Reflections on Value Investing

Reflecting on the economics of The Sainted Seven.

noreply@blogger.com (Shai Dardashti) — Mon, 09 Nov 2009 23:06:00 +0000

Berkshire owns a set of sizable businesses that Buffett bought, one by one, and that he calls his Sainted Seven. They are the Buffalo News; Fechheimer Brothers, a Cincinnati manufacturer and distributor of uniforms; the Nebraska Furniture Mart, an Omaha retailer that sells more home furnishings than any other store in the country; See's Candies, the dominant producer and retailer of candy in California; and three operations that Buffett took into the fold when Berkshire bought Scott & Fetzer of Cleveland in 1986: World Book, Kirby vacuum cleaners, and a diversified manufacturing operation that makes industrial products such as compressors and burners.

A MOTLEY CREW, yes -- but in his 1987 annual report, Buffett the businessman comes out of the closet to point out just how good these enterprises and their managers are. Had the Sainted Seven operated as a single business in 1987, he says, they would have employed $175 million in equity capital, paid only a net $2 million in interest, and earned, after taxes, $100 million. That's a return on equity of 57%, and it is exceptional. As Buffett says, ''You'll seldom see such a percentage anywhere, let alone at large, diversified companies with nominal leverage.''

Full Article

Fortune Magazine, written by Carol Loomis, published April 11, 1988

The History & Operating Philosophy of TTI, Inc.

noreply@blogger.com (Shai Dardashti) — Mon, 09 Nov 2009 16:42:00 +0000

Direct Link to PDF File

***

From TTI Inc. Website:

Headquartered in Fort Worth, Texas, TTI, Inc. is the world’s leading authorized distributor specialist offering passive, connector, electromechanical and discrete components. TTI’s extensive product line and supply chain solutions have made the company the distributor of choice for industrial, military, aerospace and consumer electronic manufacturers worldwide.
TTI’s extensive product line includes: resistors, capacitors, connectors, discretes, potentiometers, trimmers, magnetic and circuit protection components, wire and cable, wire management, identification products, application tools, and electromechanical devices. These products are distributed from a broad line of manufacturers. TTI strives to be the industry’s preferred information source by offering the latest IP&E technology and market information through the online MarketEye Research Center. MarketEye includes articles, technical seminars, RoHS, seminars, industry research reports and much more.
TTI’s products, personalized service and custom supply chain solutions have earned us the most preferred passives distributor title by CMP Publications. TTI employs more than 1,500 people at more than 50 locations throughout North America, Europe and Asia.

About Us

***

Joins Berkshire Hathaway Family of Companies

via Bloomberg.com:

Fort Worth, Texas-based TTI, which Buffett bought in 2007, is also in the distribution business. It buys components that are used in an array of electronic devices and sells them to manufacturers around the world. ``We sell cheap parts better than anyone,'' CEO Andrews declares in his Texas drawl, before correcting himself: ``We sell inexpensive parts better than anyone.''

No Losses

TTI has carved out a niche in so-called passive components -- connectors, capacitors and resistors. They sell for an average of less than 4 cents each. With 2007 revenue of $1.4 billion, TTI operates in an industry with thin margins. Everything about TTI is low cost: Its Spartan headquarters is tucked inside a 276,000- square-foot (25,600-square-meter) warehouse.
Andrews, 65, started TTI in his living room in 1971 after being laid off from a purchasing job at General Dynamics Corp. Over the years, he plowed profits back into inventory and rode out the cycles of the electronics industry that forced many rivals to sell or fold. Andrews says TTI has never posted an annual loss and has never laid off an employee.

Today, TTI's inventory is enormous. An Apple iPod may have about 500 components, and TTI says it stocks 450 of them. All told, the company sells more than a million different kinds of parts. TTI buys them from manufacturers such as Malvern, Pennsylvania-based Vishay Intertechnology Inc. and Greenville, South Carolina-based Kemet Corp. ``When you come down to it, they are an extension of
our sales force,'' Kemet CEO Per-Olof Loof says.

Full story

The Blind Watchmaker - Documentary

noreply@blogger.com (Arpit Ranka) — Mon, 09 Nov 2009 11:04:00 +0000

An excellent documentary on Richard Dawkin's 'The Blind Watchmaker.'

Reflections on Burlington Northern Santa Fe

noreply@blogger.com (Shai Dardashti) — Tue, 03 Nov 2009 16:40:00 +0000

v1.0: Road, 1979.

