Hamburg Investor

Like that view. Like to look at any stock from different perspectives. My base case, like a ground layer, is the following. I like to keep it simple. Viking and others have made tremendous work here; but than I beam me out and look at it from a meta perspective: If FFH gets a roe of 15% over the veeeery longterm, having the ability to reinvest everything (which is wrong, but nearly true with a payout ratio of aroubd 10%) at that rate, than you have that business at a pe ratio of a bit above 10 today (1.6 pb ratio at a roe of 15% is a pe ratio of 10.x). There‘s a lot of margin of safety in that view, as a. I don‘t think Prem would pin a roe of 15% on the wall, if he didn’t expect to reach more in normal circumstances (and - as said above - following the discussions here closely I don’t see, why I shouldn’t trust Prem) b. there‘s a lot (!) of hidden assets and value within the company and c. as a pe ratio of 10 for a business producing a roe of 15% is cheap, so buybacks obviously give a roe above 15% to shareholders. And there‘s a lot of repurchases happening. Okay, and I just have written it: A pe ratio of 10 for any business with roe of 15% is cheap. Try to find that on the market. Especially outside of insurance. The S&P500 (which is wrong, but in my view the best easy-to-find comparison out there, as it is bigger than the TSX and NA too) has a pe ratio of 29. So it‘s valued three times FFH AND the average S&P500 business is giving maybe 10% to 12% roe over the longterm - in any case less than 15%. So in my view the S&P500 is valued maybe 4+ times FFH. As I am happy with an overall return of 15% (in other words, using the rule of 72, a double every 5 years), and I think on top of that the gap between the market and FFHs valuation has to close somewhere along the line (but maybe part of the story might be, that S&P gets cheaper, anyway), to me FFH seems an excellent investment at todays price. And I wouldn‘t be surprised, if FFH would give a cagr return of 18% or above over the next 10 years; so 4 (at a cagr of 15%) to 8 (cagr of 23%) times todays price.

@Viking: Thank you; though I think I wasn‘t able to make my point clear. That post was not meant to Fairfax alone (and to be cristall clear: everything you write about FFH in your answer makes totally sense, the hedges etc. We agree on that point 100%). it was more like asking, if there might be a general timeless principle regarding inflation applying to all the value investors from Graham and Doddsville leading insurance companies. One could turn my discussion point to another question: Is the roe outlook for the Berkalikes a. negative correlated to inflation, b. inflation agnostic or c. gives inflation a tailwind? Looking at the results over the decades, at least my impression is, that all Berkalikes were having a tailwind when inflation was high.

