Spekulatius
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Posts posted by Spekulatius
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On 5/2/2024 at 9:09 AM, gfp said:
It's funny, with Fairfax, nobody points to the bond portfolio and panics over the idle cash. They get busy calculating the spread between 95% combined ratio cost of capital and +4.5% investment yield. At Berkshire it sits in 3 month and 6 month bills and it's some huge problem. If Warren moved $150 billion to 3 and 5 year treasury notes would everybody stop worrying about the "cash problem" and call him a genius like Brian Bradstreet? Can we just call most of Berkshire's cash the "bond portfolio" and be done with the 'big cash problem' talk?
It is a bigger problem at 2x book versus 1x book.
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15 hours ago, DooDiligence said:
Time for a grave dancer to step in.
He is already in the grave. Can’t dance any more. Maybe he can turn around in his coffin.
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I personally think after looking at all of the them that BRO and AJG are the best picks here. I only have a small position in BRO bought a bit more than a year ago and it’s as close to a neversell than you can get.
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On 5/1/2024 at 8:45 PM, Spooky said:
Market movements seem to be based a lot more on vibes these days. People have become so short term focused, trading zero day options. There is a lot more volatility day to day. However, this gives those of us with a longer term perspective an opportunity to exploit the volatility they create.
The tool market volatility is extremely low (VIX is at 13.5 and had been low for a while) , but the volatility in individual names can be very high as earnings misses get punished harshly and earnings beats rewarded handsomely. I think the latter may be a result of option activity.
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2 hours ago, LC said:
Vestis looks like a debt paydown story. They are doing some cost cutting which may or may not work, but I imagine the real story is paying down all the debt they are saddled with post-spin. That value will accrue to equity holders over time.
VSTS was a margin improvement and debt paydown story from the spin. Now it looks again like the spinoff was oversold and my guess is that they may have to sacrifice some margin to keep the topline from falling. The CC brought new information to light that they have customer retention issues which to me sounds like a combination of service issues and pricing. This was not dixlosed before. They need to work this out to prevent the topline from imploding (which is the real risk here).
At least, I am not paying a fancy multiple here and if the story works out LT, then I still think we could see a multibagger here.
I think @Dinar owns the stock too and may have further insight.
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Bought some VSTS yesterday and today. just another spinoff that runs into trouble, but uniform rental fundamentally a good business, so I think this should be fixable.
High leverage (from spin) is a concern.
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On 4/25/2024 at 11:14 AM, Luca said:
So ukrainian men that fled to Europe are now denied basic consular services and are hoped to be forced back into the country where they will be handed European and American weapons to fight for their freedom! Wow...
What do you think happened when you dodged draft during the Vietnam war or even Germany during the Cold War?
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12 hours ago, yesman182 said:
Any specific reason you think it will be blocker? Or simply that they seem to want to block everything including two handbag companies.
Yes every significant merger is going to get sued by the FTC and COF and DFS will have a high combined market share in credit cards. It is going to be tough to get this merger to close, imo.
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6 hours ago, coffeecaninvestor said:
LHX has long term compensation EPS and ROIC metrics. They seem pretty adept at capital allocation. Hopefully as their FCF increases they can reduce their share count.
I am a fan of GD as well I bought some in 2020 when it looked very attractive.
LHX has very straightforward management incentives. They have been bulking up with acquisitions to become a prime contractor, but it has stretched their balance sheet somewhat.
I think GD is probably the best run of the primes. LMT has a great balance sheet so they could flex when growth prospects are limited because some much is dependent on the F35 program which is not a priority in the current defense budget.
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Sold most of my DFS yesterday. I think the merger with COF will be blocked and I expect DFS to fall from current levels (~$130 sales price).
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Forward multiples. Nobody drives just looking in the rear view mirror.
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7 hours ago, Gamecock-YT said:
Must be a slow news day, got to love the 24 hour news cycle. If you want to read up on something that matters that isn’t getting any publicity anywhere look up the recent developments in Myanmar. More productive use of your time than caring about college kids protesting.
Myanmar is an interesting situation because it looks like the Junta running the country may lose the Guerilla war and get toppled. Could happen quicker then many people think. China is also vying for influence there, of course. Hopefully our folks from the state department are also paying attention.
