April 2019

TO: LIMITED PARTNERS OF SEMPER VIC PARTNERS, L.P.

Results for Semper Vic Partners, L.P. for First Quarter 2019 appear below, along with
cumulative performance since L.P. conversion in July 1990. Partnership results are presented
net of advisory fees or related GP capital allocation and are compared to market indices whose
returns include reinvested dividend income:

SEMPER VIC PARTNERS, L.P.

INVESTMENT PERFORMANCE

Dow S&P
Semper Vic Jones 500
Partners, L.P. Industrial Index

First Quarter 2019 13.8% 11.8% 13.7%

Since L.P. Inception

7/16/90 – 3/31/19
Cumulative 2433.4% 1632.4% 1304.0%
Compound Annual 11.9% 10.5% 9.6%

Investment Position and Outlook

I am pleased to report satisfying results for First Quarter 2019. During the dark moments
of late Fourth Quarter 2018, one might have again allowed themselves the freedom to consider
whether Semper Vic Partners, L.P.’s portfolio decline might have represented leaking balloons
rather than coiled springs. However, as was the case for Full Year 2017, our experience in First
Quarter 2019 suggests that the coiled spring interpretation better described 2018’s soft finish
rather than the leaky balloon.

Let us consider the main contributors to global investment markets during the First
Quarter. First and foremost, let us give credit where credit is due. The Federal Reserve
Chairman, Jerome H. Powell, apparently decided that the pain emanating across global equity
markets arising from rising interest rates was just too painful to endure. Indeed, in the month of
December alone, the basket of once uniformly embraced FAANGs shed over one trillion dollars
of value, succumbing to the march upwards of interest rates. The Federal Reserve’s decision to
relent future rate increases has returned spirit back to equity markets globally. Semper Vic
Partners, L.P.’s portfolio holdings participated fully along with improving sentiment.

Second, and particularly important to Semper Vic Partners, L.P.’s portfolio, global
investor nervous sentiment regarding possible adversity emanating from the US/China trade and
tariff disputes began to dissipate during First Quarter 2019. Investors have been reassured by
news from China attesting to the Chinese consumers’ seeming ability to retain positive consumer
sentiment even while our nations’ leaders trade barbs with one another.

I have been particularly impressed with how the news of China’s continued consumer
confidence has driven performance for many of Semper Vic Partners, L.P.’s largest portfolio
holdings. The 2019 results suggest that, despite headline-grabbing disagreements, China’s
consumer outlook remains robust. Indeed, consumer demand for several of Semper Vic Partners,
L.P.’s major holdings continues to strengthen from Mainland China.

In the spirits industry, demand for international premium spirits has accelerated. Martell,
Pernod Ricard’s market-leading cognac, has seen its cognac volumes in China make a full
recovery over the past years – from 1 million cases imported in 2013, down to 500 thousand
cases imported in 2016 (declining due to governmental bans on excessive, lavish banquets), back
up to 1.1 million cases in 2018. Most recently, Martell reported a 28 percent growth in its
reporting period. Competitor Rémy Martin similarly reported a recent 17 percent growth in
premium cognac sales in China. More specifically, Rémy Martin reported that 30 percent of
their recent cognac sales were in their super-premium brand, Louis XIII. Louis XIII costs nearly
$3,000 per bottle at retail, represents 30 percent of current cognac volumes in China, and year to
date has grown at roughly 35 percent.

Martell’s parent company, Pernod Ricard, represented roughly 7.7 percent of Semper Vic
Partners, L.P.’s assets and advanced roughly under 10 percent during the First Quarter. Pernod
Ricard captured recent market attention when activist investor, Elliott Management Corporation,
announced a position in its shares. Elliott Management commends cost cutting to deliver higher
near-term margins. By contrast, I commend Pernod Ricard management for their capacity to
bear the near-term burden on reported margins caused by deep levels of investments underway to
drive future wealth. Count us in alongside of current management in this case, as I prefer long-
term wealth, and plenty more of it, to higher current operating margins.

Improving prospects for Chinese consumption also helped propel strong First Quarter
2019 performance within Semper Vic Partners, L.P.’s beer industry portfolio and within Semper
Vic Partners, L.P.’s jewelry portfolio. Within beer, Heineken Holding (roughly 7.6 percent of
assets) advanced nearly 19 percent during First Quarter 2019 partially on the strength of its
announced plan to partner with China’s largest brewer, China Resources Beer, to access China’s
premium segment. Similarly, AB InBev (roughly 5.1 percent of assets) advanced 27 percent
during the First Quarter, as the market responded favorably to improved prospects for emerging
market beverages in general and improved prospects for a strong recovery in China’s premium

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beer market. Since AB InBev holds a near 70 percent share of China’s large and fast-growing,
super-premium beer segment, growth in this segment due to ongoing improvements in China’s
consumer attitude is quite rewarding. AB InBev also enjoyed investor enthusiasm over prospects
of reduced interest burden as the earlier rise in interest rates in late 2018 started to slow in 2019.

Strength in Chinese demand for hard luxury goods also drove strong returns in First
Quarter 2019 for portfolio holding companies Compagnie Financière Richemont and The Swatch
Group. Richemont represented 6.6 percent of assets and advanced by nearly 14 percent during
the First Quarter. Reports from Mainland China showed demand from much of Cartier’s local
store network increasing over 20 percent. Fears over reduced levels of Chinese travel retail
consumers were offset by strength in recovery in Hong Kong and in continued strength from
growth in Richemont’s expanded retail presence in Mainland China. By contrast, The Swatch
Group, which represents roughly 3 percent of assets, struggled due to production difficulties with
some key components. This meant that orders already received in early 2019 had to be pushed
back until such production difficulties were addressed. We have been assured recently that such
production snafus have since been resolved.

Last but not least, two of Semper Vic Partners, L.P.’s largest holdings, Mastercard and
Nestlé, contributed meaningfully to Semper Vic Partners, L.P.’s portfolio’s overall First Quarter
returns. Mastercard continued to receive warm investor welcome for its continued ability to
drive more gross dollar volume through their fixed-cost, payment systems networks. As global
commerce continues to grow at a fast pace, Mastercard’s desire to increase the share of network
payments beyond 15 percent of commerce in many parts of the developing world has been
frustrated by the surprisingly promising growth of commerce in those served markets.
Mastercard continued to enjoy mid-double-digit growth in network payment volumes, allowing
this 13.7 percent holding to deliver a remarkable 25 percent First Quarter return.

Nestlé reported strong industry-leading food and beverage top-line growth. This growth
represents improvements in segments such as domestic US frozen foods, Galderma, etc., which
previously struggled prior to the arrival of Nestlé’s new Chief Executive Officer. Frozen food
segment product reformulations, new product introductions at Galderma, and favorable results
from continued investment to expand global leadership in pet food, coffee (in all formats,
including single serve), water, etc., all drove Nestlé’s top-line growth forward. Nestlé’s top-line
growth, coupled with cost-reduction programs companywide, allowed for strong margin advance
despite ongoing investments to extend their portfolio to new geographies and into brand
adjacencies. Nestlé, a 10.2 percent position, advanced nearly 18 percent during First Quarter
2019.

