valueinvesting101

@Grey, what sort of advances in computing, big data, and artificial intelligence can be disruptive to reinsurance or insurance? Great things were talked about AI in 1960-70 but we see only piecemeal improvements in AI so far. Mostly likely we will better outcome in next 20-40 years. But how will that flow in to pricing insurance? I guess current available technical resources can allow greater insights into underlying risk but it is not effectively used in presence of greed and fear. I doubt that will change drastically going forward in 20-30 years. More likely there will be global growth in insurance due to emerging markets and globalization with improved penetration rates. Banking has been around millenniums and also using latest technical advances but fundamentals of the business have remained same and more likely to remain the same in next 20-30 years. Looking back, I think Berkshire made money by pricing risk conservatively and patiently rather than superior knowledge or data analysis. This trait is not just evident in insurance but also applicable in Berkshire's purchase of whole businesses or public securities. This trait is less likely to be copied by other companies.

Refining business is 53% of Phillips 66 refining earning. They also have chemical and mid-stream operations. Chemical, marketing and specialities are large part remaining earning sources. Midstreams assets are being moved to MLP. They own 50% interest in DCP midstream LLC and 66% ownership in Phillip 66 partners. Refining business is usually commoditized play but given spread between Brent-WTI seems to be driving high margins at US refiners. This advantage can be best exploited by refiner with large sweet crude processing capacity located strategically close to oil production states and consuming markets. I believe this is biggest source of competitive advantage for PSX. Export ban on US crude is driving Brent-WTI spread. If this ban is lifted margins of US refiners are likely to come down but I doubt this would lifted soon. If this is indeed lifted, then midstream assets should include in value which can essentially transform low price oil/gas at well to high value export items. Company seems to be increasing its dividend and buyback for last few years as well as focusing on building new mid stream operations and moving them to MLP. Most of the refiners are following above described strategies with varying degree. PSX must be good at executing them or BRK prefers them due to their size advantage. I need to explore their differentiating factor vs. other refiner. Any thoughts on PSX advantages over other refiners?

Can Berkshire buy stock from open market when they have offer pending?

What is his largest holding exactly? I tried to search it but could not find it.

http://www.bloomberg.com/news/articles/2015-07-07/buffett-scores-cheapest-electricity-rate-with-nevada-solar-farms

http://www.businessinsider.com/susan-cain-on-why-extroverts-earn-more-2015-5 I guess most people on this board will disagree with above

Do low income earner work only for largest organization? What about guy flipping burger at non-franchise place? Largest organization are more likely to automate since they have scale to justify investment needed for automation. That would be difficult for smaller players.

GM/WS/B

Recent Valero's investor presentation talks about "margin capture rate" but I could not find definition of this term anywhere. Here is a link to the latest presentation: http://valero.investorroom.com/download/VLO+IR+2015+March+FINAL+%283-2-15%29.pdf Does anyone know meaning of this term?

That's absolutely true. I met him at volunteering event for iMentor. He used to show up consistently for every meet and behave as much as any other volunteer.

Looks like this never materialized. This is latest shareholding pattern: http://www.bseindia.com/corporates/shpperent.aspx?scripcd=532636&qtrid=84&CompName=IIFL%20Holdings%20Limited&QtrName=December%202014 Does anyone know if HWIC increased their stake to 18%? IIFL has in controversy recently related commodities trading NSEL: http://articles.economictimes.indiatimes.com/2015-03-04/news/59767076_1_nsel-scam-mpid-act-jignesh-shah

An application has been granted for the original listing in the Industrial category of up to 108,078,947 subordinate voting shares (the "Shares"), of which up to 70,578,947 Shares will be issued and outstanding, and up to 37,500,000 Shares will be reserved for issuance upon completion of an initial public offering (the "Offering") and the concurrent private placements. The Shares will be traded in U.S. funds. Accordingly, they will appear under the heading U.S. funds in newspapers and the Exchange's Daily Record and Monthly Review. Listing of the Shares will become effective at 5:01 p.m. on Thursday, January 29, 2015 in anticipation of the Offering closing on Friday, January 30, 2015. The Shares will be posted for trading at the opening on Friday, January 30, 2015 upon confirmation of closing.

