dealraker

...as I wrote a while back. Next obsession is... ...what Greg said.

I'd be willing to trade my $8,500 dollars for one Bitcoin if I can get access to that BTC today and be able to sell it tomorrow morning...but it would have to be very early in the morning tomorrow. If I can not get the one BTC today, if I have to wait 5 years for access, then I'll give you $250 for it. Adoption is not relevant to that decision for me.

rkbabang you are quite free I'd suspect to begin pricing everything you own, particularly your stocks, in crypto at any time you want. Rather than an endless verbal or in print delivery to others of complex variables that are certain to occur to ramp up whatever crypto you choose...that is always based on the assumption of the ever worthless crappy dollar...why not just go all in and stop referring at all to the dollar and even further just stop using it at all. I price my stocks in dollars and I'm just about as disinterested in anyone else's price, particularly those making today's or tomorrows daily quotes, as anyone in the history of this planet. That's my nature, and it always has been. You could take that very same belief, and apparently you have such strong belief, over to your crypto of choice.

Love the typical crypto "industry" investor on CNBC this morning, in this case David Rubenstein: "No-no-no...we have no investments in crypto...it is just too complicated...my family has no crypto...we just don't understand it." Interestingly....So then he says, "Crypto is going to be around and people are going to experiment with it...it probably does need regulation...you know these things take about a year for congress to get ahold of...to regulate...and until then there's always some issues with all new things like this." So logic screams in my ear that this guy has something he ain't quite said yet, that he's got game here somewhere - because he's saying he and his family don't have crypto investments because of complexity, yet he's saying crypto is a viable thing that just needs some regulation such that it can skip right on down the road of whatnot. And then...he finally says the obvious-to-come clarification: "We do have investments in the industries that service crypto." And so it goes, the law makers, private $, hedgies...they all got crpto connections. This game, that's the industry survival, is based on ever increasing $ coming in to support or increase the price of those already in....and of course those industries- Rubenstein's private money- "serving" the business. Let the "let's regulate" games begin and let those with the $ in the game make the "regulations" so that the $5k bunch can chant "My $5k will make me endlessly rich- that's a sure $1 mil" - by 2025...or is it 2027 or 28...or whatever...it is a certainty 'cause Cathie said so." The crypto industry, in my view, should NOT be regulated. Regulation by those who are invested will do nothing but extend what will inevitably happen. And nobody knows the when or what will inevitably happen but by then the Rubenstein bunch will be in yet another budding industry anyway. But until then the little lovers will get the living hell beat out of them all while they chant in union: "A 20 PE business that grows at a 8-15% a year is the fed's making and it will collapse from the inevitable destruction of capitalism because of this free money." It's the NEW NEW THING and Michael Lewis has yet another book on the way.

It is and has always been weath transfer and about one and only one thing and that is gaining "dollar" - that's the good ole fashioned Buffett/Munger "fossil" currency. Get the right personality to cult it and off we go. https://www.theatlantic.com/technology/archive/2022/12/cryptocurrency-ftx-collapse-dirty-bubble-media/672440/

For the life of me I'll never understand the chants of "crpto (of some name) will be worth some exponential X (of course in dollars)." If you are a crypto-ist, a believer, then why in living hell do you ever refer to "dollars" --- the ancient analog of 99% dead people like Buffett/Munger. You don't need dollars...right? But they all operate 100% in dollars! DAMN! And they use QuickBooks to run their businesses.

Dinar I really don't follow WR Berkeley any longer but still own the stock.

It was a small amount of his money. I'd forgotten about it actually until a month or so ago Brown fell 11% in one day. He calls me and says, "Damn boy....you screwed me...." We laughed...he has about 20 times his investment. Like Prem's Hub back in the old days, particularly in the mid to late 1990's and even in the Elliott Spitzer days (he attacked the brokers' contingent commissions), the brokers were growing 15% and often selling for less than 10 times free cash flow. Except for my bro-in-law I never succeeded in persuading anyone in the publicly traded stocks investment arena to buy an insurance broker.

While it does read like a tabloid it is an excellent introduction to parts of the insurance business. I enjoyed reading it. Again, something that many don't accept and I get crap all the time about criticisms: You don't have to be giddy uphoric about everything management's do nor do you have to be "all in" or "all out" on something written...like this. It has some really good stuff in it- makes things simple which is too simple yet still helpful.

