they wouldn't evolve in a similar manner to the US business. So you could buy the company at like five or ten times what the U.S. business is earning. So for a company like that, given the stage where it was, it was an amazing opportunity. So we built up a big stake in Netflix at the time. But it's that, again, are we doing our valuation work? What are other people that we respect seeing and saying different sources, mosaic theory, you know, classic analyst, analytical stuff?”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“And so he came back to us, and we were like, okay, if Jeff wants to know what that business is worth, we need to do the work on what that business is worth. So we started working on it. And then Bill attended another meeting with John Malone, where John, I think, said that he would be buying every share he could of Netflix at those prices. And I think it rebounded back to like 90 by then. He said that he was restricted because some of his other holdings. And so, you know, those like this is basically all you need to know. You know, John Malone, one of the best investors in the history of the world, you know, would buy every share he can. Jeff Bezos inquiring about, you know, what the company is worth. And so I think that classic sort of, you know, trying to triangulate different sources of information to figure out. And then we did work and we realized that it was trading at a very low multiple of the U.S. earnings, but they were investing, again, all of this internationally, but those.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely, and we would sometimes call it triangulation. So getting disparate pieces of information from different people or different sources, it led you to the same conclusion would increase your conviction and belief state. And interestingly, I think Bill met with Jeff, Bezos in 2012, I believe it was. And that was, we had owned Netflix, we'd sold it too early in 2008 when we thought streaming was a risk. And then they went on to dominate streaming. But in 2012, they announced that they were going to separate the streaming piece of the business from the DVD piece of the business and the stock tanked. And I think it was 300 before that and went back to like, you know, 120 a share. I think it got down to 50, 60. And Bill had met with Jeff. And Jeff said, hey, do you know Netflix? And Bill's like, yeah, we've owned it. And he's like, we don't own it now. He's like, well, do you have a sense of what it's worth? And Bill's like, well, our work's not current.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Okay, this is still a double digit operating margin business, right? At the core retail business, but then they're investing. And so just checking in on that, you know, that Jeff still believed that and what the evidence was for that. I mean, that's similar to how we think about these companies. Again, as long as we believe a few key investment variables are true, you can withstand a lot of, you know, noise. And so I think to the point about Buffett, he talks about what doesn't change, what will be the same, what will people still be doing. That's similar to what Jeff talks about. You know, people always focus on change. And he says, what won't change is that people will still want low prices. People will always want low prices. So I think, you know, I think that that's an interesting and an important thing, you know, to think about.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Time I had no idea how special it was to have a seat at that table, but in hindsight, it's amazing. It's amazing that I was there. And then I have attended, you know, some of the dinners with Bill and Jeff and got to meet him. And he is just, Warren Buffett calls him an authentic business genius. And so to learn from Jeff and hear about how he, and here Bill, you know, and Chris Davis asking Jeff Bezos questions about the business, you know, that's just an amazing opportunity to have some of the best investing minds and business minds of one of the greatest companies in the history of the world. So I feel very fortunate for that experience. But I think that's also when we're doing work on companies. Again, Bill for many years when meeting with Jeff would ask.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“I've been very fortunate. I haven't got to attend as many of those dinners. I wished I'd gone every year. I would have been able to go every year. It took me many, many years to get a seat at that table. But one of my first experiences in 2003, right after I joined, Bill had a big investment conference for all of our clients. And Jeff Bezos was the speaker. And he gave, you know, the washing machine talk where he talked about the internet being like the early days of electricity, where initially he compared it to this washing machine and it would hurt people and it would be outside and you have to go over there and it was really clunky and it didn't work well and then you got electrical outlets and things evolved and again we were so early and you know build believes that he kind of laid out the case for aws at that meeting and then i remember attending a meeting with bill and jeff where jeff was soliciting advice about raising kids and so at”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Well, I sold it too soon twice, but that was based on again our cell discipline around the valuation. So we are sensitive both on the buy side and the sell side. We don't just own all of these sort of names forever. I think the other compounders that we own, most of them look cheaper. So a name like Alphabet is much cheaper even on the current earnings now. And the earlier stage companies, again, will look at money losing companies. A lot of people won't even do that. We're doing a lot of analysis around can this business make money and what's the value over the next five or ten years?”