coffeecaninvestor

Small adds to CACI, MKL, CI, and IQV over the past week.

Sold NSRGY to free up funds to buy more JNJ and RTO. Just a little more optimistic on JNJ over Nestle after reading the Q's. The new CEO seems fine, but I think JNJ has a good pipeline, and an easier path to growth.

Obviously it’s impossible to know what he is thinking, but I was reading The Warren buffet Way in it he breaks down the “permanent” holdings. He has in the past sold some of them such as GHC when he felt like long term prospects are not as good as. That would probably be my bet. I think he likes management enough to hold a good size position, just not as big as it had gotten.I think it’s good for the old man to be flexible. I’m sure they will find a good use for the capital. It just might not be on the timeline we would want.

I am inclined to hold it. If you own it now it’s mostly because you like the collection of businesses and less because WB is going to make a needle moving investment. Structurally Berkshire has a lot of advantages, and so I think will do reasonably well relative to the S&P. Most of the BRK my family holds is in a taxable account and I’ll sell only if something radically changes for the worse. I’d actually be more concerned if Ajit leaves.

I think the Canadian rail roads are attractive. CNI has really ramped up the buy back over the past few years. It will be interesting to see how the CP/KC merger plans integration plays out. I haven’t followed it too closely but I should start.

It’s been awhile since any railroad discussions have come up. Any thoughts on them here? CP and CNI look interesting. I own CNI might add some more. It’s been hit by a ton of downgrades despite September volumes and price seeming to be increasing.

I think the one thing that held me back on HIFS was the fact they have expanded operations to other cities. I agree they are good underwriters, but I wasn't too sure how these new loans would perform. I read all their letters back as far as they go, and I agree mgmt has done a great job here.

I've owned HIFS and BAC in the past. Kind of kicking myself for not buying some HIFS when it was trading below BV. Although with all the regulations, and crazy stuff that has gone on in the banking industry I have kind of moved banking into the too hard pile.

Updating my Holdings Market Value %NW %Portfolio CASH 0.1% 0.1% CACI 0.6% 0.9% CI 0.7% 1.0% LHX 0.7% 1.0% IQV 0.6% 0.9% CNI 0.5% 0.8% MKL 0.6% 0.9% VRSK 0.7% 1.0% NNI 0.6% 1.0% FRPH 0.5% 0.8% OTCM 0.5% 0.7% CVS 0.1% 0.2% JNJ 4.6% 7.0% NSRGY 4.4% 6.7% RTO 5.0% 7.6% Index Funds 45.9% 69.3% Primary Home 33.8%

They used part stock to buy Teminex which was a large acquisition which is why there was dilution. They make a ton of smaller acquisitions every year which distorts ROIC/ROE calculations. Looking at how high and stable gross and operation margins are and its pretty clear it is a good business. You figure they would compete on price given the consolidated industry and margins would come down over time but they haven't. They also don't require much in terms of capex, or working capital which is great because they can use that for M&A, buy-backs, dividends, and deleveraging.

Haha I’ll be sure to ask on next quarters CC.. man did he fuck up its disgusting. Dude could have literally anything and he just destroyed his life.

Well that was quick back to fully invested. Since we are pretty good savers I don’t see the need to hold a ton of cash. 3 of the largest in dollar terms stock purchases I have made JNJ, NSRGY, and RTO. Wake me up in 3-5 years, or if the market crashes. If RTO pans out it’s probably pretty close to a never sell. JNJ and NSRGY are more of a place to put cash for the time being.

Starting to buy RTO.

NSRGY - another boring company at a reasonable valuation and what I view as limited down side risk. Both JNJ and NSRGY are now 5% positions.

I work as an underwriter for a large health insurer so we deal with brokers all the time. It’s always amazed me how much they get paid, and how the situation still exists what seems like lazy work by them. I do think the product is complex enough that most CFO/CEO/HR don’t want to deal with it. Especially when they go to market the process is chaotic with requests for data, spreading all the bids, most large brokers have huge questionnaires and in some cases their own online portals to aggregate all the data. It is not an efficient process for someone to do. Some carriers will play games and try to hide costs so being able to identify that when spreading bids is important as well. The implementation process is also a nightmare so the broker and account manager work closely together because usually the sale happened because the broker stuck their neck out to move the business to a new carrier when the easiest thing to is stay with the current carrier. The relationship part is more important. It’s all a big game, and some are better at playing it than others. I can’t tell you how many bids that I’ve sent out where we’d save them millions and they don’t move to us. We only close 5-10% of the quotes we send out. It’s not always the relationship between the decision maker and broker typically it could be between the HR person who has to do the day to day dirty work. I don’t see anything changing as long as the current dynamics exist. The whole industry would have to be disrupted which is hard to do as you can see from the Amazon/BRK/JPM thing that failed awhile back.