The Smead Book List - Winter 2025

0:02You're listening to A Book With Legs, a podcast presented by Smeed Capital Management. At Smead Capital Management, we advise investors who play the long game. You can learn more at SmeadCap.com or by calling your financial advisor.

0:20Welcome to A Book With Legs podcast. I'm Cole Smead, CEO and Portfolio Manager here at Smead Capital Management. At our firm, we are readers and we believe in the power of books to help shape informed investors. In this podcast, we speak to great authors about their writings. The late great Charlie Munger prescribed using multiple mental models and analysis. We analyze their work through the lens of business, markets, and people. Today's date is December 29th, 2025. This is our quarterly book list where we talk about books, books, and yes, more books. Hosting this with me is what my father Bill likes to call our crack analyst team.

1:01To my right is my colleague, Seamus Sullivan, who's our senior analyst. and then to his right is also Will Keenan and Nick Garcia and they are both analysts here at our firm. So gentlemen, this is the second time having you guys all on so thanks for joining me again. I think last summer. So you guys are like my six-month date every six months. So let's start out talking about what you guys have just read. I will say you guys had kind of a – you didn't have the same books which I was glad to see. So maybe Seamus, I'll kick it to you first and you can talk about what you've been reading. No, I appreciate it.

1:34So I have two on there. So the first one is 1929 by Andrew Ross Sorkin. I'm sure a lot of viewers or listeners to this have probably already read it. It was, I think, kind of broadly out there. It was actually really pretty good. I enjoyed reading kind of a refresher about it. I think the backstories he gives on the people involved at the time were kind of interesting. You didn't know kind of a lot of the granular stuff or some color on what was going on back then and the personal reasons that were in play at the time. The one thing I thought was more interesting about it is it's not akin maybe to the temperament of today.

2:09I mean you have menace of crowds obviously then and you've got a little bit today. It's more how things were handled back then versus how they are now. So back then you had people had personal loss. You had companies go bankrupt. You had obviously the Great Depression. Whereas today everything is – we can't have anybody falter. We can't have anybody fall. And that dichotomy of back then versus today I think was kind of the major theme I took away from it is like, look, we need to have some ability to have people take loss and refresh the system and bring new ideas forward. And that was allowed back then whereas today it's much more we have to keep everybody safe.

2:52We have to not allow markets to feel discomfort. So that was the primary. All right. Let's see. I was going to hand over to Nick because you got one of my favorites. Yeah. Yeah. This is a great book. So When Genius Failed by Roger Lowenstein tells the story of long-term capital management and basically how that came together, the hedge fund, and tells you the story of caution around leverage and thinking you're smarter than the next guy in the room, right? Having all these PhDs, Robert Merton and Myron Scholes, working in the hedge fund, and they still blew up, right? And it caused this big panic and how did the Fed deal with it?

3:32So I thought it was a very opportune time now to read that book. So I read that book back in college initially. That's when I read it too. Yeah. So I wanted a refresh with our current environment as things are kind of getting crazy here. So like, what can happen? How does that deal with it? And they still to this day say, well, if we could have held on longer, we would have been fine. We underestimated the correlation between our trades. Sure. And we could see how that played out. So I thought it was a good moment to go back and read that book again. Sure. I'll hand it over to Will, who has three, which means Will isn't going on many dates these days, gentlemen.

4:13So shout out to all you ladies, single men here. Too much reading these days. The first book I read was The Aspirational Investor by Ashvin Shabra. Oshvin is widely considered to be the founding father of goals-based investing. He was previously the CIO of Merrill Lynch in the Institute for Advanced Study at Princeton and is now, through his connection to the School of Advanced Study, is now the CIO of the late Jim Simons' family office. And the most interesting thing I have found from this book is even though he's a physicist by training, he writes in wonderful prose to explain complex mathematical concepts even to a lowly history major like myself.

4:52and he put his allocation framework, which is quite interesting for all of our financial planning listeners in a very simple context where you have a put option, an index exposure, and a call option. And you can allocate your wealth to these three buckets. That was quite interesting. The second book I read was a book called Birthright about the history of the U-Haul business, which is one of our long-term holdings in our U.S. value fund and the Schoen family. It's always a good counterpoint. We've read lots of studies about how family businesses are run for the long-term and often have higher total returns.