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Amazon in many material ways around what they're optimizing for and their share dilution. And so all the things that matter long term. And then what's difficult with these sort of companies is to separate out the investment from the cost structure with a company like Walmart as they were growing. You could analyze the store unit economics. You could analyze the income statement. And then you could see that all of the investment in future growth was coming through the cash flow statement. new stores with companies like Amazon or more digital companies where it's R&D based or technology spend you know it's harder to understand what that looks like so we spend a lot of time with that one or any names like this trying to understand the long term operating model and the value what the valuation would look like over a longer term time horizon and so you're right many of those companies we owned Netflix you know for many years did very”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think in terms of the high valuation stuff, Amazon would be the poster child for, you know, the name that we've owned for so long that has always looked expensive or maybe for a long time has looked expensive. But I think, again, our belief there is it's always been undervalued. It has such a huge total addressable market, $5 trillion on the retail side. They invented and created AWS. It has one of the best management teams we've ever met, maybe the best, in terms of their data discipline, evidence-based, financially sophisticated. I mean, you would be surprised how few companies can even understand that the proper metric to engineer the business force free cash flow per share. And this is a company that had it in its initial annual report. And so all these companies that claim to be the next Amazon of this, of that, or the other, they don't actually behave.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“If we have a decade more like the 70s, the risk is just much, much higher. I still think we see that around in many companies that aren't so quite so dramatic”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Poor investment if the price is too high. And that's especially true. I think the risk is even higher if interest rates are rising or even stable. You're not going to have that sort of tailwind. So I think in the growth space, you have a lot of great investors. Few of them are really sensitive about that valuation piece. And we always are and always have been. So I do think in the value space, a lot of people have gotten into these sort of companies. I haven't seen any value investors do the Snowflake thing. And that was a great example of a company that I have never heard a bad thing about the company. People love this company. They love the competitive advantage. But the valuation just got so high that everything had to go right. You know, extremely high expectation. Everything has to go right for the market, for the company, you know, for you to do well in those sort of situations.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Valuation sensitive. That's key across our whole portfolio. So we're doing the valuation work. We're not always right. We make plenty of mistakes on the work, but we're going to sell something if it exceeds our estimate of what it's worth. We're going to be patient and let our winners run. But we're going to track quite closely what do we think the business is worth? And we owned Peloton at the IPO and sold it during the bubble at greater than $100 because we couldn't make a valuation case where like it's pricing in Apple type duration and level of growth. And so I think some people have taken the quality compounder argument so far that at least before this most recent bear market, they thought you could justify paying any price for a company. But obviously you cannot, you can have a great company that's a”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“You know, I really do think if you look at Buffett's evolution, it was in the same vein from cigar butt investing to high quality compounders of GECO, Bill with Amazon Nick Sleep, again, you know, one of my favorite things in this business is capital cycles, behavioral cycles. And so when I first got it, it was at the bottom of the tech bubble. And then energy global cyclicals had this huge move up driven by emerging China's growth. And that's what ended the streak for Bill because he, you know, had never been a huge fan of those companies because they didn't earn above their cost of capital through the cycle. And so, you know, getting into 2005, 2006, that was the only group of companies, those sorts of companies that outperformed. And now more recently you've seen this cycle for growth. And it reached the stage where, again, we are always...”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“This is a great topic. It's one I'm really passionate about. I agree with you completely. And it's interesting on so many levels.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Over the next few years, we think that the company is materially misunderstood and misprice. And so those are the sorts of things we're looking for when we analyze these companies.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“So we cut back a lot then, but still held it because we still thought there was significant potential for the business over the long term. It's losing money in the short term. It's been hit by Russia, China, FX. So it's gone back to five. And so, you know, huge declines. But we still see that sort of potential longer term for the business, despite the near-term headwinds. They are the only company building this sort of technology for the luxury industry. And they've made deals with a lot of companies in the space. Richemont is the biggest one that will double their GMV gross merchandise value as it comes on over the next few years. But this year they're bringing on Farragamo, Neiman Marcus. So we can see a lot of positive things in the fundamentals that you can't see if you just look at the current income statement and cash flow statement. But as we look at the implications for the business”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Know now is there's a couple of examples, but one that we've owned for a few years now is Farfetch. And this is a company that has a luxury goods marketplace. And they also have what they call platform services for luxury goods companies, which is basically they provide the tech backbone for luxury companies kind of similar to AWS. And then they own some luxury brands. It's losing money. It's one of these names that, you know, we bought it a few years ago after they did a deal for New Guards group and the market thought this is a terrible deal. And when we did the work, we thought it was a great deal. So there was something the market misunderstood, you know, in the short term. COVID hit, so the stock initially traded down, but then the market realized this deal was good and then it was benefited from all sorts of things going on with COVID and from additional deals, you know, they'd done in China. So the stock went from 10 to 75.