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Yes, the defense budget is already old news. The defense stocks are very dependable slow growers typically so while the business model is like an industrial , they are almost like annuities or consumer staples in a sense. You get extra browny points owning them if there is geopolitical strife and local wars. I keep holding RTX mostly and sold out of LHX in my IRA accounts (for a profit).
One thing to keep in mind instant the Ukraine war has not been as good as you might think for defense stocks, as some focus has shifted from F35 to other more pressing issues, which has hurt LMT for example.
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Picked up some CNHI shares this AM on the dunk related to the CEO change.
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Pretty good and short assessment of the situation from Sarah Paine :
She is correct (imo) that dictators tend to tell anyone who will listen what they are going to do, before they do it. She very well explains the difference between maritime and continental order and how cooperation creates wealth via win win versus expansion and win-lose.
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On 3/19/2024 at 10:37 AM, Intelligent_Investor said:
I feel like they always have, Warren once he got big enough knew one of the biggest risks to Berkshire was political risk so he wants no part in that at all
I agree the optics matter. Making $10 or $20M isn’t worth the headache for Berkshire. Think about this, if this becomes a political issue, it could mean that WEB get dragged in a Congress hearing to testify. Probably not worth it for him.
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12 hours ago, cubsfan said:
The US & Europe have almost the same interests and have since the end of WWII.
That's why they are great allies. That's why the West has thrived.
- peaceful relations
- economic prosperity.
- free trade
Why in the world would the US execute on the Marshall Plan if that was not the case?
I mean - rebuild your enemies Germany & Japan???
The result was almost 70 years of peace in Europe.
Meanwhile, the Soviet economic plan was a disaster for their subjects, and Mao had to kill 60 million for China to figure out their economic plan wouldn't work. Thank goodness Taiwan & Hong Kong weren't part of the plan.
Well said. Germany never thrived because of trade with a Russia. The NG dependency from Russia was a self inflicted wound that could have been voided by Merkel. It wasn’t necessary to drive the German industry.
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Just now, KJP said:
That likely is not what @Spekulatius was referring to. 3x funds rebalance on a daily basis. So, over time they do not track 3x the cumulative performance of the index. A simple example:
Buy at 100
Day 1: index goes to 105, so up 5% -- 3x goes up 15%, so 3x fund to 115.
Day 2: index goes back to 100. This is down 5/105 = down 4.7619%, so 3x fund will be down 3 x 4.7619 = 14.2857%. 115 * (1 - .142857) = 98.57. The 3x fund has underperformed (3 x cumulative return of the index).
This effect will magnify over time and can be particularly brutal in volatile but overall flat markets.
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These 3x ETF’s get killed by volatility if the underlying index goes nowhere and the index just seesaws. It’s going to essentially buy high and sell low all the time due to the inherent 3x leverage.
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1 hour ago, SharperDingaan said:
Not a bad thing; but if you want to get that European travel in .... do it sooner rather than later.
I booked a vacation during Gulf War I. It was very cheap.
So, if you are cheap, you could get better airfare prices if this escalates. In any case, the Gaza Strip is not in Europe, so it’s not going to affect European travel directly. Flights to Israel, or travel from Europe to India or Gulf States is a different story.
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I love old annual reports. The writing was so much clearer and you could get a grip what the company you owned was doing and where they tried to go.
Her is Lockheed 1958 and Getty Oil 1956 annual reports (the oldest I could find). Some of t(r airplanes introduced in lockheeds 1958 annual report are still flying.
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I love this song, but the choreography is out of this world:
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After watching “ Boy Swallows Universe” this:
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3 hours ago, whatstheofficerproblem said:
Thanks for the insight @abyli, but wasn't this the case a few years ago too? Everything you mentioned has been that way since Xi came into power. You were bullish then, what was the nail in the coffin for you? the virus?
Xi came into power in 2013 but it did only became gradually obvious that Chinese way of checks and balances within the party (via committees and fractions and term limits ) are replaced with one man Neo Maoist rule.
The Frog is slowly getting boiled, I guess.
I have a few shares of BABA which I intend to hold, but I have a hard time seeing me making a large investment in Chinese equities until something changes for the better.
Berkshire Hathaway Annual Meeting 2024
in Berkshire Hathaway
Posted · Edited by Spekulatius
Interesting- Warren’s talks about LAACZ on this annual meeting. He discussed it with Munger when they first met ( amongst many other quirky stocks):
Amazing too that he remembers the details of this conversation after more than 50 years or so.