5:32But on the flip side, family dynamics can be very messy. And this is a prime example of that. So just trying to better understand our companies beyond the immediate public disclosures. Lastly, I wrote a book called Railroader about the consolidation of the U.S. railroad industry, which we see a lot of parallels between railroad capex in the 1800s and AI capex now. And it's very important to note that the railroad industry up until the year 2000, more or less, when Hunter Harrison began consolidating, it was a very poor return on capital business and had been for over 150 years. So just an important note of caution for capital intensive industries.

6:15So let's see, I got a few. You can tell I'm married. That was a joke, guys. Come on. So Junk to Gold by Willis Johnson. I don't know if you guys ever heard this book, but it's the story of Copart. You guys familiar with the business at all? So it effectively started out as like a scrap junkyard business and turned into when you go, you total your car. That's right. How does the insurer get the most value for a totaled car? and that's really what Copart's done. They've taken these markets, which are, it's like secondary car, but really bad secondary car and taking these market developed to where the insurer is getting better payouts on the total car.

6:50So it's like value additive to the customer, the insurer, but it's like an institutional business to business market. They do everything. And so he just, he teaches a story of how he got there and how that developed over time. It really started in like the pick and pull market and the pick and pull market begat these more institutionally oriented markets. I think the other crazy part is like how they, in this case, they were able to adapt it to other places. So like the UK has these markets because of it. But the buyers actually, you know, as they grew, they found out that there were buyers in like South America and stuff like that.

7:23So just, you know, it made me think a lot about where they have a pretty simple concept and they continue to tinker with it and play with it. And it's kind of like the cumulative advantage you build up over time. Let's see a couple others. I won't, I won't, I talk about each of these. The History of Money by David McWilliams. Killer book. I think that's already out in the podcast. It was a really fun book. The idea that money is like language. The US dollar is the most accepted money in the world and English is the most accepted business language. That's an interesting paradigm. Taking Religion Seriously by Charles Murray.

7:56The funny part about someone calling themselves a happy agnostic is a very interesting way of putting it. And he does a kind of a life story there. friends until the end by jim grant i know we've talked about this like jim grant's awesome anytime he writes in barrens or anything like that he's just very fun to read and it's it's a very cerebral walk through time and that book's really about two friends in british history um that i highly recommend the origins efficiency by brian potter if you ever heard things like six sigma and lean manufacturing it didn't make any sense to me until i read brian potter's book because he explained like the whys.

8:33And I think something to take away from it is you can improve things in costs, you can improve things in time, which shows you that money and time are interchangeable. And he talked about how you can take processes and you can cut steps out, you're changing, you can save both time and money. And so and a lot of that came out of Japan originally. And then the last one, and I think this is really important is, I don't think about inflation as a societal loser anymore. And that's the book is Inflation, a Guide for Users and Losers by Mark Blythe and Niccoli, Niccoli Fracolini. All inflation does is just divide society.

9:11And you always hear from the people that lose the most. So like we have inflation, wealth loses, wealth tends to have a bigger power in the media. And so we're going to read in our history books about why wealth was so bad. Okay, and I think we'll come into this in our questions later. But I looked at it is it's a way to divide people the questions who's the losers and who's the winners and I think they do a good job of accounting for that um let's pivot to what you guys are currently reading Seamus you have a fun book in my mind uh yeah you have you had him on the podcast before yeah George okay yeah I actually read this book because of you I'm a big George Gilder fan I am officially a George Gilder fan after he we went to the Cosm thing and he was there and just reading through I'm basically all the way through his book I won't go to him much because You guys mostly already know it.

9:55But – What's the title of the book? Oh, I'm sorry. Life After Capitalism by George Gilder. And really it kind of just flips capitalism on its head in terms of thinking about information as the power – as the incentive base for capitalism. So he talks about wealth is knowledge. Growth is the learning and gaining of that knowledge. Information is surprise. I thought this one was actually really great because – Let me say it again. Information is surprise. Explain that, yeah. So when you're doing something, the feedback that you get, if it's a complete out-of-the-blue surprise, you actually gain more information and learning from it than you would if you say you went and did something, you tested it.