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“I mean, what we're always looking for is some reason to believe that market's current expectations aren't reflecting the fundamentals that we see in the business. I mean, that's similar across everything. And some reason believe that these things could go up a lot. So some of the things we look for with these companies, large total addressable market. So some competitive advantage within the market that they're operating. We want to believe that there's a compelling business model there. So there's a lot of companies that came public over the last few years where there were a lot of questions about the long-term business model. We want to do the work there. And so I would say, again, that the market doesn't understand something about the business and that we have an edge. So I think those are the”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Fundamental. So, we're not just taking shots and saying, so we want to believe the market's wrong. So we want that variant perception. But this idea that you can make a lot of money. And if you look at how managers deliver returns, oftentimes, you know, it only takes a few big winners. And Bill, this is a lesson Bill imparted very, very early on to offset a lot of losers. So if you have a couple, one, two stocks that are up, you know, 10 times one stock that's up 50 times, that pays for a lot of losers. And even Ben Graham, I think most of his returns came from Geico, you know, Buffett the same thing. Again, that's time and a high quality business. You can get those sort of returns if you have really low expectations on something the market doesn't understand a business model where maybe you can't see the market can't see or isn't looking out far enough to see.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Higher in five years and 50% likelihood it can compound growth at 7% a year. The challenge is the market's pretty efficient at pricing things with those characteristics. And with rates solo, the prices are pretty high. Some of these earlier stage companies where the market, especially in an environment like today where names are down 80, 90, you know, 95% and the market just cares about the next week, month, you can find some gems at businesses that could look entirely different in five years. And the market would meaningfully, you know, revise how it valued those companies from a money loser to something that looks much different. And we're looking when we're doing analysis at reasons to believe that's the case in the”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, no, I think that that's exactly right. And it is similar to venture portfolios. And if you look at those portfolios, they do really well, but it's driven by a handful, a small number of huge winners that go up a ton and the rest are losers. I think the risk is lower in the public markets. Well, maybe until recently when you had these really early stage companies come public. But I think this idea of what do we make it for right and what do we lose if we're wrong and the expected value there. And then at the portfolio level, you have to, you know, manage the risk and the exposure. But especially if you have pessimism, and these earlier stage companies, they're also, they can be more likely to be misunderstood. I mean, I've heard Buffett, you know, what he likes is, you know, I heard the three criteria like 15 times next 12 months earnings, 90% confidence the earnings will be.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“It's very unlikely to completely go away. I think that's no longer likely. They could have significant losses, but I think those two elements are the bull case, yes.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“No, entirely. That's entirely. You know, I think it's two things. It's that, it's supply versus demand, and there's a fixed supply. And that is the bull case. And so if you have growing and sustainably growing demand for a fixed supply thing, the price will go up. And then it's also just basic risk reward, you know, expected values. What can I make if I'm right? And how does that compare to what I lose if I'm wrong? And the upside given those characteristics, if things work out well, is so extremely high if it is, you know, digital gold, you can get values, you know, 300,000. I think Kathy Woods out there with 500,000. Those aren't crazy values if it continues to evolve in that way. So that's huge upside. And then the downside is to zero, 100%. That's the most you can lose if it completely disappears. And I think he would say, and I would agree, that at this point in its evolution,”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“So, yes, I think I'm oftentimes I want to do more of the detailed work. I think that was one of the ways Bill and I were very complimentary to each other, but his investing early was a big benefit.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“The base rate of success there was very low. But interestingly, by 2020, Bill had been involved in this space for many, many years. So he was one of the experts. And he was on calls with institutions virtually every week who are interested in learning more about crypto and learning more about Bitcoin. And so gold is basically just occupies a special psychological space in the investment universe because of a belief state that exists broadly among people. And so it seemed to be following that path. And then there were some academic research that suggested it was it actually did have quantitative characteristics that argued it could be a digital gold. And so, you know, I thought inflation was a risk and it could be a good hedge for inflation if it occupied a similar digital gold place with free option value on the upside.