mengan

You are right again I was thinking in IFRS when I wrote this. Under GAAP, reversal of asset impairment is not possible. Fairfax accounts using IFRS whereas BRK uses GAAP. Hence the different accounting results.

Quick comments on my end on the state of the various business units: Insurance GEICO Q/Q premium written growth has temporarily stopped growing, $11B in Q2 vs $11.5B in Q1. Expenses associated with both losses and underwriting expenses including marketing has increased slightly relative premium written. It still has a combined ratio of 83.5% which is really good. BH Primary is improving Q/Q from 103.1% combined ratio in Q1 2025 to 98.7% combined ratio in Q2 2025 as the issues with GUARD and the California wildfires is starting to run off. Berkshire Hathaway Reinsurance Group, Premium written for P/C dropped 18% in Q2 compared with Q1. A big drop. Profitability increased however as the claims from California wildfires run off. Other reinsurance units related to health, variability etc.. remains steady. BNSF Railroad is steady Q/Q on the top line with lower cost on fuel leading to lower operating expenses and better earnings. Income tax rate is at 19% this quarter which is below 24% recent historically. So the results this quarter is unusually good. There is also some litigation costs that are starting to run off which will result in sustainably higher margins. But the effect will be minimal compared to the size of BRK. BHE Top line, energy operating revenue decreased by 7% Q/Q as Natural gas pipelines took a big hit. This was offset by increase in revenue from Real estate (+47%). It is safe to say that the real estate business bottom was reached recently. Net earnings of natural gas pipelines declined due to higher interest expense, largely due to debt issued in January 2025 and debt refinancings in the fourth quarter of 2024 at higher interest rates, decreased margin on gas sales and lower other income, partially offset by higher transportation and storage revenues. Net earnings of real estate brokerage increased due to the run off of charges in 2024 with respect to the ongoing real estate industry litigation matters. There is great amount of uncertainty surrounding the One Big Beautiful Bill Act (the “OBBBA”) as half the profit from BHE comes from federal tax credits, BHE pays negative tax due to its CAPEX investment in clean energy including wind. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements. Manufacturing, Service and Retailing Manufacturing, Service and Retailing improved top line Q/Q sequentially with +3.6% and bottom line sequentially Q/Q with 17.7%. There is obviously operating leverage built in to the business here which is a good sign. Revenue increased on Industrial and Building products but decreased on Consumer products. The latter shows that the US consumer sentiment is likely still quite low. Within Industrial products, PCC and Lubrizol are holding steady with Marmon increasing revenue as many of its units experience double digit growth. Building products group are still grappling with slowing customer demand and pricing pressures, attributable to prevailing general economic conditions and housing markets. Consumer products group year-to-date revenues declined at Fruit of the Loom (11.7%), Garan (10.1%) and Jazwares (38.5%). I.e. Weak Consumer. Brooks Sports is doing well with 18.4% increase in revenue in the second quarter and 16.8% in the first six months of 2025 compared to 2024, primarily due to increased unit sales and changes in business mix. Service and retailing are doing well with a Q/Q top line growth of 2% and a bottom line growth Q/Q of 8.5% mainly attributed to aviation and IPS. McLane’s revenues declined $300 million (2.4%) in the first quarter of 2025 compared to 2024, primarily due to lower volumes attributable to changing overall economic conditions and consumer preferences on dining at restaurants. Pilot’s revenues in the first quarter of 2025 declined $2.1 billion (16.6%) compared to the same period in 2024. The decline was primarily attributable to lower average fuel prices per gallon, partially offset by higher fuel volumes.

It all depends on time horizon. The longer the disconnect remain between the carrying value and fair value, the more you have to justify this disconnect on an accounting basis. It also doesn't prevent BRK (Not Buffett) from writing OXY down initially, and then as the share price recover, write it up again over time. Ultimately it's all accounting profits/losses, i.e. non-cash. So I would worry too much about it.

Sorry, yes by cash, I meant Cash + U.S. Treasury Bills with maturities of three months or less.

Earnings are out. Quick comments on my end on the financial statements: 1) 5% lower A-shares (measured July 21) compared to last Q, with equivalent increase in B-Shares due to conversion. No reduction in total share count. 2) They finally wrote down Kraft Heinz resulting in a 4.745B paper loss on equity accounted earnings. The same will likely need to be done with OXY which sits at a carrying value 5.5B above fair value. So expect additional equity accounted losses in the near future (unless OXY shares rebound). 3) Equity to common shareholders stands at 670.28B, up 2.8% YTD. There was a jump compared to last quarter as 14.4B of Payable for Purchase of UST ran off from the liability side of the balance sheet. 4) Operating Results (EBIT) before investment gains (losses) improved from 12.7B in Q1 to 14.4B in Q2. Maybe it will exceed last year's (2024) 60.9B record annualized. 5) Cash from Operating Activities 10.1B vs 10.9B in Q1. A large increase in the line item "Other" due to asset impairment of Kraft Heinz. Otherwise, no surprises. 6) Net sale of equity securities of 3B this quarter. No big elephant purchases or sales. 7) They raised 51B in cash from sale/redemption of fixed maturity instruments. 8 ) From financing activities, de-levered by 500M and purchased 500M in non-controlling interest somewhere.