2019’s First Quarter was truly remarkable. Many of Semper Vic Partners, L.P.’s long-
standing positions which had been burdened by year-end selling forces recovered sharply during
First Quarter. We remained fully invested and, hence, participated alongside those recoveries.
We remain enthusiastic for Semper Vic Partners, L.P.’s portfolio in general and for Berkshire
Hathaway in particular, despite the fact, as mentioned below, Berkshire Hathaway was one of the
few holdings that showed a 2019 First Quarter share price decline.

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 “I Got Nowhere Else to Go”

While my earliest investors’ Berkshire shares have powered extraordinary compound

annual returns from my earliest purchases in the early 1980s of over 16 percent, they have waited
out this quarter’s dance, posting a slight First Quarter decline of 1.6 percent. Berkshire’s
Chairman, Warren Buffett, laments Berkshire’s less than desired ability to deploy its mountains
of investable cash. I have no doubt that Berkshire will encounter fresh periods of time when
panic grips global equity markets and only Berkshire will possess both the calm and the
reputational value afforded companies in which Berkshire invests to be presented with sizable
new investments that will form platforms for future growth in Berkshire’s intrinsic value on a per
share basis.

Much of my enthusiasm for Berkshire’s long-term ability to deliver rewarding risk-

adjusted returns reflects the character of the culture which prevails within Berkshire. I was
reminded of this culture during last year’s Annual Shareholder Meeting. Berkshire has invested
increasing amounts of time and energy when preparing for the annual meeting to make sure that
attendees leave the meeting with a sense of the owner-minded culture that drives investment
decisions at Berkshire. They do this in part through the film footage that has grown dramatically
since I first began my Omaha pilgrimage, nearly 35 years ago.

2018’s annual meeting footage I found most profound involved a vignette lifted from
Taylor Hackford’s Academy Award winning film, An Officer and A Gentleman. In the original
An Officer and A Gentleman, new recruit Richard Gere clashes with power at every step he
takes within United States Naval Officer’s Candidate School. At one point, Richard Gere cracks
under the pressure of having tried to resist conforming to his military superiors. The system
prevailed as it eventually overwhelmed the recruit’s efforts to resist conformity. When Richard
Gere exclaims, “I got nowhere else to go,” moviegoers knew that the system had him.

Berkshire’s interpretation of this film classic brought together two masters of the
universe – Warren Buffett and Arnold Schwarzenegger. We join Mr. Buffett at the tail end of
the character breakdown sequence, with a head-to-toe sweat-suited Mr. Buffett attempting
pushups with Drill Sergeant Schwarzenegger’s boot on Mr. Buffett’s back, as he barks orders.
At some point, after countless defiant pushups that defy Mr. Buffett’s senior build, Mr. Buffett
breaks down while uttering the movie’s famous line, “I got nowhere else to go.”

To students of Mr. Buffett’s investment philosophy and approach, those words uttered by
Mr. Buffett have profound instructional value as to the types of businesses, both private and
public, that Berkshire has trafficked in over the years. Though the movie depicted Mr. Buffett as
the recruit, Mr. Buffett, as an investor, prefers the position of being the one dictating terms and
conditions.

Mr. Buffett, the drill sergeant whose charges have “nowhere else to go,” has applied this
thesis of power across a lifetime of important Berkshire acquisitions of public companies.
Mr. Buffett often celebrates companies for whose products and services consumers feel there to
be no other alternative. This typified Mr. Buffett’s long-standing admiration of The Wall Street
Journal, for whom business advertisers long felt there to be no other publication capable of

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delivering the same impact. Mr. Buffett suggested that at one time, there was in fact no “across
the street” competitor to The Wall Street Journal. No “across the street.” Similarly, Mr. Buffett
has long celebrated the brand, Coca-Cola, whose product brand loyalists cannot live without.
They would prefer consumers select water when asked “Would Pepsi do???”

More recently, Mr. Buffett spoke glowingly about Berkshire’s added holdings in Apple.
When asked whether Mr. Buffett would rather keep his iPhone or a putative privately owned G5,
he without hesitation exclaimed that he would prefer the iPhone, saying the G5 would not come
even close to delivering the indispensable utility which Mr. Buffett derives from his iPhone.

Berkshire’s holdings in Apple evidence just the type of “nowhere else to go” business
that Mr. Buffett covets. While traditionally overlooked by value investors, Apple’s allure has
arisen due to the increasing grip that Apple’s products and brands have on consumers. Imagine
the wrath any parent will endure if they even propose that their sixteen-year-old might be better
served with a Dell laptop instead of a MacBook. No comparison. Not going to happen. Imagine
an adult considering switching their music files, their FaceTime services, etc., simply to obtain a
lesser price. Not going to happen. There is, for many people and for many functions, “nowhere
else to go” other than Apple.

Similarly, Mr. Buffett has celebrated the virtues of having “nowhere else to go” when
constructing Berkshire’s portfolio of private companies. For example, ISCAR dominates the
world of precision grinding technology, MiTek dominates the world of residential construction
services, Business Wire dominates the world of dissemination of time-sensitive and market-
moving corporate news, etc. In the case of ISCAR and MiTek, their domain expertise in
industrial grinding (ISCAR) and in residential construction-related software and services
(MiTek) allowed them to run singular products based on research insights that they each alone
possessed. In other words, their consumers had “nowhere else to go” which is what captured
Berkshire’s interest in the first place.

The above companies all have, or have possessed at some point, substantial unmatchable
competitive advantage. For owners of products which consumers cannot find anywhere else, the
demand the owners enjoy is largely price inelastic. The owners can charge what they wish,
much like Drill Sergeant Schwarzenegger knew, without question, that holding Mr. Buffett down
with his boot atop his back would eventually crack Warren.

Such competitive advantage, however, is never a sure thing. There is absolutely no

reason to believe in today’s world of technologically inspired disrupters that competitive moats
will remain sufficient to defend Berkshire’s private market and public market “castles.”
Berkshire’s own portfolio has shown marks of such franchise degradations over time. World
Book Encyclopedia is no longer the final source of authority in a post-Google world. Coca-Cola
no longer quenches thirst without competition, in large measure resulting from their reluctance,
for too long, to follow where consumer trends led early enough to deflect newcomer competitors.
Whether publicly available varieties such as The Wall Street Journal, The Washington Post, or

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privately owned versions such as The Buffalo News, advertiser-supported print publications’
power to impose price and terms have eroded to the point where their businesses’ franchise
values have declined almost entirely.

The one area where Berkshire’s ability to avoid the loss of competitive advantage has
involved Berkshire’s growing ability to take advantage of its presence in the private company
world. In this world, Berkshire enjoys benefits that arise from what Berkshire’s Vice Chairman,
Charles Munger, describes to be Berkshire’s presence well within the “circle of deserved trust.”
In the US, Berkshire represents to sellers of the best privately owned businesses the best option
for partial or whole sale of their businesses. Berkshire promises owners of businesses
considering sale to leave the business acquired intact upon sale. Berkshire allows current owners
to continue to run the business, should they so desire. Berkshire commits to keep existing
employee base, contributions to communities, and control of strategic vision to all take place at
the guidance of selling managers. Mr. Buffett makes this commitment to sellers and reinforces
their comfort by telling them that he buys private companies because of their line-up and has no
interest nor ability to teach the acquired sluggers how to better release their swings.