10:38It didn't – nothing came out of it that was too different. And a lot of the times – I think there was a reference in the book he talked about scientists would come back and they had to tell him or her what – when something had gone wrong. Like there was an error or this went wrong because everything from that they learned quite a bit more than they would have. It was just confirming what they were testing. And I strongly feel like the markets today is lacking that, right? Like there is very little information coming back that we actually can use. Why test anything? I mean like to your point to a certain extent, I mean if we just use the core thesis of today, it's like if you can buy the S &P 500, why do you need to test?

11:16Yes. Yeah. And it is – I mean I think we all agree it is dumbing down the management of money and where money goes to, look, just take this and don't get anything – don't send anything back that is counterintuitive, that is kind of negating what I think is going to happen. And that is – that's bad in the long run. We want things that change and that challenge our ideas and perspectives. So I thought that was really great. And then money is time like you were saying. Yeah. Second one, Pattern Breakers by Peter Zilberman. It really kind of focuses on – it's about VC tech. And he talks about Uber and Airbnb, two examples of inflection points.

11:59So Uber was able to do what it did primarily because phones had GPSs in them. Once that happened, the technology enabled Uber to basically find a car, route it to you, see where it goes, and that allowed that company to do what it did. But Airbnb, same thing on Facebook Connect. It allowed these people to see who they were dealing with. That developed a trust between the two. So going to somebody's house or apartment, you weren't as creeped out by it. So it's a great book. Both of them I'd highly recommend. I'll kick it over to you, Nick. What's yours? So I'm reading The Fairfax Way by David Thomas.

12:36It's inside Prem Watsa's Secret to Lasting Success. So did you find this on Axe like I saw it everywhere? I did. I saw it. I saw it everywhere. It's a new book. It came out a month ago. So I was like, I'm interested in it. So I picked it up. It's great. So far, it's telling the story of Prem Watsa's origin. So he got a degree in chemical engineering in India. And then he came to Canada, not knowing he wanted to be in finance or investing. And he took a class, he took an MBA class that kind of inspired him. Now, he didn't have his value methodology then. It wasn't until his first job where his boss introduced him to Ben Graham.

13:14And from there, he got steeped in the value investing methodology and mindset. And it served him through his whole life. So to the listeners, I think if you're interested in that sort of thought, reading Prem Watsa's letters is a great place. But I have found this book is really well written and it tells the story in a very – a way you can understand the flow. Sure. Well, yeah, because I've seen a lot of the Fairfax, which is – just so everybody knows, when we talk about Fairfax, it's a publicly traded company. It's an insurer in Canada. They also have another company called Fairfax India, which is an offset of that.

13:47But I say it because the people that really like the stock, they're talking a lot about this book. And full disclosure, we don't own the stock. But to your point, there's a lot of chatter about this book out there on X. Yeah, I think it's worth it. It's worth a read for sure. Cool. I'll kick it over to you, Will. What are you reading right now? I'm currently reading a book called A War Like No Other by one of my favorite classicists, Victor Davis Hanson. It's about the Peloponnesian War between Athens and Sparnos fought in the 5th century BC or rather 6th century BC. And what's quite interesting about this book is that it did not need to be fought.

14:19It was an existential – a non-existential war fought between Athens and Sparta that led to the demise of the Greek Golden Age. And it just reminds us how there's basically nothing new under the sun and many of the same follies had been reached between Athens and Sparta. It happened again in history. It begins history. It doesn't repeat itself but it rhymes. and just how fragile the current state of affairs are and how we – which reminds us that at SME Capital, we want to buy businesses that are anti-fragile in nature and durable. The book I'm reading right now is called Four-Blooded Money, which is about the biotech industry.

15:03And it's just a very interesting account of how a blockbuster drug eventually gets to market. And it's been full of very interesting facts that I previously didn't know, for example, that one of our key portfolio holdings, Merck, its main blockbuster drug currently is called Keytruda, which was actually accidentally picked up by Merck in an acquisition. So quite interesting there. Yeah, my book I'm currently in is called Evergreen. And what I found really interesting with the book, so in full disclosure, we own a lumber company called West Fraser Timber. It's the largest lumber producer in North America.