Telling Testimony:

v2.0: Rail, 2009.

The Psychology of Money and Habits

noreply@blogger.com (Arpit Ranka) — Mon, 02 Nov 2009 04:17:00 +0000

The following article by Dan Ariely, the author of Predictably Irrational, wonderfully highlights the dilemma each one of us has to deal with when it comes to making decisions in complex adaptive systems and tools we employ to deal with the situation and why it is important, but difficult, to tinker.

... After all, if we’ve done something for five years, it must be a great decision. But if we understand that long-term, repeated behaviors might reflect our habitual decision-making in the face of complex financial decisions more than they reflect what is truly best for us, we might first examine our old habits and carefully consider whether they indeed make sense or not...

Full Article

Charlie Rose Interviews Lee Kuan Yew

noreply@blogger.com (Shai Dardashti) — Thu, 29 Oct 2009 03:18:00 +0000

Conversations from 2000, 2004, and 2009

Direct Link

Also: From Third World to First: The Singapore Story: 1965-2000

In this memoir, the man most responsible for Singapore's astonishing transformation from colonial backwater to economic powerhouse describes how he did it over the last four decades. It's a dramatic story, and Lee Kuan Yew has much to brag about. To take a single example: Singapore had a per-capita GDP of just $400 when he became prime minister in 1959. When he left office in 1990, it was $12,200 and rising. (At the time of this book's writing, it was $22,000.)

Much of this was accomplished through a unique mix of economic freedom and social control. Lee encouraged entrepreneurship, but also cracked down on liberties that most people in the West take for granted--chewing gum, for instance. It's banned in Singapore because of "the problems caused by spent chewing gum inserted into keyholes and mailboxes and on elevator buttons." If American politicians were to propose such a thing, they'd undoubtedly be run out of office. Lee, however, defends this and similar moves, such as strong antismoking laws and antispitting campaigns: "We would have been a grosser, ruder, cruder society had we not made these efforts to persuade people to change their ways.... It has made Singapore a more pleasant place to live in. If this is a 'nanny state,' I am proud to have fostered one."
Lee also describes one of his most controversial proposals: tax breaks and schooling incentives to encourage educated men and women to marry each other and have children. "Our best women were not reproducing themselves because men who were their educational equals did not want to marry them.... This lopsided marriage and procreation pattern could not be allowed to remain unmentioned and unchecked," writes Lee. Most of the book, however, is a chronicle of how Lee helped create so much material prosperity. Anticommunism is a strong theme throughout, and Lee comments broadly on international politics. He is cautiously friendly toward the United States, chastising it for a "dogmatic and evangelical" foreign policy that scolds other countries for human-rights violations, except when they interfere with American interests, "as in the oil-rich Arabian peninsula." Even so, he writes, "the United States is still the most benign of all the great powers.... [and] all noncommunist countries in East Asia prefer America to be the dominant weight in the power balance of the region." From Third World to First is not the most gripping book imaginable, but it is a vital document about a fascinating place in a time of profound transition. --John J. Miller

William J Bernstein: Provides Free Chapter Of Upcoming Book "The Investors Manifesto: Preparing For Prosperity, Armageddon, & Everything In Between"

noreply@blogger.com (Miguel) — Wed, 28 Oct 2009 22:18:00 +0000

Several weeks ago Shai linked to a google talk by William Bernstein, today I was lucky to find this free chapter from his upcoming book.

William Bernstein is an efficient market guy...so I link to this cautiously. Bernstein's a great writer and for the average investor (who is unlikely to dedicate much time to picking stocks) his advice is spot on.

Click Here For A Free Chapter Of "The Investors Manifesto: Preparing For Prosperity, Armageddon, & Everything In Between

William Bernstein Background (Via Wikipedia)

William J. Bernstein is an American financial theorist. He is known for his research in the field of modern portfolio theory and for his self-help finance books for individual investors who wish to manage their own equity portfolios.

Bernstein is a proponent of the equity or index allocation school of thought, believing that all equity selection strategies should be focused on allocating between asset classes, rather than selecting individual stocks and bonds, or from the timing of their sales. Bernstein's first book, The Intelligent Asset Allocator, makes this case in detail; his second book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio (McGraw-Hill, 2002; ISBN 0071385290), is aimed for those less comfortable with statistical thought. It also puts asset-class returns into long-term historical perspective.

