John Huber – Business Analyst, Concentrated High-Quality In A Modern Buffett PartnershipThe Acquirer's Multiple
As part of our ‘Best of 2020 Acquirers Podcast Series’, earlier this year Tobias had a great interview with John Huber, Managing Partner at Saber Capital Management, an investment fund modeled after the original Buffett partnerships. Saber’s strategy is to make very carefully selected investments in undervalued stocks of great businesses. During the interview John provided some great insights into:
Best Of 2020 – The Acquirers Podcast: John Huber – Business Analyst, Concentrated High-Quality In A Modern Buffett Partnership
- Invest In High Quality Businesses That Earn High Returns On Capital
- Take A Concentrated Approach And Let Your Winners Run
- Why Warren Buffett Is Being So Cautious Right Now
- Markel’s Secret Sauce
- Volatility Is Important To Generate Great Returns
- Ted Weschler Was A Great Investor Before He Joined Berkshire
- Coffee Can Investing
- Developing Your Investing Craft Is Equally As Important As Returns
- Investors Need To Be Forward Looking
- Writing A Blog Can Help You Become A Better Investor
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Tobias Carlisle: Hi, I’m Tobias Carlisle. This is The Acquirers Podcast. My special guest today is John Huber. He’s the managing partner of Saber Capital Management. I’ve followed John since he wrote the old blog, Base Hit Investing. It turns out that started in 2012, it feels like it was only yesterday. I’ll be talking to John right after this.
Speaker 2: Tobias Carlisle is the founder and principal of Acquirers Funds. For regulatory reasons, he will not discuss any of the Acquirers funds on this podcast. All opinions expressed by podcast participants are solely their own and do not reflect the opinions of Acquirers Funds or affiliates. For more information, visit acquirersfunds.com.
Tobias Carlisle: I remember when Base Hit Investing started. Isn’t that crazy? I looked it up just to see when that was, 2012.
John Huber: Yeah. Yeah, it really is interesting. It’s been, I guess, eight years now. So, yeah. And you were one of the originals. You were one of the original bloggers that I used to follow well before I got on my own path. But, yeah, it’s interesting how the blogs have… There are so many of them now, and I’ve kind of folded mine into the firm’s website. So I still publish and everything, but it’s under a different name but-
Tobias Carlisle: Under Saber.
John Huber: Yeah, under Saber now. But, yeah, it’s good times.
Tobias Carlisle: Did you set up Saber and the blog at the same time?
John Huber: I started writing in, I guess 2012. I set up Saber in 2013. So about a year later.
Tobias Carlisle: Okay.
John Huber: I began managing money in that vehicle basically the beginning of 2014. I managed separate accounts and I started a fund on 1-1-14. The fund is what I have transitioned to recently for a couple of reasons. One was tax reasons and one was just the logistical simplicity of managing a fund versus separate accounts. So about two or three years ago, I began to merge the separate accounts into the fund. But, yeah, I initially was just managing separate accounts. Had my own capital in the fund right alongside of the separate accounts and then rolled those two together in I think 2018.
John Huber: And so, yeah, I started writing about a year before that and really had no strategy for raising money or anything and-
Writing A Blog Can Help You Become A Better Investor
Tobias Carlisle: Does the blog help? Was the blog-
John Huber: The blog was a huge help. It really was sort of an unexpected benefit for me because, and you know this probably from writing publicly, but you tend to self-select. So if people are reading your stuff and they like what you have to say, they might follow it for a while and they might reach out after a little while. And so, I get calls all the time from people that say, “Oh, I’ve been reading your stuff for three years or five years or something.” And then they finally, for whatever reason, decide to reach out and they want to invest.
John Huber: And so, it’s a really unexpected benefit of writing. For me was just being able to attract a like-minded group of people to become investors in my fund. And so, yeah, it’s been a good thing. I didn’t have any expectations at the beginning though because I really had no idea what… I was pretty naive when I set it up. I had no idea how I was going to raise capital, I had no strategy. I had a very specific goal of wanting to set up a fund and wanting to try to pursue investing and try to produce good results and everything.
John Huber: But my philosophy was always very simple. If I do well, I’ll compound my own capital if nothing else. And then hopefully, I can find some investors to hop on the ride along the way. And so, that was sort of my approach.
Tobias Carlisle: Why did you start writing in the first place?
John Huber: Well, I started writing… So a couple of things. One is I’ve always written a lot, just like personal diary or whatever, business diary, investing journals, and so forth. So I’ve always found a big benefit in writing down your ideas because it forces you to crystallize that idea and it helps you recognize flaws in your thinking, helps you clarify thought, and so forth. So it’s been an exercise that’s been really helpful for me.
John Huber: And so, yeah, I’ve decided to just post, start writing publicly because I thought, number one, it’s what I’ve always done. Writing is a good exercise. But number two, maybe I can connect with other people. You know, it’s a… Oops, it’s a… investing is kind of a solo sport at times, so it’s nice to connect with other people and it’s nice to have met a lot of friends that way. And so, that was the other reason, just for social reasons really.
John Huber: And to also get feedback, right? So if you write something publicly about a certain idea, you might get some feedback. Somebody else might recognize a flaw in your thinking. So that’s been a big benefit as well.
Tobias Carlisle: I don’t always start the podcast like this, but I think we’ve got a pretty good flow. So I’ll just keep on going if it’s all right with you.
John Huber: Sure. Yeah. Yeah.
Tobias Carlisle: Yeah, I couldn’t agree more.
John Huber: Sorry about these AirPods. These AirPods are… Does it sound quality? Does it sound okay?
Tobias Carlisle: It sounds fine.
John Huber: Yeah. Yeah. Okay.
Tobias Carlisle: Yeah, I couldn’t agree more with the writing. I wrote because I think it’s a good exercise just to crystallize. You don’t really know what you think until you write it all down. Sometimes you get to the end and realize that that doesn’t make any sense. Just that one never sees the light of day. But then it’s good to be able to look back after a long period of time and see what you’re thinking and how that’s evolved.
Tobias Carlisle: There’s a small trap though when you’re writing publicly, in that you may feel this need to sort of maintain that consistency about an idea. You’ve written publicly about some of the positions that you have on your blog. So you’ve got Foot Locker, which seems to have been a pretty prescient… I think you wrote that about five years ago where you said… Is that right?
John Huber: Yeah. I think if you’re referring to-
Tobias Carlisle: It was an interview.
John Huber: It was an interview with-
Tobias Carlisle: Forbes.