Wow, what a post! Thank you, @Viking, that resonated a lot with me. As Float, and bonds are a topic, let me add a question I haven't come up with yet: What do you think is the relationship between inflation and insurance companies performance? I have a feeling, but can't bring it all up together. Maybe an example helps: 1. Bond rates are mirroring inflation plus giving 2% real return (that sentence is not totally correct, but directionally okay, I think). Let's have that in mind for the following 2. Let's assume having a company "A" having equity with a roe of 10%, equity "B" having the same like A but the same amount of float than equity and the whole float being in bonds and company "C" having two times the amount of float/bonds than equity So what's the roe, assuming 0% inflation in a given year? A = roe of 10% (on equity) => roe = 10% B = roe of 10% (on equity) plus 2% on float => roe = 12% C = roe of 10% (on equity) plus 2 times 2% on float (that's 4%) => roe = 14% Conclusion: Assuming no inflation, Company C outperforms B with 2% and B outperforms A with 2% Another example: So what's the roe, assuming 5% inflation in a given year? A = roe of 10% (on equity) => roe = 10% B = roe of 10% (on equity) plus 7% on float (5% inflation plus 2% real return => roe = 17% C = roe of 10% (on equity) plus two times 7% on float (5% inflation plus 2% real return) => roe = 24% Conclusion: Assuming 5% inflation, Company C outperforms B with 7% and B outperforms A with 7%. Cs roe is 14% higher than As, when inflation hits 5%, but Cs roe is only 4% higher than As, when inflation is zero. Wow, what a difference! It is perfectly clear that this example is very theoretical and oversimplifies many things. Of course, depending on the company, inflation would also have an impact on profits, i.e. on ROEs (if it's a good company, its roe will stay good - if not, well...). And of course, an insurance company is not simply “Company A” plus float. Of course, insurers do not normally have a 10% ROE on their equity alone. But the example is only intended to show that higher higher inflation are good for insurers – unlike most other companies, which suffer from inflation. And I think for this purpose it's okay. It should be generally clear that higher float means higher returns (and possibly more risk) - that has been discussed very often. It has also been discussed at length that higher bond yields improve ROE of insurance companies. But I have seen little discussion of the fact that with a particularly high float (for example, twice as high as equity), insurance companies ROE is effectively leveraged on inflation. So with higher inflation (so higher bond rates) roe of „good“ insurance companies (those, that are able to hold their cr in higher inflation regimes) with more float than equity goes up with a rate that’s higher than inflation (as soon as new bonds with higher returns get bought with the float). And what does that mean? Why is that important? If you think this through, it creates a particularly attractive situation for value investors investing equity and float of insurance companies. Why? Well, high inflation usually means low stock prices (since bonds offer higher yields and thus become more attractive compared to the “uncertain” stock market, resulting in a shift from stocks to bonds). And it is precisely in this situation, why stocks get burned, that insurers benefit from particularly high cash flows (as the new bonds give higher returns), which they can use when the markets are dirt cheap. (of course that high cash flows only come over time, as first the bond portfolio held by the insurer gets a hit, when inflation and bonds spike - but over time, insurers cash flows go up). And the insurer itself? Well, the market might get attracted a lot by it, as its roe spikes (in the example above the roe of Company C wents up from 14% at zero inflation to 24% at 5% inflation. I haven't analyzed it very deep (one would have to analyze the float leverage, the concrete investments etc. over the years, the pb ratio of the stocks etc), but it is striking that Buffett generated such incredibly high returns in the 1970s and 1980s – in other words, at a time when interest rates were reaching extreme highs, and stocks were beaten down. Until the 1990s, BRK, MKL, and FFH all outperformed the market by a wide margin (treasuries yielded above 5% - like 6%, 7% etc.). Conversely, Berkshire, Markel, and Fairfax have all performed worse than ever against the S&P 500 until a few years ago. So is it a coincidence that this worse-than-ever-returns of the three companies happened during the low-interest-rate phase of the past decade (where the stock market valuations spiked?) I mean: All of them exist since 4 (Markel, Fairfax) or 6 (Berkshire) decades. And apart from the general "value+float" model they are all very different in terms of their concrete investment style. And yet the outperformance of all three (and the valuation) falls to almost zero at almost the same time. Does that make any sense?

If ones goal would be to beat the market over the very longrun (and maybe having to pay taxes, among the fees and the spread, when jumping from one stock to the next), say 15%, say 40 years (that’s more than a 64-bagger or an 8-bagger over 20 years), why should one sell FFH? 100k today would be an option, but your example with Geico leads the way: Other than at extreme elevated levels and having a better idea in terms of value creation, selling often isn’t the best idea. I see a lot of stock, that might do better over the longterm, but I don’t find a lot, where I am so sure about beating the market by a bit.

I agree with the 100k scenario. But is that likely and if so, would the question of TSX60 make a difference on the path to such a scenario? But let’s look at other scenarios (imho much more likely): What if FFH would get part of the TSX within 3 years and FFH would be valued just „somwhat“ higher than without that happening. Let’s say, FFH would be valued on average with plus 20 per cent (take any number you think is realistic… I‘d go for 10 to 25) in comparison to not being part of the TSX. Personally - of course all thing equal - I wouldn’t sell FFH at prices at 1.8 pb ratio (so todays 1.5 pb plus 10 per cent; maybe I’d sell a bit at 2.5 pb ratio and at 3.0 a lot - depending on other ideas; but the TSX wouldn’t bring FFH near that goal). So sticking to more expensive FFH the TSX wouldn’t change anything, but one thing: Buybacks would get more expensive and less attractive. Still I think Buffett is right: Don’t forget, the idea focusses on the „ifs“ of the only 2 scenarios, you can choose from in every second. Sell. Own. It says „as long as you are not a seller.“ So it focusses on the point of selling. That’s the only time you want the price to be on the spike of a century. So your scenario with the 100k applies to the same logic. You wanna sell at 100k? Fine, but why not get than an extra push to 120k, while you are speaking to your broker? Anyway: Maybe you would be a seller, if FFH would get up another 10% or 20% or XX% (choose your number you find likely) when taken to the TSX? Fine, than you might be happy for that final push. If not, not. But my personal guess would be (and I might be wrong!), that for most cobf members, price would have to spike way more than that (even though less than in your 100k scenario). And than, the general idea applies logical: You want „your“ company to buy back on the cheap site, as growth of intrinsic value per share accelerates all the more. Why should I want the opposite, so less growth in intrinsic value?