My next door neighbor owned what I'll term a self-employed agency for Nationwide. Years ago I think they were employees, then captive self-employed agents, then self-employed independent agencies but still mostly wrote the Nationwide policies. Honestly I'm too lazy or disinterested to even know exactly. But anyway it was a family thing...the father lived next door to me and then he transferred the house and business to his son (retired at Myrtle Beach) who was my close friend. This son...we had birthday parties together (one day apart) from age 6 to age 50. At 50 we had two rotating bands on his decks and two on mine, fed 250 people most who came by boats, and cleared it all out by 10 p.m. so's not to get shut down - we'd gone door to door to ok this with all our neighbors. In any even my neighbor and close friend retired a few years ago. Immediately I switched over to another friend who is sporsored by Erie - this is they guy who literally impaled me with such fear - he was so good at this business - that I responded to Gallagher's proposals for a buy-out even given my two partners greatly disagreeing with me. And...guess what? Going with my old competitor I immediately saved almost 50% as to premiums from going with the new insurance company Erie vs Nationwide. Now this year my rates all-of-a-sudden skyrocketed. I'll mess around and switch next year...or I may do the dreaded call saying, "Look, I'm gunna bail on all your stuff if..." Insurance is a great business to be in. You collect in advance of delivering your product. Then when the client wants your product you deliver it slowly, particularly if it is a big claim, and raise your premiums labeling the client as a claim x'er or whatnot. Gotta love pre-pay and slow delivery...the of course the claim x status that goes with that client wherever that client goes. LOL. Anyway Gallagher calls my current insurance guy at least once a month. My current insuance guy has two sons with him in the business and he's checking out to see how good there are- how interested they are- as to whether or not to sell out. He has 60 some agents in house in my town and about the same in other close-by towns. He is knocking it down big time mostly networking with Erie. And so some 20 plus years ago I woke up and dumped a big amount of money for me at the time in Erie Indemnity stock. Oh my...monkey see, monkey do. Braindead finally awoke. I'd watched him for years and thought nothing about it all. Rambling.

I've of course been out of the business for some time and go with whatever company I can...and such. More than once I have cancelled with x or y company knowing I'm lumped in a group that they are up pricing...then get a call from someone from the co I left offering substantially lower premiums. Like everybody else I'm lazy and dislike change thus I let them raise my premiums to a level that I know is higher than new clients. But eventually I get motivated and switch. It is not accurate to say that all companies do this with all clients, but it is accurate to say all companies do this with most clients. Geico is nothing special here, expect this in some fashion as a life script experience that repeats.

LOL. You got lumped into a group whose costs/claims were ramping up so you got the "group" bill (the one where they know X% will stay and X% will leave). Now you start over...to go through the same process all over again. Welcome to a very entry level insurance 101 class.

Dinar, my investment club met last Tuesday. We have 2 insurance brokerage owners/operators in the club and we always at least briefly discuss the business. Yes rates are apparently going up as per what they say or said, but I'm not familiar with precise numbers like 25-50% and I'd have thought that would have been mentioned given the signficance. The years pass and I tend to appreciate owning a lot of AJ Gallagher and Markel. The issue of course is the big "when" to buy and that part is not something I can state that isn't particularly my specialty or frankly anyone else's in the industry that I am aware of. Markel isn't cheap...but should it be? AJ Gallagher is firmly priced and honestly with its history it should be firmly priced, not cheap. But I own all the brokers except Ryan and Goosehead and have no plans to buy either of those--- and am delighted with all the others - Aon, Marsh, Willis, Brown and Brown, and BRP (a new holding). They are all good, I almost added to Willis when it stalled out recently, noticed that Seth Klarman bought precisely when I almost bought...and of course it was a good buy and showed why he is successful. Underwriters/reinsurance is a field I am not all that comfortable with and try to avoid if possible. That said I do own of course Berk and MKL and small stakes in a slew of them such as: Partner; Transatlantic; Arch; WR Berkley; and some other big insurance co's that have some reinsurance divisions. I'll mention something that I've always found interesting: We have had several people in my club in the insurance business over the years, several from the two largest agency/brokers in our area. Basically I can tell you that none of them have ever been interested in investing in the publicly traded stocks of the sector----- as least as per our lengthy discussions through the years.

In recent years, that's the last ten or so, I've bought things like NDAQ, ICE, VMC, MLM, WM, RSG, and PGR about every time the stocks have had run downs. Methodically they gain traction over time and I have more than invested. There are a slew of these type things available, but they are not often anywhere close to cheap. I also generally tend to add to the defense contractors, all of them, in times of stock price declines. As mentioned here recently, which I'd forgotten about, I bought BA and GE for the first time in my life. Same with drug stocks. That's my style. Most are obsessed with beat-the-market while I could care less. I have a hard time believing that Boeing and GE awill sell for less than the high 60's over a long period of time. Just rambling, mentioning that over time this model of investing has had a positive outcome not only for me but for a whole bunch of people I know or have known. Buying some Medtronic today.

Wow! Not even close to anything I have come across before. Looks like a temporary business model geared to send money up the food chain.

