Alex Morris 谈新书《Buffett and Munger Unscripted》能学到什么

Alex, how’s it going?

It’s going well. It’s one of those years where getting back to work feels like things are chilled out again. The holidays were very fun, but kind of hectic.

I hear that. This was your first holiday with a kid, right? Am I remembering that correctly?

Yes, that is correct.

It definitely changed the holiday this time, because your kid was born in—was it April? Am I remembering that correctly?

March.

This time, your kid is just going from blob form to real form, but next time they’re going to be running all around. It’s neither here nor there. I’m sure listeners don’t want parenting advice from two middle-aged white dudes.

Before we start, a quick disclaimer: nothing on this podcast is investing advice. That is always true, but maybe particularly true today because we’re going to be talking about—spoiler alert—Alex wrote a book. For those of you watching on YouTube, the book is blurring out pretty hard, but I’m holding up my hardcover copy. Alex wrote a book, and we’re going to be talking about it.

The book is Buffett and Munger Unscripted: Three Decades of Investment and Business Insights from the Berkshire Hathaway Annual Meetings. We could talk about 100 different companies. Obviously, Berkshire is going to come up for sure. I think, as a disclaimer, Alex has a position, if I remember The Science of Hitting’s disclosures correctly. I have a super-small position that’s legacy for tax reasons, whatever. Do your own work. That’s all the financial-advisor disclaimer stuff out of the way.

Okay, let’s start. Alex, a little bit of a different podcast, but the first question I had for you—I told you to hold it until we started recording—is why did you decide to write a book?

First of all, thanks for having me. I know we’ve done a couple of these, and they’ve always been fun. It’s always interesting to go on a podcast you’ve been on before and see the topics we talked about and how things change over time. It’s not always fun to listen to myself, but the conversations have mostly been pretty good, I think.

The impetus for the book was that the publisher actually reached out to me and said, “We want to see if you’re interested in writing a book.” I had been working on something for a little while that was effectively tied to my history in the finance business, working at RIAs. It was an attempt to answer the question, “How do you deal with an RIA relationship for someone who is not in the world of finance?” Think parents, grandparents, friends, and so on.

I had started writing that, and there were certain parts of it that were close to home for me, like active versus passive and thinking about what you’re paying for in that part of the RIA relationship. But there were also other parts, like financial planning, that I’m not as well versed in and that I’m not as interested in. So I had run into a wall on that book.

When they reached out, I said, “I have one idea, but I don’t really want to do it.” A couple of days or weeks later, I reached back out to them and said, “I’ve also been working on this other thing where I’m compiling all the transcripts from the Berkshire annual meetings and trying to pull out interesting nuggets by topic. Do you think there’s anything there?”

As I thought about it more intelligently, I remembered that the book that had been most important to me, especially as a young investor, was Lawrence Cunningham’s The Essays of Warren Buffett. It has a very similar structure: here are the key takeaways from decades of shareholder letters on value investing, valuation, management, and so on.

I thought about that book and what happened after they released all the meetings going back to 1994 in 2018. I thought there was probably an opportunity there. I was basically doing it anyway because it was insightful for my own education and something I used over at TSOH Investment Research for philosophy discussions and things like that. So why not take the next step forward?

After I had started writing a lot, I realized, “I need to reach out to Berkshire and make sure this is actually okay to do.” I think it was at some point in 2023, if I remember correctly, that I reached out and said, “I’ve been working on this. Is this okay to do, or am I going to publish this and then you guys are going to be very upset? I don’t want to do that if that’s the case.”

They wrote back and said, “Warren’s okay with you doing this.” So that was the start of it all.

When you sent it to me, I thought, “This is a weird thing,” but I really liked how you organized it. If I remember correctly, Cunningham—I read the book years ago—just kind of threw the letters out. I loved how you organized it into different sections.

It’s about 450 pages. I would say 435 of them are direct quotes, and then there are little blurbs from you at the start of them. I really liked how you organized it and said, for example, if you want Buffett’s quotes on EBITDA, it’s all in one place, and you can see how his thinking evolves over time.

One of the really cool things is that, most of the time—you tell me if I’m wrong—it might be because everybody does this, and you might have experienced this on a podcast: somebody asks you a question, and your keyword comes out. That’s what Buffett says; your keyword goes on. It’s pretty impressive when he uses those keywords in 2015 and it sounds just like it did in 1992.

But let me ask this. Sorry, I’m rambling; I’m super excited about this. Sometimes, when I listen to a company’s earnings calls over a year, there are two ways to do it. One is to listen every time they come and talk, so you listen to one every 3 months. The other is to read them all in a row. There are good pros and cons to both, but when you read them all in a row, you’ll often learn something just by thinking, “They mentioned this in this quarter and they didn’t mention it here,” or, “They keep mentioning this—why?”

I’ll give you an example. I read an investor day from 2021 that was perfectly normal last week. Then I read the same company’s 2024 investor day, and if I had read them both separately, I would have thought, “Oh, perfectly normal.” But when I read them back-to-back, I thought, “In 2021, they said they needed to improve their digital app because it didn’t take payments. Then in 2024, they said they needed to improve their digital app so it did take payments, because it didn’t take payments.” On its own, I wouldn’t have noticed anything. Three years apart, that’s a screaming red flag.

The reason I ask is that you read 30 years’ worth of transcripts back-to-back. What did you learn that maybe you wouldn’t have picked up by reading these individually? What did the repetition build up for you?

There are a number of different things. One speaks to who they are generally. They have an amazing breadth of knowledge on a large number of topics that they understand at a very basic level, which tends to reveal itself in the very consistent commentary you were talking about—the underlying thought process of how they view things.

It's very well thought out, very rational, and very consistent. The part that's interesting to me to layer on top of that is where you see this a lot during especially the meetings in the late '90s, but also as they got older, too—in the way Charlie specifically would answer questions. He'd say, effectively, "This is the way that we approach things and do things, and it's not perfect. It's just the way that makes the most sense to us and that we're most comfortable with. If that's not the way you think about it, fine, but go figure out your own answer then."

I think the combination of those 2 things is where their wisdom really shines through. There are topics that come up over and over and over again at the meetings, like, how do you intelligently pay managers? When you go through the book and read their answers on it, there surely are numbers and deep thought in terms of how they answer the question. There's also a very basic thought process to it all, which is: Make sure the incentives align with what you actually want as the owner.

The combination of those 2 things is really where their genius shines through, but it's also the thing that gives the whole thing its aw-shucks nature, or makes people think it's a ruse. The simplicity of it all is very real; it's just combined with deep knowledge that, in some way, shows up as expertise or as things that are not totally clear to someone who doesn't have the subject-matter knowledge. I think you get that combination shining through over decades.