John Huber: I think Forbes-
Tobias Carlisle: Yeah.
John Huber: And I mentioned Foot Locker as an example of a business that… Yeah, I think it was an interview. But, yeah, I think I know what you’re referring to, and it was just a business that I thought faced headwinds. So it-
Tobias Carlisle: You said it was cheap on the metrics, but you thought there were problems with the business. And so, you thought, well, it looked cheap at the time. The problem would be that it would continue to deteriorate and then I might have this, I think, waterfall or some big drop at some stage.
John Huber: Yeah.
Tobias Carlisle: Which has turned out to have been, it hasn’t gone anywhere over the entire period of time. It’s probably down.
John Huber: Yeah. Well, first off, sometimes you get it right and sometimes you get it wrong. And maybe that was a nice one to cherry-pick. So maybe that one is right. But, yeah, one thing about that concept in general is there’s been a lot of talk about value investing lately versus growth investing for example. And what’s interesting is one of the things I love about investing is there’s more than one way to skin the cat.
John Huber: I’ve read your books, Toby, and you’re a clear thinker. You have a quantitative approach, I think, and it’s a very value-centered approach. And there are a lot of guys, I have a lot of friends that run funds that are successful. And then at the other end of the spectrum, there’s this growth. People like to put style boxes around value investing and growth investing. To me, it’s the value of any asset is the future cashflow that you’re able to pull out of it. So that’s kind of how I think about value.
John Huber: But, yeah, it’s interesting. The last couple of days we’ve seen sort of a minor resurgence in value, so we’ll see if that begins to close this gap. But-
Tobias Carlisle: There’ve been lots of minor resurgences over the last decade. Needs to hold for more than a week or so.
Investors Need To Be Forward Looking
John Huber: Right, exactly. Yeah. But I think one of the problems, I brought it up to say Foot Locker kind of fits this bill, is the problem I see with, again, when I say value investor, I’m using the conventional definition of low price-to-earnings, low price-to-book, certain things like that. I think some of the metrics that you’ve espoused over the years, like enterprise value to protect earnings and so forth, there’re probably a better measure. But even those measures are of course proxies for what you think the business is going to earn in the future.
John Huber: So as a guidepost, you might look at those metrics as a proxy for what those companies are going to earn going forward. But what the company earned last year is irrelevant to its value. It’s all about what it’s going to earn this year, next year, year five, year 10. And so, if I buy a shopping center, I don’t care what it earned last year, I’m obviously going to look at the net operating income and use that as a proxy for what the revenue and the earnings and the cash flow might look like this year and next year. But what the last guy earned is irrelevant to me as a new buyer of that asset.
John Huber: So I think that’s where the issue is. It worked for so many years because those proxies, the earnings that they earned, that the companies earned last year, were good proxies for what the companies earned this year and next year and the year after. But I think as the economy has transitioned from a manufacturing economy to more of a services economy and then within the last 20 years to more of an information based economy, they call it the internet economy or whatever, which is sort of the subset of the services economy, we’ve had sort of a shift in, I think a shift in how, number one, like price-to-book ratio doesn’t make a lot of sense anymore because companies can now produce their earnings without a lot of tangible capital.
John Huber: And then price-to-earnings is much more useful I think, but, again, it’s a guidepost. Because things change. And so, I think you have to just be a forward looking investor. If you’re a qualitative type investor like I am, if you’re quantitative I think as a basket, value investing always makes sense. But if you’re a stock picker and you’re thinking about things qualitatively, I think you have to spend a lot more time analyzing what it’s going to look like going forward.
John Huber: So with Foot Locker, that’s an example of one that you could see problems developing with that business and [crosstalk 00:11:10]-
Tobias Carlisle: What did you identify at the time? Do you recall?
John Huber: Well, with Foot Locker, one issue it was just simply that mall traffic was declining. And so, there’s a trend in many businesses towards cutting out the middleman I think, and Foot Locker is a middleman. And so, they’re struggling for two reasons. One is, it’s a lot easier for a company like Nike to go direct to consumer or Under Armour or any other brand. If you have a brand, you can go directly to the consumer in a much easier way than you used to be able to. You used to be able to need these distribution outlets, stores, in other words, to sell your merchandise.
John Huber: And now, those are still important, I don’t think those are ever going to go away completely. But certainly, Nike… I mean, number one, Nike can set up its own stores, and a lot of the brands have been doing that. But also obviously the ecommerce and being able to sell your goods and your services online becomes a much more efficient way to transact directly with the consumer.
John Huber: And then as I mentioned, the mall traffic was just a headwind because a lot of this, in that particular case with Foot Locker, a lot of their traffic came from mall traffic. And mall traffic, unfortunately for mall tenants, is declining. So that was sort of a headwind that I thought was one of these secular headwinds that probably isn’t going to change anytime soon.
Developing Your Investing Craft Is Equally As Important As Returns
Tobias Carlisle: You’ve got an interesting background in the sense that you came from real estate development before you were an investor, a value investor. Does that help with that sort of assessment at all? What sort of property development were you doing before you were an investor?
John Huber: Yeah, so I didn’t really do development, but I did real estate investing. So I started… I have sort of an unconventional background. I got into this business in a roundabout way, but I’ve always loved investing. So I always wanted to get into, basically do what I’m doing now, running a partnership. [crosstalk 00:13:13]-
Tobias Carlisle: You get the Buffett style partnership 06, 25, right? We’ll come back to that. But I just want to let everybody know there’s no management fee. It’s just a carry over, a hurdle.
John Huber: Right. Yeah. No management fee. It’s a 25% carry over, a 6% compounding hurdle. So, yeah. I started Saber in 2013, and before that I spent about eight or nine years in real estate investing. And to back up a little bit further, I started, or I went to school for journalism, and so completely unrelated to business, obviously.
John Huber: Although it’s interesting as I look back, I didn’t know this at the time, but there are a lot of similarities between the skillset that you need to be an investigative journalist and the skillset that you need to be an investor. Again, at least the type of investing, the type of research that I do. So it’s very similar. The objective is different, right? You’re writing a story or you’re trying to report facts as a journalist, but as an investor you’re trying to determine if a security is mispriced so that… You come to a different conclusion, but the effort and the research process is very similar actually. So I’ve always loved that aspect of investing, sort of the treasure hunt aspect of investing.
