Reuters
- Warren Buffett and Charlie Munger hired Todd Combs as the first of two investment managers in 2010.
- Combs shared how he impressed the investing legends during a recent podcast.
- He bonded with Munger over obscure books and diverse topics, and dug deep into stocks with Buffett.
Impressing Warren Buffett with your business knowledge and Charlie Munger with your intellect is no easy task. Todd Combs wowed the investing icons enough to be hired as their deputy; he shared how in a recent podcast.
For more than a decade, Buffett and Munger have relied on two investment managers, Combs and Ted Weschler, to help them manage Berkshire Hathaway's hundreds of billions of dollars' worth of stocks and other investments. Combs, who also serves as Berkshire-owned Geico's CEO and a JPMorgan director, revealed how he landed the esteemed job during a recent episode of the "Art of Investing" podcast.
Combs was burned out from running his hedge fund, Castle Point Capital, and planning his next steps in 2010. He'd recently met another investor who knew Munger, and he was going to be in Los Angeles soon, so he decided to cold-call the Berkshire vice-chairman's office in the hopes of setting up a meeting.
After determining that Combs didn't want anything, Munger invited him to breakfast at a LA business club at 7 a.m. shortly afterward.
"We ended up talking for like 6 hours, which was exhausting to try and keep up with someone like that the first time," Combs said. "For him, it was like just hitting tennis balls or whatever. But for me, I was obviously very, very nervous."
"I was just riffing constantly, I'll never forget it," he added. The pair bonded over obscure books they'd both read, and their ways of thinking about things. For example, the Deepwater Horizon oil spill had just occurred, and Combs said BP had essentially sold a "really cheap, out-of-the-money put" by declining to spend a tiny amount to protect itself against a potential catastrophe. Munger praised that description as "brilliant," Combs recalled.
Munger called him to chat a week later, and they spoke about a dozen more times, until Munger asked Combs what he planned to do next. When Combs shared his idea of buying an insurance company as a source of permanent capital to invest, Munger suggested he speak with Buffett.
"I still had no idea that he was vetting me or anything like that," Combs said. He believed he was flying out to meet Buffett because the investor was interested in acquiring one of the businesses in his portfolio.
"I had no idea, which is a great way to interview people, actually, because then you have no air, you have no false pretense or anything," he said. "It's just a conversation."
While Combs and Munger didn't discuss investing at all early on, Buffett wanted to talk stocks right away. Combs owned shares of US Bancorp, Mastercard, and Visa, while Berkshire owned big stakes in Wells Fargo and American Express.
"We got right into it and it's like, 'Why Mastercard instead of American Express?' And so I laid it on him. I have my opinions when it comes to that stuff," Combs said. He recalled that Buffett quizzed him on how his assessment might be wrong, and the scenarios where Berkshire's picks would perform better.
"While Charlie and I hit it off on science and principles and philosophy, Warren and I really hit it off on just capital allocation, like risk assessment and upside, downsides and things like that, insurance too," Combs said.
Buffett asked Combs whether Progressive, where Combs had previously worked, was superior to Geico. Combs said yes, noting that Berkshire's car insurer was better at marketing and branding, but its archrival's focus on data would make it a long-term winner.
"I think he appreciated the candidness because when you're a CEO, or especially Warren or whatever, everybody kisses your ass, everybody tells you what they think you want to hear," he said.
"And I just didn't care really. I'm irreverent in that regard," he continued. "I could be wrong, but it is what it is. So that honesty, I guess, is at least genuine and authentic."
Buffett and Munger were clearly won over. They hired Combs in late 2010, then Weschler in 2012, and have steadily handed more responsibility to them. The pair had authority over $34 billion of investments at the end of 2021, or nearly a tenth of the total value of Berkshire's stock portfolio at the time.