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“See the evidence at that time that convinced me to believe in that bull case. And then I was completely wrong on Bitcoin. So it went from 3,000 to 20,000. And then it did crash, but back to 3,000. So if you listen to me, he would have been harmed because even riding through it, you know, it just went back to where I was advocating that he get out. And so, but it was something we were following. I think in 2020, that's when I put it in the fund that I run. And at that time, it had a, you know, it had the cycle. It had crashed and started resuming its rise. The bull case had shifted from it was no longer about tracking transactions and people were saying it's not great for that for a number of reasons. The cost to do that, but they were saying, you know, and they were talking about it as digital gold. And that had been thrown around in earlier years. But again, there's only one goal. So...”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“When Bill's asked, we're often asked, What are the main differences between us? So he would say, I have a much higher evidentiary threshold. What do I need to see and analyze in order to believe something? And that's probably right. And so I kick myself to this day that I didn't invest in Bitcoin when Bill did. And he made a ton of money. We had this big Bitcoin bull cycle. And so in 20, I guess it was at 2017 when it, you know, before had gone from $300 a coin and when it got to $3,000, I was telling Bill, you know, it was a big position in one of the funds he ran. And I was like, Bill, you've got to cut this back. You know, it's going to crash again. You're going to, you know, have losses in your portfolio. And at that time, the investment case was about it displacing currency and people tracking the number of transactions being utilized with Bitcoin. Again, I didn't.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“You know, we want the expectations low and controversy and pessimism and fear and all of that's a good thing if it comes to expectations. And then we want the fundamentals to be good, but that's a different set of evidence and characteristics of what we're looking at and analyzing there. So yeah, it's not going to deter him that other people don't agree with him. He will listen to what they think. And he will change his mind if they're presenting good evidence, but they have to present good evidence, I think.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“So, I've seen Bill go both ways. So, I really do think he listens to their arguments, his background in philosophy. He's going to listen to the merits of your arguments. When we did research for him, it was always based on the merits of what we were arguing and whether we could support it with evidence. So rat poison squared is not going to be convincing to him. It might be catchy and we might love to talk about it. It's interesting, but it's not evidence-based. And so Bill would say there Buffett doesn't have any particular expertise when it comes to this sort of thing. He even swore off technology broadly for many, many years. And so if you look at the people who actually know something about this and the venture capital world, they're really excited by it. And Bill will read all the details of what's coming out. I mean, he's, again, a voracious consumer of information. So I think, again, as I see it, again, if we kind of separate it into the expectations versus the fund.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“One to get to that point. And so he's made some amazing and great calls. The other thing I really admire about him, so his ability to stomach and just not get swayed and emotional, you know, in the markets is a huge benefit. I think Warren Buffett's when he talks about keys for being a good investor, emotional stability, a keen understanding of the behaviors of individuals and institutions and individual thinking. There's no IQ in there, but emotional stability, in my opinion, out there. And he's also, you know, just a very differentiated thinker. He's willing to look at things early and form his own conclusions based on the evidence. And so”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“We have always joked that Bill has guts of steel. I have never met any other investor who can, I mean, many of the greatest investors can stomach much more than other people. That's, I think that's pretty common. But I have met no one who even comes close to Bill's level of what he can stomach and tolerate. And he just doesn't get perturbed by falling stock prices. If he believes in the company, if he believes in the business, he will change his mind based on evidence. He will update his view. But if he believes in the company, then he will buy more of the stock. And the funny thing about it is we used to have this joke where internally once Bill reached the point, if things were going badly enough that Bill decided he didn't like a stock anymore, that was the best buy signal if the company was going to survive. That was the best buy signal there was because no one else was left to sell. He's the last.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Companies that you really like where there's any sort of panic going on. Those are favorite sorts of opportunities over the long term.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Definitely. We're always looking for a variant perception. And we believe the market is extremely difficult to be. It's pragmatically efficient. It's mostly right most of the time. And so there's not many areas where you can get an edge on the market. And informational inefficiencies, those are mostly competed, regulated away. It's very hard to get an informational edge. You can get an analytical edge, but again, in today's day and age, it's very, very difficult to do that. It's hyper competitive. So the area where we believe you can mostly get an edge is the behavioral, the tendency of groups of people to act in similar ways to all the behavioral finance, literature on loss aversion and recency bias. And, you know, when people have losses, they don't behave optimally. They're more likely to panic and sell. And those oftentimes create the best opportunities. And so if you can find, especially if you can find...”