John Hjorth

I think it's important to read old posts here on CoBF keeping intensively in mind the actual context and - especially - the investment environment at that particular time the post was written. I've done that over the last years a lot, and I think it has been educational to me personally - very!, actually, but it's certainly subject to one being able to keep the actual context back then in clear mind. If you read old stuff on CoBF that way, it - i.e. - beats just about any good book about the GFC. You get the real action going on in real-time, with a time stamp on it, here on CoBF - post by post.

Posted by CorpRaider in the "Semper Augustus letter" topic here in the Berskshire forum here on CoBF : I'm sorry for double posting. Has the structural situation of Berkshire Hathaway, - the parent - ever been discussed or analyzed here on CoBF? I haven't been able to find something so far.

Thank you, AdjustedEarnings & gfp, In short, I prefer to ask here when in doubt instead of making implicit personal assumptions [, that may be wrong]. [i will late forget what I've learned from the discussions about SEC filings and US capital market law in the "Could Berkshire tender stock?" topic started by alwaysinvert.] Company law, capital market law and regulations of filings with the stock exchange works in a very different way in my home country with regard to share buybacks. Yes, the question was highly hypothetical, given the actual circumstances on overall basis right now. Thanks.

I read your post based on its underlying assumptions, DTEJD1997, The fact here is however, - if one loosens up from the assumptions - that there always is a solution to every issue or "problem" in this space [behavior, combined with economics]. If one understands the problem, then one also knows in which direction to look for the solution to the problem. In short, it's a fight against idiocy, stupidity, ignorance, incompetence on so many levels : at law & policy makers, regulators and at the pension funds, and to some extent also at the savers. One of the properties of such an issue is also that unpleasant one, that it compounds over time - the more one is procrastinating and lingering, the worse it gets - simply because it's about returns. The fact is that one needs to set the pension funds free [perhaps just less constrained] to invest where the value creation is actually taking place : In the companies all over the world. We all pick our own fights. My riot against all this [and the outrageous fees related to that] has been pretty silent and is called DIY. - - - o 0 o - - - I feel pretty sure the well educated Danish youth won't take this BS. They aren't dumb, nor are they socialdemocrats. First in line the banks have been within the last 10 years or so - next in line will be the different kinds of pension funds. I expect lower expected forward returns will create an enormous pressure on fees, and regulation about asset allocation will be subject to review and rethinking.

Thanks, Dynamic, I suppose I got it right in the first place. I appreciate the visualization.

Thanks SHDL & Mike, How do you perceive these moves by Mr. Ackman & Mr. Greenberg? Remember Mr. Buffett's talk about the issuance of B shares in response to the threatened creation of unit trusts in the 1996 shareholder letter [dated February 28th 1997]? Tweet by Ed Borgato. I don't understand his "The job is to make money, not land backflips" comment. I understand the first part, not the last one. Perhaps it's lingual for me here, I suppose it means "It doesn't have to be advanced, as long as it makes money" [A bit like "Keep it simple"]. Or perhaps I'm just dumb - thick books can be written about what I don't understand.

LOL! - But I agree with meiroy, rkbabang, It really looks fantastic. What a wonderful spot... - I suppose it would be impossible to maintain usual stress levels while taking a break from the hamster wheel at such a place. I especially try to visualize how the place would look in the autumn [the colours of the leaves on the trees in NH in the autumn]... Do you plan to use it yourselves if it's not occupied by tenants? - Good luck with it to your wife and you.

Thank you for sharing, Liberty, I think I've never in life seen anything like this. Christ it stinks. Instead of subtitle "Common sense" it should have been labeled "The brain death of a reporter and an editor in chief". Are there even any basic principles related to protection of sources & verification in professional journalism that this piece does comply with? The source a dead man who set condition of confidentiality! [who can't defend himself here]. Other persons have been hung out to dry by name here. I hope somebody here sue the heck out of NYT. Not subscription protected. Ticket selling when it's worst. Is the overall perception in the US that decency is the name of a village in Sibiria? Why can't people just let FBI do its work? [ a part from this must be about ticket selling...]