The other component of it all is that the nature of the questions certainly did change as you went from who they were and the audience that was there in 1994, and even the structure of the meeting evolved somewhat. What that looked like 25 or 30 years later was certainly a little bit different from what it was in the 1990s.

You mentioned incentives there. This is off the cuff, but let me ask: Do you think Berkshire in its present form is doing a good job of incentivizing managers?

I'll give you 2 anecdotes that I'm not deeply researched on, so I'm very willing to be told I'm wrong. Number 1, Ted and Todd are both in there managing investments, right? My understanding is that their investments have not done that well and have almost certainly dramatically outperformed the S&P 500. I would give you that as number 1.

Number 2, I would point to GEICO, which I think has been losing a lot of share to Progressive, and which I think a lot of people think is poorly managed currently. I will certainly caveat that GEICO's a big business, and Ted and Todd are investment managers. Berkshire is a lot more than those 2 things. Anybody can find 1 bad investment out of 100, but those are 2 pretty high-profile examples that jumped right out at me.

My question to you would be: Do you think Berkshire in its current form is doing a good job with incentives, or do you think there might be—maybe it's because they're older, maybe it's a lot of other reasons—but maybe they're not quite eating their own cooking on that anymore?

I'll take a roundabout way of answering this. I think this is my favorite part of the book overall, but in the GEICO chapter in particular. This is one of the topics where telematics and competing with Progressive—just reading any year offhand, without knowledge of what was said previously or what would be said later—would still be insightful.

But when you sit down and look at what they've said over a period of years—I believe it was first talked about in 2012 or 2013 at the meetings—you really see how it, in some way, snowballed and how they were effectively wrong. I think that gets to one of the, for lack of a better term, problems that they may or may not deal with: If Warren goes out and talks about something publicly in a certain way, I'm not sure how much it ties the hands of the managers running a given business when that happens.

You would think it's probably more a reflection of the conversations that he's had that are generally agreed upon, but maybe that's not the case. Maybe it's more his opinion that he's sharing publicly, and who knows how much that ties their hands if that happens? If that has happened in the case of telematics, especially given some of the things that Ajit has said in more recent years, it's created a sustained and really significant problem that they obviously are still working to try to address today. In that case, it certainly hasn't worked well.

In terms of some of the other businesses, we obviously don't have a ton of insight into how the managers are compensated outside of what they lay out very clearly in terms of the general structure of the compensation systems. I would think those are pretty reasonably structured, but who knows? Those things probably do need to be rethought in a certain way, in terms of how they used to apply cost-of-capital hits to reinvestment in those businesses or for inorganic investments. Maybe that should be rethought relative to the opportunity set that headquarters had 25 years ago versus the opportunities that headquarters has today, which I would think they have done to some extent.

Let me give you one that's a complete rounding error to the business, but one that comes to mind when you say Dairy Queen. I've spent a lot of time on QSRs recently, and I hope to have more to say on all pieces of Yet Another Value's blog on QSRs—the premium, public, and podcast side—in the near future.

They have owned Dairy Queen for a long time. I think they bought it in the '90s; I can't remember when. Dairy Queen has done well for them, right? It's franchised, and it's spewed up a ton of cash. I would bet that system has done great for them.

But I would also say that when I think about Dairy Queen—it is one of the things I point out about QSRs—I can't find an example of a nationally scaled QSR, whether a burger, chicken, or pizza shop, that has failed since the '70s. One of the few counterexamples is where we're like, "Hey, Dairy Queen might not have failed, but it's on the verge."

I wonder if Berkshire's incentive, which really encouraged all cash flow to come back and, I think, encouraged not a lot of growth investments or experimentation—a lot sleepier—really failed Dairy Queen. I think that's a brand, with ice cream and burgers, that could have been a little bigger. I haven't seen the financials on Dairy Queen, but that's just one where my gut is telling me the incentive system might have gotten a little misaligned over the longer term. It might have encouraged short-term cash flow.

No, I think that's a very fair point. The nature of how they've approached a lot of these investments—and, again, the things that they break down, like the compensation agreements—is relevant here. Obviously, with the wholly owned businesses, I think the default is to structure things in a way that, if a manager does not have a very high degree of confidence that something is going to generate at least a reasonable incremental return on capital, the default should be to return it to headquarters.

I think they structured compensation systems in that way. I certainly think that can show up, especially over a period of years or decades, as underinvestment in something that needs to be tweaked in a certain way. The pushback might also be that Dairy Queen has a menu or collection of products that positions it somewhat poorly. I guess they could have tried to reposition it; they have to some extent, right?

At least in the marketing I've seen, they've shied away a little bit more from the Blizzard-first approach to marketing to more of a whole-meal type of menu. But it certainly doesn't seem to fit with where a lot of the growth has been in QSRs or fast casuals over the past decade or so. Maybe there's just an inherent problem there as well. But could they have invested in and found a way out of that? I certainly think the risk in the Berkshire approach is to underinvest as opposed to overinvest, especially in situations that have iffy futures. Dairy Queen's one.

Let me give you one more that kind of jumps out. I've spent a lot of time on QSRs recently, and when we talk about underinvestment, one thing I think about is Lotus Casinos. A casino is a license to print money, and I think a lot of casino owners have traditionally underinvested in capital expenditures because they can make a lot of money. If they spent a little bit more on growth capital expenditures, I think the returns would have been better, but they were so risk-averse and so focused on collecting money.

I would also throw in See's Candy. See's Candy has done fantastic. It's obviously the one they quote all the time in talking about their shift to better investing. But I would also say, "Hey, See's is a great brand. It's an airport." I do wonder if they had been a little bit more aggressive in opening shops and stuff, you could be talking about that.

Again, these aren't Facebook or Google or Meta, but if the business were 2× as big, it's just one thing that jumps out to me.

When you read the thing, obviously I think Charlie had a little bit of distaste on an ethical level for gambling. But when you think about casinos—borderline licenses to print money, protected monopolies, and now a lot of politics, where you're really worried about the town over getting a casino license—I don't think Charlie and Warren ever made an investment in a casino. Does that surprise you, given the high returns on capital, the protected nature, and probably less cyclicality? Or do you think putting up an ethical guardrail there makes sense?

I think it goes back to what I said before. I think they have a certain way of thinking about it, and they talked about this most notably with tobacco businesses, where they have a certain line. Right, when I said casinos, I almost said tobacco as well.

