onyx1

Yep, great event. Nice to be in the the same room with so many great businessmen and investors. Thanks Sanjeev and Alnesh!

"The Treasury Department says its proposal would still allow existing accounts to continue to grow tax-free until distributions occur, but it would prevent new contributions once a saver hits the cap." http://online.wsj.com/article/SB10001424127887324050304578412932073225110.html?mod=WSJ_hp_mostpop_read Here's more hope. Looks like WSJ may have confirmed this with someone at the Treasury.

And once that is complete, its a very small step to a one-time wealth tax for all estates above an amount which is deemed "enough".

Does it? Isn't the story always the same in the insurance industry: "we just HAD to write more business!" The big difference here is on the expense side of the equation. Ajit is using BRKs unmatched financial strength and capacity to gain a competitive advantage of 5 points or more on the expense ratio versus all of the competition.

I believe that this has been going on for a while. For example, NICO has a agreement to take on 12% of all MM marine book with Ajit paying the standard commission +2%. Brokers love it (BRKs AA rating) and so does NICO since they avoid having to staff and entire underwriting department (saving 7 points of expenses and 5 after commissions). BRK structural advantage is that they can enter agreements like these on an uncapped basis. I doubt anyone else could do the same. In hindsight this all makes sense. With $100bln capital to deploy and growing (BNSF is now the world's second largest reinsurer after NICO!), and the fact that pension funds are being lured by consultants to provide capital to the reinsurance market through sidecars etc. as an "uncorrelated asset", Ajit can no longer sit back and fill his book with opportunistic fat pitches due to market overreactions as in the past.

Is Inflation in Our Future? http://centman.com/files/PDF/Newsletters/2009/IsInflationInOurFuture.pdf Four year old paper from Century Management old but still very relevent to the current situation.

This begs the question though, if it's so obvious, why aren't most people here doing something like that? Actually, twacowfca made a thread on the idea and a lot of people followed it. I was one of those and it has worked out very well. 70 days ago, I rolled a BRK long into the 70 strike LEAPS when BRK was offered at WEBs buyback price. As luck/skill would have it, the LEAPS are up 56%. Additionally, a majority of the implied financing costs have been retired. Twacowcfa's return is even higher as he bought a short term OTM calls at the same time.

Related story. A friend of mine runs a non-profit that prepares veterans for careers on wall street, like training for Series 7 exams and teaching valuation and trading techniques. He recently trained a young helicopter pilot who had finished three tours, two in Afghanistan and one in Iraq. On one of his tours he was shot out down and was lucky enough to not only survive but to avoid falling into enemy hands. The vet completed the training and went on an interview with a well know investment bank. After waiting for 15 minutes in a conference room in comes this pompous, suspender-wearing banker who proceeded to grill the vet in a dismissive tone: "Do you have any idea what it is like to go home at night with a trading position that is going against you?"..."What makes you think you can handle the ups and downs of a trader?"...."Do you have any idea of the stress level involved here?" The young vet paused, and simply responded: "Does anybody shoot at you here?

Laughed out loud at this one!

Thanks Sanjeev Because of this board I am a richer person, and I have more money too! :)

http://www.businessweek.com/news/2013-02-19/paulson-leads-funds-to-bermuda-tax-dodge-aiding-billionaires Fund managers are “trying to find a way to have a vehicle that can go offshore and avoid paying taxes,” said William Berkley, founder of W.R. Berkley Corp (WRB)., a Greenwich, Connecticut-based insurer. “You have one company that does it and nobody pays attention. You now have four or five and it’s likely to get more people’s attention.” Ugly! Paulson takes $450mm of GP dollars and capitalizes a brand new Bermuda insurance company. Two months later his wholly owned reinsurance company invests the capital back into the Paulson LLC funds and in the meantime writes a tiny $8mm in insurance premium for all of 2012? This is a transparent tax dodge as Bermuda companies pay no annual taxes. This kind of stuff just triggers outrage and it will likely spell the beginning of the end for this type of transaction, and I would not be surprised to see US lawmakers take steps against all US taxpayers holding investments in Bermuda companies.

