John Hjorth

Just hilarious, Jurgis! [ : - ) ] - - - o 0 o - - - On a more serious note: I really want rb to chime in here, on: 1. His thoughts about the discounting of the float liability, 2. His further comments about the piece by SlowAppreciation. - - - o 0 o - - - I hope that rb is just having a good time off the board in the summer period up there in Toronto.

Added to BRK.B - quite some, based on the discussion in the topic: "Berkshire - cheap?"

I hope your are right, longinvestor. I think within the last almost five years, there has only been one day beside this, where I have been allocating more capital than today. That day was the day after the Brexit vote, buying SAN. Today I added to BRK.B, because of the talk and discussion in this topic. No more fooling around with buying in drips. USD relative to EUR has been down quite some today, also [important for me as an European investor], likely because of all the talk about the political gridlock in the US with the health care reform.

SlowAppreciation, Semper Augustus February 2017 Client Letter, p. 35, top schedule. 4 methologies.

Great discussion - thank you all, - - - o 0 o - - - I think I read somewhere in the past, that Bershire lags analyst coverage... - not! It's actually one of the best covered companies in the world! - due to this board! That's meant as a compliment to my fellow board members! - - - o 0 o - - - Personally, I have a habit of thinking of the float and the deferred taxes in the Berkshire balance sheet as financial obligations basically free of interest [without discounting them], however the nature of those obligations separately are very different, and and the same time a bit similar. I have never moved myself into the for me mentally unknown territory to try to estimate their net present value. If I should try to do it with the float, I would most likely use the provision triangles that we have access to from the 10-Ks, and try to discount the payouts using a WACC. This approach is basically a calculation based on a liquidation perspective of the liability, based on hindsight [histocal experience] projected to the future, the provision triangles are naturally dynamic over time etc.etc. After all, what rb is pursuing, is a method for doing a rough estimate of the overall discount to apply to the Berkshire float, so I think - with all the flaws inherent in this method - that it's better to try that than just doing nothing, if you're pursuing to do the discount. Edit: The percentage table on lower part of p. 91 in the 2016 10-K will be where to start, and then decompose total float on GEICO, Gen Re, BHRG & BH Primary to do the math. Edit 2: Total float year end 2016 is stated to USD 91.6 B, ref. the February 25 2017 Press Release. At p. 87 at the top in the 2016 10-K there is a specification of the part of the float, totalling USD 76.918 B, ref. that separate post in the Berkshire balance sheet year end 2016.

You get $106/share in Investments/cash, and ~$9/share in earnings. So at $170/share, you're paying around 7x Op earnings per share for a very diverse group of businesses, earning stable, predictable earnings, which have been selected by the greatest capital allocator of all time. The group probably earns 15-20% on capital, and while growth may be limited, I don't expect it to lag the S&P. So as others have said, I think ~11-12% annual return from today's price is a reasonable expectation. This is why I hold Berkshire in my 401k rather than an S&P index fund. This. This piece by SlowAppreciation, combined with the two Semper Augustus Client Letters about intrinsic value of BRK was the documents that gave me conviction to continue to add to BRK going forward. Very much appreciated, SlowAppreciation, thank you for sharing. Damn good work. Please give your GF a gentle hug from me, it appears from your blog, that she is giving you a hand on your work.

I apologize for a non-constructive reply here, Boilermaker75. If you read the December 12, 2012 Press Relase from Berkshire, it's all about the word "may". "may" here is not the same as "will", it's not in any way an automatic mechanism, and Mr. Buffett stated at the last AGM, that Berkshire would not "prep" its own stock in that situation. I think some fellow board members has called it a "soft floor" under the stock. It all depends on the given capital allocation alternatives in that specific and particular situation.

Please read the topics in this forum about the 1.2 x BV share buy back treshold for BRK, Boilermaker75, It has been discussed in all details and depth on here. It's obvious, based on your posts here about it - stated with all due respect - that you have not done that.