The example of the private company where they could have done a deal that they basically thought was a cinch—they walked out of the meeting together and, as the story goes, decided not to do it. But as Warren has explained in other meetings, they also own the plane which is a distributor to C stores, or they own retailers that sell cigarettes. You can discuss the distinction between those 2 activities at the end of the day, and I think Warren's answer has been, "I'm not totally sure, but I do see a distinction between the 2." They decided to draw a line for themselves for what they were comfortable investing in.

Does that surprise you? Especially Warren is a capitalist. I've heard people who I'm sure you might partly agree with—and you can disagree; tell me if I'm wrong—say that Warren comes across all "aw, shucks," and I think he is ethical. But I've also heard people say, "Dude, that man, especially in his younger days, would have shanked his mom for a nickel, you know?" Does it surprise you that he put up those ethical guardrails when he seems like such an economically rational actor? Or do you think there is a degree of, "He's underwriting, hey, there's an ethical, terminal-zero downside risk that I can't underwrite," and that's why he's avoiding it? So I guess I'm asking: are you surprised, and do you think his rejection is about ethics, or is there actually some deep tail risk that he's implicitly rejecting?

Maybe I'm a little more in the—maybe people would say I've been a little more believing of the "aw, shucks" nature of it all. Again, timing would be very relevant here, right? You're talking about things that he may or may not have been willing to do in the mid-'50s versus things he may or may not have been willing to do in the mid-'90s or in the mid-2010s.

I would not be surprised if there has been some change in that regard, depending on how attractive an investment opportunity is or how large it was. But I do think there's reason to believe that they've had a certain way of thinking about the ethics of these kinds of questions, and there are lines that they were not comfortable crossing. I would say that's probably closer to the truth than something else.

Have they invested in an alcohol company?

I can't remember. They owned Guinness at one point, and Diageo, if they were not the same company. They certainly owned Guinness at one point.

Okay. So they—I mean, alcohol's more socially acceptable, especially in the '90s, but I was just trying to think of other sin industries that they may have invested in. Obviously, I don't think they've done anything in guns. Maybe they did some stuff in defense. But, yeah, okay.

Yeah.

All right, to get back on track, we talked about how you read all 30 meetings in a row, and we talked about what you picked up when you did. What do you find are the biggest changes from Buffett in the '90s? Remember, he's talking to a room of 500 people in the '90s, versus in 2015, he's talking to a 30,000- or 50,000-person stadium. What do you find are the biggest differences that change over those 20 or 30 years?

It's not as prominent in the book because I purposely wrote this as a business and investing book. I mean, it's already, as you said, close to 500 pages as it is, but I left out everything that was life advice. There's a little bit of political stuff that comes in on the utilities and where that directly plays a role in terms of wind energy and things like that, but it's really focused on the business side of it all.

That is certainly one of the bigger things that happened at the meeting over time: the topics shifted more toward life advice. Things about taxes, politics, and macro became more prominent. I think that's more questioner-driven, right?

It's 30,000 people. In the '90s, it would be you and me thinking, "This man is a god," and getting a chance to ask, "Hey, what are you buying right now?" Then, by the 2010s, he's Uncle Warren. I think that's more driven by the questioners than by him, but you can tell me if you disagree.

Oh, absolutely. Again, when you start having Andrew Ross Sorkin and Becky Quick up there asking questions, there's a certain thing that they think is interesting to the audience, obviously based on the emails they were receiving from people asking questions. That certainly skewed the conversation in a way that was just slightly different from what it would have been if it were you and me in the '90s going there and asking questions.

The other thing that Warren started to do, particularly in the last 5 years or so, is have these longer introductions where he set the tone of the meeting, or at least had a topic that he wanted to discuss. One of them, I think, ran for close to an hour. That certainly limited some of the questioning and the broader topics that could get discussed.

I think that's probably the most prominent way that it's changed. I also think they became more reticent to specifically talk about certain people or businesses—at least Warren did—because they recognized the breadth of the audience once it was online.

You know, I'm thinking about Charlie. We're talking on January 10, and over the past 2 months, there have been plenty of articles and things. It's been interesting to see a lot of businesses try to curry favor with the new administration. If Charlie were still alive, I think it would be really interesting to get his commentary on, like, "Hey, you and Berkshire, which has a lot of regulatory and political connections..." I wonder if Charlie would be able to filter himself, or if he would just be out there making a mess for Berkshire nonstop, because I'm kind of thinking it would be the latter. But, man, I miss Charlie.

Yeah, me too.

Okay, this is page 439. Can you remember it by heart?

Let me get my tax book out. No, I cannot remember it by heart.

This was, I think, the most interesting quote to me when I was reading it. I thought, "Oh, incredibly insightful, and I'm not sure if he was right or wrong." So let me pull it up, actually. It's page 439, and it's Buffett talking about the internet. He says, "The internet is more likely to reduce the profitability of American business than improve it."

He talks about how the internet will likely improve productivity, but he thinks it will reduce profitability. In the long run, he thinks it is likely to make American businesses worth less. I'm talking from 2025, 25 years later. A lot has happened, but I thought that insight was particularly interesting.

Obviously, when you see that, you can see he sees what's coming for newsprint, probably retail. I mean, 2 years later, I think he buys the Amazon high-yield bond. So he probably sees it's not going to be great for retail, probably media. It's not lost on me that he's got a deep history with Capital Cities and everything, and I don't think he ever buys into a media company again. Well, actually, Paramount was a couple of years ago, but you can see he sees what's coming.

That's interesting. But, on the other hand, I think he sees it from an old-economy perspective. As you and I are talking here—and I love it when people quote "the Buffett indicator"—it's like, okay, yeah, stocks trade for a lot more than GDP. We're sitting here, and I'd say American businesses are worth way more than they have ever been. We've got the best series of companies ever. So he's been wrong on that aspect, I think.

But that quote was so insightful and maybe so wrong. People can go read it—page 439, as I mentioned—but I just love your thoughts on everything I laid out there.

Yeah, I think I tweeted that one a couple of months ago, and the reaction to it was vigorous. I have mixed feelings on the answer. I think the last part you just said would obviously call into question some of the conclusions.

I also look at a business like Nike and think about their distribution today versus what their distribution was like in a pre-internet era, and there are obviously certain benefits associated with that. There are also very significant changes in terms of how their brand is perceived and their ability to basically segment the market—where people see it and how often they see it. I think some of those things are very real, and obviously, from a competitive perspective, the ability of a brand like On to basically come out of nowhere, have a very significant presence, and sell largely D2C—it’s a different world in that regard.

