John Hjorth
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Posts posted by John Hjorth
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I got hit by this "I must have it" feeling and ordered it. Sometimes it costs a bit to be a Berkaholic.
Thank you for your posts, Marlin & Sanjeev. I'm looking forward to the read.
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DONG Energy awarded three German offshore wind projects.
The two of the projects won based on zero subsidy per MW. That's a milestone. It's based on expected technology change going forward, to bigger offshore wind turbines of the size 13 - 15 MW, where the biggest ones right now as far as I know are from MHI Vestas at 9 MW.
I have actually looked closer at DONG Energy A/S as investment recently. I'm a CPA, but I don't understand their financials - I simply can't read them [<-!].
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Added a bit to BRK.B today.
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They can buy more UAL with proceeds. 8)
Jurgis,
I just hope that the extra proceeds from the enormous Berkshire position in WFC ends up in something that has the capacity to suffer - something antifragile ... not airlines! - Time will tell.
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Berkshire starts selling WFC shares, to keep position on 10 per cent, or just below.
Edit:
What's next with regard to Berkshire and bank stocks long term? Building a position in JPM? Or a merger between WFC and JPM? If this continues long term, Berkshire will own about 10 per cent of the whole US banking system, without even being a bank holding company - I'm just speculating and kidding here.
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Dirt from Bloomberg: Ex Lone Star Funds Executive Loses 225 Million Divorce Appeal.
Somehow hilarious, despite I'm not mean. It's not about the loss of the 225 M, more about getting a court ruling stating that your're not genious under such circumstances. Talk about litigation risk here. Certainly understandable that Mr. Work is not smiling on the photo.
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Wkipedia: Libor Scandal. It was about fraudulent reporting while knowing the reporting was for the purpose of setting an interest rate benchmark.
Certainly interesting, if Bank of England now gets dragged into this.
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I certainly agree with longinvestor here, with regard to BV anchoring. I still don't fully get your reasoning, SlowAppreciation. I will - like longinvestor - just await the write up.
I bought a bit more today, by the way.
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Added a bit to BRK.B today.
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notorious546,
cubsfan is referring to, that Mr. Combs worked for a time as a Florida bank regulator after graduating from Columbia.
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SlowAppreciation,
Why are you looking at Berkshire earnings pre tax?
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"I was very surprised, when I read Todd Combs would join the board at JPM. That board seat seems to me be quite "heavy", involving a lot of work, along with Mr. Combs work as Berkshire investment manager."
Given Todd's background as a bank examiner, perhaps he will have a leg up on all the work required.
Thanks, cubsfan. Good point.
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Just some more or less random thoughts here, longinvestor,
Some more dots here, without trying to connect them all:
I was very surprised, when I read Todd Combs would join the board at JPM. That board seat seems to me be quite "heavy", involving a lot of work, along with Mr. Combs work as Berkshire investment manager.
I was also surprised to read page p. 44 in Mr. Dimons 2016 JPM Shareholder Letter. Link. I did not know about any close contact between Mr. Buffett and Mr. Dimon before that. I suppose that this particular public initiative must have involved intense discussions, meetings etc.
Most likely, Mr. Buffet is giving his two money managers leeway to build up their network of contacts. That is good.
Ref. the 2016 Berskhire Shareholder Letter issued this year, the two investment managers run about USD 21B in total, of which USD 7.6B is pension trust assets of certain Berkshire subs.
The total stock portfolio is in the shareholder letter stated to about USD 122B at 2016 year end, ex. KHC. I have several times asked my self the following question: "If I had the opportunity to ask Mr. Buffett to draw a group chart of the Berkshire companies, what would he do in the drawing with: AXP, KO, IBM & WFC?"
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With regard to the successor of Mr. Buffett, we all speculate, including me. My speculative guess is still the best person within Berkshire to evaluate risk, despite age.
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With regard to the Vice Chairman position on the Berkshire board, I think we must all live with what to come on that position - unless any of us die before Mr. Munger. To me, there is nobody like Mr. Munger out there.
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INVE A.STO
A lot of it, this morning, as a trade on the 1st quarter 2017 reporting for Investor AB with regard to reported Net Asset Value end of March 2017, where I expect a material increase, perhaps as much as SEK 30B, primarily related to wholly owned Mölnlycke. 1st quarter report will be out 24th April at 12:00 CET.