Bernstein's third book, The Birth of Plenty, is a history of the world's standard of living; it proposes four conditions that have historically been necessary for it to rise. His fourth book, A Splendid Exchange: How Trade Shaped the World, published in April 2008 by Grove Atlantic, is a history of trade.

Excerpt (Via Efficient Frontier)

I emphasize three main principles: fi rst, to not be too greedy; second, to diversify as widely as possible; and third, to always be wary of the investment industry. People do not seek employment in investment banks, brokerage houses, and mutual fund companies with the same motivations as those who choose to work in fi re departments or elementary schools. Whether investors know it or not, they are engaged in an ongoing zero - sum, life - and - death struggle with pirhanas, and if rigorous precautions are not taken, the fi nancial services industry will strip investors of their wealth faster than they can say “ Bernie Madoff. ”

Click Here For A Free Chapter Of "The Investors Manifesto: Preparing For Prosperity, Armageddon, & Everything In Between"

A Glimpse into MidAmerican Energy Company

noreply@blogger.com (Shai Dardashti) — Wed, 28 Oct 2009 16:12:00 +0000

SEC filings for MidAmerican Energy Company dating back to 1995.

Annual Report for fiscal 2008
Prospectus for 5.30% Senior Notes due 2018

Also:

CNBC Interview with David Sokol, Chairman of MidAmerican Energy Holdings, recorded October 26, 2009

Assorted Headlines: "The City and its Tower"

noreply@blogger.com (Shai Dardashti) — Wed, 28 Oct 2009 14:43:00 +0000

אֶת-הָעִיר וְאֶת-הַמִּגְדָּל

Then: October 2008

[Columbia University Professor Bruce Greenwald] kicked off the panel with a discussion of the market’s attitude toward risk, arguing that euphoria and complacency had led to its global underpricing. At the peak of the market, he noted that an investor could have purchased CDS, or insurance against default, on Dubai’s government bonds for only 4 basis points.
Greenwald believes that it works in investors’ favor that insurance is always the cheapest when it is the most desirable, and that investors should seek out high quality assets with insurance-like characteristics when everyone else is completely unconcerned with risk.

Full Notes

Now: October 2009

...Recently, via Bloomberg.com

Dubai Bonds May Yield Same as Companies One Level Above Junk

The sheikhdom’s planned dollar-denominated securities, which aren’t rated, will be sold to yield 350 basis points to 400 basis points over the benchmark midswap rate, said three investors approached for the sale. That equates to a premium of 50 basis points, or 0.50 percentage point, more than debt sold by Russian issuers such as OAO Sberbank, which is rated BBB, two levels above high-yield, high-risk debt, Commerzbank AG says.

“It’s pretty fair to consider Dubai an investment grade credit at the BBB- or even a BBB level,” Luis Costa, an emerging-market debt strategist in London, said in a telephone interview. “Although the credit-quality may be aligned to its other BBB-area peers, you still have to input some premium given the leverage in Dubai.”

...

Dubai’s credit-default swaps, which get cheaper as perceptions of credit quality improve, trade more like Egypt, whose debt carries a junk rating of BB+ from S&P.

The contracts linked to Dubai debt cost about 294 basis points, higher than the 211 basis points for Egypt’s credit default swaps. Dubai’s swaps remain the sixth-costliest of 39 emerging markets, according to Bloomberg data.

Full Story

...Recently, via Forbes.com

Credit default swap rates for five-year Dubai debt stand at just below 300 basis points, well below 943 points in February.

Full Story

Guns, Germs and Steel - Documentary

noreply@blogger.com (Arpit Ranka) — Wed, 28 Oct 2009 05:56:00 +0000

An excellent documentary on the pulitzer prize winning book, 'Guns, Germs and Steel,' which has been recommended by Charlie Munger and Bill Gates.

Connecting the Dots

noreply@blogger.com (Max Olson) — Wed, 28 Oct 2009 03:15:00 +0000

In his 2003 article Connecting the Dots, Malcolm Gladwell writes about the limitations of intelligence gathering, separating signal from noise, and the problems with Hindsight Bias:

Fischhoff calls this phenomenon “creeping determinism” — the sense that grows on us, in retrospect, that what has happened was actually inevitable — and the chief effect of creeping determinism, he points out, is that it turns unexpected events into expected events. As he writes, “The occurrence of an event increases its reconstructed probability and makes it less surprising than it would have been had the original probability been remembered.”