At the micro level—and you named a few of the very prominent ones—there’s certainly no question in my mind that it has become a lot more competitive. The size of the opportunity has also changed in the process, so that’s a very relevant consideration. But I think the answer is a bit of a mixed bag.

There are obviously a handful of very, very large companies that have turned the internet—or the term used broadly—into a very, very attractive business for them. That select group has driven the market quite a ways in the last decade-plus.

The other thing I’d say about it, though, is—and again, this is the part of the book that I love the most, right? Because it’s never a gotcha-type of thing. It’s thinking about how 2 people who are significantly more intelligent than I am or will ever be think about issues over time and how their thoughts evolve. A very prominent example is around the time that they owned IBM. Warren, I think, explicitly mentioned IBM and Apple as well and basically said, “We understand that business, and we have a better track on where it’s going to be over time than we ever would for Apple.” Charlie also said, “We would never have the confidence about where Apple’s going to be in 10 or 15 years that’s comparable to the confidence we have in BNSF.”

I think that was in 2012 or 2013, and fast-forward not too many years later, and it was at one point a $175 billion position or something like that. I’m not sure what the actual peak was, but it was a very significant position for Berkshire. I think they are willing to change their minds, but also in the context of trying to play the game that they want to play. They’re okay with other people getting rich around them doing things that they don’t necessarily understand. Like most things in life, it’s not totally black or white, but I think you can see their approach if you’re willing not to be too demanding.

That was a great answer, and I really like how you brought up the IBM and Apple example. People love to mock him—I don’t think they would do that anymore—but he was wrong. He sold, he learned, and he bought Apple. I think it’s incredible.

Let me sidetrack for a second. You mentioned Nike, and I really liked your answer. Do you think Nike is a better business today than it was 10 years ago and 20 years ago? I think it’s a very hard question to answer. Correct me if I’m wrong, but I don’t believe you have a position in Nike, although you’ve written it up multiple times on The Science of Hitting. I’m not asking someone who has done no work on it here.

The short summary of what I’ve written up to this point, and particularly preceding the CEO change, was that my sense was the company had consistently been caught offsides on the financial guidance it had given, both revenues and margins. The margins were even crazier. At one point, they were saying they’d basically get to high-teens EBIT margins, and they’d never been anywhere close to that outside of a blip during COVID, which basically wasn’t a real number for all intents and purposes.

I think what became clear to me over time was that not only was the company getting caught offsides on this financial guidance that it had consistently given over a period of years, but the strategy was also changing to some extent, probably because they were trying their best to keep up with that financial guidance. In hindsight, I think it’s become a bit clearer that they were leaning on D2C, or what they call Nike Direct, particularly the e-commerce portion of that business, in a way that became a promotions-driven way to get the flywheel to spin. To be fair, they’ve also said the same thing in terms of a push-versus-pull kind of model.

It’s got them in a place now where the new CEO has come in, and I generally agree with what he has said so far. But returning these premium destinations, as he calls them, to something closer to a full-price platform that’s not 50/50 between promotion and list price is going to be quite a challenge, given what they’ve done for a period of time now.

I still think it’s an incredibly strong brand. When they have the distinction between their base product and their premium product, I think they still compete incredibly well, and their standing in that business is very strong. But they’ve also become a very, very large business by playing to both ends of that market. Again, it gets back to this idea that your ability to segment the messaging, the product, and the perception of the product was probably a bit easier 20 years ago. If you put a bunch of product in a certain type of store in the middle of the country, it would have been perceived very differently from whatever you were selling at a flagship in New York City.

I think that part of it has gotten messier. For Nike specifically, there’s been the brand-messaging and what-they-stand-for component of it all, which is a real thing and part of the world that we live in today. Then there’s the rise of some of these premium brands that have a clear understanding of what they’re going after, and I think they have guardrails around where they’ll play. That’s something that’s just harder for Nike to do, given the business that they’ve built, unless they’re willing to get smaller, which is always an option.

I think it’s a company that really does need someone at the top who has a very clear understanding of what the brand is and how to make it better over time. My early read would be that Elliott Hill is probably a very, very good person to be in that role. Without saying this too confidently, I would say he might be the anti-John Donahoe. It’s a very important step, in my opinion.

I don’t know enough to comment too intelligently. It just strikes me that 20 years ago, it would have been much, much harder to start a competing brand. I know Under Armour did, but as you mentioned, with On, there are plenty of brands. I think you’re seeing a lot of superstars go direct with their own brands now.

On the other hand, global superstar income continues to scale in the same way. UMG artists still sign with them even at that level. Nike is that on steroids, times 10. They’ve got LeBron; that’s a national scale. No one else can offer the kind of exposure that they can.

I look at the stock market and pull up the multiples as you’re talking. 20 years ago, Nike was a 15-times P/E business. Today, it’s a 25-times P/E business. There’s a lot of other stuff going on, but the stock market is saying it’s a better business, worth more today. I don’t know if that’s right or not.

It does seem to me that you and I, if we really got lucky, could start a billion-dollar brand. Lululemon and Alo are certainly competitors. There are tons of shoe brands. I like the fit of the shoes—all the CrossFit shoes. It’s interesting.

It’s really relevant to that point. There’s this great interview with Elliott Hill that I’ve tweeted about; people can go find it. I can’t remember the name of the podcast at the moment, but one of the things he says in there that’s really stuck with me is that 20 years ago, the athletes—even the most well-known athletes in the world—needed Nike, to some extent, to be part of building their brand throughout their life cycle as an athlete. Obviously, that can extend beyond that if you’re Michael Jordan or someone of that caliber.

Today, they effectively don’t need Nike if, for whatever reason, they don’t want to work with Nike. There are reasons why Nike should still be better positioned than anybody else to win that relationship, to the extent that they value it highly. This has been one of my other knocks on the company, which I’ve been writing about for a couple of years: I think they started to skimp a little bit on what they call their demand-creation expense, which includes endorsements and other things.

I look at examples like Tiger Woods or Roger Federer and think that the idea that those relationships would go away is something that you really don’t want to happen. People can choose to leave, obviously, and Nike can’t control everything that happens. But if anybody is positioned to not let that happen, it’s Nike. To the extent that that expense line is going down by a couple hundred basis points over a period of years, I don’t think that’s a good thing.

That's not where you want margin expansion to come from. So it was one of a handful of red flags at the company that, for me, said change was needed. I don't totally have my finger on the pulse of why that is. I think I have a better sense now than I did at that time, but I'm personally really happy to see that, as of even 3 to 6 months ago, publicly—or at least reported publicly—Phil Knight was defending John Donahoe and saying he was the right person for the job, and now the reporting is pretty clear that he was responsible for the replacement. So I think it's a big step in the right direction, and I'll be curious to see how it goes from there.