Thanks for posting this interview, well worth the hour it takes to watch. Paul Lountzis is remarkable and fearless! Qualitative factors are critical but hard to indentify. His approach is as good as any I have seen and very likely to uncover insights that the market has missed. I wish I was this good.

onyx1, where did you find the info on the preferred. The few links I've read don't mention it or have any detail. Pieced together from these links: "Berkshire and 3G will each contribute about $4 billion in cash to pay for the deal, with Berkshire also paying $8 billion for preferred shares. The rest of the cost will be covered by debt financing raised by JPMorgan Chase and Wells Fargo." http://dealbook.nytimes.com/2013/02/14/berkshire-and-3g-capital-to-buy-heinz-for-23-billion/?partner=yahoofinance "Berkshire will spend about $12 billion to $13 billion on the deal for the maker of condiments and Ore-Ida potato snacks, Buffett told CNBC. The deal will also be financed with cash from 3G affiliates, plus the rollover of existing debt, and is valued at about $28 billion including debt, according to the statement." http://www.bloomberg.com/news/2013-02-14/berkshire-joins-3g-capital-to-buy-heinz-in-28-billion-food-deal.html?cmpid=yhoo

Back of the envelope analysis, seems like BRK gets the best of this deal. The 9% coupon on 8.8bln in preferred is 800mm, while steady-state FCF before debt payments averaging $1.2bln/year. With around 10bln in debt, after tax interest will be somewhere around 200mm, so very little cash will drop down to equity until the preferred is called away. Looks like the preferred is the value driver here for Buffett, and I'd wager that there is some significant call protection on the preferred (say 5 years?), or a stip the preferred can't be refinanced early with debt.

Thanks for posting! This was just about the time I remember listening to plumbers and painters argue about the merits of EMC vs Cisco vs. Microsoft. Optimism run amok. But what happened to the Dow after this was filmed? In 4 years it doubled.

Chorus is a Canadian regional operator. Similar business to SkyWest and the Republic Airways here in the US.

"For the above reasons, we petition the Commission to shorten the quarterly reporting deadline contained in Rule 13f-1. Under the Commission’s existing Section 13(f) authority, we believe that it would be appropriate for the Commission to propose shortening the reporting period to two business days after the end of the calendar quarter." http://higherlogicdownload.s3.amazonaws.com/GOVERNANCEPROFESSIONALS/26582a95-d501-4284-afd8-8e18fa9426a2/UploadedImages/Comment%20Letters/SEC%20Comment%20Letter%20-%2013f%20Reporting%20%20of%202-1-13.pdf NYSE provides some compelling logic for their recommendation to reduce the delay from 45 to 2 days. I am not sure how I would feel if I were a GP, but based on nothing more than current self-interest, I would like to see this implemented.

I think that if so that would be the purchase that finally pushes Berkshire over the top and cements the legacy. There is nothing like In and Out. That would be their crown jewel. It would be a great fit indeed, at the right price of course. Good book on the story of building the In-n-Out franchise here: http://www.amazon.com/In-N-Out-Burger-Behind---Counter-Fast-Food/dp/0061346721/ref=sr_1_1?ie=UTF8&qid=1359982247&sr=8-1&keywords=in-and-out+burger

By all means live comfortably but don't make the mistake I made in buying a big trophy home, they are way overrated! Yes, there was some satisfaction in announcing to the community that "I have arrived!" and having guests ohh and ahh at the the size of the kitchen and property, but that wears off fast. What you are left with is more space that you need and lots of money gone every year to maintain the place. 10% of the cost of the home is a good rule of thumb. Taxes and utilities are high enough, but the repairs were the worst! Whenever any plumber, electrician, HVAC, landscaper or painter gave an estimate, I could can see the joy in their eyes as they pull out their "special rate" sheet just for me. :o Big home are like boats. The happiest day of your life is when you buy it, the second happiest day is the day you sell! I don't follow at all. First off I have never in my life heard of carrying expenses for a luxury property being anywhere near 10% a year. On a 5-10 million dollar property you are looking at $100-150k all in at the worst case reflecting 1-2% which you will easily make back with appreciation over time and which would have to be spend anyways as you have to live somewhere. Moreover I don't think people should be buying multi million dollar homes that are still worrying about utility bills or repairs... When reaching a certain point in life where there is significant liquidity I find luxury real estate to provide a good balance of inflation protection as well as have a grounding effect believe it or not. It reminds you every day in my case of what only a small portion of my net worth looks like in tangible form. This is important as often when moving around the kind of numbers we deal with we tend to forget that. The only argument against owning a large luxury property for someone with significant multi million liquidity would be in a rising interest rate environment and if they are under 40 and still focused on building their wealth. Recently I have had some debates abotu this with my friends and we have all agreed that the day of a fellow with $50 million net worth living in a $500k house are over. It simply doesn't exist anymore. That worst case seems low. Of course mileage will vary, but where I live $100-$150k will barely (if at all) cover annual property taxes on a $5-10mm home. Average property taxes in my bedroom community outside NYC are 1.8%, and I don't expect taxes to fall anytime soon. The home, fixtures, furniture are depreciating assets, so a 25-year straight line gets to 4% annually. Add water, electric, gas, plus the pool needs to be heated and cleaned, the landscaping maintained (this expense can be breathtaking!), gutters cleaned, and other contingencies, add another 1-1.5%. Minimum opportunity cost of UST Bond yield adds 3% (assume a higher rate if you believe you can compound above govt bonds). All in, and I arrive at a 10% rule of thumb, add or subtract some for your local conditions. This is realistic and conservative framework I would recommend to anyone contemplating a large home purchase. If one is prepared to live with an annual "cost" for years into the future, then you can live in luxury and continue to enjoy your wealth without stress. And by prepared I don't simply mean ability to pay. In my case it wasn't a question of what I could afford. Rather, it was partly due to my sensibilities being offended from paying for something I didn't need, and mostly the fact that the "cost" was in direct conflict with my wealth compounding goal of a nine digit portfolio. FWIW, my wife thinks I am too conservative and would completely agree with your last two sentences. Hahaha!