At last year’s meeting, Warren fielded a question regarding his personal contribution to
sellers of businesses – “Do sellers sell to Berkshire because of the appeal of Mr. Buffett?”
Mr. Buffett’s response was that he had nothing to do with such decisions, but rather that such
decisions are made by sellers of the best businesses because business sellers “got nowhere else to
go” with their fine businesses if they wish to keep control, keep their workforce intact, keep in
charge of strategic vision, etc.

All sellers of fine businesses know that sales to private equity firms, despite promises to
the contrary, will not deliver needed reassurances to caring owners. First of all, their business
model envisions a sale of acquired businesses within a finite time period to generate partnership
returns and distributions. Private equity buyers do not buy to hold, but rather buy with a clear
idea of resale to generate their returns. Additionally, if private equity firms believe that change
of management, workforce, offices, and factories could result in improved results prior to resale,
all such options would likely be availed. Finally, unlike Mr. Buffett who pledges that Berkshire
commits to never sell businesses that they acquire, private equity firms, by their very contract
with their limited partners, commit in advance to sell or swap acquired companies.

For Berkshire’s returns to approach those which my investors have enjoyed since the
early 1980s, an effective reputation for being the preferred buyer of the best private businesses
will remain critical. Any steps suggesting a departure from this commitment will meaningfully
restrict further benefits from the competitive advantage which Berkshire’s historic commitment
has delivered to interested sellers. Lawrence Cunningham’s book, Berkshire Beyond Buffett:
The Enduring Value of Values, expounds deeply on this important component that should
continue to provide Berkshire special treatment with sellers, so long as Berkshire’s actions
remain in keeping with their long-standing Berkshire Hathaway “art gallery.” This is a metaphor
to which Mr. Buffett often refers when describing his commitment on behalf of future
generations of Berkshire managers to perpetuate their own best practices.

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 While I have shared above thoughts arising from last year’s annual meeting, especially
from the film vignette featuring Drill Sergeant Schwarzenegger and Candidate Mr. Buffett, there
are a few key takeaways from Berkshire’s recently released annual report that inform my
positive outlook for Berkshire’s future prospects. The first and foremost point Berkshire made
was the unasked for assist which the federal government has given Berkshire and all other
corporate taxpayers. Mr. Buffett describes how the power to strike any tax rate Congress selects
gives Congress, in a sense, a direct ownership stake in a percent of American companies. In
Berkshire’s case, as one of America’s largest taxpayers, the government’s decision to reduce
corporate income taxes this past year to 21 percent, lowered its stake in American businesses by
40 percent. Berkshire shareholders’ “ownership stake,” by contrast, increased over 23 percent
from the same federal corporate tax reduction.

Not all changes important to Berkshire described in this year’s annual report were as
favorable. The changes that I focus on are those which change the benchmarks by which
Mr. Buffett has graded his and his partner, Charlie Munger’s, handiwork over the 50 years in
which they have steered Berkshire. This is not the case Mr. Buffett claims is characteristic of
Chief Executive Officers of many American companies that change their method of being graded
by “painting the bull’s-eye around where the arrow of reported performance lands.” Rather,
these are steps that Berkshire cannot avoid given the following recent changes.

First and foremost, Berkshire has determined that the growth rate in book value per share
of Berkshire is no longer an appropriate measure of Berkshire’s advance. Berkshire could have
chosen to continue this reference, particularly had Mr. Buffett wanted to continue to enjoy the
flattering impact on future years’ compound annual returns provided by the past 53 years’ worth
of outperformance (i.e., Berkshire’s 18.7 percent versus S&P’s total return over the same period
of 9.7 percent). Instead, they recognized the fact that Berkshire’s privately held companies
continue to be valued at historic cost, while its vast investment portfolio of public securities is
valued by market prices daily. These changes leave book value a less accurate reflection of the
growth in Berkshire’s “intrinsic value.”

The second reason for Berkshire’s decision to abandon book value per share as its
measure of performance involves Berkshire’s desire to increase its use of share repurchases.
Berkshire recognizes that there may be long periods of time when its market value per share
vastly understates its “intrinsic value” per share. With Berkshire’s mountain of deployable cash,
Berkshire desires to have the flexibility to acquire sizable stakes in Berkshire’s shares.
Berkshire does not wish to any longer be dissuaded from such sizable share repurchases due to
the unavoidable fact that share repurchases, at high premiums to book value, destroy reported
book value at a fast pace. Abandoning book value as the benchmark for performance, therefore,
provides Berkshire with the ability to make meaningful share repurchases.

While confronting the changing circumstances which Berkshire faces as book value has
become increasingly misleading as a measure of the growth in intrinsic value on a per share
basis, Berkshire has shown once again how unique its culture is in its treatment of outside
shareholders. Berkshire truly treats its shareholders as partners. Accordingly, they have chosen
to work to make sure that their shareholders have proper metrics to overcome information
asymmetry that shareholders face when attempting to value their holdings. Whereas, Mr. Buffett

7
and Mr. Munger know, presumably down to the penny, the intrinsic value of their Berkshire
shares, outside shareholders have less access to needed underlying financial information and less
tools to deploy for valuation than do Mr. Buffett and Mr. Munger.

“If There Is No Conflict, I Have No Interest”

It is in a world of asymmetric information that investors can witness whether their agents
are operating for their interests or against their interests. Sadly, on Wall Street, rewards for
acting with self-interest and to disadvantage public shareholders often prove to be too tempting.
Indeed, a close investment colleague and friend once described Wall Street’s history of self-
dealing. He declared that most managements have long treated asymmetric information as a way
to personally profit. “If there is no conflict, I have no interest” was the mantra that has long
guided Wall Street conduct when managers seek to profit from asymmetric information.

Berkshire has taken a decidedly different approach. As Berkshire has, over the years,
begun to regard share repurchase more favorably, they have increasingly written about their duty
to share otherwise proprietary information that can help their outside owners calculate on their
own their intrinsic value per share. Indeed, in Berkshire’s 2018 annual report, Mr. Buffett,
suggested that “By his estimate, Tony Nicely’s management (of GEICO) has increased
Berkshire’s intrinsic value by more than $50 billion.” Mr. Buffett’s words of praise
accompanied additional public praise for Tony Nicely’s 50-year-plus tenure at GEICO, one of
Berkshire’s most dynamic creators of intrinsic value.

In earlier annual reports, Berkshire leadership has similarly called out to investor
attention information about subsidiaries that assist our valuation. Berkshire assists investors with
information that can lead to closer valuation of Berkshire’s intrinsic value. See’s Candies, for
instance, was called out for its historic ability to provide nearly $2 billion of free cash flow since
its acquisition; free cash flow that has been adroitly used by Berkshire over years to fuel public
and private market investments. The fact that See’s remains carried at book value at an amount
likely below $50 million can be misleading until and unless shareholders are given information,
as Berkshire did, about the true capacity of See’s business to generate cash.