Throughout the article, a lot of comparisons can be made between intelligence gathering and investing:

The central challenge of intelligence gathering has always been the problem of “noise”: the fact that useless information is vastly more plentiful than useful information. . . . Nor are their analysts mind readers. It is only with hindsight that human beings acquire that skill.

Relating to the current financial crisis, Gladwell also relays a warning about the unintended consequences of the Hindsight Bias:

In attempting to solve one kind of intelligence problem (overdiagnosis), the hospital simply created another problem (underdiagnosis). This is the second, and perhaps more serious, consequence of creeping determinism: in our zeal to correct what we believe to be the problems of the past, we end up creating new problems for the future.

Click here to read "Connecting the Dots" by Malcolm Gladwell
"Connecting the Dots" is also in Gladwell's new book What the Dog Said.

Sergey Brin Donates $1 Million To Organization That Helped Him Migrate To The U.S.

noreply@blogger.com (Shai Dardashti) — Wed, 28 Oct 2009 00:51:00 +0000

Google co-founder Sergey Brin has donated $1 million to the Hebrew Immigrant Aid Society (HIAS), the organization that played a critical role in helping his family escape anti-Semitism in the Soviet Union and migrate to the States thirty years ago.

...Notably, Brin cites Microsoft founder and Chairman Bill Gates as an example:

Mr. Brin noted that Bill Gates, the chairman of Microsoft, was widely criticized for not giving away enough money but is now known as one of the world’s leading philanthropists.

“While everyone was criticizing him, he was generating a whole lot more money for his foundation, and ultimately, when he got serious about philanthropy, he did it really well,” Mr. Brin said. “I’d like to learn from that example.”

Full Story

In recent years, HAIS has been helping Iranian minorities:

HIAS was selected early this decade by the State Department to be the sole agency for processing Iranian minorities from Vienna, where it operates what it calls an "overseas processing entity." In 2004, Congress passed a law that made it easier for religious minorities from Iran to qualify as refugees.

U.S. funding for HIAS's work on behalf of Iranians has almost tripled, from $1.24 million in 2002 to $3.46 million in 2007, because of an increase in applications. The United States, which is at odds with Iran over its nuclear ambitions and role in the war in Iraq, classifies Iran as one of eight "countries of particular concern" because of what the State Department calls severe violations of religious freedom.

This designation "provides the substantive basis for running a refugee program for Iranian religious minorities," said Gideon Aronoff, chief executive of HIAS. "It speaks for itself that there are people who feel there is a need for this type of program to provide them with safety."

Washington Post - February 29, 2008

Kol Ha'kavod, Sergey.

(And as a first generation American-Persian Terp, thank you.)

Escaping Perfectionism

noreply@blogger.com (Arpit Ranka) — Tue, 27 Oct 2009 05:29:00 +0000

According to the World Database of Happiness (yes, there is one), Iceland is the happiest place on earth. That's right, Iceland. Yes, I know it's cold and dark six months out of the year there. I'm just giving you the data.

The secret to their happiness? Eric Weiner, Author of The Geography of Bliss, traveled to Iceland to find out. After interviewing a number of Icelanders, Weiner discovered that their culture doesn't stigmatize failure. Icelanders aren't afraid to fail — or to be imperfect — and so they're more willing to pursue what they enjoy. That's one reason Iceland has more artists per capita than any other nation. "There's no one on the island telling them they're not good enough, so they just go ahead and sing and paint and write," Weiner writes.

Which makes them incredibly productive. They don't just sit around thinking they'd like to do something. They do it. According to the psychologist Mihaly Czikszentmihalyi, who wrote the book Flow: The Psychology of Optimal Experience, "It is not the skills we actually have that determine how we feel but the ones we think we have."

So if you think you're good at something, whether or not you are, you'll do it. The converse is also true: if you think you aren't good enough at something, you won't do it.

Full Article

Charlie Munger - Interview with BBC

noreply@blogger.com (Arpit Ranka) — Tue, 27 Oct 2009 05:19:00 +0000

Introduction:

"Charlie Munger is Warren Buffett's long-time business partner, and the Vice-Chairman of Berkshire Hathaway.

Like Buffett, he was born in Omaha, but became a lawyer in Los Angeles before meeting Buffett, and becoming a fellow investor. The two spent many hours on the phone together, discussing business, and evolving the approach to investing that has paid off so spectacularly for them both.

