Palantir

GOOG, RHT.

beautiful article.

Great info all....will need to meditate on this.....this seems to be parallel Intel's competitive issues - weak/cool hardware goes on mobile devices, strong/hot hardware goes inside datacenters....

Both Seagate and Western Digital had bumper years ending June 12 in terms of cash flow and have continued strongly this quarter....any insight as to why?

So do you think WEB is simply trying to get a "decent" return over the cost of capital, rather than a "great" one, with the decent return leveraged up via the float?

Could you explain this point? Not saying you're wrong, but I'm not clear what you're getting at. Wouldn't a capital light business also do the same?

^ I think Buffett might have been exaggerating a teensy bit. Given the size of Berkshire's balance sheet it's hard to see how they would have gone belly up. I am no superinvestor, just a 25-yo investing his little Roth IRA, my $0.02 are: So far I believe in equal weighting positions. That's really more of a risk management view - I don't know which of my positions is more likely to be successful, so I'd rather not favor one position over the other (will MSFT do better than GOOG? No clue). I am more of a "moat" investor, so I believe if you're looking for "great companies at decent prices", you need to take substantial, meaningful positions, at the same time, not so big that it will bring down your portfolio, and thus far, I've settled on 10% allocation to each stock. So the largest loss I can make on a position is 10%, but it also limits my gains. Sometimes I feel 10 stocks is too diversified, but I'm still basically a beginner, so I'll settle for not making major mistakes. I think if I was doing a deep-value strategy, I'd try to invest in much more diversified positions, so I would probably allocate 2.5-5% to a net-net type of stock.

Anyone have his historical returns? I'm wondering if he's a legitimately great manager or a more pedestrian one who disproportionately benefited from THE BIG SHORT.....

I'd like to know more about this as well. I felt the acquisition of BNSF was done at an extremely rich valuation. What FCF growth was WEB assuming for that? Also the interest in investing in "capital intensive" businesses I don't get either. I understand BRK generates a lot of cash, and they need to deploy it....but why this? If a firm is capital intensive, doesn't that also imply it will have low return? Or should we expect that Buffet is planning on leveraging a low return business with the float?

Can I apply for the position? Although I don't have 5-7 yrs exp....closer to 1-3.

This is the real weakness with value investing as an investment style from an investor perspective. You need to put outsize faith in your manager, be willing to stick with him when their returns are poor, and be ready to wait years before you can actually get any benefit out of your allocation. Not everyone's cup of tea.

Buffett barely "invests" to begin with. Most of his investment activity is in the secondary markets, and not the type of capital creation that drives real investment back into the economy. But that doesn't stop him from giving sanctimonious lectures to the rest of the world. EDIT: The above isn't there to intentionally start a flamewar, I actually mean it. :)

I can't see the links that show Paulson's performance figures....

I believe there is a firm in Oregon that does something similar. It's called Campbell Group and they create investment vehicles to invest in timber assets.

WHat about trusts like Weyerhauser and Plum Creek?

^ Yeah health-driven shifts are a big reason why Coke could see its moat diminish. I'm not that bullish on Coke. Furthermore, you have to remember that Coke is so dominant in soft drinks, that national governments could start taking steps to dismantle its monopoly. Can't rule that out.

Or maybe he doesn't, and he is equally as clueless as you? A big part of the problem is due to excessive spending and entitlements, however, being politically difficult to cut, Buffett isn't willing to speak up for it. Keep in mind, even if tax rates rise, Buffett will not pay much more in taxes....his income is 100k!

This.

If the market went down substantially, I'm going to initiate a long on BRK.B. It's getting very close to the "buy" price of 1.1*BV. And a marketwide 2-3% decline could put me and WEB on the same side of the trade. (Great minds think alike :)))

M* builds the case around the point that most of BRK's operations are insurance, and therefore low moat. This point is logical in that insurance is a commoditized service. However, they do fail to point out that the second way insurance firms make money is by investing float, something at which Berkshire is stellar at. In that regard, there is far less concern for the economic moat. They also hint at skepticism over capital allocation, but we know for a fact that Berkshire has skilled capital allocators apart from Buffett, and that particular job can be done by many within the firm. Simply the combination of negative cost of float + excellent investment performance (likely) + deep moats in non-insurance businesses make me pretty confident regarding BRK's future. But that's just IMO.

I think you're focusing too much on the "balanced budget" part. But you do have a point that persistently running a deficit and financing it via increasing the money supply is going to be inflationary. Let's say the economy gets heated up, why don't you feel the Fed can drain liquidity? The fed has such a huge balance sheet right now that releasing these (liquid) assets would do a lot in addition to adjusting rates. (Fed can also sell its gold holdings if inflation rises too much). Basically my opinion is that the Fed has a much easier time of fighting inflation than fighting deflation.

They can drain liquidity by raising rates, which will in theory not be for a few years. Regarding MBS's, I don't see there being a problem for selling these securities. Many of them are liquid, and you have to keep in mind, they are constantly maturing and being replaced by newly bought securities, and that position can be slowly wound down in a combination of maturation and sales.

I think hedging inflation is a poor idea, because we need inflation to happen first. Secondly, even if inflation does happen, many things can be inflation hedges, why silver? According to Ray Dalio, gold performs well in deleveragings, is there evidence that silver behaves the same way? You're summarizing a lot of what mainstream investors say about silver, however it's not in the form of a coherent argument, I think you should sharpen your opinion a little bit and present a case. (No offense btw).

^Possibly could be the net-nets in Japan many value bloggers have been writing about.

It's not that hard to see really...good company with very strong growth characteristics....