73 Reds

I thought a head and shoulders top was a dandruff shampoo. Do these companies have flakes?

John, personality is a funny thing. More of a control person when it comes to investing, which is why most of my personal holdings are private equity, real estate and debt. Any public stocks must meet some very strict criteria and like you, only buy for long term results and don't care what happens regarding price next month or next year if the investment thesis holds.

Effective communication "trumps" IQ.

That's just it - if you combine successful methodologies of many different types of investors, how well can you do? Wouldn't be about the money of course, but more about results. I know. of a few "clubs" that donate all profits to charities as voted upon by members just the same as the investments. No biggie, just a thought.

John, that is a nice thought, though if Sanjeev were in need of funds for COBF he'd surely have no trouble raising money from members. Got me to thinking about something completely different, an investment club (like the group Dealraker speaks about) consisting of COBF members and contributions. It would be interesting to measure how well such a "fund", as voted upon by members, would do over time.

There is no Federal inheritance tax though some states have an inheritance tax. The Estate tax (as opposed to inheritance tax) is paid by the Estate of the decedent prior to distribution. It is not a liability of the heirs. Transferring assets to a Non-revocable Trust during your lifetime removes those assets from your ownership - the Trust has its own taxpayer ID number and pays its own taxes. There can be tax benefits to the donor (creator of the Trust) particularly if beneficiaries are charitable organizations in addition to removing the assets from your taxable estate.

True, but you've already transferred ownership of the stock(s) by funding a non-revocable trust and you may have received other tax benefits on the date(s) of transfer. The stepped-up basis remains one of the most effective ways "average" people can transfer wealth tax-free with no need for estate planning of any kind but of course you have to die first.

Yep, and when anyone suggests that I sell Berkshire after decades of holding some of my oldest shares, the very thought of relinquishing free leverage on such a holding makes me chuckle.

This works well when your investments are held in tax-deferred accounts. Otherwise, you substantially reduce your buying power every few years. Deferred taxes generates solid investment results even without well-above average returns.

Not trying to convince you or anyone but the larger issue of using overvalued shares to make acquisitions does not imply that the seller is an idiot. In fact, your opinion of the Gen Re deal kind of proves my point.

Buffett didn't buy the company for a 5 year hold. And he used overvalued shares to do it. You can cherry pick a time period to be right about just about anything but the bigger picture doesn't distort the ultimate outcome.

Both parties made out well. The issue is really not debatable. I've been doing private deals for decades and there are always issues that arise after a transaction has been closed but as a buyer you anticipate and discount your purchase offer for any such issues. Buffett would have liked a cleaner General RE but he fixed the issues. That's life.

That's fine but your COBF namesake implies that you recall Berkshire's acquisition of General RE with overvalued stock. Worked out well for all parties involved. The definition of what is "overvalued" may be far different even for the same party depending on the circumstances.

Not sure I understand the question. Motivated sellers will accept a viable offer. If there are competing offers and a stock alternative is higher than any cash offers, why would a seller necessarily reject it? After all, once the transaction is completed, the seller can always sell any or all of the shares. And as has been discussed here, the quality and future of the acquiring company has a lot to do with "valuation".

High P/B provides an opportunity to use shares as currency for future acquisitions. Companies like BRK and Fairfax can prosper in any environment and if high valuation is the only thing wrong with the stock, I'd never sell in a taxable account unless the proceeds were needed for something entirely non-investment related.