Berkshire management is well within the circle of deserved trust in this most crucial
moment, providing valued information that helps outside owners better value the very shares
which the company seeks to repurchase. Rather than conceal and repurchase less properly
valued shares, Berkshire shares information, where it can, that leads to more fair terms for those
who choose to sell.

Berkshire also celebrated in this year’s annual report profound changes underway in the
organization at Berkshire. Mr. Buffett celebrated the ascent of both Ajit Jain and Greg Abel,
responsible respectively for Berkshire’s insurance operations and its manufacturing and services
operations. The transfer of authority appears to be moving far faster than I might have thought.

Where the transfer of authority to Berkshire’s two new Vice Chairs has been most acute
has been in the transfer of executive compensation responsibility. Mr. Buffett has long
celebrated his fingers and toes approach to executive compensation. Rather than deliver

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500-page proposals for compensation packages to warring camps of compensation consultants
and attorneys, Berkshire has taken the KISS, “keep it simple, stupid,” approach. In lieu of
lawyers, consultants, and impenetrable documents, Berkshire appears to rely upon a practice of
thoughtful reflection on the one or two variables that best align operating subsidiary conduct
with parent company desires. Once such critical “choke points” are discovered, simple one or
two-page documents seem sufficient to provide understandable compensation packages.

Absence of any stock options in the mix whatsoever keeps agency costs and management
short-term conduct, typical of far too many US-based corporations, to a minimum. I understand
that compensation for something like GEICO can be built around as simple as a two-part
formula, sustaining a compelling combined ratio and growth in market share. Such two variable
compensation packages prevent overreliance on either variable and assures a favorable long-term
orientation driving daily decision-making.

Given the importance ascribed within Berkshire towards getting compensation packages
simple and simply right, it is truly remarkable that compensation discussions and decisions
would have been handed over to the new Vice Chairmen so early. Nonetheless, I understand that
executive compensation has indeed been handed over, an indication of the faith that both
Mr. Buffett and Mr. Munger place on Mr. Jain and Mr. Abel. Similarly, I understand that both
Ted Weschler’s and Todd Comb’s orbit continues to expand within both their duties to actively
oversee their own investment portfolios, as well as to lend themselves as financial experts, both
to serve the parent company needs and to serve and assist needs of smaller, underlying Berkshire
subsidiaries.

On a final note, however, I do believe it likely to be the case that Mr. Buffett will
continue to maintain the only other responsibility beyond executive compensation which he has
claimed that he has assiduously retained to date. This responsibility, the pricing of See’s
chocolate, most likely remains too dear for Mr. Buffett to relinquish. And, his execution of that
duty speaks volumes about Mr. Buffett’s deep understanding of consumer psyche.

Mr. Buffett retained pricing decisions for See’s for all these years because of his desire to
make sure that he raise (not lower) the price of See’s chocolate assortments fast enough. His
interest was to avoid the situation where a general manager would lead See’s down market in
price to increase See’s market share in volume. Nothing could be more brand destructive,
Mr. Buffett has long asserted, than to cheapen the proposition of See’s products as gifts. In order
to retain See’s appeal, Mr. Buffett recognized that price is, indeed, a part of the product
purchased. It is because See’s remains a fully priced product that it retains its full impact upon
receipt as a gift.

Mr. Buffett suggests how unresponsive a gift of chocolate might be if the donor
announced to his loved one that their confectionary gift was a store brand and purchased on sale.
By contrast, paying up for the right to give indulgence has seemed only fitting to Mr. Buffett.
However, as best I know, Mr. Buffett has continued in his important role in keeping See’s prices
moving ever upwards, along with its offering’s appeal. (I plan to visit See’s products booth
while visiting with Berkshire managers and touring its businesses at the convention center. I will
report back if I see any cracks in See’s firm pricing armor.)

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 In closing, I do look forward to sharing with you at the end of the Second Quarter any
thoughts from my 35th Berkshire Annual Shareholder Meeting. Despite recent share price
performance, Berkshire will likely retain its leading portfolio weighting. I know of no other
company where agency cost risks are lower and where shareholders are more treated as true
partners than at Berkshire. No doubt, we will hear plenty more about Berkshire’s tireless pursuit
of businesses which provide valued services and valued products for which, in the mind of
consumers, there is “nowhere else to go.”

Newest Member

It is my pleasure to finish my First Quarter 2019 letter with news that my and my wife,
Gina’s son Christopher Russo will return to Gardner Russo & Gardner LLC. The last time
Christopher worked for us was during an internship during college. Christopher studied at
Colgate University upon graduation from Lancaster Country Day School. Following several
years spent in New York as a paralegal at Seward & Kissel, Christopher studied at Columbia
Business School, graduating (MBA 2011) from their Heilbrunn Center for Graham & Dodd
Investing in the Value Investing Program. Following Columbia, Christopher rose to Executive
Director during his seven years as a buy-side research analyst at one of Morgan Stanley’s global
value equity investment practices. Christopher “returns” to Gardner Russo & Gardner as Senior
Research Analyst after a paternity leave following the birth of his second child.

I am asked at every investor meeting to describe any “material” organizational changes,

to which my answer typically resembles the country western verse often referred to by Warren
Buffett when he describes something unlikely for him to do – “If the phone doesn’t ring, you’ll
know that it’s me.” Indeed, it has been over 25 years since Robert Coleman joined as Senior
Research Analyst, over 20 years since Eugene Gardner Jr. returned as Senior Research Analyst
and Portfolio Manager with his father, almost 15 years since Timothy Quinn returned as Senior
Research Analyst and Director of Research, and most recently 3 years since we were joined by
our able research analyst, Tierney Werner. Obviously, by our deliberate and considered steps
taken to date with organizational changes, Christopher’s joining, as have been our prior hires, is
indeed “material.”

Just as I have long favored finding exceptional companies in which to invest

(i.e., minimum agency costs, capacity to globally reinvest, managements’ “capacity to suffer”
Wall Street censure during reinvestment, family control and board level influence, tax-deferred
unrealized gains, etc.), we have focused our research efforts on trying to find information that is
knowable and important about a handful of companies and industries which I believe possess the
above described characteristics. We select our analysts with an eye towards individuals who
recognize that their work remains extraordinarily valuable to our investors even while possibly
not resulting in a new portfolio position for decades (as was the case during much of the past
decade).

Given the unusually slow pace of change in our analyst bench, our decision to hire
Christopher would be “material” enough given his level of training and experience gained at
Morgan Stanley. In addition, the fact that Christopher is family is considered “material” by
some investors, possibly for what I believe to be concerns that I do not share.

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 As you can imagine, given that I embrace as a core value virtues that I believe arise in so
many of Semper Vic Partners, L.P.’s family-controlled companies (over 50 percent of assets),
I would likely believe that family member participation in Gardner Russo & Gardner to be a
point that is both celebrated and “material.”