I have posted about it over and over again : This is a severe misconception, likely based on lack of understanding & knowledge of the Danish mortgage bond market. The long term interest rates in the Danish mortgage bond market are not negative [but at record lows, yes, right now ~1 percent]. Mortgage rates with short term refinancing terms are negative right now [and have been low for many years]. [<- & good luck with that, if one is a highly levered Dane.] It's not the Danish central bank that's buying these mortgage bonds. It's primarily foreign capital inflow to this bond market from abroad, because this particular part of the European bond market is considered safe haven for institutional money. [yet, still this "traffic" is to me somewhat incomprehensible.] If ECB has been buying some or a lot of these bonds, you may perhaps have a point, but it will mean squat for Denmark, ref. just below here. Furthermore, those short term mortgage bond rates are actually the only measurable & visible short term bond rates, because there are basically no Danish T-bills in circulation - Denmark does not, and has not for many years been running at at deficit. Just to put the gloom and doom-talk here on CoBF a bit in Danish perspective. What is it [in general terms] that the Danes are doing with their mortgages? To refinance [here it is called "to convert"], you have to terminate your existing mortgage two months before end of a quarter, so the deadline for next round of refinancing was end of July. This round just closed was the biggest in history. 80 percent of all mortgages decided refinanced [measured in DKK, not number of mortgages] were decided rolled from negative short term refinancing rates to long term fixed rates [the majority is likely mortgages with 30 years annuity profile], at ~1 percent interest rate, locking in the "advantage"/historical opportunity for the long term. This is only possible because the debtors do not have to buy the underlying bonds related to the existing mortgage in the market, but have the right to redeem at par at any time.

The Berkshire A & B shares - bought back since the implementation of "structured" buyback programmes [first max. 1.1 x BV, next max. 1.2 X BV, then [& now] "Mr. Buffett & Mr. Munger decide"] - are they retired? [or are they held in treasury, and thereby constituting potential acquisition capacity [dry powder]]? [Not that I think this would take place at the recent market price levels.]

On overall basis, I do, actually. The question is if this is warranted, or I'm naive. Perhaps it's not only about the Danish legal system, but also about that I live a place, where we have some kind of a "dual legal" system - the legal system and The Law of Jante. Parts of the Danish press practise The Law of Jante zealously. Here is a hilarious example. ["You can't speed up a Tesla when it's standing still" and "I haven't filed a police report for violence against me by the officers because they were two against one." [ : - D]] The real problem is that I may be severely biased here because I forget about such cases [related to equality for the law] in the long run - simply because I don't give a damn about them [like example above], and because I haven't really seen some appalling evidence that there exist exemptions from equality for the Law. There is a risk that the casuality in this line of thinking may be logically flawed. So, thank you for asking, wachtwoord.

Greg, Thank you for elaborating with specific examples. After reading your post I understand your position better. Some of those examples have actually hit the Danish press. I read it as yet another token of USA gradually becoming more divided [without the intent to turn this topic into politics].

They just need to get hold of his blackmail material ( tapes?). I agree it could be interesting. Also, do all scumbags bank with Deutsche Bank? Personally I think Spekulatius' take on the situation is the key to understanding the real situation as of now.