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“It's those revisions to expectations that drive stock prices. So, you know, the great thing about value investing is you're fishing in a favorable pond of low expectations. But those expectations have to be wrong. They have to be wrong for you to actually make money. But it's a good pond to be in. And so we try to find low expectations, fear and pessimism. It's exactly what you want in an environment like this where, especially after the market suffered big losses, that's an advantage time to be investing if you can be long term. So yeah, that was definitely one of the lessons that Bill always reinforced.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“A monthly or quarterly and dramatic dramatic outperformance. And so this idea of fear and pessimism, you know, Buffett talks about this a lot. When those are high, it's a good odds that things can go right. And no one can predict the future of the world. I've heard Bill he's been asked many, many times, what did you know about Amazon? What did you see in Amazon that others didn't see in the early days? And he's very clear, nothing. I mean, there was a lot of analysis about the company and the business model and the working capital cycle, the free cash flow, and Jeff Bezos. I analyzed the fundamentals. You don't know how the futures. You don't know anything about the future, you know, that other people don't know. But he thought it got really mispriced. He added aggressively to it after the tech bubble burst. And so, you know, a lot of our work, I was fortunate to work with Michael Mobison, who wrote the book on expectations investing.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“Analyses on the market about odds of making money. He'd had rolling, we were looking at rolling five-year returns and it had gone negative and it doesn't do that much. And when it does, your odds of future five-year returns are much more positive. And so there was a lot of work about that. Interestingly, you mentioned AES and NextTal and some of these names, you know, we have a poster board of I think it was Money magazine and there was a cover, the profile that was done of Bill of his portfolio at that time called The Scariest Portfolio Ever. It was like shocking exclamation point, something else outperforming question mark. And it said starring like Tycho AES Nextel and we tracked the returns of that portfolio relative to the market that was part of my job. You know, we would up.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“That's a great story. I love that story, and I love all the details and that you are there for it. And listening to it now after, you know, working with Bill for over 20 years, there's so much that we could discuss about that. I think maybe just to start, I feel so fortunate. I did win the job lottery. You're right. They had tried to get Bill to come back for many, many, many years, unsuccessfully. So I got super lucky. And I think starting in July of 2002, which was right at the bottom of the market after the tech bubble burst. And so a lot of the initial work I did was on analyses.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“And I said, Yes, I have a younger sister. And she said, Well, what would she say, or you're, you know, the worst things about your biggest faults? And I said, oh, that's easy. She tells me all the time all of my faults. She thinks I'm bossy, controlling. I think I always know everything. And then I'm like thinking as I'm saying this, what are you doing? You're ruining your chances at this jump. But Jennifer laughed and Bill laughed and Jennifer said, that's exactly what my younger sister would say about me. And so I'd realize, you know, okay, these people actually do want to know who I am and, you know, accept me for that. And I think there were some similarities with both of them there that came out in the interview process.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“And I had only met Bill very briefly, so I didn't know him at all well. And I said, well, maybe it's the he seems so serious and smart. I don't know if he jokes around at all. And then knowing Bill, you know, years later, you know, I think we were just discussing one of Bill's jokes. So I completely got that wrong. He loves to joke around. But I think, you know, we're quite similar in many regards. And I remember in one of the interviews, this is how I knew I'd found my home culturally at Leg Mason with this group of people. I was in an interview with Bill and, you know, this woman, Jennifer Murphy, who's wonderful, and she's a great mentor. She was a CFO at the time. And she asked me, you know, I'd been asked at all of these investment banking, what are your weaknesses? And I was trained to say, you know, I'm a perfectionist. I like to get everything perfect. And Jennifer said, do you have any siblings?”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT
“That's very true. I mean, I was Magna Cum Laude. I won the accounting scholarship for one of the best students in the accounting degree. My investments professor, I think, told them that I got the highest score. So there were things that made him think I was smart and could do the job. But then I think Sir John Templeton talks about people either being price and value or trend in momentum. He could clearly see that I was price and value. And Bill and I are very similar in many ways, which is one of the reasons that we worked, you know, so well together psychologically, I think we're quite similar. So we hit it off. And I actually remember in the interviews, one of the analysts asked me what the worst thing about Bill was, which I was taking aback to have that.”
2023-04-16 · We Study Billionaires · RWH025: Patient Capital W/ Samantha McLemore · IDENTIFIED FROM THE TRANSCRIPT