Last updated on July 2nd, 2019 at 10:59 am
Author and founder of Ram Partners LP
Jeff Matthews, founder of Greenwich, Conn.-based Ram Partners LP, a hedge fund focused on consumer, technology and health care investments, started his career on Wall Street in 1979 as an oil analyst with Merrill Lynch.
Throughout his career, Matthews has been a long-time observer of Warren Buffett and of Buffett’s holding company Berkshire Hathaway Inc.
“I don’t invest money the way he does, but I started following Buffett very early on in my career,” said Matthews, who was the keynote speaker at the BizTimes Wealth Management Summit on Oct. 27. “I’ve learned a lot from him over the years, and learned a lot just reading the transcripts from his annual meetings.”
A few years ago, Matthews attended his first Berkshire Hathaway annual meeting with a friend who is a shareholder in the company.
“I never actually attended any of the meetings before that point, even though I had closely followed Berkshire Hathaway and Buffett for many, many years,” Matthews said. “I always kind of figured the message from Buffett would be the same, buy a good piece of business at a good price and don’t sell it and that’s it. It turned out to be one of the most interesting and eye-opening experiences of my life.”
Shortly after his first visit to a Berkshire annual meeting, Matthews began writing about the experience on his financial blog: “Jeff Matthews Is Not Making This Up.” The post, which was originally going to be just one or two sections endued up being an 11-part series.
He was later approached by McGraw Hill publishers to turn the post into a book, “The Pilgrimage to Warren Buffett’s Omaha: A Hedge Fund Manager’s Dispatches from inside the Berkshire Hathaway Annual Meeting. “
Most books written about Buffett end up being a tribute to him or tips and strategies on how to invest like him, Matthews said.
“I wanted this book to be different. Berkshire Hathaway is about way more than Buffett himself,” Matthews said. “It’s about him and his personality trait that makes him the best investor ever, but it’s also about his business partner, Charlie Munger, and the fact that they are intellectual equals and have been making business decisions together for over 50 years.”
To understand Berskshire Hathaway, you have to understand Munger and who he is, and you have to understand the companies they have bought, Matthews said.
According to Matthews, being rational is the biggest reason for Buffett’s success, but a big part of the business is focused on the company’s shareholders, as well.
“Berkshire has more than 40,000 shareholders that literally come from all over the world,” Matthews said. “They are very loyal, very interested in what Buffett says and they are intelligent and knowledgeable about the business.”
From the beginning, Buffett said he wanted quality shareholders, Matthews said.
“He focused on wanting quality shareholders who wouldn’t flinch when he did something as long as it was within the model he had laid out for Berkshire,” Matthews said. “A lot of times, when you are a public company, you end up being subject to the day-to-day pressures of Wall Street and frantic Wall Street analysts.”
Matthews compared the frantic Wall Street analysts to shouting bleacher fans at a baseball stadium.
“Buffett never wanted to be the baseball manager who listened to the screaming bleacher fans, he never wanted to listen to the bleacher section that is Wall Street,” Matthews said. “(Buffett) wanted fans and shareholders who could really understand and who trusted what he was doing, and I wanted to show that in this book.”
Matthews’ book is written in a blog-like format and can be read and understood by people who may not have an extensive financial background, Matthews said.
“At Berkshire, you don’t need to be a financial genius,” Matthews said. “You just need to have the ability to read his shareholders letters and the owner’s manual that outlines the 15 principles of the company.”
Matthews says he has written the book in a very clear-eyed format.
“I wanted people to be able to take their own trip to the Berkshire annual meeting the way I did, but I also didn’t want it to be just a tribute to Warren Buffett,” he said. “I didn’t want it to be all about just the good stuff because there is a lot of stuff that happens when you run a company the way he does that isn’t necessarily great. I’m a hedge fund manager, and so I’m used to looking at the situation from both sides, and so I wanted to bring that approach to the book as well.”
The book describes the atmosphere of the annual meetings, which have been called the “Woodstock of Capitalism.”
“There is a lot of stuff in there you will not read anywhere else,” Matthews said. “(The annual meeting) is like a big party, like Woodstock without the drugs, nudity and loud music. These fairly like-minded people come together from all over the world to enjoy themselves in an atmospheric gathering that’s not about rock music or drugs. It’s about money, and it’s really about investing for the long haul. Plus, it’s fun and not meant to be deadly serious. The ‘Woodstock of Capitalism’ is a pretty good sobriquet for it.”
At the annual meetings, Buffett and Munger take questions from the shareholders. They answer each and every one honestly and to their best ability, Matthews said.
“There are no lawyers or PR professionals censoring shareholders or directing the conversation,” Matthews said. “The only questions he won’t answer are about what the company is looking to invest in now, and that’s only to protect the value of the investment.
“Everything else is on the table, and the book explains some of the questions he has answered. People have come to view Buffett as an intellectual Superman, they ask questions about their lives, their careers and what they should do, and he answers them all,” Matthews said.
According to Matthews, Buffett has a strong focus on making money, and in the end, that is his job.
“The lessons we can learn from Buffett are very simple,” Matthews said. “At the end of the day, it’s strictly business. There is no heavy math involved, no complex calculations and you don’t even have to be a hedge fund manager or an MBA to get it. And sometimes it pays to be somewhere other than Wall Street.”