My thoughts about the value of family involvement within investment managers arose
from personal experience. As early as my first years as an investor at the then Ruane, Cunniff,
where I trained and learned from famed investor and Richard T. Cunniff’s daughter, Carley
Cunniff, I recognized the possibility that family members can, indeed, work thoughtfully
together in their efforts to build investor value. Their ability to see beyond conventional
thoughts shared by many investors surfaced in 1999 when Carley famously called out risks that
investors faced then in one of the Internet 1.0’s most well-embraced favorites, Lucent
Technologies. Comfort with shared values and views allowed Carley and her firm to avoid the
worst setbacks that beset a vast number of investors at that time. Finally, I witnessed through
Carley’s independent confidence that there can be in a firm such as ours, where family members
work alongside one another, a deeper-shared commitment to build and maintain an institution
with a well-centered, long-term view of how to best serve the long-term needs of our investors.

Just as Carley Cunniff delivered industry-leading, investigative investment analysis while

working as a Partner alongside her father, so too, have I witnessed across Semper Vic Partners,
L.P.’s portfolio companies the properly harnessed power of family focus in their operating
businesses. I consider myself privileged to partner with family-controlled and family-influenced
companies with the sizable percentage of the assets which I oversee in partnership with long-
term minded, family-controlled companies.

The example which I like to refer to that helps appreciate the virtues of well-aligned,
family-controlled companies arises from Semper Vic Partners, L.P.’s long-standing portfolio
company, Comcast. I have long admired the family leadership that has led Comcast over its 55
years. Starting with Ralph Roberts and leading down today to his son, Brian, the most
remarkable difference between Comcast and its fellow family-controlled cable company down
the road in Pennsylvania, Adelphia Cable, had to do with the talent which Comcast was able to
attract to run the business which the Roberts family oversaw. Playing for the longest term,
largest risk-adjusted returns as they did, Comcast attracted the best managers to help them apply
continuously cutting-edge technology and services to deliver on their appetite for more wealth
tomorrow. Adelphia, by contrast, dramatically lacked inspired or committed members of its
bench.

I believe that we have properly struck that balance within Gardner Russo & Gardner.
I am blessed every day to go to work alongside of a leading value investment research bench,
leading global compliance and firm operations experts, a global trading desk, an unusually
responsive and helpful team of separately managed account professionals, a seasoned team
overseeing Semper Vic Partners, a seasoned team overseeing our technology efforts, and a
seasoned Administrative/Chief Compliance Officer, Anne Gardner, who along with her husband
and now son has had a celebrated role in supporting Gardner Russo & Gardner to its fullest
potential.

11
Indeed, it is my interest to source both from within added family members when they deliver
best talents, and from outside team members in my desire to continue to invest deeply in the
organization that I feel blessed to oversee.

Certainly, this has been the case with our firm. When I arrived as a Partner 30 years ago,
the firm had already had family, most notably Anne Gardner and Diana Crumay, working
alongside of Gene Gardner Sr. for decades. Similarly, since my family assumed control of
Gardner Russo & Gardner nearly five years ago, I, as Managing Member, along with our team of
colleagues and associates, have pursued a policy of making significant investments to build for a
stronger future for our firm, even at the expense of current income. Owners can be more patient
with their investments and hiring decisions. Such investments have involved the full adaptive
reuse, by our firm, of the vast former tobacco warehouse, now known as global headquarters of
Gardner Russo & Gardner. (Do visit!!!) Similarly, investments in technology have helped us to
deepen our defenses against cyber security risks and increase our ability to serve often complex
investment needs of our taxable, family office clients.

While there will be more communications to follow regarding the hire of our “newest
member,” I did want to make sure to, at once, let all of our investors, our investment industry
colleagues, and our investment industry trusted and valued third parties know how excited we
are to be joined by Christopher. We remain dedicated to continually investing deeply behind the
growth of our investment advisory business and look forward to continuing to serve your needs
with Christopher alongside his new colleagues at Gardner Russo & Gardner.

In closing, I continue to search globally for attractive new investments capable of

balancing risk and return in ways similar to existing portfolio companies. As always, please feel
free to let me know if you have any investment questions that arise from this material or to let
me or my colleagues know how we may be of further service. Best wishes,

Thomas A. Russo
Managing Partner
Semper Vic GP, LLC

Attachments

12
 Semper Vic Partners, L.P.
Annual Summary of Limited Partner Returns

Semper Vic Dow Jones S&P MSCI MSCI All Country MSCI Emerging
Year Partners Industrials 500 EAFE World Index ex-US Markets Index
2019 (Thru 3/31) 13.8% 11.8% 13.7% 10.1% 10.4% 9.9%
2018 -12.4% -3.5% -4.4% -13.4% -13.8% -14.6%
2017 27.0% 28.1% 21.8% 25.6% 27.8% 37.3%
2016 2.5% 16.5% 12.0% 1.5% 5.0% 11.2%
2015 5.0% 0.2% 1.4% 0.4% -5.3% -14.9%
2014 6.1% 10.0% 13.7% -4.5% -3.4% -2.2%
2013 21.9% 29.7% 32.4% 23.3% 15.8% -2.6%
2012 24.2% 10.2% 16.0% 17.9% 17.4% 18.2%
2011 6.7% 8.4% 2.1% -11.7% -13.3% -18.4%
2010 21.5% 14.0% 15.1% 8.2% 11.6% 18.9%
2009 25.8% 22.7% 26.5% 32.5% 42.1% 78.5%
2008 -31.5% -31.9% -37.0% -43.1% -45.2% -53.4%
2007 7.7% 8.9% 5.5% 11.6% 17.1% 39.9%
2006 20.8% 19.1% 15.8% 26.9% 27.2% 31.6%
2005 3.2% 1.7% 4.9% 14.0% 17.1% 35.0%
2004 11.9% 5.3% 10.9% 20.7% 21.4% 25.1%
2003 33.5% 28.3% 28.7% 39.4% 41.4% 55.5%
2002 -1.0% -15.1% -22.1% -15.7% -14.7% -5.6%
2001 0.1% -5.4% -11.9% -21.2% -19.5% -2.5%
2000 15.6% -4.7% -9.1% -14.0% -15.1% -30.8%
1999 -2.1% 27.2% 21.0% 27.3% 30.9% 66.4%
1998 23.8% 18.1% 28.6% 20.3% 14.5% -26.0%
1997 24.7% 24.9% 33.4% 2.1% 2.0% -12.3%
1996 19.0% 28.8% 23.0% 6.4% 6.7% 5.8%
1995 23.6% 36.9% 37.5% 11.6% 9.9% -4.5%
1994 12.4% 5.0% 1.3% 8.1% 6.6% -8.7%
1993 22.1% 16.7% 10.1% 32.9% 34.9% 71.3%
1992 13.4% 7.4% 7.6% -13.9% -13.0% 9.0%
1991 27.4% 24.5% 30.5% 10.2% 11.5% 56.0%
1990 5.3% -0.7% -3.1% -24.7% -24.3% -13.8%
1989 24.6% 31.8% 31.7% -9.2% 10.3% 59.2%
1988 19.8% 16.2% 16.5% 26.7% 25.9% 35.6%
1987 37.1% 5.5% 5.2% 23.2% NA NA
1986 24.8% 27.2% 18.8% 66.8% NA NA
1985 43.9% 33.6% 31.7% 53.0% NA NA
1984 13.6% 1.0% 6.2% 5.0% NA NA

Compound Annual Return 14.2% 11.9% 11.0% 7.7% 5.6% 9.8%

Semper Vic Partners’ “global value” equity investment style is value‐oriented and long‐term‐minded.  Semper Vic Partners has provided over the years considerable 
exposure to foreign companies that evidence a strong “capacity to re‐invest.” Indices against which Partnership performance is compared may or may not precisely mirror 
composition or investing style of the Partnership.  Compound annual returns for Semper Vic Partners, L.P., as other returns of the major indices, are expresesed with 
dividends reinvested.  Semper Vic Partners' results are for Semper Vic, a general partnership, through July 16, 1990 and for its successor limited partnership, Semper Vic 
Partners, L.P., thereafter.  Annual returns are limited partner returns and are expressed net of all expenses.  Reported Partnership net‐of‐fees performance may be 
impacted by the presence of non‐billed, family accounts.  Any results that include Semper Vic Partners, L.P. estimated monthly performance (including year‐to‐date and 
compound annual performance) are unaudited.  Past performance is not a guarantee of future results and does not diminish possibility of loss.