15:38They also have the largest lumber mill in the world, at least according to them. If the Russians don't have a bigger one, it goes the story in Quenelle, British Columbia. If you want to gamble while you're at breakfast sometime, go up to Quenelle. You've got to go to Prince George, the northern capital of British Columbia first. But it's a it's a logging town or really a lumber town there. And so what I liked about the book was, you know, when we when when we're doing a lot of the work nine years ago in the business, you just you're learning to learn. So you're you're learning. I remember we went out to it got bought by Ranier.

16:12But there was a publicly traded REIT out on the Olympic Peninsula. And so they took us out to this site and they usually call them stands. That's what they refer to as kind of like a grove that they're going to cut. It's like a timber stand. And so we go out and this guy is taking – you're figuring like you're thinking these old lumberjack pictures where there's like hundreds of men and they got these big saws. And there's a big sequoia they're cutting down and stuff like that. You get out to like these are – this is like a Doug fir stand or like what would be referred to as a spruce pine fir stand.

16:42And it's out – there's a guy on a big mechanical truck with this arm. It's got a circular hand on the arm. So it saws off the trunk. It picks it up. And then it runs it through the arm on the circular arm to take off all the limbs. And then it runs it back through. and then he takes this thing and drops it onto one of those trucks where it's got the big U-shaped container holders and like stacks it with the other locks. Now you're watching this and you're like, man, these are like little straws to this tractor. What was interesting about that is when you look at, and I connected this up to, I think I shared Jim Tuer's podcast on Tucker Carlson's show.

17:24And Jim Tuer, to your point, was just at Cosm to connect that up. And Jim Tuer is one of the great material science minds of the United States of America today, just a brilliant mind. And he was talking about in the podcast with Tucker, he said, you know, we can study the inside of a tree, but we can't replicate the tree. Because he explains that these are effectively like tube-like strands that are as small as your hair follicles, but they're stacked and compressed so close. But these tubes, like he says in this book, Trent Pressler's book, Evergreen, these are like water sucking tubes these tiny strands would be taking a straw of your hair sucking water up it have you guys ever seen when someone does a big mechanical splitter on a tree if you're oh you should go go youtube it i recommend that to all our listeners when they put a mechanical splitter it's like a big axe style head going in and when it happens it's compressing these tubes and what you'll see is water comes flying off of it it's really cool and so as i'm listening to this it's like i have multiple things like being out that tree stand seven years ago, plus watching that YouTube video.

18:30And you're kind of watching this. I'm listening to Jim Tours' podcast this week. And it's like, you're watching this all together. It's like the incredible ability to understand the components of the tree. And yet we aren't God. We can't actually do that. So it's interesting to think about in material science, how you think of like what we're seeing now, it's like, oh, AI, we're going to solve these things, but we can't actually replicate a tree from its material perspectives, okay? So one other thing I'll add to that is it's really like a story of the Western United States because like he points out, the pilgrims came here.

19:01What they put back on the boat to go back, it was timber because England was running out of timber. And then when England finally ran out of timber, what they produced? They produced coal. And he argues – there's others that would disagree with this, but he argues that all coal is is just timber that sat in the ground for a very long time. and it's at a point where it's ready to burn and stay for longer. We talked about that you can create charcoal out of trees by burning it at very low levels because what it does, it gets a lot of the water and the materials like that out of it. So again, you're just like, there's a lot of technology paradigms.

19:36Every time a new technology came about, you guys ever seen the Spruce Goose by chance, the big, big plane that Howard Hughes built? There's a movie about it in The Aviator. That's in Oregon. That's in the state of Oregon at a museum there. And the Spruce Goose was a new technology of flying. And that came out in World War I and World War II. So every time we made a big movement in technology, it brought trees, these archaic luddite forms of energy. It brings us forward either from material use or energy use, which I thought is really interesting. We've talked a lot about all new technologies pull forward past energy sources.