Top 10 Ways to Become a Billionaire Self-made Forbes 400 billionaires 1. Investments: 77 2. Technology: 45 3. Real Estate: 22 4. Fashion and Retail: 18 5. Media: 17 6. Food and Beverage: 15 7. Energy: 12 8. Health care: 11 9. Sports: 10 10. Manufacturing: 10 Top 10 Ways to Become a Billionaire Heirs on the Forbes 400 1. Investments: 19 2. Service: 17 2. Fashion and Retail: 17 3. Energy: 16 4. Food and Beverage: 14 5. Media: 11 6. Manufacturing: 10 7. Real Estate: 5 8. Diversified: 3 8. Technology: 3 8. Health Care: 3 http://www.forbes.com/sites/erincarlyle/2013/09/18/how-self-made-forbes-400-billionaires-earned-their-money/ I think it depends on which part of the world you are looking at. In developing world, its easier for established companies to make money across the industries especially heavy industries due to crony capitalism, inefficient and protected domestic markets, huge upfront investments and government support required.

Hopefully Berkshire can pick some good pipeline assets then ;)

http://economictimes.indiatimes.com/industry/banking/finance/finance/prem-watsa-likely-to-fork-out-rs-950-crore-for-26-stake-in-india-infoline/articleshow/45391048.cms

I think instead of 3G, deal with BYD might make more sense. I don't know much about different type of batteries that Duracell makes but I believe BYD can use this brand with their execution expertise and China cost advantage.

Yeah. This came out yesterday. http://www.bloomberg.com/news/2014-11-03/gross-says-deflation-a-growing-possibility-threatening-wealth.html

You can get those on Bloomberg. I believe it was mentioned somewhere that Todd uses Bloomberg terminal.

I agree with KCLarkin strategy. Best to way to insulate from market fluctuations is to understand business better. You would not worry about your kid too much if he is sick and cannot study/play for couple of days. What matters is long run habits, aptitude and attitude. I think same goes with the stocks/businesses. Try thinking about challenges/opportunity business faces. Try to read up about competition and new entrant. When focusing on bank, try comparing what advantage/disadvantage other companies have such as Paypal, quicken loans have or can exploit. This will help you understand potential opportunity and risk. Also expanding one's circle of competence is always good idea than focusing on market fluctuations. Learning about different businesses is very interesting pastime anyways. Reading snowball, I was amaze at how many different ways WEB thought about making money before turning into stocks. He was very entrepreneurial before turning into sloth. I think turning into sloth directly can be dangerous as you will miss out on learning from running or analyzing actual business. He had to keep learning by buying failing retail business or candy business to gain new insights. 'Empty mind is devil's workshop'. Keeping oneself occupied with different or related hobbies is good idea. I usually find reading about legends in the different walks of life makes me focus more on substance rather than just few ticks of stock prices.

Happy birthday Sanjeev!! Enjoy!!

Okay so large companies cannot grow as fast as small companies but 10 smaller companies combined will be able to grow faster than one large company. Isn't that what Berkshire is? Collection of independent companies running with minimal interference from each other. I think top 20 companies in SPX have weight of around 42% and most of these companies work in single industry. They perform poorly when they try to go into different business area. So either ROI decreases and hence slow growth aka value creation or significant cash built up or spitting cash out of business hence lacking compounding. Berkshire seems to have advantages in terms of float from insurance business, excellent capital allocation to go into completely different areas and still able to generate returns. For giant Berkshire to grow faster than even larger SPX index(combined market cap of $20tn) it needs to have selected companies from SPX with above average potential. Running company privately does give management greater flexibility and less pressure to create greater longer term value. Isn't this missing growth in earning capacity of acquired companies such as Gieco but no growth in its book value. Does book value captures growth in earning capacity?

Warren :D

Yes. Lot of Davita stock is held by Pension fund. It was posted by someone on the board and mentioned by Buffett in one of the interview.

Why does GS investment has cost basis of $750mn? I thought Berkshire got those without paying out any money. Also in last letter he mentioned that S&P is likely to beat BRK book value growth in 2013. But there is no such statement in this year report. I think it was kind of obvious for him that S&P will perform well in 2013 and interestingly he writes this letter well in advance. This emphasis is establishing 1.2 book value base and consistent call to indicate that book value understates intransic value might be coming from need to sell BRK stock by Gates foundation and similar sale for charity by other long term berkshire shareholders. Indicating bargain available for BRK stock should support stock price due to selling pressure.

http://www.sec.gov/Archives/edgar/data/915191/000110465914013634/a14-6855_1sc13da.htm Does this mean Fairfax is selling Blackberry? What re-balancing does this document refers to?