The material contained in this communication is intended solely for the recipient.  No further dissemination is permitted without the written consent of the Fund 
Investment Manager.
 Performance Contribution by Security
Gross of Fees | US Dollar
Semper Vic Partners, L.P. 12/31/2018 - 3/31/2019

12/3 logo.jpg Performance C Semper Vic Gross of Fe Portfolio

Classification Avg Wgt Return Contrib
Mastercard Inc Cl A 13.66 25.02 3.25
Berkshire Hathaway Inc Cl A 13.50 -1.57 -0.23
Nestle SA-Spons ADR 10.15 17.73 1.77
Pernod Ricard 7.74 9.65 0.75
Heineken Holding NV 7.59 18.93 1.41
Compagnie Financiere Richemont SA 6.60 13.96 0.92
Philip Morris International Inc 6.58 34.06 2.02
Unilever NV ADR 6.00 9.07 0.54
Wells Fargo 5.32 5.78 0.35
Anheuser-Busch InBev SA 5.14 27.16 1.30
The Swatch Group AG-BR 3.18 -1.67 -0.06
Martin Marietta Materials 2.67 17.31 0.46
Altria Group Inc 2.54 17.92 0.45
Brown-Forman Corp Cl A 2.40 8.28 0.20
Diageo PLC 2.18 15.79 0.33
Comcast Corp New Cl A 2.00 17.39 0.34
JC Decaux SA ACT 1.65 8.63 0.15
Alphabet Inc Cl C 0.99 13.33 0.13
Brown-Forman Corp Cl B 0.10 10.86 0.00
Security Total 100.00 14.07

Gardner Russo & Gardner LLC EXCLUDING CASH AND EQUIVALENTS

 Performance Review
Semper Vic Partners, L.P.
December 31, 1992 to March 31, 2019
ENDING CONTRIBUTIONS TOTAL EQUITY
MARKET VALUE WITHDRAWALS PORTFOLIO HOLDINGS DJITR SP500T MSCIEAFE MSCIEXUS MSCIEM
Monthly
March 813,934,758 109,439 2.9 3.0 0.2 1.9 0.7 0.7 0.8
February 790,558,184 (40,434) 4.5 4.6 4.0 3.2 2.6 2.0 0.2
January 755,932,983 (12,420,639) 5.8 5.9 7.3 8.0 6.6 7.6 8.8

Quarterly
First 813,934,758 (12,351,634) 13.8 14.1 11.8 13.6 10.1 10.4 9.9

Yearly
03/31/2019 813,934,758 (12,351,634) 13.8 14.1 11.8 13.6 10.1 10.4 9.9
12/31/2018 726,365,967 (48,278,488) (12.2) (11.6) (3.5) (4.4) (13.4) (13.8) (14.6)
12/31/2017 869,225,972 (36,316,528) 27.1 28.3 28.1 21.8 25.6 27.8 37.3
12/31/2016 711,956,861 (364,035) 2.7 3.5 16.5 12.0 1.5 5.0 11.2
12/31/2015 688,169,584 (28,163,143) 5.1 5.9 0.2 1.4 (0.4) (5.3) (14.9)
12/31/2014 677,189,085 (59,278,700) 6.4 7.4 10.0 13.7 (4.5) (3.4) (2.2)
12/31/2013 687,743,731 (14,727,546) 22.1 23.3 29.7 32.4 23.3 15.8 (2.6)
12/31/2012 572,340,496 1,110,777 24.4 25.6 10.2 16.0 17.9 17.4 18.2
12/31/2011 456,300,208 16,088,195 6.9 8.0 8.4 2.1 (11.7) (13.3) (18.4)
12/31/2010 407,423,106 2,578,856 21.5 22.8 14.1 15.1 8.2 11.6 18.9
12/31/2009 329,754,141 (28,080,294) 26.1 27.3 22.7 26.5 32.5 42.1 78.5
12/31/2008 287,323,541 (32,659,859) (31.3) (31.0) (31.9) (37.0) (43.1) (45.2) (53.4)
12/31/2007 454,642,793 1,398,047 7.9 8.9 8.9 5.5 11.6 17.1 39.9
12/31/2006 420,334,077 (6,785,049) 21.1 22.2 19.1 15.8 26.9 27.2 31.6
12/31/2005 353,988,239 (248,736) 3.4 4.4 1.7 4.9 14.0 17.1 35.0
12/31/2004 342,608,040 3,168,832 12.1 13.4 5.3 10.9 20.7 21.4 25.1
12/31/2003 302,479,334 (995,095) 33.8 35.4 28.3 28.7 39.4 41.4 55.5
12/31/2002 227,082,318 (2,040,889) (0.7) 0.2 (15.1) (22.1) (15.7) (14.7) (5.6)
12/31/2001 230,792,035 (28,203,294) 0.3 1.4 (5.4) (11.9) (21.2) (19.5) N/A
12/31/2000 257,666,755 (109,166,801) 15.9 19.1 (4.7) (9.1) (14.0) (15.1) N/A
12/31/1999 331,664,015 11,443,539 (2.0) (1.2) 27.2 21.0 27.3 30.9 N/A
12/31/1998 326,544,792 (8,882,906) 24.1 26.1 18.1 28.6 20.3 14.5 N/A
12/31/1997 272,112,842 30,834,100 24.9 28.9 24.9 33.4 2.1 2.0 N/A
12/31/1996 187,327,981 9,653,686 19.4 22.1 28.8 23.0 6.4 6.7 N/A
12/31/1995 146,884,620 17,052,429 23.9 28.0 36.9 37.6 11.6 9.9 N/A
12/31/1994 102,055,506 15,881,446 12.8 15.6 5.0 1.3 8.1 6.6 N/A
12/31/1993 75,053,207 18,159,144 22.7 27.2 16.7 10.1 32.9 34.9 N/A

_____________________________________________________ GARDNER RUSSO & GARDNER LLC _______

 Performance Review
Semper Vic Partners, L.P.
December 31, 1992 to March 31, 2019
ENDING CONTRIBUTIONS TOTAL EQUITY
MARKET VALUE WITHDRAWALS PORTFOLIO HOLDINGS DJITR SP500T MSCIEAFE MSCIEXUS MSCIEM