I'm so shocked by reading the last few posts in this topic, honestly, Predators are everywhere, not just in the US, also in tiny Denmark [for my part]. Absolutely terrible stories pops up now and then - also here. Those cases are however still dealt with in the court system. -Do you not trust the US legal system? [opinions of Canadians are not relevant here]

Thank you for your post, Cigarbutt, My immediate reaction to your numbers : 0_0. I've actually never paid any real attention to that part of Berkshire's securities portfolio, nor the size of that particular part of it. - - - o 0 o - - - Then [- naturally! - ] some basic numbers digging : Berkshire "bond portfolio" [called in the financials : "Investments in fixed maturity securities"] : [All figures in USD B] EOP2019Q2 : 19.962 EOP2018Q4 : 19.898 EOP2017Q4 : 21.353 EOP2016Q4 : 23.432 - - - [Here I'm inserting a dotted line, because the accounting definition for this part of the portfolio was changed between EOP2015Q4 and EOP2016Q4][1] --- EOP2015Q4 : 25,998 EOP2014Q4 : 27.397 EOP2013Q4 : 28.785 EOP2012Q4 : 31.449 EOP2011Q4 : 31.222 EOP2010Q4 : 33.803 EOP2009Q4 : 35.729 EOP2008Q4 : 27.115 EOP2007Q4 : 28.515 EOP2006Q4 : 25.300 EOP2005Q4 : 27.420 - - - o 0 o - - - There is no practical way to adjust EOP2005Q4 - EOP2015Q4 figures to figures based on principles for the following period, based on [for us] available information. It looks more to me like Cigarbutt here has been hinting, implying, or perhaps even suggesting : "It's not about a ""min. USD 20 B in cash & cash equivalents" Berkshire contingency liquidity rule", more like a ""min. USD 20 B in cash & cash equivalents AND USD ~20 B in bonds all times" Berkshire contingency liquidity rule". - - - o 0 o - - - Note 1 : Before [somewhere] between EOP2015Q4 and EOP2016Q4 : US T-Bills could be part of : a. Cash and cash equivalents [if maturities was less than three months when purchased. b. Investments in fixed maturity securities. [Here understood as "total value of US T-Bills minus [a]"]. After [somewhere] between EOP2015Q4 and EOP2016Q4 : US T-Bills could be part of : c. Cash and cash equivalents [if maturities was less than three months when purchased. d. Short term investments in US T-bills ["short term" is here defined in US GAAP and IFRS as "with maturity within one year after the balance sheet date". e. Investments in fixed maturity securities. [Here understood as "total value of US T-Bills minus [c] - [d]"].

Amazon link. Available in English, French & Italian. After reading the April 2016 review of the English version of the book I immediately pressed the buy button on Amazon UK : I expect multi-level entertainment! [ : - P ]

Thank you to all for some high quality posts since my last post, Lots to think about. [ : - ) ] To me, it's inspiring and educational to read your posts, because the situation can be approached & looked at from several angles. - - - o 0 o - - - I have read that particular blog post by The Brooklyn Investor discussed by KFS and Mephistopheles before, I suppose it must have been just after it was posted late 2017, most likely because it was mentioned here on CoBF. What caught my eye reading it this time [, not last time] was the large movements in cash during the period 2001 - 2004 [both years included]. [uSD 5.863 B EOP2001 -> USD 40.020 B EOP2004], so I dived into the cash flow statements for those years [i've never really looked closer at these earlier - they are somehow "just history" to me]. It became clear to me, that Mr. Buffett was rolling out of bonds with - at least some - duration to cash and cash equivalents because of low bond yields and really no other attractive allocation alternatives, to some extent like in today's environment. I found this on p. 5 in the 2003 Annual Report : So, basically nothing new under the sun, just that 16 years have passed. Berkshire still doing basically the same thing it always has, and "everything in life is just phase", and Berkshire is "now in a phase" similar to 2003, [and "this phase too will eventually pass" - one way or another ...]. So, in short - It's just "business as usual" at Berkshire, in a way [like it has always been].

Great idea with a recapitalization here, gfp, CAT & DE - not now, but in the next severe downturn. I think CAT has done really well since the GFC. Mr. Gates owns CAT right now, if I remember correctly. I'm not sure Mr. Buffett likes their financing arms though. Mr. Buffett could likely get better financing terms under the Berkshire umbrella for both compared to them as standalones, or provide group internal financing. - - - o 0 o - - - [J/K : Add to that : No need for an elephant gun to catch caterpillars and deers.]

