jay21

Can you guys point me to any good resources if I wanted to get smarter on telecom, satellite, cable, and wireless technology? Thanks

Down the rabbit whole: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lmca-liberty-media/ http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/liberty-interactive-linta/msg151570/#msg151570 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/lvnta-liberty-ventures/msg128101/#msg128101 http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/liberty-media/ http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/siri-sirius-xm-radio/msg140769/#msg140769 There's more but those will get you started

Yeah, i think freddie is good? FIATY maybe?

"Since FHEFSSA was enacted in 1992, the GSEs’ combined book of business grew substantially until 2008. At the end of 1992, Fannie Mae’s retained portfolio was $156.3 billion and the total of its MBS outstanding was $424.4 billion. Freddie Mac had a portfolio of $33.6 billion and a total of $407.5 billion MBS outstanding. By 2008, Fannie Mae’s portfolio grew to $768 billion and its MBS outstanding increased to $2,289 billion. Freddie Mac’s portfolio grew to nearly match Fannie Mae’s, at $749 billion, while its MBS outstanding rose to $1,403 billion. To put the size of the GSEs’ obligations into perspective, at the end of 2008, the GSEs held about 43.7 percent of the total outstanding mortgage debt in the United States and their combined obligations were $5.2 trillion. Their combined obligations rivaled the U.S. public debt, which was $6.3 trillion in October 2008." 33b in PLRMBS in 1992 and 749b in 2008. 20% CAGR. Ratio of PL portfolio to guarantee portfolio at 1992 was >10. In 2008, ~2. Looks like a pretty big shift to me.

I read in an article that one of Klarman's problems with size is that he may dilute the culture. He has a very large team and if they kept growing so would the team.

Aleph blog had a great comment on shorting. Many people think the opposite of being long is being short. However, being short is the opposite of being levered long. E.g. if you have a 4% short position and it goes against you by half, you are now at a 6% position, which is bigger in your portfolio. http://alephblog.com/2014/01/28/on-position-sizing-in-equity-long-short-hedge-funds/

I think I would prefer something like Double Line to REITs (especially mREITs), but that's just me and I am very unqualified to tell people who are on SSI what to do with their money.

LUK agrees and they bought a protein processor, National Beef. You may want to start there.

Maybe at some point. But in the next 5 years, absolutely not. She has very little experience and is just getting her feet wet. Maybe I am reading too much into things, but in one article they stated she likes to listen and ask questions rather than be a focal point during meetings. IMO, I interpret this as she does not have the experience or knowledge yet to be the leader. I can't imagine her running a meeting with Rose, Ajit, Tedd and Todd, etc. I'd also like the next CEO to have some history of capital allocation, whether through investments or tuck-ins or insurance or something else. If she keeps excelling and makes the most out of the opportunities she has (which it sounds like she is), I could see it happening in 10 or more years. I agree with you in general, but specifically, listening and asking questions is a huge component of a CEO's job. A good one, anyway. Lots of good leaders lead not by being a focal point or celebrity but by managing the direction of the group in less direct ways. Completely agree. Like I said I am probably reading too much into things, but I can't help but think maybe she is asking questions and listening because she cannot contribute in a significant way. I could be way off, but it's tough to see any 29 y/o being able to significantly contribute to conversations with managers at the top of their fields. I think she will get there and could play a big role eventually. You would have to try NOT to learn if you are talking to WEB and his managers everyday.

Maybe at some point. But in the next 5 years, absolutely not. She has very little experience and is just getting her feet wet. Maybe I am reading too much into things, but in one article they stated she likes to listen and ask questions rather than be a focal point during meetings. IMO, I interpret this as she does not have the experience or knowledge yet to be the leader. I can't imagine her running a meeting with Rose, Ajit, Tedd and Todd, etc. I'd also like the next CEO to have some history of capital allocation, whether through investments or tuck-ins or insurance or something else. If she keeps excelling and makes the most out of the opportunities she has (which it sounds like she is), I could see it happening in 10 or more years.

"WB: Greg hit on point – we have distinct competitive advantage in that we pay lots of federal income tax. There are programs that involve tax credits. We get 1:1 benefit. I don’t have figures, but I would guess 80% of utilities can’t reap tax benefits because they don’t have federal income tax. They wipe out taxable income on bonus depreciation. So they can’t have appetite for projects with tax credits. By being part of BK, a huge taxpayer, Mid-American has extra abilities to do projects without worrying about exhausting tax capacity." "WB: Cash intensive businesses are unattractive unless the cash consumed earns an attractive return.Utilities are 12%. Not as good as 20% growth with no capital. Same with railroad, we will spend way more than depreciation. We’ll earn reasonable returns. We would be in terrible situation if we were spending a lot just to stay alive. If you go back to world of 20% ROE, hard…., and we can’t earn 20%, and so we have to like the returns we have." http://www.scribd.com/doc/92763946/Berkshire-Hathaway-Annual-Meeting-2012

http://mcelvaine.com/our-fund/performance/ Wow. This shows me fees matter. Pre-fee: 11.3% Net Return: 8.1% Index: 7.4%

It would be unfair to the index funds right? Because they started at a much higher valuation than BRK relative to today? http://www.multpl.com/table S&P PE ratio was ~30 in 1999. It is now 19.6. So the returns have to fight that multiple contraction. This was interesting imo.

Very interesting. Good luck Mohnish! I bet he could raise another few $M just from this board.

