All Activity

All out of cartoons?? Try a logical argument for once, it will help exercise your brain.

“5th? hold on, it’s 3rd largest” Come on Becky would it hurt to read a letter or two since interviewing him is your whole career? At this point aren’t they just friends? Why does she do the fake hardball stuff? WB likes her and I guess that’s what matters. WB was almost unbelievably great. Very touching when he was explaining his leg and just said I’m happy I was born. Reminds me of my grandparents at the end. Every time you turn around they break something and it’s just frustrating.

Dude's glued to his delusions. THC gummies would probably tip him over into a full blown psychotic episode.

Ok - forget about Trump and Bibi. Everyone is sick of the IRGC, even the Chinese who told the Iranians to knock it off with the ship attacks and get back to negotiating. Iran is losing all their friends and leverage. The IRGC may remain, but their destruction is pretty much assured. And the oil markets are yawning.

Becky asked the question (I thought she was excellent in this visit), but Warren didn't answer (Will all the funds be spent within 12 months of receipt, or something like that).

Hopefully the SOH opens soon, and the Bab-el-Mandeb (Red Sea) remains open; while views may differ as to mechanics, we have a market for that. We just don't have confidence in the dysfunctional Whitehouse, or the abilities of two old men to remain calm and collected, while under immense pressure. C'est la vie. SD

Yea definitely seems like a lotta tatted up thugs on Argentina. Very physical game

The only new thing I learnt from the interview was that Alphabet purchase was Buffett's, not Greg's investment. It's clear that Warren's Berkshire stock will go to the four foundations run by his three children. What's not clear to me is if the foundations will continue to be big shareholders of Berkshire or not.

Add to PGR

Personally, as sort of an armchair novice investor, I have often focused in a first pass view of investments, on multiples of earnings per share, the P/E ratio. That works fairly well for investments that have relatively stable, predictable earnings, similar to interest paying bonds, and is less valuable when earnings are volatile, and occasionally even negative, or when earnings growth prospects are extremely difficult to estimate. But for a mature insurance company, or even a conglomerate like Berkshire, it can be a helpful starting point. For example, a hybrid view of valuing Berkshire might look at the market value of the equity portfolio, the cash, and then add to those two pieces a multiple of normalized earnings. Say that equities are worth $300 billion, cash is at $380 billion, and the normalized projected operating earnings of all of the subsidiaries are estimated as $48 billion per year, or $4 billion per month. What multiple would you be willing to pay for those earnings is something you have to determine individually. Compared to risk free bond rates of say 5%, you’d typically want something higher than that, perhaps 8%, for a PE multiplier of the inverse, or 12.5. That would value the operating subs at $600 billion, and added to the equity and cash, you’d get an estimated total intrinsic value of $1.28 trillion compared to a recent market cap of $1.06 trillion. So a bit of a margin of safety at current prices. Of course you might divide the operating subs into categories, and assign typical PE multipliers used by the market for similar industries…say about 30 for the railroad and something less than 10 for the electric utilities, but that’s too far into the weeds for me personally on a quick first pass. Looking at the history of earnings per share for Fairfax prior to about 2018, this was all over the place, with not a very predictable pattern. But since then, we’ve had a good track record of earnings per share well above $100, and my own expectation would be closer to the $200 level and above going forward, particularly in light of the impact of share buybacks on the earnings per share going forward and the interest rates locked in for the bond portfolio. Ignoring the cash and market value of equity piece of the Berkshire approach, and using the same 12.5 multiplier for an estimated earnings per share value of $200 gives me an intrinsic value per share of $2500 US. If we were to add in cash and equity, I would not be at all surprised to see a result closer to $3,000 per share US, similar to @SafetyinNumbers preference for using a 15 multiplier to an estimated EPS of $200. With management retiring shares at less than US $1700 a share recently, I am confident that they are buying back well below any reasonable estimate of intrinsic value.

That’s football nowadays, trying their best for fouls and getting the opposition sent off. It should be another level again with England vs Argentina, the latter completely loathes England.

Let me clarify: There have been 90 days of negotiations during a CEASEFIRE, along with, perhaps 40 days of actual fighting by the USA. Imagine the sustained damage with just another 40 days of fighting, where Iran cannot touch the USA. Bill Clinton brought Serbia to surrender with an 70 day bombing campaign, taking out power plants, electric grid, all the bridges and communication assets - once the Serbs showed they were not serious about peace with NATO. Barrack Obama brought Libya to surrender with a non-stop 7 month bombing campaign - at the insistence of France and the Europeans. You are now almost 30 years later - where the American military has "eyes in the sky" showing every single movement of assets in the IRGC. Furthermore, the precision weapons employed by the USA dwarf anything imaginable in the 1990's. Notice that the IRCG has not touched Israel for months. Telling, that IRGC understands, unlike Trump, if they dare to launch missiles into Israel - Netanyahu knows where all their leaders/families live. Trump will be far kinder to Iran's leadership than Bibi - while the Donald fights to restrain Bibi. The momentum on controlling the SOH has shifted dramatically. Time is not on the side of the IRGC, just like Libya and Serbia.

