INVESTOR IN THE FAMILY Radio

Join us at the June 2017 DIY Investing Summit! Hear from nine top investors from Seeking Alpha as we discuss the outlook for the second half of 2017 plus lots of timeless investing wisdom.

Join us at the June 2017 DIY Investing Summit! Hear from nine top investors from Seeking Alpha as we discuss the outlook for the second half of 2017 plus lots of timeless investing wisdom.

Join us at the June 2017 DIY Investing Summit! Hear from nine top investors from Seeking Alpha as we discuss the outlook for the second half of 2017 plus lots of timeless investing wisdom.

Join us at the June 2017 DIY Investing Summit! Hear from nine top investors from Seeking Alpha as we discuss the outlook for the second half of 2017 plus lots of timeless investing wisdom.

Join us at the June 2017 DIY Investing Summit! Hear from nine top investors from Seeking Alpha as we discuss the outlook for the second half of 2017 plus lots of timeless investing wisdom.

Join us at the June 2017 DIY Investing Summit! Hear from nine top investors from Seeking Alpha as we discuss the outlook for the second half of 2017 plus lots of timeless investing wisdom.

Welcome to Episode 6 of the "Becoming Buffett" Series!

This week we discuss the 1970 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

Some brief notes:

1970

First letter signed by Buffett

• Very diverse earnings across various operations
• • Bank had record earnings
  • Insurance had some setbacks but still excellent returns
  • Textile became more and more difficult and broke-even
  • Highlights the value of diversifying
• Overall BH return of ~10%
• • This is far better than would have been the case if BH had remained exclusively devoted to the textile business
  • Again, reinforces why strategic diversification can be so valuable
• Continue to face strong headwinds in textile operations
• • Actively working to make the most of the situation, including costly decisions to BH and employees
  • Are we willing to make an honest assessment of our "business (household)" and make appropriate changes? Ex: cut expenses, take a step of faith and try to start a new income stream, etc.
• New insurance division will take years before a real evaluation can be made (long-term mindset)
• • How long are we willing to wait for an investing thesis to play out?
  • What if an investment loses money for 3 years, then returns 20%+ for 10 years straight, would that be worth the wait?
• Surety business
• • Operated at a significant underwriting loss
  • Contractor's bond field was a disappointment
  • Even Buffett and BH make investments that don't' appear to work out, nobody is perfect at this!
• Launched a new business/subsidiary out of National Indemnity (insurance operation) and plan to open a new one in 1971
• • BH began launching new companies/subsidiaries
  • This is a new method, methods so far:
  • • Full acquisitions
    • Common stocks (no longer)
    • Starting new businesses
    • What options are on the table for you and I?
• Buffett is quick to celebrate his operational managers and give them credit
• • Strong management is central to his acquisition philosophy
  • Are you surrounding yourself with people smarter than you?
  • Are you trusting your capital to people smarter than you?
  • Are you humble enough to admit and act on this?
  • Bonus: Would you hire yourself to manage your business?

http://investorinthefamily.com/

Interview with Chris Rawley

Not a farmer

Did not grow up in the ag world

Military - Navy

Went to work in real estate

First alt investing was real estate

Worked in different industries

Few years ago became enamored in ag as asset class

Ag is an asset class that is taken for granted

Crowdfunding act of 2012 for investors

• Pooling small $ together to buy larger assets
• Allowed retail crowdfunding for non-accredited investors

A number of real estate funds focusing on apt buildings, etc

Created "harvest returns" about a year ago

Put money in private placements of ag

Have investors w existing land and make the opportunity available for investors

Focused on the production side (crops, land, etc)

HR focused on accredited investors

Non-accredited by end of the year

Reasons to invest in ag

• World population
• • Urbanization - arable land is shrinking
  • Wealthy populations shift from plant protein to animal protein, more ag devoted to protein
• Returns
• • Farmland has outpaced S&P, reits, gold, since 1970
  • The underlying land
  • Price of crops has increased
  • Operations of the land
• Tangible
• • Like real estate
  • Real land
  • Returns positively correlated to inflation

Common investment for large institutions

Very challenging to access these investments

There are some farmland and timberland REITs

• Problem: correlated with greater stock market

There are some funds but have really high minimums ($250K)

Liquidity is a double-edged sword

Allowing on the marketplace:

• Confidence in management team
• Location, trends
• Expected returns

Regulatory environment

• Act of 2012
• SEC published rules for
• Big learning curve regarding regulation

How will you validate yourself to a skeptical market?