These are big businesses, so it's tough to over-obsess over them, but it does strike me as, okay, I get Roger Federer. He's an all-time tennis great and still a big name, but 5 years removed from tennis, the sport is already moving on quickly. But I look at basketball—LeBron James, Kevin Durant, and a few of these guys—and they get lifetime shoe deals with Nike when they're big enough names, right?

And Tiger Woods—even though he will probably never win another golf tournament, and he might not play in many more golf tournaments—he is still by far the biggest name. You hear it all the time in golf: he's by far the biggest name. And guess what? He's going to be teeing off at the Masters for the next 30 years, right? Because they do that lifetime-exemption thing.

It seems crazy to me that they didn't lock that up. Again, a business is much, much beyond that, but it's just one interesting thing. It seems crazy from Mr. Knight's point of view, but it also speaks to the risk: Tiger Woods said, "Okay, cool." Nike probably offered him some dollar figure, and he was like, "People follow me. I can go launch my own brand."

Twenty years ago, he could not have launched his own brand, right? Despite being at the absolute peak of his powers—the Tiger Slam, the distribution, the marketing—he could not have taken all that himself. Today, his Instagram can do it.

Yeah, I think the one other thing—to say something positive about Nike—is something that I saw in this industry, especially as someone who owned Under Armour at one point. I can't remember exactly what period, but as I watched more closely, there is an inventory component to this industry that is certainly a risk for Nike as well. They're going through a portion of that right now.

But there's an inventory component to this industry and a cash-flow-cycle component to this industry that make it somewhat difficult for a brand to become very mainstream, at least in a relatively short period of time. You're running a very significant risk in doing so. Now, that said, maybe someone like On appreciates that and is willing to move a bit—or a lot—more slowly in terms of the growth trajectory they're going to have in the years ahead. But that is a very real component of this business that, in my mind, is one of the competitive advantages Nike has at its scale that it can continue to lean on.

Let's go back to Berkshire. Is there an industry—or let's say industry, because I don't want to say company—is there an industry that Berkshire hasn't really invested in that, after you read all these things, you're surprised they haven't made a move into?

Huh. Well, I have to think of what they haven't invested in. I think some of the ones—and you talked about it with Paramount—are certainly surprising in hindsight to me. Who knows what the investment thesis was, right? That's a surprising one to me in hindsight, after knowing their history with Capital Cities and some of the things they said around the time that they owned Disney and then sold it.

Some of the commentary they've had subsequently made it pretty clear that they probably wouldn't touch that or ever want to invest there. So the idea that they bought Paramount was perplexing to me and honestly still is. I don't have a sense of what that was.

Buffett always jokes that Berkshire paid that one dividend in the '60s, and he's like, "I must have done it when I wasn't there." I wonder if Paramount was one where Ted or Todd made the investment and Buffett wasn't there when it was made.

Yeah, no, that makes sense. I guess the 2 that came to mind are so small, but I always think about the joke: What does the oil man say to his kids on his deathbed? "Don't sell the oil rights." I think Buffett bought TPL in the '60s, really early. I'm a little surprised that they've never done anything in mineral rights, but they're so big—what are they going to do, buy Greenland? Buy all the mineral rights? That's one that jumped out to me. I'm just a little surprised they never got there, but it's so niche, and they've invested in so much, as you said.

The other one, real quick, that I was thinking of is retailers. They've owned a number of retailers, generally very small and niche ones. They owned Walmart at scale at one point in time. Obviously, Charlie had a lot of involvement via Costco.

That's a space where they obviously have a good understanding of the risks as well, because retail has gone through a lot of changes over the decades. But it's one that seemed to have been of interest to them, and I'm somewhat surprised that they didn't eventually land on one they wanted to stick with in a more long-term way than they have. Costco would be a very prominent example, but even Walmart, which they were buying and then sold again.

Walmart and Costco, right? It's off the cuff, but Costco probably trades, as you and I are talking, at 50 times earnings. Walmart is at 40 times earnings. Obviously, they would have bought it 10 years ago if they had known it.

I think one of the reasons they never bought Costco is the little ethical line. They were like, "Charlie's on the board, he's involved, we don't need to approach him." Obviously, they missed it, and they've spoken highly of it. But 10 years ago, when I think about Walmart, it's a 10-times-price-to-earnings business, and people worried that Amazon and retail—all this sort of stuff—were going to take over.

Today, it's a 40-times-price-to-earnings business, and Walmart and Amazon go head-to-head in a lot of aspects of retail. Do you think Warren and Charlie thought Walmart or Costco could or would be 50-times-earnings businesses? Do you think they realized the degree of the moat as we went into the internet age? Or do you think one of the reasons they didn't really lean into them in the aughts and the 2010s is because they did think they were secularly challenged and they were kind of wrong?

Their answers may be different. Correct me if I'm wrong, but I think there's one interview where Charlie says explicitly that he thinks Amazon has more to worry about from Costco than Costco has to worry about from Amazon—something along those lines. I think he thought very highly of Costco's position.

With the benefit of hindsight, the acquisition they did of Innovel and what they've done in big-ticket appliances, furniture, and things like that is a very intelligent application of e-commerce to Costco's business. Based on my understanding of the historic shareholder letters and things like that, I think they viewed the business a bit more broadly in the mid-2000s or late 2000s. Over time, I think they've honed in their strategy, at least for the stuff that they do—not the DoorDash-type delivery.

For the stuff that they do, they've really honed in on big-ticket appliances and things where their white-glove service can really be a value-add. So I think they've intelligently shifted that a little bit, and maybe Charlie saw that to some extent: the core of their moat is going to be sustainable even as Amazon gets—and surely will continue to get—even better at the delivery component of its business and the grocery component of its business.

Obviously, Charlie has said these types of things. He's perfectly fine holding Costco at basically whatever price it trades at. I guess we'd have to see how extreme that went before he'd change that conclusion, if at all. But my sense has been that maybe Warren hasn't been as much in line with that view.

That's one of the funnier things from the meetings. Charlie talks about Costco, and Warren just sits back. At one of them, he says, "Now, Charlie will do his 5-minute talk about Costco for all of you, as he's done 10 times before."

But in his defense, for people who shop there and see how busy it is all the time or look at the financial results, it's a company that has—Sean from Ensemble Capital said something along the lines of—Costco basically allows well-off people who are frugal to spend money without worrying about it. That's effectively what they sell, and they're very, very good at it.