Today, Munger says he may only speak to Buffett once a week, but his key influence on the success of Buffett's enterprise over many decades is undisputed."

Link to the Video

The Link Between Economic Opportunity & Prosperity

noreply@blogger.com (Shai Dardashti) — Mon, 26 Oct 2009 17:57:00 +0000

The 2009 Index of Economic Freedom Covers 183 countries across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights.

Index of Economic Freedom World Rankings

How the small investor can beat the market

noreply@blogger.com (Shai Dardashti) — Mon, 26 Oct 2009 17:51:00 +0000

How the small investor can beat the market
Joel M . Greenblatt , Richard Pzena , and Bruce L . Newberg

The Journal of Portfolio Management Summer 1981, Vol. 7, No. 4: pp. 48-52
DOI: 10.3905/jpm.1981.408811

Direct Link

Harvard Business School Case Study on BYD

noreply@blogger.com (Shai Dardashti) — Mon, 26 Oct 2009 15:50:00 +0000

BYD Company, Ltd. by Robert S. Huckman, Alan MacCormack

24 pages. Publication date: Apr 12, 2006. Prod. #: 606139-PDF-ENG

Considers whether BYD Co., Ltd., the largest Chinese maker of rechargeable batteries, should enter the Chinese automobile industry by acquiring Qinchuan Auto, a state-owned car manufacturer. Set just after BYD's initial public offering on the Hong Kong Stock Exchange in 2002, it describes the development of BYD's labor-intensive approach to battery manufacturing--an approach decidedly different from its more capital-intensive Japanese competitors and one that took advantage of the abundant supply of low-cost labor in China.

Highlights the unique benefits and challenges created by BYD's operations strategy and asks students to determine whether the capabilities developed by the company in battery manufacturing can productively be applied to the automobile sector. Asks students to consider which, if any, aspects of BYD's operations constitute sources of sustainable competitive advantage for the company.

Direct Link

Transcript: George Soros interview

noreply@blogger.com (Shai Dardashti) — Mon, 26 Oct 2009 15:48:00 +0000

Chrystia Freeland, [Financial Times] US managing editor, interviewed George Soros, the fund manager, about the state of the world economy, relations between the US and China, his investment performance and regulating bankers’ compensation. This is a transcript of that interview.

Direct Link

Persuasion Tactics by Prof. Sanjay Bakshi

dahhuilaudavid@gmail.com (Dah Hui Lau) — Sat, 24 Oct 2009 16:31:00 +0000

Prof. Sanjay Bakshi was recently invited by India’s Ministry of Finance to make a presentation to delegates from seventeen third-world nations who had come to India for a training program.

The presentation on “Persuasion Tactics” can be downloaded from here.

"You cannot spend you way out of recession or borrow your way out of debt."

noreply@blogger.com (Shai Dardashti) — Fri, 23 Oct 2009 18:51:00 +0000

The 24 pages that follow are as interesting as the introductory quote.

Fushi-Copperweld: The shape of deals to come?

noreply@blogger.com (Shai Dardashti) — Fri, 23 Oct 2009 18:35:00 +0000

Excerpt posted at TheDeal.com on December 20, 2007 at 3:01 PM:

Fushi-Copperweld: The shape of deals to come?

As news stories go, a visit to Nasdaq Wednesday by some executives from Fushi International Inc. couldn’t hope to compete with the $5 billion that China Investment Corp. ltd. pumped into capital-impaired Morgan Stanley. Yet a small U.S. acquisition by Nasdaq-listed Fushi says more about the kinds of deals ordinary Chinese companies will be looking for as they pick up the pace in their U.S. acquisition activity.

Founded in 2001 and posting 100%-plus annual growth rates, Dalian, China-based Fushi makes bimetallic wires used in telecom and other applications.
As Chris Wang, Fushi’s CFO, explained in an interview Wednesday, Fushi needed more manufacturing capacity plus access to global markets and a brand that’s known outside China.

Enter Copperweld Bimetallics LLC of Fayetteville, Tenn. Founded in 1915 but left a corporate orphan by a series of restructurings, Copperweld was privately owned, burdened by debt in a business that requires ample working capital and needed access to the booming market in China. It also has significant excess capacity.