• Why is ag a good investment?
• Why crowdsourcing a safe/good idea?
• Learning curve on the farmer side

Looking for people raising $500K-$2M

Sale/leaseback deals

Provide creative financing opportunities

How much of portfolio? ~5-15%

https://www.harvestreturns.com/

http://investorinthefamily.com/

Welcome to Episode 5 of the "Becoming Buffett" Series!

This week we discuss the 1969 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

Some brief notes:

1969

• Proceeds from funds temporarily utilized in marketable securities were able to fund major purchase of 1969 (The Illinois National Bank and Trust Co.).
• • Used money from stock investments to make an acquisition
  • Perhaps someday we could take money out of an IRA or other account and acquire a company?
• Allocating capital into securities like this allowed BH to see annual returns of more than 10% as compared to the return in textile operations of only 5%
• • Buffett saw that BH's core business was struggling and diversified into stronger sectors (insurance, stocks, etc)
  • Do you have a metric or means for measuring the total return on capital for your household, factoring in all data points (ex: your salary, raise, investments, etc.)?
• "We anticipate no further purchases of marketable securities, but our search for desirable acquisitions continues."
• • Any such acquisition would be dependent upon obtaining proper financing.
  • BH was open to borrowing in order to take advantage of the right opportunity, how do you feel about that for yourself?
• Textile business is struggling, slowdown greater than expected and recovery for the sector appears dependent upon Federal Gov intervention
• Insurance company continues to perform wonderfully
• • New California operation will take a few years before an intelligent verdict can be made about operating results
  • Yet another reminder to be patient with investments when the buy thesis is still intact
  • When was last time you were patient (meaning years) in waiting for an investment to finally materialize?
  • What is your patience threshold? Years? Months? Weeks?
• Acquired a bank
• • Bank is operating at peak profits and performance
  • BH bought a bank performing at the top of it's game, did not go into details as to the price of acquisition. Was okay buying at it's peak because of value it could bring to BH overall and in future.
  • Don't have to limit ourselves to companies that are struggling (often mindset in value investing)

http://investorinthefamily.com/

Welcome to Episode 4 of the "Becoming Buffett" Series!

This week we discuss the 1968 letter to Berkshire Hathaway shareholders.

Buffett's annual letters book: http://amzn.to/2ogVi4U

Some brief notes:

1968

"Immediately after year end, we purchased all of the stock of Sun Newspapers, Inc. and Blacker Printing Company, Inc., which represents an initial entry into the publishing business."

• Working hard to improve operating earnings in textile ares
• • They aren't just abandoning the investment at the first sign of trouble, willing to be patient to allow thesis to play out.
• Letter now divided into three sections: textile operation, insurance operations, and marketable securities/acquisitions
• • Could you have one more income stream 3 years from now?
• Insurance operations going well
• • Investment income increased substantially in 1968
  • Capital gains from common stock investments
  • "The insurance companies continue to seek new areas for expansion"
  • Could you make ONE great investment this year that could reward you for years to come?
• Marketable securities/acquisitions
• • Funds were held in common stocks as a temporary investment while waiting for acquisition or expansion opportunities
  • Bought Sun Newspapers, Inc. and Blacker Printing Company, Inc. as entries into the publishing industry
  • "This purchase, while small, has the potential for future expansion."
  • • Is there a local, private company you could buy an interest in (or buy outright)?
    • Let's stretch our thinking in regard to the options available to us as investors
• Management of insurance and publishing companies continued under existing leadership after acquisition
• • Quality mgmt is a big deal to Buffett
  • Is it for you?
  • Are YOU a quality manager of your business (household)?
  • The benefits of great management is that you now have super talented people working to make you money; work to surround yourself with people smarter than you!

http://investorinthefamily.com/