If interested, please take a look at the powerpoints in the clip from the Investor AB Capital Market Day held in Stockholm on 30th March 2017, especially the powerpoints at the 0:40:38 mark. [You can see the powerpoints if you do not run the clip in full screen mode, and you can navigate the clip by just clicking on the powerpoints.]
I will roll the position back to full long term position, with proceeds back in to cash, no later than end May this year.
Perhaps the conglomarate discount on Investor will just increase materially. I will for sure find out.
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Pelagic,
To most of the extent of your post, I personally agree.
In short: Mr. Buffett has written in the BRK Shareholder Letters, that this is about a "social contract" - [bRK: You make sure we make some decent money on our capital invested, and we will make sure you have access to energy ...].
- Germany is [to me, at least it seems to me] - just different.
A deal is a deal - a handshake is a handshake - except in Germany, where it to me seems obvious, that everything already agreed on, can be [political] subject of discussion.
I will never pour capital into that industry in Germany again.
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Jurgis and Cardboard,
I remembered reading this article some time ago: Danes invent safe nuclear power plant.
I'm not an engineer, but from reading the article and taking it at face value, some problems with nuclear power today seem to be related to the technology chosen in the early days of nuclear power.
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I think it makes sense to think of what Taleb calls "antifragility". Sure, some quiet expensive darlings will probably keep growing earnings in a downturn, but I'd like to own stuff for whom it presents an opportunity as well (unfortunately those are difficult to find at reasonable valuations). Anyway, I think that is companies (typically with owner-operator mindsets) that buys back stock opportunistically when it's "cheap" because they have a good handle on its intrinsic value and attractiveness compared to other capital allocation options. But I also prefer companies that know how to prosper from doing M&A - ie buying a struggling competitor in a downturn. Preferably something without too much integration risk (think Auto Nation buying car dealerships). I haven't experienced a major downturn, but I think I'd have an easier time riding it out knowing that my Companies are busy creating value while my screen is showing large losses.
Thank you for an excellent post here, kab60.
Mr. Taleb defines an antifragile thing as a thing, that gains strength, when it is subject to disorder, stress, headwind and punches from some direction, perhaps several.
I have had severe second thoughts going forward in recent months with an intention to buy more of long term positions, and I have been struggling with getting some structure on my thinking.
Here is what I have started to do - position by position:
1. I go back to the '08 financials of the company and study it, trying to find answers to the following questions:
1a. What was the financial position and overall condition of the company then [in most cases - just around early spring '09 - thereby near the buttom].
1b. What did the management then express of expectations going forward - short term, mid term and long term.
1c. What did the management express in the spring '09 that it would do short term, based on 1a combined with 1b.
2. Then I look at the '09 and '10 financials from the same angle , as mentioned under bullet 1 - including specifically looking for hindsight bias in the management and chairman letters for those years.
3. Then I take a look at "now" - the '16 financials, and ask my self the questions while reading:
3a. What is the financial position of the company now?
3b. What changes has been made to management, investment strategy etc. since '08 - '09?
We all now know in clear hindsight, that the worst action - then - was to panic near the buttom and go on the side line for a period of some extent.
So far, I have looked at BRK, INVE A.STO, LUND B.STO, INDU C.STO and SCHO.CPH this way. What has been really striking to me, is that they have all been overall faithfull to their investment process, investment policy, policies about use of leverage etc., all actions based on expressed expections near the button in the spring of '09.
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Cigarbutt,
First off all, Berkaholics are quasi-autistics! - I like your humor.
I really need some time to think about the contents of your post. I'll get back to you here then.
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An SA article, by Left Shark Investing, in my humble opinion, worth a link here: Berkshire Hathaway: An In-Depth Look at Normalized Return on Equity.
I like the line of thinking and method of shaving off "Insurance" from "Insurance and other", thereby trying to analyze the earnings etc. of the big black box called "Other".
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Is "just $200k" typical for investors here to start with? I started as soon as I had my first 10k saved.
10K?!? In a separate thread, someone advocated your portfolio obliteration! Just kidding, and I hope I didn't overstated the someone's response, which I more or less agreed with.
I started small too.
I deliberately evaded that dimension in my reply to paarslaars on 22nd March this year, despite I understood that dimension also in the post from paarslaars.
All on this board started out somewhere, doing their very best from the very first day to get the snowball rolling, based on some kind of initial capital, whatever size.
There are topics and posts about "synthetic portfolios" laying around a few places on this board [actually I'm a bit puzzled about that]. It's about putting some of your hard earned to work - not "paper-money". There are shades of your own personality, that you will never get to know about, if you don't do it. Mr. Taleb is calling it "Skin in the game".
