All Activity

With all due respect, where do you get the idea that Todd delivered outsized returns before Berkshire? As for size being an impediment to their performance, first of all, they clearly missed: MSFT, Alphabet, Meta, LVMH, Hermes, Costco, Chipotle, Progressive, Visa, MasterCard, and the list goes on and on. Also, somehow large size did not prevent sir Christopher Hohn from putting damn good numbers.

You mean the Muslims in India are treated the way Muslims treat Christians and other minorities in Muslim majority countries? Actually, Christians and other minorities in Muslim majority countries can't even dream of being treated the same way that Muslims are treated in India. How are Christians and Zoroastrians and Bahai of Iran treated? Christians of Iraq? Christians of Lebanon and Egypt? You cannot build a church in Saudi Arabia. How are Christians treated in Chechnya?

Also this. https://www.nytimes.com/2024/05/18/world/asia/muslims-india.html

Random thoughts: - If you want to compare to Mr. Buffett (which it is a mistake) but if you want to, think about this. In 2000, Berkshire's "equity portfolio" was $37B total. $28B of the $37B (75%) were in 5 businesses: Amex, Coca Cola, Gillette, Washington Post, & Wells. Need to further unpack that $28B because it basically was permanently allocated - Amex/Cocoa Cola (still owned and untouched) makes up $20B of the $28B, Gillette turned into P&G which was turned into a tax free exchange for Duracell, Washington Post turned into cash, shares of Berkshire, and a TV station (tax efficient), Wells at $3B was added/trimmed and finally sold with sizable gain in 2022 - if not for a little scandal, arguably, he would still be holding today. That leaves $9B (25%) to allocate in 2000. Lets just say that again, $9B was a lot in 2000 but nothing today in relation to size of portfolio. - Ted/Todd manage roughly $15B each, that's 10% of Berkshires "investments in equity securities". Pittance in relation to Mr. Buffett's $300B+. - Traditional money managers/hedge funds may have $20B, $40B, $60B+. They employ 100's of people. Ted/Todd each have 1 assistant. - Size is the biggest thing holding them back from outsized returns, who knows what other funds actually manage and their are some lists out there but here is the point, they are tiny in comparison. Both Ted/Todd proved they could deliver outsized returns with small amounts of capital in previous life. Also previous market cycle. - Ted/Todd true value will only shine through once the loaming shadow of Mr. Buffett is gone - Finding a "stock picker" successor was not the task for Mr. Buffett in looking for replacement, it was about capital allocation for the next 10/15/20years. Giving Ted/Todd a traditional yardstick to compare performance is not the game although monthly reports are shown to CEO. - Trying to paint Ted/Todd as classical money managers is a mistake. They do many things for Berkshire. And just having them at the ready for future issues is important. I view them as the fire sprinkler alarm handle inside Berkshire. Rarely used but when needed incredibly important. - Ted/Todd are going to make some mistakes with hindsight, they will lose money. Mistakes are fine. Permanent loss of large amounts of capital is not fine and trusting someone to do that job as well as deliver "alpha" is yeoman's work - could prove to be difficult in coming years as capital amounts grow. - Ted/Todd have not had an opportunity, due to the "Fed Put" and other governmental intervention, to operate in a prolonged bear market. Everyone has made money for previous 12-15years - most glorious bull market in history coming off 2008-2009 financial crisis. - Ted/Todd will also have to replace themselves at the end of their tenure and finding someone who can replace themselves is not an easy job. I believe both Ted/Todd have the character traits to attract/find the right kind of replacement when that time comes. Final thought: - Berkshire today is not the same company as Berkshire in 2000. Different game. - Ted/Todd's value will be shown when they can allocate significant sums into situations - $50B-$100B+ and there be a significant margin of safety. - Mr. Buffett has repeatedly said Ted/Todd are Berkshire's intellectual property. Almost like the recipe for Coca Cola, you don't share the recipe hence the reason why they do not get on the mic and to cast their views on markets/businesses. I tend to agree. - Looking forward to watching them both grow as managers/allocators and be stewards of Berkshire's capital (our money).

Nice. I'm going to see these guys in Birmingham tomorrow.

I was fortunate to hear Sonny Rollins live a couple of decades ago in Carnegie Hall. Still love to listen to Coltrane. You got to spend some time in NY for the music - we went an amazing Argentian music concert the other day - Pablo Ziegler.

Except Paramount ..

The board gripe is just ignorant. Buffett has gone on record to say most boards are useless, but he says the board structure that seems to be most effective is the one where a family with controlling ownership governs a professional management team (meaning the managers aren't family, and the board isn't dominated by a single person). With that structure there is genuine interest in the best long term performance of the company for its owners.

Additionally, hundreds of private deals go across their desks each year, which they analyze. Todd says most of them are deals he wishes he could short. I'm sure the opportunities that do look promising end up getting outbid by private equity.

They meet every weekend and discuss any S&P 500 companies selling for less than 15x earnings that have long term growth prospects. It's not rocket science. My guess is there aren't many companies selling for 15x or less, and that there are even fewer for which long term growth can be predicted with any confidence (aka: too hard pile).

Office was never a great asset class and it was a joke to see 4-5 cap prints for the better part of 2014-2019. Meanwhile grade A grocery traded for 7-8 and warehouse near double digits. Both the Wall Street crowd, and the academics, just had no clue what they were doing because they were still living in the 1980s.

