The Digest #168
Charles F. Feeney's philanthropy, Howard Marks makes the case for credit, Spin-offs, Birkenstock's IPO, Costco's clothing, Todd Combs interview, Equifax, and more ...
Charles F. Feeney
It takes a great deal of talent to accumulate billions of dollars but the same is also true for giving away large amounts of money in a thoughtful way. Charles F. Feeney, who died on October 9 at the age of 92, built a multi-billion dollar fortune as co-founder of Duty Free Shoppers. By 2020, his entire fortune was gone.
Through The Atlantic Philanthropies, Mr. Feeney successfully allocated all of his accumulated capital, content to fund his retirement with $2 million. His desire was to give anonymously, although his activities were revealed due to a lawsuit in 1996 related to his company’s sale to LVMH. In 2002, Atlantic Philanthropies announced that its final grant would be made in 2016 and that it would cease operations in 2020.
Mr. Feeney was Cornell’s most generous donor. The university’s obituary describes how massive projects were funded on an anonymous basis with Mr. Feeney receiving no credit whatsoever for his generosity. After his gifts became known, Cornell received Mr. Feeney’s permission to rename a street in his honor.
For most billionaires, the thought of retiring on $2 million would be horrifying. However, Mr. Feeney seems to have taken frugality to an entirely different level. In a 2003 interview, he couldn’t conceive of buying a Rolex when a $15 watch does the job very well. In his 70s at the time, Mr. Feeney took taxis or the subway when he was in New York City and flew economy class. He had no desire to live in a large home.
What drove Chuck Feeney’s philanthropy? He clearly had a desire to see his wealth make a positive impact during his lifetime and had no personal aspirations to consume any meaningful wealth. As a result, giving away his money imposed no personal sacrifice in terms of a lower standard of living. This takes nothing away from Mr. Feeney’s generosity but does seem to explain what made it possible.
For readers interested in learning more about Chuck Feeney, I recommend listening to Founders Podcast #171 which covers his biography.
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A new article for paid subscribers was published on Monday which looks at Costco’s director compensation as a potential model for Berkshire Hathaway in the future. A free introduction is included in the article prior to the paywall.
Further Thoughts on Sea Change by Howard Marks, October 11, 2023. In this memo originally released to Oaktree clients in May, Howard Marks makes the case for a reallocation from equity to credit given that high yield bonds now offer contractual terms similar to the historical return on equities. (Oaktree Capital)
Audio presentation of the memo, 34 minutes.
Costco Clothing Is Cheap. WSJ Readers Love It. But Is It Actually Good Value? by Jamie Waters, October 6, 2023. I recently mildly ridiculed the expensive tastes of the Wall Street Journal’s Off Duty section, particularly when it comes to men’s clothing. So I am obligated to include this Off Duty article covering clothing … at Costco! (WSJ)
The Thin Line Between Bold and Reckless by Morgan Housel, October 5, 2023. “The line between inspiringly bold and foolishly reckless can be a millimeter thick and only visible with hindsight. But it’s easy to view the process that led to successful outcomes as something to emulate, and the process that led to failures as something to avoid.” (Collaborative Fund), October 11, 2023. John Steinbeck’s son describes how he was tricked into reading using a form of reverse psychology: “[My father] actually once bought this lowboy cabinet and locked all the books he wanted us to read in it with this gigantic key and hid it on top. We went through that in about two years. We’d sneak down every night with flashlights and unlock this thing. We were about eight and nine. And my father said, ‘Don’t ever let me catch you touching anything in that cabinet.’” (Hey Pop)
Todd Combs - Investing, the Last Liberal Art, October 9, 2023. 1 hour, 11 minutes. “Todd Combs is an Investment Manager at Berkshire Hathaway and CEO of GEICO. We cover his journey to working alongside Warren Buffett and Charlie Munger, how to build range across skill sets, and tactics to compound for decades.” (Art of Investing)
Valuation and Capital Allocation in Declining Industries, October 5, 2023. 55 minutes. “In this episode, Phil Ordway, Elliot Turner, and John Mihaljevic discuss valuation and capital allocation in declining industries.” (This Week in Intelligent Investing)
Be Useful — Arnold Schwarzenegger, October 2, 2023. 1 hour, 19 minutes. “No country ever was built by people sleeping in. Austria was not built by people sleeping in. America was not built by people sleeping in. People struggled, people suffered, people worked their asses off to build this country.” (Tim Ferriss Show)
Where Do You Draw the Line Between Money Mind and Style?, October 11, 2023. 1 hour, 13 minutes. Alice Schroeder, one of Warren Buffett’s biographers, has said that he has a “money mind”, or a “sixth sense” for identifying opportunities. This podcast explores the importance of a money mind for investors. (Focused Compounding)
Equifax: Your Score & More, October 4, 2023. 1 hour. “We cover Equifax's long history as a credit reporting bureau, the competitive dynamics and pricing structure of the industry, and why its employee verification tool is now its crown jewel.” (Business Breakdowns)
Jerusalem from the Mount of Olives
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