John Huber: But sometimes in life, timing isn’t ideal. And in school, my senior year I began studying about Buffett and I began… So I’ve always been interested in investing. My dad was a very avid investor in his own account. He was an engineer for Delphi, which is a parts supplier for General Motors. And he spent his career there and he invested actively in his own account. And he did very well. He is a very good investor, and I always thought I’d sort of take that playbook and have a career, invest my savings as more or less a hobby, just because it’s something that is intellectually stimulating, it’s fun, I like the process, and so forth.
John Huber: But I began studying Buffett. I picked up a book in the library one day. And again this was toward the end of my time in school, and so I had a decision to make. I got very interested in investing to the point where I decided I wanted to pursue business as a career in some form. And I naively began studying Buffett’s Partnership Letters and it led me to Graham and Dodd and all of the classic texts that everyone talks about. And I say naively, because I looked at his structure and I thought to myself, “That’s a really good…” The partnership structure that Buffett set up in the 50s, he started with 105,000 bucks and had like six or seven family members that were investors and he worked out of his house. And it was just a lifestyle that seemed appealing.
John Huber: And so, I thought, “I’d like to try to replicate that somehow.” And again, I’m not talking about replicating his results because I don’t know if Buffett’s results are replicable, but certainly the structure that he had, I thought that one could emulate if given the right conditions. So that was my goal. I had no idea how I was going to get there, but I became interested in business, became interested in real estate specifically.
John Huber: And long story short, a friend of mine and I decided to set up a small partnership in 2006 and we began… So, and this is where a lot… So timing on the career decision was not great because I had just finished school, timing on this, I was much more fortunate. So the real estate market began to crack in 2006. I think housing starts reached 1.8 million in January of 2006, which was the historic peak of the housing market.
John Huber: And fast forward a year and a half later and housing starts were cut in half down to 900,000. And so, the Foreclosure boom really began in the fall of 2006, early 2007. Of course, Subprime Crisis hit in 2007, and then Lehman in 2008, and the rest. We all know that story. But it was really a once in a generation type of an opportunity to buy single family housing as an asset class and then also multi-family housing. So we, my partner and I, did residential investing in the single family and multi-family sectors and we did things on a very small scale.
John Huber: So it was all our own money. We had a couple of investors, but primarily a small sort of very small focus group of investors and our own capital. And we would cherry-pick these incredible bargains. And I always tell people, I was like more of a Graham and Dodd investor in the real estate market. Because we would buy things, we’d buy 50 cent dollars and we’d be able to shine them up a bit and sell them once they were stabilized. And so, we would buy like… we bought a 12 unit apartment building that was 50% occupied, stabilized it, leased it up and then sold it. We did a lot of things like that on a very small scale.
John Huber: We built up a small portfolio of I think 20 units set at the peak. And that enabled me to collect cashflow, finance my living expenses. And then also the most important thing for me was, as I thought about, “Should I go back to school and get an MBA? Should I go to Wall Street? Should I go try to work at a fund? How do I get into investing as a business or how do I get into the field?” And the overriding, as I made my pros and cons list, the overriding factor that rose above everything else was autonomy.
John Huber: And so, I just didn’t want to go get a job, Toby, that’s what it really came down to.
Tobias Carlisle: I understand that. I understand that.
John Huber: I really valued the… There’s two things. I view investing as a lifetime game, and there’s two parts of the equation. There’s the economic compounding, which is the obvious objective of investing, trying to produce great results over time and compound your money and money compounds over time. But the other thing is getting better at your craft. So knowledge, some people call it knowledge, compounding or whatever, but basically the idea that the more time you spend, the better you get.
John Huber: And so, the most satisfaction I get out of this business is the process of trying to continually get better at my craft, the craft of investing, so to speak. And so, I didn’t want to, at that point, early on in 2005, 2006, I didn’t really want to go work for someone else where I’d have to spend 70 or 80% of my time doing something that someone else directed. I wanted to allocate the precious resource of time in the best way that I saw fit.
John Huber: And so, I earned a lot less money in the early years, but I think of it as a sort of a longer term investment in learning what I wanted to learn and reading what I wanted to read and developing that skillset. So real estate was a way for me to do that. So, long winded answer to a pretty simple question, but, yeah, that’s what got me from sort of there to developing the partnership or starting the partnership about eight or nine years later in 2014.
Tobias Carlisle: When you’re transitioning from Graham and Dodd style real estate, and real estate is already, if anybody who’s looking at real estate is probably closer to the Graham and Dodd end of the spectrum, but when I look at the positions that you’ve written about publicly, I don’t know necessarily whether you hold these or not, these are just companies that you’ve written about. And you’ve written about Tencent, you’ve written about Facebook, Markel, Berkshire. These tend to be at the growth… Well, maybe not Berkshire so much anymore, but certainly Markel and these other ones at the growth here.
Tobias Carlisle: And so, how do you transition, how do you evolve as an investor to get to those points?
John Huber: Yeah, it’s an interesting question, yeah. Because in real estate, the asset is a commodity more or less, so there’s not a lot of… The way to make real returns in real estate is either through development or through sort of an activist approach. In the public markets, we might call it like an activist approach. Where, again, you take an asset that’s underperforming and you get it up to speed. So there’s an operational component to real estate. If you want to make outsized returns, that’s how you do it. Or you get lucky like I did and you find yourself in the midst of one of the greatest fair markets in the history of real estate, which is really all that was. Better to be lucky than good, is the saying, and that’s really what it is.
John Huber: So I don’t think we’ll probably ever see a real estate market like that. I’d mentioned those housing starts. They fell all the way from, I think, 1.8 million was the peak, but they dropped down to 400,000 in 2009, and they sort of bounced along the bottom for a good two or three years. And so, there was a five year period where you could buy… Banks were in this liquidation phase and you had this extreme oversupply coupled with an extreme decline in demand. And so, it took years, in fact.
John Huber: Just what’s interesting about the real estate market or the housing market is just, like late last year in December, was the first month in 12 years that we hit a million starts on a seasonally annualized basis. So it took 12 years to get back to what would be considered by most… Most real estate observers consider a million starts is sort of the equilibrium number that you need to support population growth.
John Huber: So we have 330 million people and population is growing at 1%. You have 3.3 million new people entering the world each year and there’s two or three people in a household. So you need a million new houses just to sort of keep up with that. It took a decade plus to get back to just equilibrium levels. That’s how oversupplied we were. So it was a really once in a generation type opportunity. I sort of say that as a background to say, it was quite easy to be a Graham and Dodd investor in 2008, 2009, probably in the public markets too.