It’s possible Fairfax has shortened the duration of its reserves which would dampen the impact of higher rates on discounting. Perhaps another way to defer earnings.

Maybe! BVPS growing again and a 100% increase in sequential earnings might offset the sellers though.

Interesting. I'm speaking in generalizations of raw interest rate moves, but the generalization didn't seem to hold true for that quarter (when it has been true in others). There's probably some component of what credit and mortgage spreads did too since Fairfax doesn't just own straight treasuries and that may explain the difference in Q1. But as a ballpark, if they're under in duration, they'll outperform their liability when rates rise.

I wouldn't complain about that, although I do think our government needs to be funded somehow, I'd love to see reduced government spending, but it's pretty obvious that's not going to happen. I feel like we should avoid incentivizing bad behavior (government handouts / a tax system that encourages under the table work) and try to incentivize good behavior (saving/investing/earning more money). Our progressive tax system/income based safety nets create a lot of moral hazard. If I were king, I'd try to create a more balanced tax system. Tax all investment income at the same rate, so lower taxes on cap gains/dividends/interest while increasing the tax on stock buybacks to the same rate. Lower the higher income tax brackets, or just use a flat tax rate. Incorporate a VAT tax (and maybe exclude essential goods/services). Reform entitlement programs so that they serve to help bring people out of poverty instead of keeping them there. Close the huge endowment loophole for avoiding taxation on unrealized capital gains/estate tax (no need for a wealth tax).

So after earnings release potentially another big down day and Fairfax with the opportunity to buy back more shares? I’ll take it

The battle for the SOH needs to have been decidedly won, and with traffic flowing freely both ways, by Nov-03 (US MidTerm) at the latest... 3 1/2 months. Should both Netanyahu and Trump lose their elections, it will be the allies withdrawing; and a global coalition stepping in to negotiate peace, security, reparations, and a return to 'normal' flows. The US and Israel have been at it for 4 1/2 months ... and the SOH is still closed; no reason to think that it will be much different come Nov-03. Were the Iranian people pre-disposed to overthrow the regime, it would have already happened; now the growing misery just makes the population want to see Trump gone (WW II bombing effect). Of course the SOH will reopen ..... just most likely with different players. SD

@TwoCitiesCapital, is that what happened in Q1? From the Q1 conference call: "In the first quarter, net earnings included a $184 million unrealized loss due to increasing interest rates in the quarter. This consisted of unrealized losses on our bonds of $364 million, as I previously mentioned, offset by the increase in discount under IFRS 17 on our insurance and reinsurance reserves of $180 million. For the first quarter of 2025, this number was a net gain of $120 million."

Bond losses would be offset by the liability adjustment on the insurance if they ran equal duration. The bonds have typically been shy of duration of the insurance, so should actually be a sight net positive

Almost like when you ignore the shitty politicans and chronically online trolls, the US is a welcoming, friendly, accepting place for all people. At least much more so than many countries out there....

Basically the Berkshire problem, no? I know there are better ways to value it, but I have high confidence that when Berkshire trades at 1.3-1.4x book, it is trading below intrinsic value. Likewise, I have high confidence Fairfax trades at a discount when it trades at 1-1.2x book. And I think intrinisic value is growing quickly. Don't need to be exact to know when you got a deal. I also like the idea of valuing float. Smarter people than I can do SOTP for a better valuation..

What I found hilarious, is that for all the whining we ve heard about how horrible the US is and how hostile we are to foreigners….millions of them just had the time of their lives traveling here for the World Cup and seeing many different pieces of America. Somehow another dumb fuck liberal narrative gets exposed as a lie, go figure!

@73 Reds, great question: "Why use BV as a valuation metric?" The primary reason for me is habit - it is built into my models/mental framework. Another important reason is it also the key metric that the investment community focusses on for P/C insurers (rightly or wrongly). I do include "excess of FV over CV" in my models - that provides an important improvement to accounting BV - getting us closer to "economic BV." But that is incomplete. Is book value still relevant as a valuation measure for Fairfax? Great question. I need to think more about it. What do others think? PS: When I value Fairfax I like to use "normalized earnings" and PE. Much of their EPS is very stable. And for investment gains I use a three year average - which makes this part also very stable. As a result, PE works for me. Bottom line... stock is trading today at about 8.5 x "normalized earnings." Crazy cheap from my perspective.

@Viking I love your work but have a lingering question for you and others: Since most acknowledge the benefit of share buybacks even above BV which also go to reduce BV, why does everyone seem to focus on BV as a valuation metric? Can't we find a better valuation metric that doesn't overtly reduce the estimated value that we are trying to measure? Is it just because BV is so easy to measure or is there another reason why every time someone seeks to value Fairfax, book value is always considered?