If you are a net buyer of FFH (this is what you are per definition as long as you are not selling more stocks as your personal share of FFHs buybacks is, or am I wrong?), you should be happy with low demand for FFH. High demand means higher prices and all you want being a net buyer is low pricing. That‘s true for tomatoes and for stock. If you’re selling tomatoes, hope for strong demand, otherwise, not. So I expect for most us this news is good news.

I voted for going short term in 2021. It looks just obviously right from todays perspective. It seems totally easy to with todays view. Why not going very short, if you‘re not getting paid for longterm? But nobody did, except FFH. So maybe it was ‚t that obvious., not that easy, than it seems today? And what difference that decision made in terms of income. That was briliiant and brought billions and billions of dollars over the years (and still brings) through higher interest rates. And the tineframe helped the more: The decision brought a lot of cash, when others just didn’t have that (so even pushing returns more, as this held prices down). But not only that: It‘s been a motor for better ratings (so that decision saved a lot of the cost of debt). But I understand a lot of other perspectives here just as well. There’s no right or wrong when discussing that question.

The best decision was to still hold Blackberry, when it became meaningless in terms of size, as seeing Prem still having this in the portfolio held a lot of people back from buying Fairfax (again). So sticking to meaningless Blackberry investment helped holding the stock price (very, very) low, so that Prem could buy back a lot of stock at a fraction of its intrinsic value. Disclaimer: This post is not meant totally serious (but maybe a bit).

To me this ai topic seems it cpuld get the biggest threat to Fairfax, Markel and Berkshires insurancs business. My biggest concern is, that ai may change the whole characteristics within the insurance business. Who needs brokers anymore? If everything gets transparent online - why bother just take the cheapest offer? This is what changed e. g. the tourism industry. 25 years ago people where going to a travel agency (think: broker) and there was no full transparency about the e. g. flight and hotel costs. I am not a deep expert in the question, how disruptive ai could get. But what has been written here is exactly what my concerns where all about. If ai technology helps being cheaper and more efficient and getting the better clients on the cheap, then my best guess is, that old structured (e.g. brokers business) looses part of its value. Prices may erode especially in niche areas. It might get easier going into that niches for a newbe and there offerings might get seen and welcomed. Nobody is married with his insurer, other then e. g. a car brand; and even the latter erodes, but maybe that takes even longer. To me this seems mabe the point where we should focus on the most in ghe upcoming years (the performance of the people following Prem might be a second, but my concerns are way less within that field at the moment).

… so that is what you do? I wanna live here. It’s my home. I was born here and I belong to northern Germany; so that’s not my way. And I have to work, so can‘t use the Freistellungsauftrag etc. in a major way…

I totally agree with you. But it was different. Today is a different game than 10 years ago. But I was referring to the „why“ people don’t buy FFH today. And if one recognized FFHs portfolio a while back, than that’s still relevant. You might expect that to cone back and if you like buying garp stocks and no turnarounds, cigar butts, cyclical investements etc. than you might not trust Prem. Than you might feel more comfortable investing alongside Buffett, who clearly is focusswd on quality, garp style investments over decades. In my opinion even the investments of the 2010s weren’t that bad; they just weren’t seen as for the hedges and it was bad timing with low interest rates, that supported disruption and strong growth.

That view resonates a lot with me. Let me add: I don’t understand, that a lot of people seem not liking FFH, as it‘s not the „original“ and therefore not „safe“ and „credible“ wnough. But what’s wrong starting 20 years later following Buffett (and others), Graham etc.? And now we are 60 years down the road (BRK) and 40 years down the road. As if 40 years of outperformance, being on position 8 of all American stocks over that timeframe, being g better than BRK doesn’t speak for itself. Of course that view is just meant ooposing the view, FFH being not long enough in the game. there are other reasons I totally find rationale. E. g. finding yourself not comfortable with Prems value investing „cigar butt“ style. I only would say, that the outperformance of BRK was made largely in the early years, when Buffett wasn‘t longing for GARP stocks, but cugar butts too (the original Berkshire Hathaway being a testament itself for that style). But of course I understand everybody feeling more safe with the portfolio of BRK of the last decade. And if one is fine with less but safe performance - well, why not? But as you said here; in my eyes FFH is an easy choice and I never sold it through the bad years. I knew Prem is able, I trust him and his abilities. I know he understood the power of Float combined with equity investment. He clearly is from Graham and Doddsville, FFH is smaller (so outperformance is easier to achieve) and so why shouldn’t he outperform the market over the long run? Why shouldn‘t he achieve his goal of 15% per year? That’s a double every 5 years, so 16 fold over 20 years and 64 fold over 30 years. And if he wouldn’t reach his goal? If he would only e.g. manage a 12% CAGR over 30 years? Well, than that’s „only“ a 32 folder. That’s still enough for me; and it felt safe, as FFH was cheap in 2012 and 2013 on top of that. So for me, that was enough when investing in 2012. I outperformed the marked more in the years before, investing in micro caps in Europe before (I had looked to Greece too and to Mytileneos and Eurobank too, but haven’t invested back than); but living in Germany there’s no place to hide from taxes - as long as you don’t go Buy and Hold (over 20 to 30 years, tax gets more and more irrelevant…). So that was a lot of effort and a lot of the outperformance was taxed away. Anyway, that’s been my investment thesis and it still holds true: FFH should outperform the market by a few percent and that extra percent brings a lot of extra compounding over the years; more than enough at least for me. And to me it feels like a safe bet. And it should at least double one time more often than BRK, which I hold too, but less.

