About one month ago, typically during the first week of May, 40-45,000 people show up to the Berkshire Hathaway annual meeting to get a chance to listen to Warren Buffett and Charlie Munger answer questions for the day. Last year, an auction on Ebay to have lunch with Mr. Buffett ended up with a price tag of nearly $3.5 million dollars. One does not have to be a genius to figure out that time is precious for CEO's who have created a lot of wealth for shareholders.
One of the great things about investing is you can find leaders of companies who meet your criteria for guiding a business in the future. Very rarely, however, do you find excellence which has been sustained over a long period of time. Even more unique is to find a leader who has proved their greatness for many years, and has also repeatedly battled back from situations where they actually had to start over. Given that background, let me suggest the investment world should view John Malone with the same elevated status as it does Mr. Buffett.
Let's give some quick comparisons to back this idea up. As of this moment, Buffett created a company, Berkshire Hathaway, which is currently valued at 285 billion dollars. Malone's Liberty Media has three different equities, one of which is a tracking stock, Liberty Ventures, and combined they have a market value of around $35 billion. Liberty also recently spun out Starz Entertainment, also controlled by Malone, and it has a market value of almost $3 billion. He also runs Liberty Global, the largest cable company in the world, having a market value of nearly $50 billion. In addition, Malone sold TCI cable years ago for close to $50 billion. While he was in charge of TCI, Malone created the Discovery Channel (currently worth nearly $32 billion), and Black Entertainment Television, which was sold to Viacom for billions. At one time, Malone was the largest shareholder of DirectTV (he still owns a big stake), which is worth nearly $50 billion as well. Other public entities Liberty and Malone have control of, or near control, include Expedia, Live Nation, TripAdvisor, Home Shopping Network, Interval Leisure Group, Barnes and Noble, and Lending Tree. Clearly, as a shareholder of either Buffett or Malone, you would be a very pleased owner.
Buffett is a media darling who draws attention everywhere he goes. Malone is also followed closely by the media, and is also known for a few of his colorful quotes. The striking similarity is from an investment point of view, both of these leaders are indeed the smartest guys in the room, and the correct adjective to describe them would be 'Opportunistic.'
A few days ago, at the Liberty Media Annual Meeting, approximately 40 people were in attendance, a bit of a contrast to the Berkshire Annual Meeting. As is the case every year, it was a finance person's dream because Malone and his incredibly sharp CEO Greg Maffei displayed their complete mastery of the issues which affect the companies they own. If you wanted to hear about competitive positioning, margins, macroeconomic environment, growth rates, capital intensity, tax loss availability, tax leakage, stock performance, whatever it was, Malone and Maffei have the answers down cold.
The guy who hired Malone was looking for 'The Smartest SOB I could find,' when he brought him out to Denver to run TCI Cable. Malone and Maffei are indeed the smartest guys in the room. Wall Street only respects success, and Malone is the epitome of it. In fact, hedge funds and Wall Street were well represented, and naturally, they asked leading questions in a way to get responses which would give them an indication on how they should think about their positions in Liberty. It is pretty simple boys (and ladies)- you own them. Berkshire Hathaway is well positioned for the future, but I would argue what Malone owns and control is just as well placed. You could even make the argument that with Charter's tax loss carry forward and Malone's ability to know how to use it and leverage, Liberty might be in a more advantageous position. I know, I know, really rough for these two billionaires.
Once in a while, things can go your way when you think things through. Fourty thousand people attend the Berkshire Hathaway Annual meeting, only about fourty were in Denver for the Liberty event. Like a kid who gets a chance to meet a childhood idol, I was able to speak to Mr. Malone in person. As a shareholder, I thanked him for his leadership and wisdom. I also told him I admired his humility, and obviously the incredible returns as a shareholder (it is hard to believe how good the returns have been-take a look at this column for more information). He was very gracious with his time and those precious few minutes will be remembered for as long as I invest. Buffett has a quote, 'Price is what you pay, value is what you get.' Having gone to both the Berkshire and Liberty annual meetings, it is self evident to know where the value was with respect to how to best utilize one's time.
A really nice column mentioning a great investing book-
Corporate America is just loaded with cash, some might argue too much so.
Here is an argument being made that labor competition and 'An Age of Anxiety' is what is keeping growth constrained.
Thank you for reading the blog and I hope you stay cool in the summer heat. Here in Vegas it is currently a balmy 109!!!
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.
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