I would posture these impairments are new ones, Dynamic, Please see the KHC 2018 10-K, p. 41. Please take a look at the basic assumptions for growth in the defined CGUs [1.5% - 4.7%], while there really isen't any growth. -Also [same p.]: The wonders of GARP investing. Lack of growth can easily make capital disappear in GARP investing. Spekulatius would say in his mother tongue : "Keine hexerei, nur behändichkeit!" - I think KHC is absolutely uninvestable directly because of this. I'm sorry I never got to a short write-up about the KHC 2018 10-K in the KHC topic, after recognizing this.

I couldn't find a topic about Bill Browder in the General Discussion forum, so I'm posting it here : All this is actually blowing up exactly today in the Danish Press : Boersen.dk [August 7th 2019, 21:00] Opinion - Flemming Rose: Maybe Bruun & Hjejle should have received the Cavling-prize instead? [This is the foreword to a book [written in Danish language] to be released on August 12th 2019 called :"The wizard: The story about Danske Bank, money laundering and the man, who betrayed the world".] Boersen.dk [August 7th 2019, 21:00] Opinion - Bill Browder : The business man Bill Browder about the money laundering case: Flemming Rose should be ashamed. Boersen.dk [August 7th 2019, 21:00] Opinion - Berlingske - Berlingske: Flemming Rose's criticism of the money laundering case is a deep delusion - copying the already known, primarily Russian, criticism of Browder: https://borsen.dk/nyheder/opinion/artikel/1/385595/berlingske_flemming_roses_kritik_af_hvidvasksagen_er_en_dyb_vildfarelse_-_kopierer_den_allerede_kendte_primaert_russiske_kritik_af_browder.html?utm_source=opinion&utm_campaign=nyhed_04 [for a reason unknown to me, I can't fetch and embed this link] - - - o 0 o - - - I can't wait to lay my hands on that new book about all this mess in the beginning of next week. I may end up feeling like a victim of ticket scalping though. Edit : No tweet from Mr. Browder about this - hmm ...

You actually didn't, longinvestor, Ref. here : So my bad. I've edited my post accordingly.

Like so many other Berkshire investors, I picked the 2019Q2 10-Q just after it was made available on the Berkshire website Saturday [my local time, that's at 14:00 in the afternoon]. I dived directly into the information about share buybacks in the cash flow statement and the specification of the buybacks. Next, a glance on the information about the five large stock positions, remembering Dynamic's prior comments here on CoBF about BAC. No surprise for me there - it looked to me, that Dynamic was head-on. Then I just tried to "feel" myself : "My stomach - & what was going on inside my head?" I thought : "Great! - No frustrations or the like - just nothing going on in "my system"". -I am now really mentally and emotional detached to the lagging capital allocation in Berkshire! - That has "just" taken me six months to get so far! ... [The 2018Q4 13F/HR and the 2018 10-K in combination caused some strong and strange reactions at me ... - I did not sell though on the following Monday after the 10-K, or later.] - - - o 0 o - - - Then this "150"-thingy popped up in my mind ... -What was it, and where?! I had to really concentrate and think carefully, digging in my memory. I came to the conclusion, that it was related to some comments from Mr. Buffett about share buybacks at an AGM a few years ago - perhaps in 2017? [perhaps before, perhaps later?] - and particularly : How [the h**k] do I trace & find it again?! Next, I fairly quickly realized, that the fast & easy solution was to grab Joel's Buffett Compilation was the way to go, because it's a searchable pdf-file. I then grabbed the file [already downloaded many times, so last version [- my SSD must be female, because it's pregnant!] I expanded the index in the file and started a search from first page of the 2017 AGM transcript, searching for "150". Outcome : Bingo! - yes, there it was - p. 4,100 [of [as of now] 4,953 pages [ 0_0]] : After that I have done the following : 1. Saturday : Read the whole actual question from Mr. Gelb in the transcript and the full responses from both Mr. Buffett and Mr. Munger. 2. Saturday : Looked up that particular session on the CNBC Buffett Archieve [ Link ] - it 's question #2 in the afternoon session at the 2017 AGM, properly marked, just click on it. 3. Saturday : Repeated bullet #1. 4. Yesterday [Tuesday] : Repeated bullet #2 - but this time focusing on Mr. Munger's appearance under Mr. Buffett's comments [to me : no real reaction, and most of all, no ping time after "Charlie?"] - - - o 0 o - - - More later [also yesterday], I scrolled through the AGM 2018 & 2019 transcripts and read the Q&As about share buybacks - all as I personally consider general, to some extent and varying degrees also evasive As. - - - o 0 o - - - Again, I do not any longer get hit by frustrations over the situation [i may elaborate on that], I don't hope for anything, & I try my very best not to speculate about this matter at hand. - - - o 0 o - - - What do you get out of all this? I mean : Is this "150 billion"-comment from Mr. Buffett to you an indication of an inflexion point? -Maybe just a soft one? [longinvestor Mr. Buffett time ago has called it a "filled bladder syndrome" [ : - ) ] -So "inflexion point" in that terminology meant as the approximate stage where the "filled bladder syndrome" escalades to an "overflow issue"]. - - - o 0 o - - - I would like to read your take, thank you.