Let me switch tracks completely. One thing that really interests me—this is at the start of the book, but maybe this is because I’ve been looking at a lot of cyclical businesses—is that I feel a lot of cyclical businesses right now are priced like we’re going into a depression, whereas a lot of other pieces of the market are priced like everything’s going to be really good. One thing that really jumped out at me is the famous quote: “We’d rather have a lumpy 15% return than a straight 10% return,” right? And they talk about that a lot.

They say, “Hey, I’m looking at one.” This is from page 36: “We hate making investments where you can’t make predictions on key variables,” right? But then they talk about the lumpy business, and just a few pages after that there’s the story of, “Hey, we went and bought the—I think it’s the Alabama brick company—and nobody else would buy it. Nobody else would buy it because it’s cyclical and you can’t predict. But we just looked and said, ‘Bricks are going to be here forever,’ and there’s a lot of asset value there.”

Intellectually, I can bridge the 2, but I just think it’s really interesting when they talk about predictability and no cyclicality. Then they talk about buying these cyclical businesses, and you look at Buffett recently: in 2007, he gets burned on ConocoPhillips, and now he’s buying Occidental. Yes, you can bridge it. I’m not going to accuse them of being big hypocrites, but it is interesting to look at the 2, and I just wanted to raise it to you and get your views on it.

No, I think this is very closely related to what we were saying before in terms of the wholly owned businesses, particularly, and their ability to control—if not directly, then through incentives—how capital is invested or pulled back on throughout the course of a cycle. I think you see this in industries like manufactured housing, where it’s something that they invested in in a very significant way at a time when things were very, very ugly. I think they’re very comfortable doing that, but I also think that they are concerned. Maybe some of their experiences in publicly traded oil companies speak to this.

I think they’re also very concerned about the aggressiveness, or lack thereof, of capital allocation at different points throughout the cycle. When it’s in their own hands and they have the ability to directly influence how those decisions are made, they might be a bit more comfortable than when they are relying on others to make those decisions. That would be my sense.

Again, I think it is structured in a way that the default is basically that the capital comes back out, as opposed to being reinvested for growth or whatever else, unless there’s a very strong reason for doing so. That gives Warren tons of flexibility to do what he thinks is best, and I think that’s just the way he probably likes it. But there are probably some downsides to that—or certainly some downsides to that—in terms of Berkshire’s evolution over decades.

It’s a great point. The other thing is that this comes back to one of the first questions I asked you, talking about underinvestment in the businesses. One thing that really jumped out to me is the old Charlie quote where he says, “We hate businesses where every year they tell you there’s a profit and there’s no cash flow.”

It’s just interesting to think of that, and how every business seems like it’s trying to get all of the cash flow up. I wonder how much they’re worried about adjusted EBITDA and profitability with no cash behind it, and whether that led them to suck everything up. They probably did invest it better than many of these businesses, but it comes back to the underinvestment.

It is tough: the adjusted EBITDA quote, and then they’re going and buying a brick maker and buying railroads. There is some cash left over, but those guys make a lot of use of adjusted EBITDA, too.

Let’s end quickly with 2 things. Let’s fast-forward to the present day. I think a lot has been made of Buffett’s view on the market currently. Buffett hasn’t really made big new investments recently. He’s been buying Oxy up and down, but last year he started selling his Apple position. I think he’s been a net seller of stocks for 3 or 4 years in a row.

I hear lots of debate. Some people will say Buffett is the best market timer of all time. Maybe he doesn’t call it exactly that, but if you look at his big market calls, he’s always raising cash before something hits the fan, and he’s always deploying cash when things are scary. This time, with COVID, he doesn’t really deploy much during COVID. I think there are a lot of reasons, and we can discuss them if you want, but he doesn’t deploy much during COVID. Right after COVID, he basically starts taking the cash out.

I’ve heard people say he’s bearish. I’ve heard people say, “Look, man, he’s 93 or something. He’s trying to create a blank slate for his predecessor,” which goes against the idea that he’s buying BNSF and all these regulated industries to tie his predecessor’s hands up, which is kind of funny. You’ve read all these annual meetings; you’re up to them, I’m sure. What do you think Buffett’s view on the market these days is?

My sense would be that it’s not particularly great. I don’t know if I would say that it’s directly driving the actions—or at least the scale of the actions—across the board. With something like Apple, I haven’t looked too closely at the valuation when he started trimming or selling fairly aggressively, but it was a very large position that he may have looked at relative to something like long bonds or intermediate-term bonds and thought, “I’m more comfortable taking the tax hit.”

I believe he explicitly touched on taxes at the meeting when he was asked about Apple, right? I think that may have been a component in terms of changes to the current tax structure. I think that may have been a component as well.

I think the other thing he’d say is that we still own these businesses. If you’re measuring how much is invested, it’s still a very significant percentage of the overall asset base of Berkshire Hathaway. Is part of it him cleaning up to make it a blank slate for the next guys? Maybe that’s true, particularly on Apple.

My perception would be that some of the other things, like Coca-Cola or AXP, just stay there in perpetuity. But I could be wrong on that.

Last question I’m going to ask you. Obviously, I read The Essays of Warren Buffett. You have one other insurer in your portfolio at this point, so you’ve got Berkshire and Markel there—I hope I’m not breaking news. Markel is a company I’ve followed off and on.

Markel themselves think of themselves as a mini-Berkshire, right? Part of the reason they rose to prominence is that they hosted the breakfast on the day after Berkshire. I know for a fact they want to turn their annual meeting into a Berkshire-type thing.

You guys—I just want to ask about Markel, admitting I might be asking a biased witness. What are the parallels you see to Berkshire? The critics say, “These guys have been claiming it for 20 years, but look at the returns. It’s not exactly Berkshire’s.” What are the non-Berkshire pieces you see to it?

I think you could start with the insurance business. I think there are portions of the insurance business—at least based on my assessment of what they look like—that look like very high-quality insurance operations. There are other components of the insurance business, particularly on the reinsurance side, and then the messiness around ILS. I think the track record in the reinsurance book has been less good, for sure.

There’s also this messiness around the ILS stuff and understanding what role they’re going to play there long-term, and whether or not they deserve to win in that portion of the business. So, I guess that’s a little bit of both there.

Obviously, Berkshire has had pieces of the insurance business over time that were quite difficult, most notably Gen Re. For, I believe, a decade or so after that deal was completed, they had problems getting that in place and turned around.

On the wholly owned businesses, I think I wrote this at one time in one of my Markel articles. It’s just funny to look back and think: if you looked at Berkshire when they were, call it, 2 decades into the wholly owned businesses game, which is basically where Markel is now, they started in 2005, I believe, with AMF Bakery Systems. That would put you in the mid-90s or so for Berkshire.