TIME-WEIGHTED CUMULATIVE RETURN 1,717.2 2,514.0 1,349.6 997.2 401.6 438.8 N/A
COMPOUND ANNUALIZED RETURN 11.7 13.2 10.7 9.6 6.3 6.6 N/A

* TOTAL PORTFOLIO RETURNS NET OF FEES CHARGED

* EQUITY HOLDINGS RETURNS NOT NET OF FEES CHARGED
FISCAL YEAR ENDS 12/31

INCLUDED FOR PERFORMANCE REFERENCE ARE THE FOLLOWING INDICES:

DJITR - Dow Jones Industrial Average

SP500T - S&P 500
MSCIEAFE - MSCI Europe, Australasia, Far East
MSCIEXUS - MSCI All Country World ex US
MSCIEM - MSCI Emerging Markets

CLIENT TOTAL RETURNS INCLUDE DIVIDEND INCOME, AS DO RETURNS FOR ABOVE REFERENCED INDICES.

Semper Vic Partners' "global value" equity investment style is value-oriented and long-term-minded. Semper Vic Partners has provided over the years considerable exposure to foreign companies that evidence a strong
"capacity to re-invest." Indices against which Partnership performance is compared may or may not precisely mirror composition or investing style of the Partnership. Compound annual returns for Semper Vic Partners,
L.P., as other returns of the major indices, are expressed with dividends reinvested. Reported Partnership net-of-fees performance may be impacted by the presence of non-billed, family accounts. Past performance is not
a guarantee of future results and does not diminish possibility of loss.

The material contained in this communication is intended solely for the recipient. No further dissemination or reproduction is permitted without the written consent of the Fund Investment Manager.

_____________________________________________________ GARDNER RUSSO & GARDNER LLC _______

 Portfolio Valuation
Semper Vic Partners, L.P.
March 31, 2019
MARKET UNIT TOTAL % OF ANNUAL %
UNITS SECURITY PRICE VALUE COST COST GAIN/LOSS ASSETS INCOME YIELD

CASH AND EQUIVALENTS- usd

PAS Admin Cash Account 72,825,700 72,825,700 8.9 0 0.0
Dividends Accrued 1,236,355 1,236,355 0.2 0 0.0
Cash And Cash Equivalents (18,220,358) (18,220,358) (2.2) 0 0.0
55,841,697 55,841,697 0 6.9 0 0.0

COMMON STOCKS- usd

455,000 Mastercard Inc Cl A 235.45 107,129,750 20.54 9,347,671 97,782,079 13.2 600,600 0.6
319 Berkshire Hathaway Inc Cl A 301,215.00 96,087,585 55,320.22 17,647,149 78,440,436 11.8 0 0.0
819,000 Nestle SA-Spons ADR 95.32 78,067,080 17.87 14,633,419 63,433,661 9.6 1,692,681 2.2
592,750 Heineken Holding NV 100.27 59,435,342 13.35 7,915,945 51,519,396 7.3 865,415 1.5
328,500 Pernod Ricard 179.66 59,016,996 66.50 21,844,536 37,172,460 7.3 614,295 1.0
588,500 Philip Morris International Inc 88.39 52,017,515 22.35 13,151,427 38,866,088 6.4 2,683,560 5.2
671,500 Compagnie Financiere Richemont SA 72.84 48,911,146 28.92 19,416,502 29,494,643 6.0 832,660 1.7
776,500 Unilever NV ADR 58.29 45,262,185 28.15 21,857,860 23,404,325 5.6 1,203,160 2.7
485,500 Anheuser-Busch InBev SA 83.94 40,754,941 75.75 36,778,114 3,976,827 5.0 1,077,810 2.6
770,000 Wells Fargo 48.32 37,206,400 22.39 17,239,670 19,966,730 4.6 1,386,000 3.7
80,000 The Swatch Group AG-BR 286.17 22,893,865 366.87 29,349,831 (6,455,966) 2.8 392,000 1.7
102,500 Martin Marietta Materials 201.18 20,620,950 19.45 1,993,877 18,627,073 2.5 196,800 1.0
355,000 Altria Group Inc 57.43 20,387,650 4.97 1,765,779 18,621,871 2.5 1,136,000 5.6
362,500 Brown-Forman Corp Cl A 51.17 18,549,125 3.94 1,426,562 17,122,563 2.3 240,700 1.3
395,500 Diageo PLC 40.89 16,171,880 8.35 3,303,910 12,867,970 2.0 324,310 2.0
380,000 Comcast Corp New Cl A 39.98 15,192,400 1.03 392,908 14,799,492 1.9 319,200 2.1
395,000 JC Decaux SA ACT 30.45 12,028,418 35.71 14,103,808 (2,075,389) 1.5 177,750 1.5
7,125 Alphabet Inc Cl C 1,173.31 8,359,834 1,088.34 7,754,405 605,429 1.0 0 0.0
758,093,062 239,923,374 518,169,687 93.1 13,742,940 1.8

TOTAL 813,934,758 295,765,071 518,169,687 100.0 13,742,940 1.7

TOTAL ASSETS 813,934,758 295,765,071 518,169,687 100.0 13,742,940 1.7

_____________________________________________________ GARDNER RUSSO & GARDNER LLC _______

Semper Vic Partners, L.P.
After Tax Rate of Return, Net of Expenses
July 16, 1990 - December 31, 2018

Semper Semper Dow Jones S&P MSCI MSCI All Country

Net After tax Industrial Average 500 Index EAFE Index World Index ex-US
Year YTD % YTD % YTD % YTD % YTD % YTD %
1990 2.68% 2.05% -10.42% -8.67% -16.19% -12.39%
1991 27.35% 26.28% 24.53% 30.47% 12.50% 13.95%
1992 13.44% 12.24% 7.40% 7.61% -11.85% -10.97%
1993 22.06% 20.52% 16.72% 10.08% 32.94% 34.90%
1994 12.37% 10.42% 4.99% 1.34% 8.06% 6.63%
1995 23.58% 22.55% 36.90% 37.52% 11.55% 9.94%
1996 19.02% 17.77% 28.93% 23.11% 6.36% 6.68%
1997 24.67% 23.94% 24.96% 33.38% 2.06% 2.04%
1998 23.80% 22.77% 18.12% 28.56% 20.33% 14.46%
1999 -2.14% -2.44% 27.21% 21.01% 27.30% 30.91%
2000 15.59% 14.36% -4.71% -9.11% -13.96% -15.09%
2001 0.06% -1.86% -5.40% -11.89% -21.21% -19.50%
2002 -0.96% -1.89% -15.07% -22.10% -15.66% -14.67%
2003 33.49% 33.35% 28.26% 28.69% 39.36% 41.41%
2004 11.86% 10.88% 5.32% 10.88% 20.70% 21.36%
2005 3.17% 3.03% 1.17% 4.91% 14.02% 17.11%
2006 20.83% 20.89% 19.05% 15.80% 26.86% 27.16%
2007 7.65% 7.18% 8.88% 5.50% 11.63% 17.12%
2008 -31.47% -32.17% -31.93% -37.00% -43.06% -45.24%
2009 25.79% 25.45% 22.68% 26.45% 32.46% 42.14%
2010 21.49% 20.87% 14.03% 15.07% 8.21% 11.60%
2011 6.67% 6.61% 8.38% 2.11% -11.73% -13.33%
2012 24.21% 23.99% 10.23% 15.98% 17.90% 17.39%
2013 21.89% 21.16% 29.65% 32.41% 23.29% 15.78%
2014 6.08% 5.45% 10.04% 13.69% -4.48% -3.44%
2015 4.96% 3.31% 0.21% 1.38% -0.39% -5.25%
2016 2.46% 1.86% 16.50% 11.96% 1.51% 5.01%
2017 26.95% 26.20% 28.11% 21.83% 25.62% 27.77%
2018 -12.38% -12.56% -3.48% -4.38% -13.36% -13.78%