Swedish_Compounder, I hear you, but I still think we eventually should discuss Berkshire valuation methods in another topic than this, to avoid clogging things up too much. [ : - ) ]

It's way off, Swedish_Compounder, I was in doubt what you meant by your first post about it here, but not after your last post partly quoted above. You're in your calculations ignoring some material perspectives in the interactions between the income statement, the balance sheet & the cash flow statement, that can't be ignored, because it's about accounting logic [, and your post is about book value]. Here I'll mention just three - here in order by significance - the most significant placed first, and two of them about the most significant liabilities, by order: 1. Float, and the income from it From the press releases, Berkshire float EOP 2017 was approx. USD 114 B, while at EOP2018 it was approx. USD 125 B - an increase during 2018 of USD 8 B [which was a great year with regard to growth in insurance float]. Your calculation considers that earnings [addition to book equity], while it is just growth in some net insurance assets and liabilities in the group balance sheet. Btw, you can't even estimate it by the posts in the 2018 cash flow statement as adjustments to net earnings to arrive to cash flow from operating activities [uSD 3.449 B + USD 1.114 B + USD 1.174 = USD 5.737, which is not near USD 8, ref. the press releases - some posts must be lumped together in the cash flow statement to keep it on one page]. Earnings from float is the investment income from the cash made available by the float minus cost of float. See a post by me in the MKL topic about cost of float. Some people think it is [[[combined ratio in percent]/100]-1], [like in "combined ratio is 95%, so cost of float is minus 5%"]. It isn't. 2. Deferred taxes. Taxes paid by Berkshire "normally" [<- in the meaning : seen over a longer range of years] are lower than taxes charged to the income statement, the difference being deferred and provided in the balance sheet. 2018 is not "normal" [because of the large decline in the market value of the stock portfolio], and the same can be said about 2017 because of the tax reform. [This however pulls the other way than bullet 1 - the point again here is that your basis for extrapolation if off]. 3. Estimate of maintenance CAPEX. Investments in property, plant, equipment & equipment held for lease are bigger than depreciation and amortization. - - - o 0 o - - - Let's go back again to "Share repurchases" [ : - ) ]

scorpioncapital, Your considerations are on a wrong basis. In the "Can Berkshire tender stock" topic we've reached the conclusion, that the share buybacks at Berkshire are not based on safe harbour rules, because Mr. Buffett & Mr. Munger want to buy back shares in an opportunistic way. Thus, Berkshire can't buy back shares in four silent periods during each year, which leaves only about 8 months left to execute share buybacks.