20:08And his book did that to a wonderful degree. Hi, I'm Cole Smead, CEO and Portfolio Manager here at Smead Capital Management and host of this podcast. If you enjoy this podcast, I'd like to invite you to check out SmeetCap.com. At our firm, we are stock market investors. We advise investors who play the long game with a discipline that has proven success over long periods of time. Learn more about our funds at SmeetCap.com. Past performance is not indicative of future results. Investing involves risks, including loss of principle. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges, and expenses.

20:47Read and consider it carefully before investing. Smead Funds Distributed by Smead Funds Distributors, LLC, not affiliated. Let's see, books you've had recommended to you. What do you got, Shamit? We had Against the Gods, The Remarkable Story of Risk. I've heard by Peter Bernstein, I'm sorry. From just knowing a little bit about it, I looked up kind of the prologue on it. It's just the evolution of probability. So how that helped develop society. Insurance came through there, the people's willingness to take risk, to plan things. So yeah. He's got some great quotes. It's funny. I've never read the book.

21:27I've stolen quotes out of the book. It's an excellent book. It's a really fun read and a fun panorama of the history of probability. Yeah. Pricing risk. If you don't know Peter Bernstein, he was incredibly well thought of and was considered a monster in terms of his quality and his thinking. Nick I'll hand it over to you what's your book sure the next book on my list is The Caesar Palace Coup by Max Froomes and Sunji Indap yeah which we did on the podcast I know you've done that on the podcast but being from raised in Las Vegas I went to UNLV and by the way he goes back to Vegas a little too much like I feel like it's every other weekend it's like Nick what are you doing there must be a girl out there I think you never know there's a lot of things in Vegas you never know what you're going to find out but that wait no so you went to UNLV just so everyone knows I went to UNLV.

22:13That's where I went to college. I got my grad degree from UNLV. So anything about Vegas, like the strip and how that's pretty interesting to me, how that can play into Wall Street and how that. So let me ask you this because I want to ask your take on this because so you think about all these transactions, you know, you know, what like without reading the book, what do you think like from when you went to college or what do you think has changed a lot in the model of Vegas just in general? I know we've gone through the pandemic, for example. Yeah. Just from as a person who's lived there, what do you think has changed in the last five, 10 years?

22:50Because the other things that we've talked a lot about as a group is like, oh, you know, Vegas traffic is way down. And you go and look at the data and it's like, it's down, but not in some abnormally weird year. And if you look at revenue, it's up. So how do you look at the change of Vegas, say, post-pandemic? I think there's been almost two paradigms. First off, they're changing to – they're getting more high net worth or high value customers. And those customers are staying. So they're building like the resorts world. A lot of new casinos are – the Fountain Blue, they're targeted towards the higher spend per trip customers.

23:26Sure. They've also, at the same time, made the shift where station casinos, Red Rock, Suncoast, are targeting a lot more locals. So they get the locals to actually go out there and do activities at those casinos. Sure. Which they wouldn't generally go to the Strip unless – like when I lived in Vegas, I wouldn't go to the Strip unless I had a friend coming down. Bring them to the Strip. You don't generally go there because that can be very dangerous, right? But I think the shift has been it is more for a higher income customer. Sure. So the volume could be down. And this is something we talked about before.

24:09If you look at, of course, after the pandemic, there was a big rebound and a big spike. Yeah. But part of that was people didn't go to Vegas for a year or two. It was like a vengeful buyer that wants to go out. So if you're looking at the change from that spike, obviously that's going to bias your numbers, right? So if I'm looking at year-over-year numbers, it's going to be down. But to your point, revenue is not. Yeah. Will, what do you got for books that you've had recommended to you? First one, The Odd Man Inn. To me, Capital, we're always trying to triangulate around business values to figure out what they're worth and buy at a big discount.

24:47And one of the ways we back into that valuation is what a private buyer, typically an industrialist, or a strategic acquirer would pay for the entire business. Norton Simon is one such industrialist. His biography is about his life. He was a well-known industrialist, investor industrialist, and also a well-known art collector. So there's a museum that he has in Los Angeles that I plan to visit sometime. So that sounds quite interesting. The other one is effectively an earlier one-man version of the futures exchange in Chicago, a man named Kaluskol Bankian who was an Armenian living in Turkey. And what's the name of the book?