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Sean O'Reilly: Buffett actually didn't do a ton of talking about consumer goods brands.
Classic Buffett investments are Coca-Cola, Gillette, Procter & Gamble. It's so well known
that he doesn't spend a ton of time on them, although if you read any of those old “How
to Pick Stocks Like Warren Buffett” books that are written in the 90's and the early
2000's, they always cite these consumer goods brands, which is our bread and butter, at
least for this show, as what he looks for in a company.
We got a few good tidbits that I actually just wanted to highlight for our listeners.
The biggest of which was the red and white elephant in the room was Coca-Cola. Do you
still drink Coke, Vince? Vincent Shen: I'm not a huge soda drinker
these days. O'Reilly: You used to be though. I know I
was. Shen: Yeah. Sure. As a kid, I think everybody
-- before I guess this bigger movement towards healthier foods and trying to avoid sugary
drinks like these sodas. These companies have seen that, but Buffett still seems pretty
bullish on the company right? O'Reilly: Yeah. People in the audience and
even that hedge fund investor Bill Ackman, they've all basically criticizing Buffett’s
stake in Coca-Cola. He owns like 9% of the company, it's worth like $10 or $12 billion
or something. Coke, Ackman says it leads to obesity and it's bad for you, these sugary
drinks are just terrible for you, they aren't part of a good diet, and all this stuff.
Buffett's answer to it, which you got to give him credit, it's comical and everything, but
he notes that he gets 700 calories a day, about a fourth of his caloric intake, from
Coca-Cola and switching to water and broccoli may not make it easier to live to 100. Yeah.
That was his response to the whole diet type stuff, whatever. It wasn't at this meeting,
there was a previous meeting where Charlie Munger chimed in and he talked about how sugars
can sometimes help soften up arteries and make them less hard and all this stuff. Oh
man. Shen: I don't know if I'm going to be taking
medical advice from Charlie Munger, who I respect quite a bit.
O'Reilly: He's 92 so you could do a lot worse. Shen: There you go.
O'Reilly: Yeah. Is he 92? He's in his early nineties.
Shen: Yes he is. O'Reilly: Anyway. The other question that
was thrown at Buffett regarding Coca-Cola was executive compensation at Coke headquarters
in Atlanta, Georgia. Shen: Yes.
O'Reilly: Buffett's son took his spot on Coca-Cola's board. The board just had to vote recently
on compensation packages for Coca-Cola's management team, and it included a lot of stock options.
Buffett actually, he didn't vote for it, he didn't vote against it, he abstained.
Shen: That's a pretty significant ... That's pretty significant since they own 9% of the
company. O'Reilly: Yeah. It would be the IF team voting
on something and half the people not being there or something.
Shen: Sure. O'Reilly: Or you not voting. You're that important.
Everybody was like, why didn't you vote against it if you don't like the compensation? You've
said stock options, which these guys are getting to a large degree in the compensation package
in question, why didn't you just vote against it?
He's like, "That would go against what I want and I don't want to give the impression that
I don't broadly support the management team, which I do." and so he abstained. I don't
know. You get the sense that it's a classic Buffett move, because he does not like direct
compensation or awards or anything. […]
Last but not least before we move on, we've talked a lot about Heinz, we've talked about
Burger King in the past. These are of course deals made by 3G Capital, the private equity
firm that Buffett's teamed up with, in particular for the Heinz deal. Again, a lot of praises
on them. Munger said he loves their cost cutting initiatives of literally getting rid of any
unnecessary expense. Coolest thing out of the meeting that I liked
was Buffett said he's in awe of Jeff Bezos' genius for making customers happy buying the
things they were already buying. I can attest to that. I love my Prime membership, I get
my detergent delivered to my door and I have a smile on my face.
Shen: Yeah. I wasn't really surprised by that comment. He's always come off as somebody
who respects talented management and somebody who's visionary.
O'Reilly: Yeah. Shen: I don't think you could take that away
from just Jeff Bezos and what he's done with Amazon for sure.