John Huber: I mean, I was following the public markets. I was investing my own personal capital. I wasn’t running money professionally at that time, but there were a lot of bargains around everywhere, right? In the stock market, there were bargains in the real estate market. And so, it was easy pickings at that time.
Invest In High Quality Businesses That Earn High Returns On Capital
John Huber: If you think about, so to answer your question on why is it different in the public markets or why is my approach different? I really think of investing as a… If you think about the very simple elements of the transaction, providing a company with capital. You can think of it in terms of like a small company that you’re investing in, a startup company, or even a friend’s small business or something. If you invest capital into a venture, your objective is to achieve a return on that capital.
John Huber: And so, you will judge your success other than any intangible factors like helping someone out or helping your friend get started or something. Most people will judge their success based on the return that they achieve on that capital investment. And so, investing in a business is… The point of investing is to achieve a good return on capital. And the same objective exists inside of a business. A good business can earn high returns on capital.
John Huber: And so, when I look at the stocks that have generated the most wealth over time, they’re very rarely like these bargain basement Graham and Dodd type stocks, they tend to be companies that are high quality, companies that earn high returns on capital, and are simply going to earn a lot more money in the future than they are now. Or if you look back in the rear view mirror, companies that have generated a lot of wealth tend to be companies whose earning power has increased dramatically over the last 10, 15, 20 years. So that’s a very simple observation, good companies make good investments, and it’s something that your grandma in Iowa can easily understand.
John Huber: And so, it’s a very simple concept, and it’s the concept that I employ. And so, when I think about the margin of safety concept, I think the margin of safety comes in large part due to the quality of the business as much as the perceived gap between price and value at any given moment. Because business is dynamic. So if you think of yourself as a part owner of the company that you’re invested in, you’re paying that management team to act in a certain way and to adjust to changes, and we live in a world where change is much more pervasive than it was 10, 15, 20 years ago.
John Huber: And so, those are things you have to think about as an investor now. And I think, I’m personally more comfortable investing in companies that are good at adapting to those changes and are good at utilizing the capital that they employ effectively. And margin of safety comes from a company that their earning power is going to increase going forward. So that’s why I prefer the companies that tend to be on the growth year end of that spectrum, they tend to grow into their valuations. They’re much more forgiving. I’ve found that mistakes tend to be made a lot more on the valuation than… If you pick the right business, as Buffett says, you pick the right business, you’re going to make a lot of money over time.
John Huber: So I think the mistakes I’ve made have been more when I’ve focused more on the static valuation of an enterprise versus what I think the company’s going to look like, say three, four or five years down the road.
Tobias Carlisle: So let’s just talk about that a little bit. How are you making that assessment? How are you thinking about a valuation when you’re buying something? Are you looking… You’re thinking three to five years down the road, what I think this thing can be generating in terms of free cashflow and that’s what I’m looking at now. Is there some hurdle that you’re trying to meet at any given point in time?
John Huber: Yeah, there’s a hurdle that I try to meet. I have an objective in mind. So I kind of work backwards, sort of a reverse DCF of sorts. But, yeah, the simple explanation is, I think of it in terms of future free cash flow. So I will do a DCF at times, but it’s typically very simple back of the envelope type thinking. And I try to do the analysis and then figure out what I think this company looks like in say five years. And I think much beyond that is very difficult because things can change so rapidly.
John Huber: But I think on the rare occasions where I have an insight on what the company looks like in five years, and that insight differs from the market, is where the opportunities are. And those are, in my case, few and far between, but they do appear once in a while.
John Huber: And so, yeah, I try to look at what I think the company is going to earn three, four, five years down the road and then work backwards to determine the return that I’ll get at this particular price. So you capitalize those earnings in year five and you can work, what is that worth? What’s the company going to earn in 2025? And what does that look like? What is that worth to the market? And then you can work backwards to determine the return that you’ll get. So that’s the end game.
John Huber: But most, 95% of the work is understanding the company, understanding the threats, figuring out how it’s going to adapt to changes and risks and so forth. And so, most of the work is spent really taking my time reading about companies and watching them over the years and observing how they operate and understanding their competitive advantages and their risks. And then, at a certain time, the market gives you an opportunity to buy things at a certain price.
John Huber: So the process for me is I create a watch list of these companies and then I just wait for evaluations on each company, and then I just wait for the market to give me a valuation that makes sense to me.
Take A Concentrated Approach And Let Your Winners Run
Tobias Carlisle: And when you fund them, how much are you looking to allocate to any given company as a proportion of the portfolio?
John Huber: Yeah, that’s an interesting question because I think portfolio management is a big part of the equation. So I’ve always thought that the simple concept of value investing is easy for everyone to understand and it’s very difficult to implement. And again, for my type of investing, I think there’s just not that many great ideas. And so, I think a lot of investors have two or three or four really good ideas and then they water those two or three or four ideas down with 15 to 20 other ideas. And that tends to dilute the value of those few great ideas.
John Huber: And so, I try to, as best as I can, eliminate the ideas that dilute those few ideas. And so, it’s a long way of saying it’s a concentrated portfolio. In the ideal world, I’d have 20 stocks and they’d all have an equal roughly approximately equal risk reward. But in the real world, it doesn’t usually work that way. And so, it tends to be a very concentrated approach. And there’s more than two or three or four that I typically have between five and 10 stocks in the portfolio at any given time. So it’s quite concentrated, but it depends on the situation.
John Huber: So sometimes a starter position might be 5%, sometimes it might be 10%. And then on the rare occasions where there’s high conviction, it can be upwards of 20% of the portfolio. And the biggest positions in my portfolio tend to be the ones where I’m most convinced or most convicted in the risk reward. And I guess more importantly, the biggest ideas tend not to be the ones where I think might have the most upside but have the least downside. So that’s kind of how I think about position sizing. You know, the… Go ahead.
Tobias Carlisle: Sorry, go ahead.
John Huber: I was just going to say the wider range of outcome… Stocks have a certain range of outcomes. I think about it like a barbell. So on the left, if you picture a barbell, on the left side of the barbell, you have what I consider to be like the real defensive names, the really durable names. So the Berkshires of the world. The range of outcomes is quite small for some of those types of companies. They’re very defensive, they’re very… Berkshire is somewhat economically sensitive, but it’s a very stable business with a strong balance sheet. So other companies in that list might be like waste management or something like if you’re a trash collector. Your revenues are fairly predictable in any given year and therefore the outcomes are fairly narrow.