Packer, for some reason I think you would like the Malone type companies because of your familiarity with cable/telco/media. DTV, Starz, Discovery, and all the Liberties should be considered. Although, you probably think they are expensive based on comps. I'm starting to get very interested in DTV. I like BRK, MKL, and LUK (although LUK pays a dividend). Race listed a bunch of others that people like. I'm interested in any thoughts you have on the companies listed. Also a few I am looking at: TDG, DHR, POST, CFX, DVA,

I thought they had hit their target debt level recently? I was suspecting continued buybacks, but nowhere near the level over the last few years? I am not an expert on DTV but they can de-lever via growing EBITDA and then lever up again. I'm thinking about creating a Malone type basket with LMCA, Global and DTV because they are so good at deal making and capital structure optimization. I never get fully comfortable with the assets though (specifically SIRI). I'll keep digging.

I think a few of your examples are a little off base. I think Munger would recognize you can plant more trees. He's worried because you can't plant more oil. But, I probably should just keep my mouth shut wrt to this because I am not knowledgeable. If anyone has some links readily available with regards to Munger's views on energy I'd love to read them. I'm sure he has a much more nuanced view and has done his work. My instincts have me leaning against him so I would like to hear a deeper explanation.

I'm hoping that WEB rethinks his buyback program in response to this, but I doubt that will happen. Also, I think they will increase IV by double digits still.

Go for it. I'll try to participate. Most of the threads I make on the debt markets seem to fall flat though.

I agree with this. HY corps have me a little concerned though. If we get raising rates, then some could have difficulty refi'ing.

Interesting. I thought this was a Ted or Todd pick and I believe Lubrizol will be integrating it into BRK. I wonder how all the pieces came together on this one.

Eric, I don't get what point you are making. Maybe it would be in their self interest to do an equity fund as opposed to an insurance co. The same thing was probably true for Buffett. Is there something else you are trying to get at? That shouldn't affect the merits of BRK or FFH as an investment, imo.

There was link to an interview from 2013 on the site: http://www.givernycapital.com/assets/documents/179/TWST_04_15_13_Giverny_Capital_.pdf?1386962107 Some of his picks are : WFC, MTB, UNP, and FAST

This was presented to me somewhere between 6 months and 1 year ago and I haven't pulled the trigger on it. The primary reason being that I am always concerned about mixing finances and family. So if the primary concerns are that this will cause family problems, I'm totally understanding and it is something that I am thinking about. To say that I'm going to blow up or I am taking on too much leverage sort of defeats the purpose of the thread. I can customize the transaction to fit my needs in terms of sizing. I am asking if you could lever BRK (or another company that you thought was trading at a discount that will grow over time) how much would you do so? What terms would be acceptable to you and which terms would you avoid? I can also hedge downside by buying puts (obviously this will create a higher borrowing cost). IDK, it seems like I can basically create a warrant on what I think is one of the best companies in the world. Overall, I'm still leaning towards not doing it or even waiting until stocks are cheaper before I ask to borrow. I was curious to see if other people would and if they could think of a good way to do it. Some specific responses below: Started looking into this and haven't found anything yet. I'll let you know if I do find anything. Also, feel free to list your concerns. I'm not closed minded. Thanks Packer. These rates would probably be too high for me. I think securing with my salary would reduce the cost somewhat. I was also thinking about doing some type of upside sharing as mentioned. +1 Why lever up on something that is at 90% of IV with recourse leverage deep into a bull market? If you really that confident, why not just use LEAP? You can get 2016 BRK.B $100 strike option for $23.6. That gives you nearly 5x leverage for 2 years at an interest rate of about 4.25%. Vinod The term is flexible and I don't know what BRK will trade for 2 years from now. I'm pretty sure it will trade much higher 10 years from now, which is the time frame I am thinking of with this. In terms of recourse, as long as I meet interest payments I wouldn't be forced to sell. BRK's value is also debatable. It probably matters how much leverage. A callable loan, secured only by income and not assets, with an indeterminate term? Can I borrow from them, too? :) How much are you thinking of borrowing relative to your earnings? No idea how much I would borrow that's one reason why I posted. I was thinking a lot, but whenever I actually pull the trigger on something I usually adjust downwards significantly because I know I'm biased. Maybe 1/2 of my salary, which would allow me to effectively delever in 1 to 2 years and I have more than enough asset coverage for it? Overall, it seems like almost everyone is against, which is the way I was leaning. Maybe it's not even close and my greed is making it look close. Thanks for the comments.

This may not be the best forum for this question, but I may be able to obtain some non-margin leverage through a relative and would like some advice. This relative is risk averse and generally has a lot of cash. They would prefer this cash make a higher return than a HY savings account. I mentioned the possibility of borrowing for them and paying interest and the person seemed receptive to lend a high amount relative to my own net worth (which is pretty low). My first thought was to borrow a lot but I want to make sure I offer a fair rate of return relative to my risk as a borrower, but also to make sure that I can achieve a sensible ROE. What rate do you think would be fair for this risk? Note that I would pledge my earnings from job to cover interest payments and principal as well. How much should I borrow relative to my own net worth? Also, it might be worth noting that my salary is roughly 1/2 of my net worth. Also, they seemed to be flexible on when I can pay back the principal. One thing I was thinking if I pay them the 10 yr plus 100bps with no maturity, but I can prepay at any time. Does this sound reasonable? Can you think of any custom transaction that would be beneficial to us both? The reason I placed this in the BRK forum is because I would place all the money into BRK, which I believe to have very little risk in terms of compounding at a sensible rate over a long time. Therefore, we would have to consider the return of BRK in order to know at what payment rate am I making a negative return. I also wanted to see what people who are familiar with BRK would have to say and what they would do in my shoes. Thanks for any comments/suggestions.