I am just all in (from my perspective) with 43% Fairfax Financial and nearly 2% extra in Fairfax India. Is it a pity, that I can't buy more just right now? Not really. For one: Prem buys back shares for me anyhow. So his buybacks are my profits anyway. For two: With what I had, I was able to buy much cheaper. So it was good not to keep ANY ‘dry powder’, but to ALWAYS be all in with the investable budget in FFH within the last years imho. What is 4 months when investing? I think that's (almost) nothing. But it's only been four months since Fairfax Financial was consistently cheaper to buy then today; and it's only been 4.5 months since Fairfax was 7% cheaper; and before that it was very much cheaper very quickly. So the little bit of growth in intrinsic value in those short 4.5 months (maybe 5% to over 8%?), that was already reflected in the price then, when we compare it to todays situation: Fairfax was as cheap then as it is now relative to IV; and before it was much (much?) cheaper. So anyone having dry powder for over 4,5 months until now and not having invested back then, hasn't done so good in my eyes, but only has had luck - of course only as long as it was clear to that person, that Fairfax was a great investment back then. But you have to bear in mind the risk of not having been invested during this time. And that's a really high risk imho. If it is true that Fairfax Financial is (very) cheap at the moment (which I believe), then it makes no sense to wait for it to become even cheaper. I don't think a lot of people have been profiting within the last years by trying to time Fairfax. It just went up and always very rare came back and then it's been for a very short time. It's just gone up, up, up sind end of 2022. A very good investment that you can buy cheaply is like a very stretched rubber band: it is very likely to shoot forwards and this can happen very quickly. It doesn't make much sense to speculate that such a strongly stretched rubber band will become much tighter or could be folded for a long time in that situation. The arm holding it (even if it's Mr. Markets arm) will eventually become limp and will no longer be able to hold the pressure. The comparison is probably moderate, but I hope you get my point. Not doing the right thing one is very quickly caught in the trap of constantly waiting for setbacks that never come and all the time the dry powder is lying around instead of compounding. We all know the stories of Buffett and Munger about the biggest mistakes they ever made: When asked, they keep (kept) citing situations where they didn't buy even though they could see that an investment could be good. Gayner often talks about how he bought his first shares of BRK far too late, and many other value investors tell similar stories. I was able to buy Lotus Bakeries for 400 Euro 10 years ago (or so); now it's 12.000 Euro or so. Since that happened and I was "thumb sucking", I now, what Buffett meant. And each time I drink a coffee and they put this little caramel cake to the coffee, I get remembered. What else is it then thumb sucking to have dry powder lying unused while having discovered an investment (in my case FFH) that one sees as a once in a lifetime opportunity and isn't going all in, but holding something back? What is one waiting for when looking at a very good or even once-in-a-lifetime investment? What is one waiting for? For an even better investment or an even better price? Really? If the dry powder is investable, then I invest; if it's not investable (but needed for my financial security), then of course it's not to touch (in fact it isn't dry powder then). Of course, it's a little bit different if you are constantly expecting new cash flows that you can reinvest (which is not the case for me at the moment). It's totally clear, that one is happy then, buying on the cheap. But Fairfax has been cheap today and all days before within the last years, so I don't see any point "actively waiting" for a cheaper entry - the risk of missing this opportunity is just far too big in my eyes.

Thank you and thank you @SafetyinNumbers and @gfp. I mixed up different things, all clear now. Thanks!

