John Hjorth

It's important to note at the bottom of page 4 of the letter that all earnings are stated on a pre-tax basis. If I remember correctly from the AGM a couple years ago, he thought the operating businesses in aggregate were worth 8 or 9 times pre-tax earnings. So the calculation would go more like 160k + 99k. $170 or so per B share. I - for one - understand your academics. Are you a buyer at these levels, or are you not?

But what is the Total book value. Is it: 15.5 billion / 6.4% = 240billion? Is so, the mktcap is 330 billion. It seems a much bigger gap than the per share numbers? Your calculations makes no sense. Total book value is equal to total shareholders equity ex. non controlling interests [M USD 255,550][Annual Report p. 37] The missing piece of his calculation is that 15.5B/6.4% = 240B, but that is the starting point for last year, so you re-add 15.5B, which matches your number. thanks! sleepydragon, I apologize for the not very constructive reply from me above. rmitz got it right on behalf of me though. Thanks.

I think of this in a totally different way. It's not about long term debt [interest bearing] on the group balance sheet. Yes, the debt is a large number, but it does not matter that much in the total picture. It's about : Insurance float, now at USD B 88 [and still counting], basicly free borrowed money from the policy holders Deferred taxes, now at approx. USD B 63 [and still counting], basicly free borrowed money from Uncle Sam. To me, by making calculations over a 20 year time span for BRK for evaluation of performance, you are making a serious mistake. BRK has over the last 20 years morphed into a totally different company - by acquisitions - than 20 years ago. To me, BRK is in an increasing degree over time becoming a Nestle, Unilever or AB InBev [just not only doing business in food or beer, but a lot of things], plus an insurance operation, and there is no sign that will change going forward. And the CAGR in BV pr. share has been seriously hurt by that change with in the last 10 years or so. In January I actually made some calculations on that, and the picture of it is striking. Please see attached file, which is quite rough in formatting, based on the first column figures on first page in Annual Report 2014. You might say, that the file is so rough in it's calculations, that it is flawed, because I'm using simple mathematical averages in stead of the IRR function in Excel. My point is, that the outcome in the diagram won't change materially by doing the calculations totally correctly, because the development in the tendencies is so striking. To me, people investing in BRK now perhaps expecting [or trying to get] 10% - 15% CAGR going forward are destined to get disappointed and should consider taking on other risks than investing in BRK. John_Hjorth_-_BRK_-_Book_value_per_share_-_v1_-_20160113.xlsx

But what is the Total book value. Is it: 15.5 billion / 6.4% = 240billion? Is so, the mktcap is 330 billion. It seems a much bigger gap than the per share numbers? Your calculations makes no sense. Total book value is equal to total shareholders equity ex. non controlling interests [M USD 255,550][Annual Report p. 37]

sleepydragon, Numbers explanation of the 6.4%: Berkshire Hathaway shareholder's equity per outstanding Class A equivalent common share end 2014 [uSD 146,186] X 1.064 ~ Berkshire Hathaway shareholder's equity per outstanding Class A equivalent common share end 2015 [uSD 155,501] [Figures: Annual Report p. 34]

For reference and info : https://en.wikipedia.org/wiki/United_Kingdom_withdrawal_from_the_European_Union https://en.wikipedia.org/wiki/United_Kingdom_European_Union_membership_referendum,_2016

I found this reading guide for the Annual Report today on The Rational Walk : How to Read the Berkshire Hathaway Annual Report www.rationalwalk.com/?p=13696 I will try to follow it tomorrow.

There are consequences. Jurgis, That's the proposal, i.e. : more regulation, by a new layer in capital requirements, including, and based on, the stress tests outcomes.

I wasen't posting any comments to the link above, because while posting I had not made up my what to think about it. I still haven't made up my mind about it, but basicly, my line of thinking is in line with what ni-co and SharperDingaan has posted above after my original post. What's the purpose of stress testing the European banks, if there aren't consequences of not passing the stress test? To me, it's just spin then. It makes less and less sense at to me, the more I think about it. This topic has turned more and more interesting to me along with the new posts. Add to that the ongoing EU/UK situation not particulary covered in this topic. SAN released full financial statements for the year 2015 on 12th February. The tearing apart the statements af SAN have I not started on yet, I have been a bit lazy in the evenings the last couple of weeks, doing other things. It must wait a bit. What I would like to do now is the following : A top-down "analysis" [hardly an analysis, just a simple record/specification] of the following : Sovereign debt held on the balance sheets end of year 2015 Off balance sheet items end of year 2015 for the largest European banks, and I will include C, BAC, JPM & WFC [all figures converted to a common functional currency, naturally], and share it with the board. My basis would be this list : http://www.relbanks.com/top-european-banks/assets and take the first 22 banks listed, further more including : 22 Danske Bank 29 Svenska Handelsbanken 30 DNB Group 31 SEB, those four last mentioned out of personal interest. Any comments and/or personal wishes?

Yes, Saturday 8:00 AM Eastern time : http://www.berkshirehathaway.com/news/FEB2516.pdf .

European Union Updates Bank Stress Test Beyond Pass/Fail http://www.nytimes.com/2016/02/25/business/dealbook/european-union-updates-bank-stress-test-beyond-pass-fail.html

Here's What Buffett Wouldn't Do, and Maybe You Shouldn't Either http://www.bloomberg.com/news/articles/2016-02-24/here-s-what-buffett-wouldn-t-do-and-maybe-you-shouldn-t-either

valueinvesting, Thank you for the link above. The reason also I asked the question was that I see no borrowing activity for BH Finance Corp. at the BRK website, in the SEC filing section. I suppose it must be a bank loan then.