I am surprised to read the levels of cash in some accounts at 40%, 60% or higher. 110% net long. Even with the indexes approaching all-time highs, I don't see market value of my holdings reflecting a worrisome level of speculative enthusiasm. When I do, I will happily sell. The fed is forcing the markets into equities and that won't change any time soon. For context, I don't manage third party money so if I am wrong I won't have the discomfort of explaining a large drawdown to LPs. By all means live comfortably but don't make the mistake I made in buying a big trophy home, they are way overrated! Yes, there was some satisfaction in announcing to the community that "I have arrived!" and having guests ohh and ahh at the the size of the kitchen and property, but that wears off fast. What you are left with is more space that you need and lots of money gone every year to maintain the place. 10% of the cost of the home is a good rule of thumb. Taxes and utilities are high enough, but the repairs were the worst! Whenever any plumber, electrician, HVAC, landscaper or painter gave an estimate, I could can see the joy in their eyes as they pull out their "special rate" sheet just for me. :o Big home are like boats. The happiest day of your life is when you buy it, the second happiest day is the day you sell!

Here's an "all-in-one" solution: "It is not inconceivable to imagine a home buyer spotting a home for sale in a Berkshire owned paper, contacting a Home Services of America real estate agent and taking out a Wells Fargo Mortgage on a new home. The new home might include Shaw Carpet, Ben Moore Paint, MiTek fastners, USG drywall, a Trane heating/cooling system, and Johns Manville insulation, all surrounded by an exterior of Acme Brick (and some components may even have been shipped by BNSF). The closing transaction in some areas could be through one of American Home Services firms. The family would then drive to the new home, turn the Schlage door knob and may decide to fill the space with new furniture from one of Berkshire's regional furniture stores. A John Deere riding lawn mower may be handy for the new yard. And in some parts of the country, the home could use MidAmerican Energy utilities. And DirectTV may be a desirable entertainment option." http://seekingalpha.com/article/1089381-broadly-framing-housing-with-berkshire-hathaway-in-2013

Well that didn't take long, looks like your 97.5's have doubled, way to go TWA!

Good news for the industry as Travelers continues to benefit from price increases that are outpacing loss cost trends on all their markets. “We are very encouraged by pricing trends across all three business segments. Renewal rate change in Business Insurance was approximately 8%, up from nearly 6% in the fourth quarter of last year and consistent with recent quarters. Renewal rate change in Financial, Professional and International Insurance improved to 4%, and we once again achieved double-digit pricing improvements in Personal Insurance. Given the continued low interest rate environment and uncertain weather patterns, we will continue to seek improved pricing. "

Seriously? Can you provide any substantive evidence of your claim?

This is a good point and one I rarely see brought up by those who want to see guns out of the hands of the public. When I see a man make a statement for elimination of guns I laugh because it is easy for him to say, he has the upper hand over half the population (women) by being physically stronger. 96% of violent offenders in jail are men, and women are easy targets. A gun in the hands of a woman levels the playing field. What would be the effect on rape, assault, and muggings if all women were issued a hand gun to carry in their purses and properly trained in its use?