philassor

thanks for the link; found the reading interesting/entertaining. I know that some of you hold grantham in high regards. In my humble opinion, I find his attempts to anticipate short term market moves as rather futile and contrary to ben graham and buffett's assertion that you cannot predict the market in the short term. there are too many moving parts and too much psychology and frivolous emotions involved for this kind of exercise. It is a little bit like making sense of a chaotic system in physics. good reading anyway.

Buffett was full of praise regarding Jamie Dimon's annual letter and his explanation of the financial mayhem: http://investor.shareholder.com/jpmorganchase/annual.cfm

see you in omaha, pilgrims.

And he already has a small stake in Swiss Re. The only thing is he is a little low in cash for this elephant... He said he likes to have substantially more than 10b in hand to handle potential catastrophic claims. So it is a seducing rumor but I am not holding my breath too much.

I thought this article was worth the read: a "tech" company with a moat (low cost) and a huge market. A potential rocket stock? Good enough for buffett with that type of manager at work and despite the tech label. Too bad he could not buy the 25% he wanted... http://money.cnn.com/2009/04/13/technology/gunther_electric.fortune/index.htm?postversion=2009041309

Thanks basl1, certainly a good rumor and a viable possibility.

"To me it's clear what's driving the dysfunction in compensation. It's our system of publicly owned companies. In these companies there is a massive disconnect between the underlying owners of the businesses and the boards and managers at these companies which is largely brought about by financial intermediaries, managers of money, who are also compensated in bazaar ways" amen

This angst about post Buffett Berkshire fate and performance has been addressed at every annual meeting in the last few years (following the inevitable run by a truck question). I remember Munger pointing out (in essence) that Buffett did not build this magnificent castle without giving thought about its long term viability after his departure. The key point though was that the Culture and blueprint are in place as a template for the continuation of future success. Berkshire will continue to be a great heaven for businesses and the allocation of capital machine will be functioning just fine (of course not as well as under the irreplaceable oracle). The insurance gold mine will operate under the same probabilistic prudence and appropriate reserves. And we therefore need not worry that BRK will continue to outperform the S&P 500 for the next decades to come.

Mungerville, you are right, book value is a moving target and is obviously different today than it was 2 months ago. The point is however is that the element driving the book value down such as the long term put options value derived from various stock indexes contribute mightily to the book's apparent deterioration when they do not have a meaning in the context of short term emotionality of the market. ( As per Buffetts discussion on the Black Sholes formula and its implication on financial statements p 20 and his note 3 page 26); same can be said about the securities held in aggregate way below intrinsic value but temporarily devaluated by a depressive Mr. Market. Book value is therefore significantly understated, Berkshire price today is near an artificially low book value and is therefore far below intrinsic value. Anyway, what is remarkable is that operationally Berkshire did not have a bad year in 2008: to paraphrase Buffett the two most important businesses (insurance and utility) delivered outstanding results and have excellent prospects, on top of that capital allocation went also very well (apart from his confessed unforced errors with Conoco and the irish banks) and prospect look bright in this illiquid market.

regardless, we don't need positive reinforcement to know the stock is far undervalued. keeping it simple, the stock sells at 1.1 x book value versus the traditional value line yard stick of 1.6 x book. that would give it a near 40% discount. When you factor in the fact that the derivative book value impairment of 7 billion is bogus as per his explanation on the shortcomings of accounting, the stock is substantially more underpriced. And then of course the market value of his holdings is artificially low.... to me,all in all, his annual letter reads like a decent year in absolute terms and excellent year in relative terms.

Well said partner, right on. :)