Ben Gilbert: evaluation

Transcript context

…Warren though, being smart, being Warren, he's like, wait a minute, it's Mary Poppins. They're going to be able to generate revenues for years after this. Kids aren't only going to want to see Mary Poppins once and in one year, every generation of kids is going to want to see this thing, take it out of the Disney Vault. He values the company in his head just off Mary Poppins. It's like the theme parks, all the other movies, let's assume all that is zero, that's my margin of safety. He thinks that it's still worth more than $80 million just on Mary Poppins. He puts $4 million of partnership capital into Disney, buys 5% of the company, and then of course Warren being Warren at the time, within a year he's made $2 million on that, he's made a 50% return, and he sells the whole thing. My God. What's the quote? "Better to be approximately right than precisely wrong. " Sure, he was approximately right, but you have to stretch that approximately pretty far to be like it was the right decision for you to get out of that business. I mean, okay, so the principle of that quote is, look, there's no way that you're going to be able to exactly know the intrinsic value of the company. You will never know exactly what you should pay for it either on your entry price or your exit price. It's the margin of safety idea that you should be approximately right, so if you can get a big margin of safety then you're sort of okay on the entrance price and you're okay on the exit price, even if they're not precisely correct. Well, you were way, way off on what the intrinsic value of this enterprise could be. Sure, you made money, but this is the sin of, I suppose it's an omission that he didn't continue to make money. In a way, it's commission because he actually had to act to sell the stock. But how different his net worth would be and who knows about Berkshire's future if he had continued to hold 5% of Disney at that point. Totally. I mean GEICO, Amex, Disney, we're not even talking about Intel. These are all companies that Buffett owned a meaningful percentage of in his very early days and he didn't hang on to them.…

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