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Cold-calling Charlie Munger with no ask
Why he made the call
Todd Combs had grown his fund, Castle Point, past half a billion dollars, with great investors, great partners, and a great team. The work had turned into 80 to 100 hour weeks and monthly reporting, and the joy was slowly decaying. He knew insurance and planned to buy an insurance company for its permanent capital, and he figured Munger would not be around much longer. With a trip to Los Angeles coming up, he decided to call, certain he would never get a meeting.
Getting the meeting
Munger's assistant asked what he wanted, because everyone always wants something. He wanted nothing, only to meet him. She checked with someone they both knew, who spoke well of him. Mark Nelson of Caledonia, a mutual investor who had presented right after him at an investor day, had also told him he reminded him of a young Munger.
Six hours and a dozen talks
The next day Munger emailed to offer breakfast at 7 a.m. at the California Club. They talked for about six hours. A week later Munger phoned, and they talked for a couple of hours more. About a dozen conversations followed, and early on they barely touched on investing.
Eventually Munger asked what he was going to do, and then told him he should talk to Warren. He took it to be about a company in his portfolio that Berkshire might buy, and he had no idea he was being vetted.
Why do investors want insurance companies' float?
Insurers collect premiums up front and pay claims later, so they hold a pool of other people's money in the meantime, called float. Unlike a fund's investors, policyholders cannot withdraw it on short notice. That makes the money patient, which suits long-term investing. Berkshire Hathaway bought the insurer National Indemnity in 1967, and insurance float became the foundation of its investing.
How did Munger and Buffett come to partner?
Charlie Munger and Warren Buffett met at a dinner in Omaha in 1959. Munger was practicing law in California and soon moved into investing, running his own partnership starting in 1962. He joined Berkshire as vice chairman in 1978 and held the post until his death in November 2023. Buffett has credited him with pushing Berkshire toward buying great businesses at fair prices rather than mediocre ones at bargain prices.
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