John Huber: So I don’t tend to invest a lot in those, but as you move your way down the spectrum from the left side of the barbell to the right side, at the other end of the spectrum we have more of the cyclical companies that have a wide range of outcomes. So like an oil refinery, for example, it doesn’t control the cost of its input, it doesn’t control the cost of the product it sells, and therefore the margins can be all over the place. It’s a very volatile business and therefore the stock price is very volatile.
John Huber: So I don’t really invest at that end either, it’s sort of the opposite of I think to Taleb’s approach where he says, “Invest at both.” And I’m kind of more in the middle where I think of two categories in the middle of that barbell, which are more of the secular growth businesses that have a durability to their business and are very likely going to be doing better in say five to seven years than they are now. And then maybe more of the fast growers. So there’s like the durable growers and the fast growers which have more of a wider range of outcomes and are more economically sensitive, but have more upside potential possibly.
John Huber: So those are sort of where I like to look for investments, but the bigger positions tend to be on the left side of the barbell and the smaller positions tend to be on the right side of the barbell because of the distribution of possible outcomes.
Tobias Carlisle: The narrower the distribution of possible outcomes, the larger the position tends to be. And the wider the distribution of outcomes, the smaller the position tends to be.
John Huber: That’s how I think about it. Yeah. Yeah, I really think about it in terms of downside. So in theory, you could have something with a wide possibility of outcomes at a certain valuation where the range of outcomes exist more on the upside and that could be potentially a bigger position. So it just obviously depends on price, but that’s generally how I think about it.
Tobias Carlisle: If you sold something to 20% at inception and everything goes right and the position gets very big, do you trim them back to… How are you thinking about it on a sort of continuous basis? Are you trying to trim them back to their appropriate risk weighting in the portfolio? And then is that a valuation question or is that some other consideration?
John Huber: Yeah, that’s what I really struggle with, Toby, it’s selling has always been a difficult proposition because if you invest in an operating business, in an ideal world, someone was talking about this the other day, like the coffee can portfolio where, I don’t know if you’re familiar with that concept, but basically if you’re an individual investor, it’s really a great way to invest. You pick one stock a year or one stock every so often and you put your savings into it after you’ve spent a careful amount of time researching it, and you put it in the coffee can, so to speak, and you forget about it. And then every year you add to it. And I think individual investors probably improve their results if they thought that way.
John Huber: And I think as professionals, and again, at least for my type of a longer term low turnover approach, that approach works. So the problem is, is when the stock appreciates, if you have a 20% position, and this is a First World problem to have, but if the position goes in your favor and it becomes a 30% position, what do you do with it? For me, I tend not to trim those positions unless the valuation gets to a level where I consider it to be significantly stretched or my future returns are going to be worse than cash, for example.
John Huber: I always tend… I’ve learned from this because the best investments I have made, I’ve tended to trim things too early and that has reduced unfortunately the returns that I could have achieved. And in hindsight, when you think a stock reaches its fair value, I’ve often found that in hindsight it still was undervalued. So I tend to think about it in terms of opportunity costs. So if the position gets to a market, what I consider to be a market return going forward or sort of an opportunity cost, let’s say the S&P is your opportunity costs and let’s say that’s 7%, just to put a number on it.
John Huber: If a stock gets to a level where your future returns are going to sort of match the market, I’ll tend to hold those until they get to a level where I think I might actually lose money at this level. So if the stock it’s overvalued. Because again, I’ve learned that the best businesses tend to often look overvalued and they still are oftentimes fairly valued or in some cases they’re still undervalued. So unless something gets egregiously overpriced, I’ve tried to do my best to not trim things.
Coffee Can Investing
Tobias Carlisle: Yeah. There’s a great story about Claude Shannon who was the father of information theory and he worked at Bell Labs, had an association I think with MIT. And so, he got to invest in a lot of companies very early on, Motorola and so on, was one of them. And he’d put the money in and then never touched it. And so, by the time that he passed away, I think it was Motorola, was like 88% of his portfolio because it had gone so well, but everything else in his portfolio had performed as well. It was just that Motorola had been such a spectacular return. I forget the numbers, but they’re just silly numbers, like a hundred thousand percent or something like that.
John Huber: Yeah. Right. Yeah. And so, at that level, that’s an extreme example. And again, it’s in the coffee can, the reason you put the stock certificate in the coffee can is you just forget about it. You lock it away. Put it in a vault somewhere and just don’t think about it. And that’s sort of what he did with Motorola.
John Huber: And there are fund managers that have implemented approaches that resemble that coffee can idea which I really love. But it’s very difficult as a money manager to do that, I think. I don’t know what your thoughts are on that, Toby, but it’s hard. Because if a stock gets to 88% of your portfolio [crosstalk 00:39:44]-
Tobias Carlisle: Your fortunes are tied to that stock.
Volatility Is Important To Generate Great Returns
John Huber: Yeah. Your fortunes are tied to that stock. And any incoming investor, they’re basically buying that single security. So you’re going to have a more volatile approach. And so, the reason why, and this gets more to a fundamental sort of the concept of edge, I think a lot about this is, in investing, volatility is something that almost every investor tries to mitigate to a certain degree. And it’s very difficult to do that and it’s understandable why people want to mitigate volatility. Volatility can be painful. And we’re coming off of stretch here where we’ve gotten a healthy dose of that.
John Huber: And it is interesting because in the public equity markets, volatility is just the nature of the beast. So trying to mitigate that is a very difficult thing and I think in most cases it’s an impossible feed. The [crosstalk 00:40:51]-
Tobias Carlisle: Probably reduce returns to…
Ted Weschler Was A Great Investor Before He Joined Berkshire
John Huber: I was just going to say that. The way to reduce volatility is to sacrifice returns. And so, the sort of the converse of that is, the way to produce great results in the stock market requires the price of volatility. That’s sort of the price of great long-term results is the willingness to take volatility. So there are some fund managers that have done that successfully. Ted Weschler is one who he, before he started to work for Berkshire, he ran a fund that did phenomenally well in a decade where the stock market did literally zero. I think he started his fund in 2000, and he wrapped it up in 2010, and that decade was essentially a lost decade for the S&P 500.
John Huber: But he did I think 25% returns or something during that decade. It was just an incredible stretch. And it was largely due to two stocks that he bought in the very early years. One was DaVita and one was W. R. Grace. And same sort of thing. I mean, he bought those, they were big positions at the beginning, but they became huge positions. I think when he wound up his partnership, one of the two was 50% of the portfolio. So I don’t really know the details, I don’t know if he trimmed it along the way, but it became much bigger than his cost basis. And a large part of his returns were due to those two decisions that he made early on. So a number of lessons in there. You don’t need that many great ideas to produce great results. And when you find the great ideas, you should stay with them as long as possible.