Thank you! Really appreciate helping us (me) learning. What I don’t get: And the dividends received itself just disappear from the balance sheet (so Viking has to adjust) But why? What’s the inherent logic? I mean it doesn’t feel accurate in the sense, that what’s hapenning is more like shifting something you own from one pocket into another, while the balance sheet just perceives the pocket with less in it. I thought the idea of the balance sheet was putting on record all pockets.

Bought my first shares in 2013. Held them and added until 2018. It became my third biggest position until than (10% or so). Than had to reduce my portfolio in May 2020 (I needed money for buying our home) by nearly a third and reduced every stock but Fairfax (it went just too cheap) and even added a tiny bit. In April 2023 I added (and reallocated ) big at 900 CAD and it became my biggest position by far from around 10% to around 30%. This year Fairfax Financial grew to over 50%. Reduced it in October to 40%; today it‘s around 42%. It was a drag long term but it never felt wrong even in the bad years. I regularly look at my stocks, but when doing that I always felt FFH being a longterm winner, like I think about BRK and MKL. Mkl was one of my best performing stocks since 2011; that changed in the last years. BRK was my first stock, when „really“ beginning to invest (2007). It‘s interesting to watch that movie - sometimes one really outperforms the others than the other. Sometimes insurance stocks were really unloved; now that changed a bit. One does bad investments, the other looses traction in the insurance business, one buys Apple bug and wins, than sells a lot of businesses on the stock market… But over the long run the different strategies all seems to win; of course float helps. And having a value investor as manager helps.

Anyway - 1% in any given months is a lot. Great!

Why do you think 50% being reasonable this year? My best guess for your performence guess is that you add Momentum + undervaluation + good business numbers from quarter to quarter + an add to the TSX60 altogether. Am I right or wrong? But what, if the market crashes or interest would go down (to be clear: which I am NOT saying will happen; what I am saying is just, that I don’t believe anybody being able to predict if interest goes up or down or stays where it is)? I think everything is possible from minus 40% (if the market crashes 50% - why not?) to a double in price (e. g. if stock markets go up 50% and the market falling in love with insurance stocks in general or everything of the above happening). So why do you think it „should“ go up 50%? How do you get to a pe ratio of 10 after that? I assume you mean a pe ratio on the basis of normalized earnings and take 20% roe? At 1,4 pb ratio that‘s a pe ratio of 7 today, 50% growth in price in 12 months would be a pe ratio of 10 than (without counting in the returns / growth in business value over that time frame).

A big thank you @Viking, @Parsad and all the others here and to the Fairfax team of course. I‘ve never been as sure in an investment as in Fairfax over the last years and I am still sure about it, being around 43% of my stock portfolio at yearend (and I am always fully invested, only long). My portfolio gave a return of 42% (after tax and cost) in 2024 and although not everything from the outperformance came from Fairfax, the majority of it came from it. Looking out over the next 5 years I expect a return of no less than a double, and if not in share price, than at least in intrinsic value (and that’s with a big margin of safety). My best guess is a threefold in intrinsic value and more in price (including dividends). Any stock market crash in the meantime would dampen return in price of FFH and pushing its CAGR of intrinsic value up, as I am sure FFH would find very good use for its cash than. But better than that: I expect Fairfax to be an outperformer not only over the next 5 years, but over the (very) longterm. And that’s what really matters at least to me, having no place to hide from tax (in Germany we don’t have tax free accounts - including spread, cost and tax you pay nearly a third jumping from one investment to the next one). All the best to everyone here and to your families! Have a good start to 2025 - greetings from Hamburg, Germany

I voted a 9 for the following reasons: 1. I think of FFH as a learning company. So I don't give too much credit for the mistakes they made after 2009 - that's the past 2. After that mistakes I don't see bad decisions, but a lot of good ones: Expanding the insurance business and becoming a worldwide insurance company, business/stock decisions (the pet insurance business, greek and irish investments etc.) and the improvement in quality of the insurance business (relatively better cr in comparison to the market after 2011) etc. etc. - that was really, really good. 3. 1 and 2 alone would have led me to vote a 8 (maybe 7). But the TRS and - more - the astonishing manner in which Bernard has managed fixed-income investments in recent years (going short before interest rates went up) is simply phenomenal in my view. I'd expect that going down to a 7 or 8 over the years (you can't always be top top.

It wasn‘t like that; I had to sell a lot of my portfolio (a quarter or so) in 2020, as I bought a house. But I sold other stocks and sticked to FFH. In 2022 and 2023 I got new funds and shifted others from to FFH. I should have shifted earlier (2020) from e.g. BRK to FFH.