I’d ask anybody listening to this to pull up a Berkshire Hathaway annual report for 1995 and see what the collection of businesses that they owned inside the wholly owned businesses looked like. Point being, I think Markel is still early on this journey. I think the track record so far at Markel Ventures has been decent, from my perception at least, and I think they’ve probably learned a lot along the way.

That probably speaks to the component of it that’s closest to Berkshire and that I’m most optimistic about over time, which is having somebody in charge who I think is trustworthy.

I think he’s able. I think the team around him is able. And I think they have capital allocation options at their disposal that allow them to hopefully make intelligent decisions in a way that your average management team is more hamstrung by, in terms of hosting investor days and saying, “We’re going to generate X billion dollars of free cash flow over the next 5 years. We’re going to give 80% of it back to you through repurchases,” just blanket statements about how they’re going to allocate capital.

There’s a certain rationale for why companies do these things, but I think a company like Markel, to the extent that they play their hand well, has meaningful advantages in terms of capital allocation that can add up in a very significant way. And if you layer that on top of a well-running, growing insurance business, then I think that’ll work out pretty well over time. But we’ll see.

Last question. I think it scales not as well as Berkshire. Not as well as Berkshire, probably, to be clear. Actually, last question. I just think—and I think this was actually before the annual meetings—but Buffett and Berkshire have made a lot of money in banks over the years, and they haven’t really gone into banks recently.

I think they famously sold most of their banks. Wells Fargo probably should have been sold in 2007, but they ended up selling it in the late teens or early 2020s. Previously, especially when they were smaller, banks were among their bread and butter. I think there’s the famous story from Gabelli, I want to say, where, when Wells Fargo was distressed in the ’90s, they were getting ready to assign an analyst to it. Then they saw it was in Buffett’s portfolio, and they said, “You go do something else, analyst. Wells Fargo’s clean. This is a buy.”

I think his track record in banks is unbelievable, actually. In the GFC, in the financial crisis, what were his big investments? Banks, Bank of America, and Goldman Sachs, as well as the savings-and-loan banks. I understand we’re not in a savings-and-loan crisis, but he’s bought and held them for years, and most investors I talk to today don’t look at banks or consider banks—perhaps rightly.

I just wonder: You’re probably underexposed to banks if you’ve only got Ally. Do you think investors are cutting this area off at the market rightly because of all the changes that have happened, or do you think that if you study Buffett, maybe banks should be more up your alley?

Yeah, I think my answer speaks to having owned Wells Fargo at a point in time and owned Bank of America at a point in time. Unlike most of my other bank investments, Bank of America actually worked out reasonably well, but that was reflective mostly of really fortuitous timing. I bought in March or April 2020, so there were plenty of other things I could have bought that would have worked out well, too.

Ally has been more troubling up to this point in the investment, and I think owning it and watching it closely as a result has really taught me a lot. Obviously, it’s a bit of a smaller bank, and they’re less diversified than some of the larger banks are by a wide margin. It’s really taught me about the challenges that banks navigate throughout the course of the cycle and how their decision-making doesn’t need to be good 90% of the time. It needs to be good 100% of the time, or they’re potentially putting the business at risk.

That’s been really apparent as they’ve gone through a management change and now tweaked the strategy in terms of where they want to play on the credit side. I think there’s probably a lot of logic to support that decision, but it speaks to how difficult it is to switch what they were into something that could be broader and more diversified and potentially serve customers in other ways in-house.

The point being is that I think it’s a fairly difficult business. To the extent that you’re going to own a bank, you need to be in a business with someone that you really, really trust. It’s a hard business for that because it’s very difficult to get your arms around what the actual exposures are at different points in time.

It’s very different from owning Nike or owning some retailer, where you can always look at the balance sheet and have some sense for what the inventory risk or whatever it may be is. That’s much, much harder to do with a bank. I remember going back at one point in time and reading Countrywide’s annual report from whatever the last year would have been. With the benefit of hindsight, I thought, “I really don’t think I can even identify now what here would have foretold the problems that were coming.”

Maybe that’s just a lack of knowledge on my part—or it certainly is a lack of knowledge on my end—but there just weren’t indications there that someone could even see it then. Maybe it’s just more difficult, which might suggest that the prices are lower. For the ones that work out, you’re going to get a bit of that reflexivity on the capital returns, and they’ll work wonderfully.

That’s kind of the two sides of the coin that you get on something like this. I’m hoping Ally is going to be like that, and I think they have certain things, particularly on the deposit side, that make them potentially well-positioned to go down that path. But we’ll see. It’s certainly not the easiest thing for me to own, which is reflected in the position sizing versus some of the other holdings.

No, it’s like your Countrywide example. I instantly pulled up their 10-K, and I want to do this. I want to do exactly what you did. I might even steal it for a blog post. It reminds me of NYCB—not First Republic, because with First Republic, it was very clear. You could read their financial statements and see that, if you marked their book to market, they were way negative.

But it reminds me of NYCB, which famously had issues recently. They were making New York-regulated, rent-regulated loans, and they had never had a loss in 30 years. The bank basically blew up on them. I still don’t believe they really had a loss, but it became increasingly clear that, because of some, in my opinion, very poor regulations and all this other stuff, the loans were going to be way underwater when they came due.

I wrote about it and bought a little bit. Then I had a bunch of bank experts say, “Dude, you’ve got to look at where this is going.” But if you looked at their 30-year history, you would have been like, “Wait, you’re talking about them blowing up on loans that are well covered right now and that they’ve literally never experienced a loss on?”

You kind of did the math. Basically, what they were having was 10% expense growth with no revenue growth. You do that math for 2 more years and think, “Oh, yeah, these loans aren’t completely underwater.” But it shows how hard banking is.

At the same time, I think what Buffett saw—and maybe this is something we can incorporate—is that he buys during the savings-and-loan crisis, and he buys Bank of America and Goldman Sachs during the global financial crisis. If you can buy a good bank below tangible book value during a crisis, it’s probably worth more than tangible book value. Then you can just let that compound for a very, very long time because they earn the book value, and either they reinvest it at hopefully decent rates or they pay it out.

Maybe that’s kind of the thesis. Anyway, Alex, go ahead.

No, the other thing I was thinking—the other example that comes to mind from that period, similar to Countrywide, is that I remember looking at Moody’s at one point in time. In that case, you could look at their ratings business and track the mix of business moving more and more to structured products over time. So in that case, you would have had some indication.