John Huber: But it’s difficult to run a fund that way because people are sensitive to volatility, and naturally you’re going to have more volatility as your concentration level increases.
Tobias Carlisle: And you’ve also got the problem that it’s got to be run continuously with an eye towards what is coming in the future for every investor who’s… not just because the investors are coming, but because you don’t sort of live on your past record, you’re always trying to position for what’s coming in the future.
John Huber: Right. Exactly. Yeah, it’s difficult to do because in the short run, and I would define the short run as one year, two years, three years even. It’s I don’t think anyone can outperform every year consistently for many, many years. I think you have to… I mean, if you run… I guess Jim Simons did that, so maybe it is possible. Maybe you can come up with a strategy, Toby, you’re a quant guy, so it’s possible for you.
Tobias Carlisle: I’m a value guy who does some quantitative stuff. The quants won’t have me.
John Huber: Yeah. Yeah. So to me it’s, again, the price of long-term results is the willingness to withstand volatility and underperformance. Volatility sort of a euphemism. Underperformance in the short run is the price that you need to pay to get great out-performance in long run. So unless you want to hug the S&P to produce results that are significantly better than the S&P, by definition, you’re going to have to do something differently than the S&P. And sometimes, unfortunately, that means hopefully over the long run, differently means good. But in the short term, differently can sometimes mean bad.
Why Warren Buffett Is Being So Cautious Right Now
Tobias Carlisle: Can I talk to you about a few of the positions that you’ve written about publicly? So Markel and Berkshire.
John Huber: Sure.
Tobias Carlisle: I think that both got unusually cheap recently, and that the businesses are, as you say, maybe a little bit more tied to the fortunes of the economy than other businesses, but still both exceptional balance sheets run by exceptional managers with an eye to the very long-term. Markel of course is an 11, $12 billion company, Berkshire is a $440 billion company. So Markel, and run by a 58 year old rather than a 90 year old. So a much longer runway. But just talk through those positions and where you see them now.
John Huber: Yeah, they’re both really great companies. I don’t happen to own either of them right now. Berkshire appears to me to be cheaper than I think it’s ever been since 2009. What’s interesting is, and this is something I, as I watched the meeting at the CenturyLink, which was just sort of an odd experience, I don’t know if you watched Buffett’s annual meeting, but he’s in the CenturyLink with like five people and the place is just totally empty. So very conducive to social distancing in that particular venue. But it was very odd that he… So he said a couple of things.
John Huber: One is he, obviously, the takeaway was he seems quite bearish on the stock market and the economy.
Tobias Carlisle: I’ve never seen him like that before. He’s always, to me, extremely optimistic.
John Huber: He has been optimistic, I would say for the last probably, I don’t know, 15 years. He was very optimistic during the last crisis. One of the things he said, he had never bet against America theme, which I think is absolutely right. In fact, I was reading this book by Alan Greenspan, just this, or I’m reading it currently, and this sounded like something Buffett would cite the statistic, but you know, in 1776, I think there were three or 4 million people here in the US and the output of per capita per head of that group of people was about $4 a day in 2020 dollars. So in current dollars our GDP per capita essentially was around $4 a day. And now we have 330 million people and the output is around $130 a day or something in that ballpark.
John Huber: So we’ve seen, what is that? A 32-fold increase in real GDP per capita. It just shows you the power of the productivity or just shows you the productivity gains that we’ve achieved and the standard of living increases that we’ve had in this country over a relatively, in the scope of history, a relatively brief period of time.
John Huber: So I think Buffett’s right, never bet against America, the tailwind is too great. But, yeah, he definitely seems cautious, to say the least. But I was thinking about it. He has been bearish in the past. He was bearish in 1999, he gave a famous talk in Sun Valley and was essentially booed off the stage when he gave that talk.
Tobias Carlisle: Is that true?
John Huber: I don’t think literally, but people were… In Snowball, the book by Alice Schroeder, she opens the book I think or very early in the book has a section where a lot of the technology guys were there and they were kind of whispering under their breath as Buffett was warning about the lofty heights of the stock market at that time. So I think he predicted that stocks would return like 4% a year over the next decade and that actually proved to be optimistic.
John Huber: People thought it was dire and they thought it was way too pessimistic. If you look at public opinion polls in 1999, people were expecting 13% returns, 15% returns, over the next decade like they just saw in the previous decade. And when Buffett said 4%, it was just away out of consensus view. And again, that decade turned out to be even worse than that prediction.
John Huber: So I think he was bearish in ’99 and I think he was bearish in the mid 80s during the merger boom. So in Lowenstein’s book, there’s a spot, which is the first bio which was written in the mid 90s, there’s a few chapters that talk about the merger boom and stock prices started getting out of control because at that time companies were trading. So coming out of the bear market in the early 80s, companies were trading well below replacement value and we had significant inflation. And so, real assets were appreciating in nominal terms.
John Huber: And you had Volcker, the Fed chairman, sort of famously broke the back of inflation and then you had interest rates coming down and it led to cheaper money. And there were a number of factors that kind of led to this merger bonanza and inflated stock prices to a level where I think Buffett just became uncomfortable.
John Huber: So he didn’t make, if you go back and look at his annual letters from the mid 80s, I don’t think he bought a single stock between 1984 and 1987. And so, there was like a two or three year, maybe it was two year period, 85, 87, that he didn’t do much of anything.
Tobias Carlisle: And he wound up his fund too, I guess in, that was ’69, right? The fund. So he must have been quite bearish then too.
John Huber: Yeah, I think he was bearish in the late 60s and he was bearish in the mid 80s. In fact, he actually sold stocks in a pension fund. And again, this is in the Lowenstein book which is kind of remarkable. But he actually sold stocks prior to the crash. I don’t think he sold a lot of, he didn’t sell his positions, his core positions or anything, but he sold some smaller positions that were sort of in some of the pension funds that Berkshire’s insurance subsidiaries managed prior to the crash. Because I think he was worried about the level of the markets. But of course then he was buying hand over fist after the crash of ’87.