I agree about the sellers being longterm shareholders. But who were the buyers? Maybe also longterm shareholders? Both could be right.

@Viking Are you sure, that this happened a lot? Is this something, we could see e. g. here at cobf? I am not so sure. (Btw: We should all give a lot of credit to you and the others posting a lot here, if that hasn‘t happened to the readers here. I learned a lot, thank you!) I bought my first FFH shares over a decade ago and it did it mostly, as I saw a lot of similarities between BRK (which I bought first), MKL (which I bought some years later) and FFH (which I bought last and added a lot, when it became cheap). So I didn’t buy FFH as a value investment, it just became a value investment (and a turnaround investment) as an addition to the GARP idea, when its business underperformed and the prices dropped to the low levels of 2021, 2022 and 2023. But at the core my general thesis always was that of FFH being a GARP quality investment with a longterm roe of 15% or more. Then the bad years came, but I always sticked to it, as I believed in management and thought of the lost decade as a phase. So I sold nothing. And following this board (which is of course not mirroring the average FFH shareholder in many ways - but still) I haven‘t got the impression, that a lot of people look(ed) at FFH as some kind of cigar butt value investment first line. I wouldn‘t be surprised, if a lot of people bought FFH with a similar view, so with the idea, that growth would come back. Then most of the trading we saw over the last 10+ years maybe wouldn‘t be „real people“, but computer, algorithmic, automated driven. Counting the latter out maybe over the years until 2022 or 2023 the „real people“ weren’t largely Value, but GARP oriented (with a longterm view of course) and longterm shareholders. Then those shareholders loaded up just more stocks, when they became cheap. A lot of us seem to have a big part of their portfolio in FFH - maybe no coincidence, cause maybe this is not only a function of stock returns over the last years, but more a combination with „old shareholders“ loading up more in the cheap years. But this doesn‘t make those buyers/holders value investors - they have been growth investors with the luck of buyibg really cheap. For me FFH now is 45% of my portfolio and it would be 55%, if I wouldn‘t have sold a bit a months ago. Had you asked me 5 years ago, with the excetion of BRK I wouldn‘t have thought of me owning any stock as being more than 10%, maybe 15% of my portfolio. And now I have FFH three or four tines that much - and I am not the only obe. It just happened, as FFH developed so good, the stock got that cheap and there weren’t a lot other good investments. So maybe there weren’t so much value investors involved in FFH historically, and since 2022 or so, there maybe are „new real people“, buying stocks from algorithmic driven sellers with a momentum view and some (few), that followed the stock or are understanding insurance stocks and now look at the numbers and understand, that something exceptional is going on. I have no idea, how one could evaluate that topic, if there are/were value investors engaged and who owns FFH today with what view - other than within this board, people sharing their view and the surveys here. Would be interesting to see, what you, @Viking and others think!

Wouldn‘t it be a tailwind for the shortterm pricing, but a headwind for the longterm? - If price gets higher and less volatile, buybacks are less good investments (cheaper is better) - So buybacks get less attractive. So either Prem buys back at a more expensive price (which is less good then it be for intrinsic value then it would be without being added) or he doesn’t at all, as the price gets too high (which is less good for intrinsic value then it would be without being added). Paraphrasing Buffett from memory: As long as you are not a seller of stock, but a buyer, (what you are, if the business you hold shares of buys back stocks) cheaper prices are always better. Who thinks, Berkshire shareholders would be better off today, if BRK would have been added to the Dow 20+ years ago? (Maybe that’s another reason, why BRK never splitted the A shares…)? If you don’t think that would have helped BRK, why do you think, for FFH it would be?

Thank you very much, I agree on your points. It‘s late here in Germany, but with the resonance here, we should open a discussion separate, I think (happy, that others are interested too in this discussion!) One thing came up in my mind; maybe we should focus more on the term „intrinsic value“; as you write here, at high roe companies, the iv tends to go up in value fast; I tend to agree, but than I think, if nothing really changed to the business, but iv moves up e. g. 30% from year 1 to year 2 (so 30% roe - let‘s say over decades), than iv can‘t be estimated right in year 1… But one gets to absurd levels e. g. of BRK, when you discount its value back from today to the 1970ies. And looked back from that perspective, BRK should have bought back a lot of more own stocks at every price there was, as the discount was just so absurd… But it didn‘t happen, Buffett hasn‘t bought back. But okay, let’s talk about that somewhere else…