cubsfan

I'm there Doo!!

Oh, that is such a brilliant comment, and hits at the crux of the problem in America. So many people, (gov workers, etc) - want something for NOTHING. Where did the idea of sacrifice and work ethic go? With government - cutting spending has to happen - I live in Illinois - and there is going to be a tax revolt here one of this days. Real estate taxes are out of control, Chicago city taxes are out of control and city workers don't actually work. Pensions, etc - they all want to retire at 50 with full pension/benefits and get a second job. It's a ticking time bomb - raising taxes will be the route they take, until the public revolts and forces spending down. I hope I am out of here by then...Florida, here I come!

There has been a debate on the Berkshire board (Motley Fool) re: the BNSF deal - there are some smart guys there. Here is the best post on the issue (IMO): I love the BNSF deal. Best thing ever. Quite aside from any increase in the value of the firm and retained earnings, it returned an after tax dividend yield to BRK averaging maybe 10% in the first 10 years of ownership, depending on how you estimate the cost of the acquisition. After the purchase, former BNSF shareholders represented owned 5.765% of Berkshire shares. So, did we get good value for that dilution? Even if you assume (somewhat heroically) that Berkshire was worth 1.75 times known book on closing day when BNSF was purchased rather than the market price at 1.403 P/B on closing day, the total purchase cost was $35.95bn of intrinsic value. That includes $2.92bn of "invisible" cost for our estimate of the gap between market price and intrinsic value on closing day. $8bn of that total cost was and remains financed at low interest rates. For practical purposes that debt can be considered to be secured by the BNSF shares acquired, even though it's a general obligation. In any case, Berkshire's head office gearing has been lower than usual in recent years. It's not like they stretched. My main point: overall I think that block of financing is best viewed as part and parcel of the acquisition. So, for ~$28bn out of pocket value paid we got all the ongoing returns from BNSF less the ongoing interest cost on that debt. It's hard to estimate the value of the railway these days in a way we'd all agree on, but we can look at the cash return in hand. Dividends averaged $3.43bn/year in the first 7.88 years of ownership, net after tax in Berkshire's hands. Interest has been maybe $160m a year on the $8bn financed, for a net after tax yield of 11.72% on the ~$28bn notional acquisition cost. Yes, debt has risen at BNSF HQ, but the value of the firm has risen even more, so that's a net hidden gain on top of the cash yield, not a drag. Arguably the railroad has outperformed the average other asset at Berkshire. By extension, the modest amount of stock used to purchase a fraction of it was well spent. If the railway had been bigger it would have been sensible to issue even more stock to buy more of it. But it was only so big.

You have a good point - and that visual is enough to keep me away..

Merry Christmas to all of you ! I offer my sincere apology to ALL of you for delving into the subject of politics at all this year. I'm done for good - and promise to be a better citizen of CoBF going forward. Peace to all the great minds here.

Thanks - only good news of the day.

Doug Kass loved to put these shorts out on BRK when it was a little pricey - always got the headlines and scalped a few bucks here and there. Even got him an invitation to be the featured short bear at the Berkshire meeting on the panel with Becky Quick, etc - where he shamelessly promoted himself in front of 40,000 attendees.

There is no doubt China has been the leader in industrial espionage. The Chinese Red Army steals trade secrets every day. It's been going on for years. I have friends who work at CrowdStrike and have traced so much of the activity back to the Chinese Red Army. This hardware play is new to me though, but on the software side, it's a business for them. The US government has know about this for years, but feeling that China may actually move toward democracy, and being such a valuable trading partner, etc - we've not rocked the boat. The plan always seem to just try and block them via technology. Perhaps shining the spotlight on them with the public is the right way to go.

Fantastic - thanks for posting!

Most boards are lap dogs anyway, what the heck - might as well spread it around to the women. Good for them!

But these are perfectly good reasons for retaliatory tariffs on China - as they do not protect US producers and have been stealing US intellectual property for years, both here and in China. If Chinese IP was stolen by US companies in the USA - the US company or individuals would be prosecuted and protected by our government. We are a nation of laws and respect the rights of others. The Chinese are not. Trump is using his leverage and doing the right thing.