Cumulative Return
2127.18% 1707.98% 1449.37% 1135.38% 278.60% 333.61%
Since 7/16/90
Compounded Annzd
11.52% 10.71% 10.11% 9.24% 4.79% 5.29%
Return Since 7/16/90

Notes:
1. 1990 reflects a partial year, beginning on July 16, 1990
2. Assumpt Long-Term Capital Gains Qualified Dividends
1991-1997 28.00% 15.00%
1998 to 5/5/2003 20.00% 23.80%
5/6/2003 to 12/31/2012 15.00%
2013-2018 23.80%
Short-Term Capital Gains Investment Income/Expense
1990 28.00% 28.00%
1991-1992 31.00% 31.00%
1993-2001 39.60% 39.60%
2002 38.60% 38.60%
2003-2012 35.00% 35.00%
2013-2017 43.40% 43.40%
2018 40.80% 40.80%
3. The tax rates for 2013 - 2018, above, include an additional 3.8% resulting from legislation implementing the Net Investment Income Tax.

Semper Vic Partners’ “global value” equity investment style is value-oriented and long-term-minded. Semper Vic Partners has provided over the years considerable exposure to foreign
companies that evidence a strong “capacity to re-invest.” Indices against which Partnership performance is compared may or may not precisely mirror composition or investing style of the
Partnership. Compound annual returns for Semper Vic Partners, L.P. and for the Dow Jones and the Standard & Poor's indices reflect dividends reinvested. Semper Vic Partners, L.P. results
are for Semper Vic, a limited partnership established July 16, 1990. Annual returns are limited partner returns and are expressed net of all expenses. Reported Partnership net-of-fees
performance may be impacted by the presence of non-billed, family accounts. Any results that include Semper Vic Partners, L.P. estimated monthly performance (including year-to-date and
compound annual performance) are unaudited. Past performance is not a guarantee of future results and does not diminish possibility of loss.

The material contained in this communication is intended solely for the recipient. No further dissemination is permitted without the written consent of the Fund Investment Manager.
Why You Should Own 'Moat'
Stocks and Hold Them Forever
By Chris Mayer
From Daily Wealth
September 26, 2018

At a small, invitation-only investment gathering in New York, I had the chance to speak with
Tom Russo.

He manages the Semper Vic Partners fund, which has returned about 14% annually for more
than 30 years. That tops the S&P 500 Index by more than three percentage points per year.

To appreciate how great a three-percentage-point difference is over 30 years, consider this:

$10,000 invested at 7% annually for 30 years is $76,122. But $10,000 invested at 10% annually
for 30 years is $174,194.

Despite all his success, Russo is as humble and as nice a guy as you could hope to meet. I've met
him before, and he's always been generous in sharing what he's learned.

Russo spoke about one secret of his success that I'm still having a hard time wrapping my head
around.

I'll share this secret with you today. It has to do with patience... and not only deciding which
stocks will serve you well over the long term, but what the "long term" really means...

First, a little background: Russo is commonly known as the guy who took Warren Buffett's
principles and applied them to overseas markets. In the early 1980s, this was a novel thing to do.

His particular focus was on companies with powerful brands – or "moats," as Buffett said. These
companies had a competitive edge that translated into a huge financial safety net.

So Russo started buying European brands such as food company Nestlé and beverage maker
Pernod Ricard.

And then he held them... basically forever, or until he couldn't hold them any longer.
For example, in 1989, Russo began investing in Weetabix, the maker of a rather tasteless cereal,
which – for whatever cultural reason – Brits seem to hold as some sort of semi-sacred comfort
food.

Anyway, back then, Weetabix traded for less than six British pounds per share. Russo figured it
was worth at least 13 pounds per share. He wound up owning almost one-fifth of the company.
Eventually, a private-equity group bought Weetabix for 54 pounds per share in 2003. That made
Weetabix a nine-bagger for Russo. And he had to sell.

Otherwise, he doesn't sell – pretty much ever.

And here we get to the mind-blowing part. Russo said his average holding period for his top 10
stocks was probably about 25 years.

Let that sink in. Many people can't hold a stock for 25 months – or even 25 days – much less 25
years. With that kind of grip, your portfolio doesn't change much. Russo's doesn't.

When asked about how he manages his portfolio, Russo told a story. He said he has a friend in
Boston who was trying to get into an exclusive country club. Year in and year out, he couldn't
get in. It had a waiting list.

Then, the Red Sox won the World Series for the first time since 1918. (This was in 2004.)
Suddenly, several spots at the club opened up. It turns out, all these old guys were hanging on to
see the Red Sox win the World Series. And when that happened, the old guys finally expired
happily.

Well, Russo said his portfolio was a bit like that. Spots open up when something dies. In fact, he
just bought a starter position in Alphabet (Google's parent company). It was his first new
purchase since... 2010!

But what about technology? Doesn't changing technology make it harder to hold a stock for so
long? I would say yes.

In my book, 100 Baggers, I shared some evidence showing that corporate lifespans have been
shrinking:

For example, take a look at the average lifespan of a firm in the S&P 500 index. It is now less
than 20 years... The average lifespan was 61 years in 1958. So things have changed a great deal.
At the current rate, Innosight estimates 75% of the current S&P will be replaced by 2027.

Leaving the S&P 500 doesn't mean the death of the firm. But unless there is a buyout, the S&P
usually kicks you out only when you are in trouble – for example, Circuit City, The New York
Times, Kodak, or Bear Stearns. Or it kicks you out when you get too small – which is another
way of saying you underperformed.
Against this backdrop, we have to be more diligent about making sure we don't own firms about
to go the way of buggy-whip makers. Suffice to say, holding on to stocks for a long time does
not mean blindly holding on to stocks for a long time.

That's why Russo's focus on moats has paid off... along with his extremely long-term holding
periods. He selects the best companies that are most likely to last.

I often write about the virtues of buying and holding, patience, and all the rest of it... But Russo
has made it an art form. And he's super successful. To beat the S&P 500 by three percentage
points per year – for more than 30 years – is a hall-of-fame kind of run.

You have to sit on your stocks and give them time. Don't look at stock quotes every day. Don't
fret when they don't go anywhere. Focus on the business.

If the business is good, time is on your side. Hang on.

Regards,

Chris Mayer