In the last couple of weeks I have tried find some information about the financing of the PCP deal, so far unfortunately without luck. I suppose all former PCP shareholders by now have received cash for their PCP shares according to the merger agreement. I remember seeing a Youtube video linked to from this board, where Mr. Buffett mentioned that a part of the acquisition plan [most likely - I do not recall the exactly verbal expression from Mr. Buffett in the video] was to take on some leverage for BRK. Any insights and sources on this matter from my fellow board members would be much appreciated. Thank you in advance.

dabuff, Do you have a source for that statement?

blainehodder, Fair enough statement here from you. Certainly it depends on personal investment style, and also work process. I'm just not a macro guy, and perhaps the topic title to me indicated - at least indirectly - possible efforts of market timing. If I have stepped on the toes af any posters in this topic, I hereby apologize.

Glavacem, You are welcome. I ordered my copy of the reprint in the beginning of December 2015, based on an e-mail from Max. I don't remember the exact date of arrival here, but I think it was about 2 - 3 weeks after ordering. I'm in the Northern part of Europe, and I opted for cheapest freight, with no tracking available. I was surprised - in a positive way - by the quality of the book. It's a yellow hardcover, in a very good quality. In the last months it has become a book, that I use frequently, "napping" a more or less random shareholder letter almost every evening before going to bed - as brain food - to "sleep on".

This topic makes absolutely no sense to me. Why aren't people buying the heck out of their best ideas these days?

valuefinder, BRK is a quite complicated group of companies, so it takes a lot of time to study up on the different parts of it, to get some kind of feeling of it as an investment. Personally, I would suggest to start reading the financial statements available at the BRK website, including the yearly shareholder letters written by Mr. Buffett himself. It's very informative, but also an entertaining read, though quite time consuming. Max Olson [Max Program on this board] has created a compilation of the shareholder letters since 1965, the first one issued in 2013, a 50 years edition i 2015, and a later reprint available here : http://www.lulu.com/shop/warren-buffett/berkshire-hathaway-letters-to-shareholders/hardcover/product-22445483.html - Enjoy! :-)

Also: http://www.berkshirehathaway.com/news/FINAL_BRKLivestreamRelease.pdf .

Svenska Handelsbanken comes to mind. But personally I wouldn't touch a bank in a NIRP environment. Nor would I touch WFC because I think the risk of NIRP in the US is significant. Much as I love Wells. Yes, I would also mention Svenska Handelsbanken here, if any, not totally sure about it. Please note that history of Swedish banks is quite special. Basicly the whole Swedish banking sector was in dire straits back in the beginning of the '90s. Then, The Swedish State stepped in with decisiveness, and cleaned up the mess. The Swedish banking sector therefore is much less fragmented now, compared to ie. the Danish banking sector, if I remember correctly [haven't checked the exact numbers here], but it is something like about 15 - 20 Swedish existing banks right now, compared to approximately 115 Danish banks. The aftermath of the 08/09 FC here in Denmark was a bloody mess, which changed the national banking landscape totally, quite some [for Denmark] middle size regional banks were totally wiped out, together with a large number of small institutions. Basicly the method for cleaning up here was quite US-like. Basicly, the customers in the surviving banks "got the bill for the party". The Swedish banks did not suffer in the same way under the 08/09 FC, I suppose based on the recapitalisation that took place many years before that, likely also based other things. https://en.wikipedia.org/wiki/Swedish_banking_rescue

I'll never understand making anything 1% of a portfolio. I'm building positions over time. Most likely I'll buy more of this thing later.

Just for info here: I just checked up on the Web and on the SAN webpage several places I thought could be relevant to look. Conclusion : So far SAN has been mute.

I have no understanding of the strategy implemented here by 17M. I can't relate to it. But I can relate to position sizing. Position sizing - to me - is not only about cash vs MTM values of positions measured against investment ideas at a certain point in time, to me it's also about cash vs capital already allocated to a certain investment idea [down a lot or not, or the opposite], measured as an absolute cap, measured in percent. For every idea, to which I commit capital, while taking the initial investment, I also put on a cap [in percent] of total portfolio, to which is the max the position is to grow [,or to what I'm going to loose, if I'm totally dead wrong], based on my conviction on the idea. I may reconsider along the way on positions, but the tresholds met both downwards [max capital allocation] and upwards forces me to actually think about it. That way of doing things makes me avoid blowing up totally. I may mess up my pants, but I walk away with messed up pants, nothing more. I don't blow up, by continuing allocating further capital to my "best idea" actually beeing my worst, like shoveling capital into a black hole. The last part of the last 17M Blog entry seems to me like the last moves in a Chess game of a looser, ref. above.

DB News - not in the Investor Relations section : https://www.db.com/newsroom_news/2016/ghp/a-message-from-marcus-schenck-deutsche-bank-s-additional-tier-1-at1-capital-en-11386.htm https://www.db.com/newsroom_news/2016/ghp/a-message-from-john-cryan-to-deutsche-bank-employees-0902-en-11392.htm To me, we are approaching "VRX IR quality level" here [throwing out internal e-mails instead of doing some serious work, thereby providing some [more] - perhaps a lot of - facts relevant for the situation. - Panic?