Copperweld approached Fushi, and after a meeting in Beijing things moved fast. In September Fushi, advised by Houlihan Lokey, bought Copperweld for $22.5 million, including assumed debt. Copperweld’s CEO, Chris Finley, is now chief operating officer of the combined company; Fushi founder Li Fu is chairman and CEO.

The company will have sales of about $150 million in 2007, and a Piper Jaffray & Co. report projects sales of $332 million in 2009.

Finley, a wire industry veteran, will divide his time between China, the U.S. and a facility in England. He’ll also be getting a full-time translator. Asked about the biggest surprise so far on the integration front, he said: “How quickly Fushi committed to Copperweld’s capital plan.”
Given the social and political reverberations of such deals, that’s an important point. Some Copperweld equipment is being moved to China, but Finley says it’s machinery purchased on the eve of the telecom bust in 2000 and never put to use. In a statement issued on the eve of a China trade visit by Tennessee Governor Phil Bredesen — who was scheduled to meet with Finley and Fu in Beijing — Finley spoke of “the development of innovative new products, processes and technologies right here in Tennessee.” — Kenneth Klee

Direct Link

(The future is now?)

The Story of General Motors and the Free Lunch.

noreply@blogger.com (Shai Dardashti) — Wed, 21 Oct 2009 18:24:00 +0000

"General Motors Getting Eaten Alive by a Free Lunch"

That was a headline from The Washington Post...on April 19, 2005

***

In subsequent events...

Xi'an has reaches its vehicle production target of 2009 with 326,365 units in the first three quarters, according to the Xi'an Development and Reform Commission.

The capital city of Shaanxi Province made a total output value of 34.9 billion yuan in the automobile industry and earned $350 million through exports.

BYD manufactured more than 269,000 units for the first nine months of the year at its plant in Xi'an, up 167 percent from a year earlier, making a 12.9 billion yuan output value; Shaanxi Automobile Group made 56,000 units in heavy-duty cars, down 5.7 percent year-on-year, making a 16.6 billion yuan output value.

The major vehicle parts manufacturer Shaanxi Fast Auto Drive Group Company produced 380,000 gearboxes from January to September, dropping 26 percent from a year earlier, making an output value of 5.37 billion yuan.

Direct Link

Very back of the envelope...

269,000 units with an "output value" of $12.9 billion yuan
Translates to roughly 48,000 yuan "output value" per unit
Adjusts to approximately $7,030 "output value" per unit

***

Epitaph: General Motors Eaten Alive by a Free Lunch

The World is Flatter.

noreply@blogger.com (Shai Dardashti) — Wed, 14 Oct 2009 23:17:00 +0000

With a click of a mouse...

...and many more.

The world is flatter.

Burlington Northern: Western Coal Connection (1970s)

noreply@blogger.com (Shai Dardashti) — Wed, 14 Oct 2009 15:11:00 +0000

Burlington Northern Santa Fe Corporation Second Quarter 2009 Investor's Report

Revenue ton miles (in millions)

Domestic Intermodal: 12,125
International Intermodal: 14,959
Automotive: 940
Total Consumer Products: 28,024
Coal: 69,475
Industrial Products: 21,060
Agricultural Products: 25,144

Total revenue ton miles: 143,703

Freight revenue per thousand ton miles

Domestic Intermodal: $42.23
International Intermodal: $29.68
Automotive: $87.23
Coal: $12.59
Industrial Products: $32.57
Agricultural Products: $24.39

New York Times: Gates Puts Feynman Lectures Online

noreply@blogger.com (Shai Dardashti) — Wed, 14 Oct 2009 01:42:00 +0000

[Bill] Gates, who purchased the rights to the videos privately from the Feynman estate, BBC and from Cornell University, in cooperation with Curtis Wong, a Microsoft researcher, has created a Web site that is intended to enhance the videos by annotating them with related digital content.

...

Mr. Gates said that he had stumbled upon the film version of the lectures a number of years ago, watched them with a friend using a traditional film projector, and “fell in love” with them. The lectures are not the first acquisition of this kind that the software billionaire, has made. In 1994 he acquired the Codex Leicester, a collection of the written work of Leonardo da Vinci, for $30.8 million in an auction. He did not disclose the amount he spent to gain clear title to the Feynman lectures.

“I do think that making science cool to people when they’re young and therefore getting more people to go into it in an in-depth way, I think that’s very important right now,” Mr. Gates said.