From See’s to Coca Cola: Charlie Munger on Warren Buffett’s Strategy | HBO/KFF 2016【C:C.M 320】

[Transcript]

CHARLIE MUNGER: He made millions and millions of dollars value investing in lousy companies that he bought very cheaply. Besides, it's unpleasant to watch lousy companies you don't like. It's much more fun to watch somebody you like and admire succeeding than watching some jerk kind of half mis-manage some company that's very cheap. It's a better life. It's the reason we don't short stocks. Even if we made a lot of money doing it, I don't think either one of us would bother. We found it unpleasant. You're crazy you're rich that if you deliberately go out and do a lot of unpleasant things you don't have to. That was the most useful idea that Ben Graham ever had. Have the mindset of someone that was buying into a business wanting to hold for the long pole. And use that mindset when thinking of stocks. And we neither one of us have ever departed from that one.

Well remember Warren had a long history of buying stocks below working capital per share or hugely cheap securities. And my definition they were all pretty lousy companies. And in See's, we bought a really good company. In its field, it was the best, and in its part of California which is pretty much all of California, and it had a wonderful product and a wonderful reputation and so on, and had a powerful trademark, and a good culture, and we bought that and it made so much money. It just was eye-opening how important these brands were. I don't think that Warren would have made all the money that Berkshire made in Coca Cola if he hadn't bought See's, it just, he learned. The record of Berkshire Hathaway and the record of Warren Buffett is a record based on continuous learning. If he hadn't kept learning from every experience, the record would not be as good. He learned from See's that he should buy Coca Cola. You really come to understand the power of a brand more when you buy something very cheaply and you're still getting 300% per annum on your investment in cash. That draws your attention that a brand can be very important.

Source: https://youtu.be/F6s2HAzMeL0?si=4K5VrYDekx8W07Z3

[YAPSS Takeaway]

Investing in high quality, well managed companies with strong brands, rather than focusing solely on cheap, poorly managed ones.