This post was originally published on MastersInvest.com.
Ted Weschler and Todd Combs have been anointed to manage Berkshire’s equity portfolio when Warren hands over the reigns. Warren’s decision to hire Todd and Ted was based on what they’d done, how they had done it, and their character. Both now manage $10b each of Berkshire capital.
In a recent rare interview with Yahoo News, Warren, Ted and Todd talk about how they spend their days and how they think about investing.
I’ve outlined below my key takeaways from the interview..
Buffett spends most his day reading. So do Ted Weschler and Todd Combs. In fact Warren said in the interview “These are the only two guys we could find that read as much as we did”. So what do they read?
Ted Weschler spends half the day reading random things like newspapers and trade periodicals. In a 2016 interview Ted pointed out “To be a successful investor you need to be hungry, intellectually curious, interested, and reading all the time. Read a lot of newspapers. You need a certain level of randomness in order to connect things that might give you an insight into where a business is going in five years that somebody else might not see.”[Tweet “”To be a successful investor you need to be curious & reading all the time.”- Ted Weschler”]
Todd Combs reads about 12 hours a day – newspapers, quarterly reports, SEC filings, transcripts and trade magazines.
Like Buffett, they’re hoping to find or confirm an edge – a thought, an idea, insight or trend that’s not being recognized by the market.
2. Hard Work
Ted and Todd spend most of their day reading. Successful investing is hard work. As Peter Lynch noted “The person that turns over the most rocks wins the game. And that’s always been my philosophy.”
It’s important to be a life long learner. Ted Weschler notes the last 5 years have been the steepest learning curve of his life. Which is a pretty powerful statement at 50 years old. In a large part he believes this is due to the data set from the businesses he’s been exposed to at Berkshire (and no doubt learning from Buffett).
4. Speaking to Corporates
Buffett believes he is a better investor because he has experience in business and a better businessman because he has had experience in investments. Buffett notes that Berkshire is about as good a place as you can find to really understand competitive dynamics. Both Ted and Todd have Berkshire businesses that report into them. As Berkshire owns dozens and dozens of businesses and touches almost every type of industry in one form or another it gives the portfolio managers the opportunity to speak to operating managers who know more about their businesses than an investor can learn in a lifetime.
There are no rules of any kind on diversification or industries in which Todd and Ted can invest in.