philassor

Very true; Brk is like a BNSF train in motion (with 70 cars and an insurance locomotive) ; it would take a lot of years and screw ups to stop its momentum. Culture and talent in place will insure it won't derail. ;)

Web on float: So how does our attractive float affect the calculations of intrinsic value? When Berkshire’s book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and were unable to replenish it. But that’s an incorrect way to look at float, which should instead be viewed as a revolving fund. If float is both costless and long-enduring, which I believe Berkshire’s will be, the true value of this liability is dramatically less than the accounting liability. A partial offset to this overstated liability is $15.5 billion of “goodwill” that is attributable to our insurance companies and included in book value as an asset. In effect, this goodwill represents the price we paid for the float- generating capabilities of our insurance operations. The cost of the goodwill, however, has no bearing on its true value. For example, if an insurance business sustains large and prolonged underwriting losses, any goodwill asset carried on the books should be deemed valueless, whatever its original cost. Fortunately, that’s not the case at Berkshire. Charlie and I believe the true economic value of our insurance goodwill – what we would happily pay to purchase an insurance operation producing float of similar quality – to be far in excess of its historic carrying value. The value of our float is one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value. So if you believe like I do that overtime that Berkshire's float is costless (or better) over time due to their proven obsessive underwriting discipline, one can be bold and look at valuation statically and modify the book value as follows. Book value on 12/31/2012: 187.6 B Float : 73.1 Insurance Goodwill : - 15.5 -------------- Net adjusted BV 245.2 (1.3 x stated book value) Then of course you have to add X amount for the understated goodwill (think Sees Candy) of the wholly owned companies. and you obtain perhaps 1.5 to 1.6 times stated book which incidentally was how the market was traditionally valuing Berkshire ; No wonder Buffett buys back at 1.2 of book.

Just out of the oven: http://www.nytimes.com/2012/11/26/opinion/buffett-a-minimum-tax-for-the-wealthy.html?_r=0 Looks like Buffett is trying to preempt the "lobbyists,, lawyers and contribution hungry legislators" by suggesting a minimum tax above one and ten million of income regardless wether it is a capital gain, a dividend or pay for labor. Bye bye carried interest scams. Cant' wait to hear some ranting from the delusional Ann Randists steeped in self serving bias (even though they lost the election).

Luk is going to become a Handler-Steinberg tango. http://dealbook.nytimes.com/2012/11/12/leucadia-to-buy-jefferies-in-3-6-billion-deal/?partner=yahoofinance

Buffett has statistically 5-7 years more to guide the ship; the ship has another 5-7 years on autopilot. So without any new talent you still have up to 15 years of outperformance. I suggest we resuming this debate in 15 years. ;)

That's not exactly what I understood. I think what he was trying to convey is that the deal wasn't so great that it was worthwhile to sell some of his stockholdings to pay for it, although it would have been a better use of capital in this low interest rate period if they had had enough cash available to close it. My recollection is that they could no agree on the terms. (maybe they wanted brk stock or too much money?)

Thank you for the post.

Regarding NetJets, I don't know if this Sorkin article was posted, but here it is anyway: http://www.omaha.com/article/20120328/MONEY/703289937 Is this the natural course of bona fide litigation or could it be indirect harassment/payback from the part of an irate group against the Buffett rule? Hum… The amounts are no chicken feed that's for sure. >:(

I think it was from Dale Carnegie that he learned to criticize generally and praise specifically. This is kind of an extension of that, it seems. No, I understand that and why he does what he does. He had no choice but to fire Sokol. I just believe he did so much for the company and Berkshire, that you don't simply heave it all away. Buffett should have made mention of what happened, why he made his (or the board`s) decision, and that they obviously had little choice in the decision. As well as indicate that the company still appreciated the years of service Sokol showed. This guy, for all intents and purpose, was the one who was going to run Berkshire when Buffett was gone. You can't just bury him! ``Lose a shred of reputation for the firm, and I will be ruthless``, just doesn`t cut it here. Cheers! I respectfully disagree. That happened early last year, and was fully addressed at the AGM. Time to move on. Cheers! :) By the way, did you notice that their next CEO has been tapped ( with two backups ). He ( or she if it's J. ) is described as being well known to all members of the BOD. I've got my idea about who it is. What's yours? All right I'll play the guess game: Matt Rose (for his youth and breadth of experience) I don't think it will be Ajit since he is too valuable evaluating insurance risk and has less managerial experience than Matt; What is yours?

I second your opinion; for what its worth I am posting the follow up link on the "magnificent 7 euro based stocks" (initial link from BargainValueHunter). Just to throw some more euro names in the hat: http://seekingalpha.com/article/313561-the-magnificent-7-euro-based-stocks-buffett-should-buy Some like BP and Zurich financial perhaps seem interesting to me but nothing irresistible yet. I guess I am getting greedy.

He finally bought after more than 80 years of observation (BG and WEB combined). I guess IBM's long term competitive advantage has now been satisfactorily established after a century of successful operation, as the other long term holdings mostly have a 100 year track record with excellent returns. Interestingly, my brother in law used to work for IBM. He says that IBM's new CEO is the very best manager he has ever seen. The lukewarm reaction of the market based on Brk's price decline today seems to indicate that there is more a sense of disappointment than excitement on the IBM purchase. It reminds me ( at a smaller scale of course) of the BNSf purchase. Plenty of doubters (He lost his mind was some of the chorus). It did not take long to prove them wrong. All the naysayers then are wishing we are forgetting who they were. I guess Buffett is used to it and enjoys it. I certainly do. Such is the life of a contrarian.

One prerequisite for writing clearly is knowing the subject very well. I agree as well; There is a french saying that goes: ce qui se conçoit bien s'énonce clairement What is fully understood can be expressed clearly.

That there is a "national conversation" is testimony to the efficacy of the constant brainwash that moneyed interests and their favorite corruptees (republican congressmen) hammer on the public. Something as evident, simple and logical (though very mild ) as the "Buffett Rule" should be immediately accepted not discussed. Fortunately the generally naive public is no dupe on this one as the polls show.

Thanks for the slides; great data.

Looks like The Cumming/Steinberg duo are at it again: http://www.bloomberg.com/news/2011-05-12/leucadia-said-to-join-centerbridge-in-bid-for-citigroup-consumer-loan-unit.html