John Huber: And then I think, that was really the point where he became more of the buy and hold forever. So he bought Coca-Cola I think in ’87 or ’88. And that was really the first… Washington Post, he’s never sold, but there have been some others, but really that was the beginning of what I would call the current Warren Buffett mantra, which is sort of buy these stocks and hold them forever. And of course, that doesn’t hold true for every position because he still sells things, so when he makes a mistake. That’s one of the best. The most underrated aspects of Buffett I think is his ability to change his mind when he’s wrong. And he evidenced that with the airline sales-
Tobias Carlisle: IBM.
John Huber: Oh, yeah. Yeah. IBM, Tesco, the grocery store in the UK, which is a relatively smaller position. He sold those. So he does sell things I think when he realizes he made a mistake. But, yeah, he seems bearish.
John Huber: But, yeah, I guess back to Berkshire itself as a stock, one of the things that was interesting about the meeting is he stopped buying back shares in March, which was really surprising because he has always said that he’s always sort of benchmark intrinsic value somewhat to book. So he’s always sort of tethered his estimate of intrinsic value to book value in some way. And he’s adjusted that slightly over the years as book value [crosstalk 00:52:30]-
Tobias Carlisle: It’s gone up. It’s gone up. And then more recently, the last pronouncement was basically, “We’re going to ignore book value, we’re going to make it our own assessment of that.” Which to me said it’s going to be even higher than 1.3 times book or whatever it had been in the past.
John Huber: Right. And that makes sense because the railroad that he bought in 2009 for 26 billion is probably worth a 100 billion today, but the assets are still held on the books at the price that he paid in 2009. So it certainly makes intuitive sense that book value has become less tied to intrinsic value. But what’s I guess unique about this particular time is he was buying shares in January and February at 1.3 times book and then he stopped buying at a level that got as low as I think 1.15 or so, by my estimates. And it’s hard to know exactly what it was, but just sort of adjusting for the markdown in his $250 billion stock portfolio. And you can kind of get a rough estimate of what the price to book ratio was in March at the bottom of the market.
John Huber: And so, my conclusion on that whole thing is I think Berkshire is extremely cheap, but I think Buffett is cautious because I think he doesn’t want to see the boat that he spent 50 years building, start to develop holes when he’s 90 years old. He’s said many times in the past, he’s talked about all sorts of different debacles like the LTCM debacle in the late 90s was a famous example of sort of greed gone haywire or greed on steroids or something, where so much leverage was used by extremely smart people to produce more money that they didn’t need.
John Huber: He’s got this quote that basically says, “Once you’re already rich, you don’t need to get rich again, basically.” And so, I think the issue with Berkshire right now is he could, and this is just my complete speculation. I don’t know that this is the case, but I think he could be looking at the environment and seeing potential for a significant litigation in business interruption, insurance, potentially workers’ compensation, which Berkshire’s a big underwriter of.
John Huber: And I think there have been some court, in fact, there was one court case in France last week where Axa is going to have to… Basically the French court ruled that they’re going to have to reimburse certain restaurants for two months of revenue. And so, I think if you start to violate contract law and even if it’s clear that these contracts do not… A pandemic is a…
Tobias Carlisle: It’s carved out.
John Huber: It is carved out. If you’re just going to start to override that, then who knows? How do you handicap that? Who knows what the losses could be? I mean, it could be a hundred billion. And I think Buffett has said before that Berkshire is fit to withstand a $250 billion hurricane season or even more and which would be multiples of the worst hurricane. I forget what the damage Katrina caused, but it would be multiples of that. And Berkshire wouldn’t even see any hit to its capital. So it’s an extreme fortress and I don’t think there’s any doubt it’s still is an extreme fortress. But I think when you have the uncertainty of the pandemic possible litigation, it’s hard to know what the claims will end up being when the dust settles from this.
John Huber: And he said at the meeting, the other thing he kind of said, it didn’t get a lot of publicity, but I think he tipped his hand a bit when he said, “There’s no law that says a major storm can’t come during a pandemic.” So if you have a Katrina this summer and you combine it with all of the possible claims from the pandemic, it could be sort of a once in a 500 year flood. And I think he just wants to be prepared for that.
John Huber: And I think he probably views that as a tail risk that’s probably got one or two or 3% or even lower odds. But he said before that, he doesn’t want to take even a 1% chance of something bad happening. So I think that’s more likely the reason why he wasn’t more aggressive in buying stocks, but that’s just my [crosstalk 00:57:19]-
Tobias Carlisle: As opposed to him thinking that there might be another leg down or there might be another opportunity. You think it’s more of the risks that he’s seeing now?
John Huber: Yeah, I really don’t think he’s timing the market. I could be wrong on that. The other school of thought is he’s close to Bill Gates. And I’ve been following Bill Gates, the blog that he writes has been very interesting in learning about the epidemiology of this virus. But I don’t think, I mean, it’s possible he’s looking at it and saying, “There could be another leg down,” but when you have 137 billion in cash, for him not to use 10% of that to buy stocks, is quite surprising.
John Huber: It would be abnormal for him not to be buying when the S&P is down 35%, and you could be buying stocks that you liked [crosstalk 00:58:18]-
Tobias Carlisle: You can buy your own stock.
John Huber: Buy your own stock. If you liked your stock at 210, why aren’t you buying it at 160? The idea that the intrinsic value… He said, somebody asked him that and his answer was, “The price to intrinsic value hasn’t changed.”
Tobias Carlisle: I found that a little confusing when he said that, honestly. I wasn’t sure whether he was referring to 210 or closer to the bottom. Yeah, sorry. Yeah.
John Huber: Yeah. Well, that confused me as well because the price to book, it’s harder to reconcile that. Because the price to book was lower in March than it was when he was buying shares in January. So it tells you that either his view of the intrinsic value of the business itself has gone down. And that certainly could be the case. The pandemic was a game changer. And so, maybe the railroad is worth less, maybe the utilities are worth less, although that’s hard to imagine because the utility is more of a recurring cashflow business. And the intrinsic value of any asset doesn’t change all that much by what happens this year, it changes a lot by what happens over the next five to 10 years.
John Huber: But a downturn in earnings, a cyclical downturn in earnings doesn’t change the values by all that much, yet stock prices were down 35% on average and up to 50%. So it’s hard to reconcile that. The only explanation is, he believed that book value was overstated or intrinsic value had gone down.
Tobias Carlisle: The explanation that I like the most is that, if you have a range of outcomes and you have some valuation that’s based on a range of outcomes, if you introduce a new outcome or you put some more weight on the lower end of that spectrum, that will naturally pull down your intrinsic value estimate. And that seems to be the way that Buffett thinks. He doesn’t want any possibility of the thought, having too much weight in the lower end of that spectrum with outcomes manifesting. So he’s always trying to avoid the worst possible outcome rather than trying to capture the best possible outcome.