COB - Chairman Of the Board But I don't know what it is in Danish - ha!

Thank you, Mike. My pleasure John - thank you!

Hi. I've been looking a bit into that. Seems very interesting. Have you seen a decent writeup anywhere or mind to share a couple of points? What's obvious is the deposit growth, which is incredible. The culture is based on the Commerce Bank model, that Vernon Hill "invented" in America. The culture is real - I can tell you that. Both customers and employees love this company. You have 56 "stores" going to 100-130, roughly in 5-6 years. The "store model" is totally repeatable - and UK will eventually support, perhaps, 200 stores. There are structural reasons for the growth - by that I mean - the UK banking sector is being forced to shrink (I mean the legacy banks) as the UK regulators and the public's interests have not been served. (RBS is still 65% owned by gov). So some assets are being dispersed, the market is opening up, and legacy branches have closed at a fast rate due to cost cutting and poor locations. So there are significant industry tailwinds for the growth of "challenger" banks. Metro is the best of them all. It's the fastest growing bank I have ever seen in my life.

Hi. I've been looking a bit into that. Seems very interesting. Have you seen a decent writeup anywhere or mind to share a couple of points? If you PM me - I will send you a writeup. I spent 2 days onsite in London in June at the bank.

Added to Metro Bank (MTRO.L) - UK exchange

It seems safe to say in retrospect that June 26th at 186.44 closing price was an attractive buying opportunity for Berkshire. BRK up 18% since, SPX up 6.75% We buy when Berkshire gets cheap - because we know how to value it - regardless of the index performance or correlation. Just soo true. It's extremely cumbersome & boring, occupies a lot time to read everything on the Berkshire forum here on CoBF and to discusss [World's best place to discuss Berkshire, I may add!]. - And still we all have personal opinions about a lot of things absolutely not being somewhere near optimal at Berkshire... I, for one, still can't find a modest praying carpet on the Berkshire Wear website ... [<- J/K] John - the Motley Fool Board on BRK has some outstanding commentary and valuation analysis as well. FYI.

Good for you Parsad - done!

I am a big fan of the "Dhandho Investor" - that is what I given out to all newbies. It that doesn't resonate, then I'm not sure the value track is up their alley.

Love it!

If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it. You know, that's a good point - if people are willing to pay $3M to have lunch with Warren, why not buy the building, you might get to have lunch with him a lot more often!

I loved my Jag - about my favorite car - but I would never buy one again. Too many problems & expensive repairs. I live in Illinois, and always seemed to have trouble passing the emissions test - neither the Jag dealer or the State could ever figure out the issues. Pretty awesome and fun car - if you do buy one - I'd suggest you have it covered under warranty the entire period.

I don’t think we have ever seen a president surrounding himself with so many crooks and lowlifes ever- Manafort, Ross, Nunberg , Scaramucci, Pruitt etc. Feels like a banana republic to me. Surreal. Yea, except for Obama - Hillary, Rosenstien, Comey, Brennan, Clapper, Susan Rice, Reverend Wright, etc, etc..... Why exactly is Susan Rice for example a crook? Reverend Wright was quickly sacked and never part of the government or even campaign in any way. Not the nicest fellow in my book, I agree on that. Susan Rice - ok, you got me there. She's not a crook, but she's the worst kind of liar and sleaze in the Obama administration. 4 American heroes died in Benghazi - but she engineered the coverup with the phony video story. It was a spontaneous attack fueled by that damn video! - because the Arab world loves President Obama - how could it have been anything else?? Of course it was not a planned terrorist attack? She dishonored those 4 heroes for political gain - pure and simple. It cost her the Secretary of State job.

I don’t think we have ever seen a president surrounding himself with so many crooks and lowlifes ever- Manafort, Ross, Nunberg , Scaramucci, Pruitt etc. Feels like a banana republic to me. Surreal. Yea, except for Obama - Hillary, Rosenstien, Comey, Brennan, Clapper, Susan Rice, Reverend Wright, etc, etc.....

It's so good to see Warren change his mind on these things.