Your post makes perfect sense at least to me, rb. Without the intention to nitpick your post, insurance float stands at USD 105 B at the end of 2017Q1, and I have a fairly strong propensity to add approx. USD 82 B [deferred taxes] to that amount as leverage, free of cost, and basically free of covenants, if the insurance operation does not start to stray away. [Mr. Jain will see to that.] Book equity at that time was approx. USD 293 B. If any of my fellow board members here on CoBF know of a company with similar properties, please contact me.

Exactly what boilermaker75 said.

I'm in Berskhire, and it's the by far largest position - right now about 21% on overall basis. When the talk is about indexing, I've developed a habit of going to p. 13 - 18 in the Semper Augustus Client Letter of February 2017 about Berkshire. There I study the "Company B", especially it's P/E, and it's P/B. That's - simply put - my vaccine against indexing. Berkshire investing is "sitting on your butt and your hands" investing. So is indexing. Next time hell breaks loose here on Earth again, while indexing one will bleed exactly as the overall market is bleeding. Berkshire will come down some, too, but most likely not as much, because of all the cash and T-bills, the "lazy capital", and also a war chest in a severe downturn or a real crisis. I consider Berkshire anfragile, in the meaning Mr. Taleb uses the word. The more stress you put it under, the stronger it will come out on the other side. The drag on ROE for Berkshire from the warchest is to me the opportunity cost for Berskhire being antifragile. Just a special kind of put, built into the stock. - - - o 0 o - - - Edit: cubsfan beat me to it - for a part of my post.

I found on YouTube - without the *<beep>* inside it. Much more entertaining than reading the excerpt. lol.

Thanks for sharing, LC.

If you read the JPM 2016 shareholder letter by Mr. Dimon carefully, nothing of this will be a surprise to you. It's all covered in the shareholder letter, however phrased more politely, but at the same time not in any way disguised. This is about his own personal integrity, and the integrity of the bank that he is responsible for running. He is to me indeed in his very own league, and he just speaks up, frankly and candid. There is nobody around - anywhere - to ask him to shut up, as I see things, - and he knows that. Just like Mr. Buffett.

Thank you for helping me getting through the day today, LC. It's hillarious. It's the perfect desciption of me today. I haven't still mentally overcome getting screwed by this beautiful Spanish lady & brunette called Ms. Botin. [<- this is meant as a separate joke]. When did you get rid of SAN, LC? - I see that you have modified your profile signature. [<- This could be a separate joke, too, - at the expense of me, naturally - depending on the content of your reply.] Yesterday, the Lady of the House did notice in the afternoon - while I was communicating with TwoCitiesCapital in the SAN topic - that her man was sitting behind his monitors, frozen, and his face almost collapsed into the face of an old sour man, and she asked why. I explained it to her, after which I said "... I have no need for a Spanish brunette to screw me ... - it's your job!" [<- That's actually meant as joke, too]. Then she walked away from me, laughing. The anger inside me did build up, so I was almost going ballistic, however I did not react or respond, still. I managed within a couple of minutes to get myself into some state of embarassment in stead.[<- that's joke #4 here, and the real joke here!]. Please say after me: "Spanish corporate government". [<- That's indeed joke #5].

Rokoko Post [since 1732]: Islamic State takes responsibility for Roskilde Festival.

I'm really trying to understand this, but does the fact that the partners get 21/42 not mean that they own 50% of the partnership? Or am I completely off base because under X it says: "A limited partner has no right to substitute an assignee as contributor in his place.", this doesn't constitute ownership? Cameron, No, you are confusing the profit sharing agrement with capital acccounts of the general partner and the limited partners. The capital accounts of the partners [general or limited] define the ideal share for each partners share of the whole partnerships net worth. Hint: Fire up Excel, and try to do some calculations. Edit: Tim beat me to it! [ ; - ) ]