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I have been even more pro-nuclear, but with construction costs and safety being more screwed up than one would expect, I got a bit more moderate. Still it's a great source of potentially cheap energy with huge EROEI.
Fun clip.
Can we use German solution to Brexit perhaps?
Just kidding. 8)
Off topic:
I suppose it's evident to everybody that I have lost some money on E.ON and RWE. And those Uniper shares I can't even ask for getting delivered as physical stock certificates [for use on the toilet] in our modern time, where everything is going on digital.
So, In short I just got carried away and thought it was time to slap the German people in general. Last time it was Uccmal and I who totally agreed on Italian style problem solution, based on the train wreck of the Italian banking system.
Please accept my apology, if you are reading this and you are German, and if I have offended you.
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Certainly a different direction than what I perceive is the future direction on the other side of the Atlantic Sea.
energy generation in the united states is moving in the same direction.
sys,
Thanks. My perception might be wrong - on overall basis. I think that is what you meant. What I meant specifically with my comments was, that there is long term zero tolerance in the major parts of Europe going forward in the long run towards energy generation based on coal, which not to the same degree [at least to me - I might be wrong here] seems to be the situation in the US.
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Valuehalla,
I'm reluctant to new approaches for valuing Berkshire, for more than one reason:
1. Mr. Buffet him self has in several shareholder letters giving methodical overall guidance to shareholders about how to make own judgements about their investment.
2. There have never been any "promises" about the future of Berkshire, because there is no formal strategy as such - except for capital allocation and overall adaption to existing conditions in a broad sense. We do not even get any formal and structured short term [for the coming year or so] guidance. I'm not even sure of the existense of an internal budget consolidated at group level. Personally I do not think it exist.
What matters to me, is on running basis to have some kind of perception the relationship between book value per share, the soft buy back treshold, market price and intrinsic value based on already existing valuation methods for Berkshire. Here I'm talking about ranges for for each number, without trying to make it an exact science with calculation results with double underlining and x decimal places.
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Personally, I consider Berkshire a buy right now, compared to much else, under the recent market conditions. Right now I expect to buy a lot more going forward, which naturally might be subject to change.
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My earlier posts about the Berkshire cash flow was ment as comments about what has been discussed many times everywhere, also on this board: The drag on returns because of size.
Personally I think many investors underestimate the value going forward of two very special Bershire characteristics - in combination:
1. The enormous cash flow from operating activities,
combined with:
2. Outstanding capital allocation skills at the 4 persons taking care of that particular part of the whole business,
thereby making it possible to grow - without issuance of new shares.
rb posted about it yesterday in the topic "Anchor defensive holdings".
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On this board fellow board members has posted speculations about the next large Berkshire aquisition, including my own bablings and thoughts on this topic.
My point then was that there is today no privately held US company large enough to move the needle for Berkshire, that with a reasonable probability could be considered an volunteer aquisition target.
I looked on this side of the Atlantic also, based on advice from rb, especially Germany. I found out, that many of the large and good privately held German companies were controlled by foundations, who would likely never sell.
So to me, the next large Berkshire aquisition most likely will be a company today listed. That I do not expect to take place unless the price appears to be right for the Berkshire investment team. Most likely that will not happen before we are in the next material downturn.
Untill then I do not expect a material increase in cash flow from operating activities - it will be lumpy going forwards, in steps, combined with macro effects on that figure.
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Personally, I share your opinion on nuclear energy. Here it is acually tabu to have such an opinion,so I keep it for my self most of the time.
The political decision in Germany to shut down all nuclear power plants after the TEPCO accident seemed madness to me. It created large losses in the German utilities E.ON and RWE. E.ON has spun off all coal powered plants in a separate company called Uniper, handing out Uniper shares to existing E.ON shareholders : "Here you are - mess around with this thing yourself - we have had it with it".
[German style of problem solution : In stead of solving the problem,
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Andy Killpatrick book is at Amzn now
in Berkshire Hathaway
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lol! Thanks for the advice about how to handle and approach this brick, longinvestor!
The Lady of the House will most likely shake her head again - Last time was when I bought both the English and Swedish version of the Investor AB 100 years Anniversary book. She did not understand why I really needed both versions. When I'm reading the financials of Svenska Handelsbanken AB - on/off - [244 pages], she asks me : "What's so interesting about that light blue old fashion community telephone book? - is it the Swedish verson this time, or the English?" ...