Of course, then you needed to understand what structured products were and why that may or may not have been relevant to any other broader view about those businesses. I just think it’s very challenging in terms of being a generalist.

Being a generalist is something that you can do in a lot of places. If we’re talking about owning something over a long period of time, you can probably get away with not having a ton of deep industry knowledge. You can piece it together as you go.

Banking is one where, particularly if you’re someone who’s susceptible to getting shaken out when things go down a lot or things start getting scary, that’s going to be a very difficult game to play, as you and I both know from watching how things have worked out even over a period of 5 years, let alone 25 years.

No, you say if you’re going to get shaken out, but then the counter is that, in banking, it’s the one industry where a panic can actually destroy you. As you saw with a lot of these guys, your deposits are fleeing, right?

Whereas in any other industry, if you’ve underwritten well, you probably can’t destroy it with a panic, right? You and I could create a panic in Nike stock, but it’s not like customers would stop buying Nikes because the Nike warranty isn’t there or something.

So banking is one of the very few industries where a true panic can be that self-fulfilling cycle, where you start a panic and that actually does cause the run—a run on a bank.

Any thoughts you want to have? We've been over an hour; this has been great. Any thoughts you want to wrap this up with, or anything? Can I ask you one question before we go?

Yeah.

Yeah, yeah. I should say this. I wrote up Academy Sports and Outdoors recently. As of last week, I wrote up Dick's Sporting Goods as well, which I think ties into this whole Nike and On business evolution.

Honestly, it hits a lot closer to home having now looked at these businesses. I know you've looked at Academy as well. I'd be curious how you're thinking about either Academy specifically or how that space is evolving. Nike is evolving its strategy a little bit to move back toward some of these wholesale partners. How do you think about that space, and is it increasingly interesting to you or less so?

No, to be honest, it's less so. Academy's old CEO was really good. I don't follow it as closely as I used to, but they were dramatically missing same-store sales. As I'm sure you know—and Dick's too, to a lesser extent—there's a lot of stuff where you and I know our sizes and can just order it, but there's a lot of stuff where you want to go feel it.

Especially at Academy, I love that if you've got a kid, you want to have them try it. It's where you go and they try 15 different baseball shoes and everything. I thought there was a real reason for it. A lot of the stuff they sell is much harder to transport, so there's a real reason for buying online and picking up in store.

But then, over time, I thought, "Look, I started buying it because I thought there was some white space for boxes, and I thought the returns on boxes initially were good." Then, once they started reporting more and the COVID boom really came out, I was like, "Aren't these going to be good returns on boxes?"

Retail is a tricky game, man. I came to see a lot of retailers—it's just a very tricky game. They go bankrupt fast. I just thought my edge and the returns were better elsewhere. That's kind of where I landed, but I'd be happy to be wrong.

I love the Academy guys and want them to do great, but they lost a legendary CEO. I came to view it as low-moat-y, but not no-moat-y. I started thinking, maybe this is really low-moat-y. You know, it's one of those businesses: Academy sails along for 10 years, and then they get a legendary CEO and a COVID boom, and they grow great.

Then the legendary CEO goes, and the COVID boom goes, and the returns just started trending toward meh again. I was like, "That story—I've seen that a few times. That story seems tough." Do you disagree? I don't believe you have a position, because I remember reading your write-up. I think you were like, "Look, this is interesting, but I need a lot of questions answered," if I remember correctly.

Yeah, no, I generally agree with that. There are a couple of things that come to mind. First, there are very few instances where you're going to find a company that goes public late in the year at a $1.1 billion valuation and then, the next year, has net income north of $700 million. You don't see that every day, which speaks to the COVID boom.

There were some shitty companies that went public right around COVID, and then the next year they were earning their whole market cap. Yeah, it's nice when that happens. But to your point—and I see this in terms of Dollar General and Dollar Tree—when you own a retailer and comps are underperforming peers or the market, or whatever it may be, you need to have a good reason for why that's happening, right? Especially if it continues for a sustained amount of time. Those can be very tough.

As I'm now finishing up work on Dick's, it's interesting to think about. Their strategy strikes me as a little bit more like Home Depot's post-financial-crisis strategy. Unit growth has completely stopped, and they've now started to think more about what they call House of Sport.

There's a great quote from Ed Stack, who's the founder's son. He says, basically, "Go and create the store that, if they put it next to a Dick's Sporting Goods, would kill the Dick's Sporting Goods. Go make that store."

I think it costs a lot of money to build these, for sure, and it'll take a long time to transition even a significant percentage of the base to that model. But I think they've done things in the current stores as well to build upon exactly what you were saying.

There is a component of this business that is touch, feel, try—golf clubs, a new baseball bat, a new glove. There's a component of that in this business that's not as susceptible to e-commerce risk as some other businesses. Academy would say, for example, that it's hard to buy a canoe on Amazon, or maybe a kayak. Some of those things are a bit different.

There is also a certain component of the timeliness of a purchase. There may be times you need shin guards for your kid to go play soccer, and the game's at 11 and it's 8:00 a.m. You can't wait for it. I can't tell you how often that specific anecdote has come up.

Just on Dick's, I love that they're leaning into that experiential, touch-it piece. It reminds me of Bass Pro Shops, right? I'm going to Memphis in a few weeks, and people are like, "We should go stay at the Bass Pro Shops pyramid," which is very unique. People go—it's a full day when you go to a Bass Pro Shops.

Maybe it's not a full day when you go to Dick's, but to the extent you can get people in there really wanting to experience it and spend extra time, that is your moat against e-commerce. Honestly, I'd probably prefer Dick's over Academy, but there's no gun to my head. I don't have to have either.

Yeah, well, the EPS chart for Dick's, just like Academy's, saw a massive tailwind coming out of the pandemic. I think it was, call it, a 5-year period of right around $3 a share of earnings, and then it shot up to today at, call it, $13 or something. So it's been quite a change.

I haven't looked at Dick's share price in a while, though. It has done really well in what I think was a brutal environment for retailers last year. Just like Academy, they had that stretch in the mid-2010s where things were going sideways at best and they were trying to find their path forward. It seems they've got that a little bit more now, with the pandemic tailwind also certainly helping.

Well, we're way over now at this point. Alex, we're going to have to have you back on at some point because I know you mentioned Dollar Tree there. I know we got a lot of questions on Dollar Tree. I know that's your second- or first-biggest position, depending on the day, these days. So we'll have to talk Dollar Tree at some point in the future.

Alex, thanks for coming on. Looking forward to our Dollar Tree follow-up at some point.

Thanks for having me, as always.