No question there is further pain, write-downs on property, defaults etc. However vacancy rates are not staggered consistently among properties, it’s the old commercial buildings that have highest vacancy rates, new ones less so. As ever quality will matter. This article highlights some of the differences and where the squeeze points are: https://www.brookfield.com/news-insights/insights/misunderstood-us-office-market This could be a slow car crash that continues for a couple of years. The refinancing of debt seems to be an average of 5-10 years and many of those loans will need refinanced at higher rates. So I get it. It’s not a slam dunk. However I suspect there is good money to be made at these prices. A 50% + drawdowns in any sector is rare and it’s worth considering whether the pervasive doom and gloom is justified. I mentioned above, some of these REITs are trading at 08/09 lows. Is it really that bad out there? My back of the envelope bull case: - office work is not dead even if wth is here to stay at some level - excess inventory will get wound down and the supply problem will fix itself in time - companies will default and fail but overall I think we will muddle through No position btw. Talking out loud.

I agree with the above. No one can say for sure but I think it would be silly not to give some credit to one of the 2 for the Apple investment.

Well, I think they see what a mistake it was to give real estate developers that much market freedom, and future regulation will prevent this situation from occurring again. For now, something has to be done and I agree that the government can use the situation and make the best out of it. Russia has deep cultural ties with China, they share a huge border and there are countries in China with many Russian-speaking people that have close ties to Russia. It is not in China's Interest to join Washington's sanction games and hostility towards Russia so IMO they are doing just what's fine for China.

Halford still has a set of pipes! Looks kind of like he's sitting in a wheelchair here (but he's not). Too bad he doesn't mention Charlie in the lyrics.

I would assume good money (tax payer money) is used to pay for bad investments made by companies (state/city officials?). Seems they have that in common with every country in the world. I don't think this will make their economy more effective, but it might make officials and even some citizens happy. Anyways, the Chinese should decide what they do with the money. I don't really care as long as they don't become as aggressive as the Russians. Oh wait, they (Xi and Putin) already seem to be (literally) on the same road hugging each other:

Your spirit still lives on Charlie.

Terrible place to be from. I remember my parents going to a school/church meeting when a black family was trying to get their kid into Pius. My parents had them over for dinner and the neighbors hated us afterwards because they thought my folks were trying to sell the house to black people (the place was for sale at the time). We moved to Milton, FL around 8th grade. No more futbol until I went to AATC in Ozark, AL (Airframe & Powerplant mechanic training), and another student organized a squad. I'd love to find a good sax player!

This macro stuff may be a waste of time but it's interesting and who knows, it may mean something one day? i disagree on much of the above. ----- There seems to be some kind of misunderstanding coming from many sources (locker rooms to ivory towers). Individual savings rate does not affect aggregate savings. Individual savings mean disposable income minus consumption. If one changes behavior and increases spending (or investing), the individual savings rate of that person will decrease but the money spent (or invested) will increase another person's saving. Aggregate private savings has historically resulted from money printing which used to be tied to the general growth of the economy and the correlated growth in private loan activity at commercial banks, not anymore though. Yes, starting in 2020, excess savings were built up, but not as an aggregate effect of net worth growth or (only) stimmy checks. The excess savings were built up from (slight simplification here, but in essence) commercial banks (effectively, on a net basis) buying securities (mostly government debt). Let's say mattee2264 buys a US Treasury and Uncle Sam sends the harvested funds to Cigarbutt, no additional aggregate net private savings is created. However, if the Bank of America (NYSE:BAC) buys the Treasury from mattee2264, to match the new asset held, it credits a deposit for mattee2264 and (magic of money printing) the aggregate net savings (private) increases to the extent of the increase in public debt. Look at the following for a graphic representation: An interesting conclusion is that the US effectively applied an MMT-like Friedman's helicopter money experiment and it looks like the net result is what the great thinker predicted. After a while and some lag, the only thing which changed is the general price level, not the underlying real aggregate net savings, with long-defunct thinkers suggesting that the outcome of such debt experiment would be closely tied to the productivity of the funds obtained from debt (there is a developing story here..) Like many suggest, in real terms, for deposits or excess savings etc, 'we' (we, also meaning the typical paycheck-to-transfer-to-paycheck American, 78% or whatever) are back to where 'we' were before the experiment started. What happens next is where the money is but non-linear changes have to be considered? Concerning what choices people had when services were curtailed, one may look at the following consumption picture and consider the possibility that the government borrowed in order to allow folks to buy excess goods (instead of later?).

That's funny, my college suit mate was from Mobile Alabama. Black kid who played the saxophone, although he is 15 years younger than you are.

Yes. I (62yom) went to Catholic school in Mobile, AL when he was still at Man U. Played soccer at St. Pius X and our coach (Fr. Nicolas) was straight from the motherland. I had nun's all the way to the 7th grade and thought most of them were IRA terrorists. I still get nervous when I hear Edelweiss because of the trauma of sister Gertrude's music class. Was an alter boy, love fart jokes and my Dad grew up in the UK. Dribble on brother! edit: I don't keep up with what's going on in the game now but do catch important matches. Don't care who wins, just enjoy watching the artistry.

The reality is that the sector is overbuilt most everywhere, and much of the stock needs to be written down in a big way. For most it means that asset write-downs will trigger debt covenant defaults, unless replacement new equity can be raised via new share issuance at rock bottom prices, and material dilution. So extend and pretend, 'cause if one BK's the game is over for all of them. How many IB's went down within 4 months of the Lehman's collapse ??? If you simply opened a new REIT and just bought a building (at a suitable deep liquidity discount), you would have a much better proposition and at a lot less risk. No shopping, until the vultures come down from the trees. SD

I don't have to swing..... What's the saying about generals always fighting the last war, especially if they won? You haven't really seen any bankruptcies in the space, sure some of the big names handed back the keys to places, but there hasn't been the big shake out you would expect to see in a highly levered business where the cycle has turned.

What if we have already seen the big wash out? We are four years into this bear market. And as you hint at, extend and pretend might work. If the excess supply of commercial real estate is taken off the market the demand problem will solve itself.