John Huber: Yeah, I think that’s it. And that’s sort of what we were talking about with the pandemic risk is when you introduce that new risk, however, remote that risk is, it’s going to have some element of lowering your intrinsic value. And so, if there’s a risk of a hundred billion dollar industry wide claim, then you have to account for that.
John Huber: And really, I don’t think he’s doing anything fancy in terms of trying to get too precise with this. I think he’s just saying, “Hey, there’ll be more times to buy stocks. I want to make sure that the painting that I’ve spent my entire life painting or putting together, doesn’t start to develop cracks.” So I think he’s just more thinking about the downside.
John Huber: And then the other side of it is private business fallout hasn’t occurred yet. So in terms of private deals, he just hasn’t had enough opportunities. He sort of lamented the fact that the Fed came in… He didn’t lament the fact-
Tobias Carlisle: He was front-run a little bit by the Fed, where previously they’ve performed that role for bigger businesses.
John Huber: Yeah, exactly. He has sort of played the role of J. P. Morgan, the man. J. P. Morgan famously bailed out the financial system in 1907 and Buffett sort of did that in 2008, not exactly, but he was able to provide capital. Whereas it took the Fed six months or so, in 2008, to really enter the picture.
John Huber: They did some minor things in the fall of ’08, well, they did some major things in the fall of ’08. But compared to what they did this time, it’s pretty remarkable what they’ve done. So I was just looking at the Fed’s balance sheet just last week and they put $3 trillion into the financial markets in six weeks. It has absolutely been unprecedented despite the overuse of that term. In the last couple of months, it really has been remarkable what they’ve done.
John Huber: So, yeah, I think Buffett he’s always lamented private equity as a competitor and now he’s got the Fed, so it’s a tough game for him. But Berkshire itself as a stock, we’ve been chatting about the company, but the stock itself does look cheap. I think the reality for Berkshire is it exists on the far left side of that barbell that I described earlier, and I think there are better ideas out there than Berkshire Hathaway is a stock investment, but it’s a great company and it’s…
Markel’s Secret Sauce
Tobias Carlisle: How do you think about Markel in that context?
John Huber: Markel is a great company. It’s run by a great CEO, Tom Gayner. And I’ve had the chance to visit Markel. I’ve met with Tom. He’s a great guy. He’s an excellent steward of capital, shareholder capital. And it’s going to continue to do very well.
John Huber: I think it operates a similar business obviously it’s in the insurance business and it has started to branch out into private businesses. They have a segment called Markel Ventures, which is sort of their wholly owned subsidiary businesses. And that is a very difficult business, I think. What Buffett has built at Berkshire has always amazed me because I’m not quite sure how he has been able to assemble a collection of companies that have been evergrowing. The growing size of these companies have been ever increasing over the years. One of the largest railroads in the country in 2009, and yet they have continued to operate at a high level, even after they’ve sold the Berkshire, which is not typically the case with a conglomerate.
John Huber: Typically, when you acquire a business… There are exceptions. There are some companies that have done very well at this, but my experience, my observation, when I look at conglomerates, there tends to be a lot of fat inside of that conglomerate and there tends to be businesses that are not operating on all cylinders, so to speak.
John Huber: And so, Berkshire has really been a remarkable thing. I think it’s very difficult to do. So I don’t think Markel, I wouldn’t bet against Markel, but I think it’s going to be tougher to replicate what Berkshire has done. I would think of Markel much more as an insurance company and much less of a Berkshire baby, so to speak. I’ve never really put Markel in that bucket. I’ve always thought the secret sauce of Markel is the simple equation of taking float, taking a profitable insurance company and using that as a way to invest in permanent duration securities, which are stocks.
John Huber: And very few insurance companies do that. Berkshire does it, Markel does it. There are maybe one or two other examples of insurance companies that do that to a certain extent, but those two do it very well. And Tom Gayner, his genius is not in being a stock picker, it’s in using that simple equation of, “Hey, if I have permanent capital and I invest…” Permanent capital is the equity capital. “If I have a profitable insurance business that’s not going to require more capital and I can grow the float over time and I never have to touch the equity, then the equity should be invested in permanent duration security.” So instead of getting two or 3% in a bond portfolio, you can get seven or 8% by investing in what essentially could be an S&P 500 fund.
John Huber: Now, he has historically done slightly better than that, but he certainly hasn’t performed the way Buffett has. I don’t think he ever intended to because he runs a very diversified basket of stocks, whereas Buffett started as a true stock picker and then sort of backed into an insurance company. Whereas Markel is an insurance company through and through. And it’s a very good insurance company. It’s one of the best insurance companies in the world.
John Huber: And so, that’s the secret sauce, is just simply taking the float and the inherent leverage in that model and then buying stocks. And so, instead of getting a return on equity that’s 10, you get a return on equity that’s closer to 13 or so. And that’s why they’ve been able to compound their book value over time is because they’ve added three or 400 basis points to the return just through that simple formula. So I think that will continue, and it’ll continue to be a great, great business. And you’re right, it does have a longer runway. So I don’t own it right now, but I love the business. It remains on the watch list. And at times it gets fairly cheap.
Tobias Carlisle: I appreciate the very thoughtful discussion, John. We’re coming up on time. If folks want to follow along or get in contact with you, how do they do that?
John Huber: Yeah, they can visit my website which is, sabercapitalmgt.com, and they can read the writing that I posted. And I have all the archives up there, so they can read my thoughts on investing there. And then they can find my email address there as well. [crosstalk 01:07:45]-
Tobias Carlisle: And what’s your Twitter handle?
John Huber: Twitter is… That’s a good question, Toby.
Tobias Carlisle: It’s JohnHuber72.
John Huber: You got it. Yeah. Yeah.
Tobias Carlisle: I’ll link to it in the show notes.
I use Twitter, I’m not like a frequent poster on Twitter, but I do post things from time to time. Every few days, I’ll post something that’s interesting. But, yeah, I do use Twitter as a resource for uncovering news and uncovering information. So you can find me on there as well.
Tobias Carlisle: Well, I appreciate the time. John Huber, Saber Capital Management, thank you very much.
John Huber: Yeah. Thanks, Toby. Thanks for having me on. I really enjoyed it.
Tobias Carlisle: My pleasure.
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