Cameron, I apologize for a non-constructive reply to you here. Mr. Buffet started from the start block with the first partnership with an initial capital of USD 105,000 from the limited partners [family members], and USD 100 of his own. With a 4 per cent watermark, taking 50 per cent of the total profit excess of 4 per cent. When he was extremely good at what he was doing at that time under such an agreement with the limited partners, he got totally extreme returns on invested capital in the early phase of the whole thing. One can actually say, that he was levered/amplified 1,050 times on the upside [105,000/100, and naturally still subject to the watermark], while at the same time participating in losses equally with his limited partners. His returns on his own capital account in the early years must been in thousands of per cents, however I have never seen any attempt to do the calculations, most likely because his withdrawals and capital injections to his capital accounts in the partnerships are still today not disclosed. Link. You have to to add the "X/42"'s in the agreement to understand the built-in profit sharing mechanism. This was for the first partnership.

This basic assumption for your post about the early partnership years is not correct, Cameron.

SA: Berkshire moves quickly on regulatory approval for Oncor. Expected.

Depending on the country.. here investment income is only taxed for dividends, not realized gains. ... And they call you socialists. It was tax return 2016 deadline for us - when your tax return is not trivial - owning foreign stocks falls in that category - 2nd July. I was really puzzled when I saw the outcome. Adjusted for inflation, I think I have go back to the last years of my time at university to find such low taxes for me. We have taxes on realized gains, but I'm a net buyer, and so far, I have not sold much. I haven't been working in a normal job for almost two years now. The Lady of the House is retiring finally at 1st August this year. Two years ago she went on a kind of temporary/reversible pension scheme called "Efterløn" [in Danish, in English translated to something like "After wage"]. I have presented to her just after I finished all the tax returns for the family a calculation, that documents, that she will not be subject to Danish income taxes payable on her Danish state pension [under the existing Danish tax regime, that is] for many years, perhaps I can defer those taxes directly into her estate to come some day. She is still asking questions about it, because she does not still fully understand it. I can hear, that she thinks it is just soo sick, that because you have cash to continue to build deferred taxes in retirement, so that she is not contributing - on running basis - to the nations common household. Then I try to divert her thoughts into another line of thinking, by suggesting that she could think about how smart I am instead. Then she walks away from me, telling me I'm a "hopeless specimen of male gender of Homo Sapiens - totally lost, absolutely no hope for me, a hopeless case.". Also I, like rb, have noted, that some fellow board members have used the term "socialist" in connection with some European states.

Great post, DooDiligence, Thank you for sharing your line of thinking. - - - o 0 o - - - Personally, I'm trying to take a break from the market and all the reading of financials right now, while trying to get some kind of structure on my investing, by trying to set up in writing for myself, what it is, I'm actually doing, and why. So far, I have found out, that I suffer from an attraction to B2B conglomerates, and float, i.e. insurance companies and banks. One of the questions I asked myself in that process so far, is: Why have I invested in Investor AB, while at the same time, right now I have no intention to touch Kinnevik AB.

... Here, we are told he was sharp e as well! I hereby nominate you as candidate for the CoBF poster of this week!

While reading a topic on my brokers blog yesterday, there was in a topic mentioned something about a Danish finance professor, who has analysed the alpha of Mr. Buffet. After doing some search I found this topic about it, and the link in this topics starting post to the old article on SA. Unfortunately, the link to the research paper in the SA article is dead. I found the research paper on Lasse H. Petersens personal website. If you click on the "Warren Buffett" link in the end of the fourth paragraph, just left to the image of the book, you'll get the research paper. It's an empirical approach to analyzing the return Mr. Buffett has generated at Berskshire for a period of thirty years. If you can get your head around the talk about beta and sharpe ratios, you will perhaps find this piece as interesting as I did yesterday.

France may close up to 17 nuclear reactors by 2015 - Hulot. Oh well, - I suppose the private shareholders of E.ON and RWE are standing on the boarder between Germany and France, waving with the flags: "Welcome to the club!" - to EDF shareholders.