Here's a typical first page of a recent Wells report on AJG and they've raise the "target price" to $215. For the record...now for about 20 years I've thought Wells was crazy over-the-top on broker valuations. Turns out ole dealraker was the damn crazy one...didn't know what I've owned for nearly 30 years. Will it continue...LOL? Who the hell knows? Arthur J. Gallagher & Co. (AJG) AJG: Best Broker Outlook; Q3 EPS and Conference Call Roundup Our Call Summary: AJG reported Q3 EPS of $1.72 beating both our estimate of $1.63 and consensus of $1.66. The beat was driven by better results in Brokerage, beating us by $0.04 on lower expenses (the level of margin deterioration was in-line with expectations but AJG restates its prior year margins for FX), and Corporate beating by $0.04 due to a favorable tax item and FX remeasurement gain. FX offset results by $0.02, just below our $0.03. Our 2022, 2023, and 2024 EPS estimates are now $7.77, $9.05 and $10.45 (from $7.66, $9.00 and $10.40). Our new estimates primarily reflect the Q3 beat and higher organic revenue growth. Our price target is now $215 (from $212) based on a 23x multiple of our 2023 EPS estimate and $4.50 per share to its clean energy investments. The shares should get a lift from the quarter, reflective of the company raising its Brokerage outlook for 2023 (to 7-9% organic growth from the prior 6-9%). We reaffirm our Overweight rating. • Organic outlook better for 2023, with the Q3 in-line. In brokerage, AJG reported 7.8% organic growth, in-line with our estimate and the "pushing 8%" that AJG guided to at its September investor meetings. Given the weaker results at BRO, we expect the in-line organic quarter and higher forward guide will be well-received. AJG lost $465,000 of contingents from Hurricane Ian as compared to $19 million for BRO (BRO also expects to not see the $19 million of revenue in 2023). Most impressively, Gallagher is now looking for 7-9% organic growth in 2023 (up from its prior 6-9%) and agreed with us that if the market really hardens they could potentially see double-digit organic growth (about 80% of their Brokerage business is commission based). • Strong growth in all regions. Gallagher saw 9% growth in its U.S. retail business, 15% in the U.K., 9% in Australia/New Zealand and 13% in Canada up 13%, while Benefits was up around 3% (excluding timing), and wholesale was +9%. AJG is now looking for over 9% organic growth in Brokerage for the full year (unchanged from its prior outlook), with over 9% growth in the Q4 (unchanged from the previous guide). In Risk Management, AJG reported +12% organic, better than our 10.0% estimate and guidance for 10%. AJG expects Risk Management organic to be about 10% in Q4 and at least in the high-single digits in 2023. • Margins in line with expectations, with improvement in 2023. Within brokerage, AJG saw margins contract 120 bps, in line with its guide for 125 bps of contraction. Within reinsurance, revenue came in at $120 million, in-line with expectations and Gallagher said the business performing well and generated 8% organic growth in the quarter (above 7% in Q2 and in-line with the Q1). Risk Management EBITDAC margin was 18.2%, close to its 18-18.5% guide (which was impacted by a new client ramp-up) and Gallagher is looking for a 19% margin in 2023. Within Brokerage AJG said that at 6% organic they should see 50 basis points of margin expansion and pointed to the potential incremental margin from higher fiduciary investment income as coming on top of that. • Robust M&A pipeline. Gallagher has more than 50 term sheets with nearly $400 million of revenue, unchanged from its September investor meeting. Further, they reiterated that they think they will have more than $4 billion of cash to use for M&A through 2023 without issuing stock and did say that if deals do not materialize they could end up buying back their shares. Our sense is they will wait to see how the pipeline develops as higher interest rates could potentially cause PE interest in the group to wane. Equity Analyst(s) Elyse Greenspan, CFA Equity Analyst | Wells Fargo Securities, LLC Matthew Byrnes, CFA Associate Equity Analyst | Wells Fargo Securities, LLC Wesley Carmichael, CFA Associate Equity Analyst | Wells Fargo Securities, LLC Hristian Getsov Associate Equity Analyst | Wells Fargo Securities, LLC

Thanks Spek...I actually think I've read that presentation before. There's another odd player called Ryan Specialty, RYAN. As of yet I've not investigated that business. I have owned Erie Indemnity for some time now, many years. What a business model! Very different. ERIE. Valuation? I don't get there, but others obviously do.

tnathan I'm not aware of any thesis on Goosehead but I'll post any I see. I think Wells was covering them and will follow up when I can.

While we are on the railroads keep in mind that rather than cap ex UNP, CSX, and NSC have endebted themselves buying back stock. Check the stock proce buy-backs for more clarity on all of this outlay of cash. My guess is Warren Buffett isn't impressed watching the Harrison model.

Railways are truly long term anti-fragile. Railroads may have times of trouble. My view is that the over-the-top Hunter Harrison efficiency model that the railroads (all but Burlington) have implemented have brought forward quickly most of the gains that would have been gotten in the future. At present my view is that the railroads are understaffed and have employment policies that are so awful change is inevitable. I do find it so interesting that Harrison, the chain smoking cut-and-cut guy, came to CSX after his stints in Canada and did the axe job fast and furious. Along the way he began the fast track to being out-of-here and ended up working almost none whatsoever at CSX. All while getting hundreds of millions in compensation. So once again, Harrison stood for precisely what he wasn't and he became yet another classic example of wealth transfer vs wealth build. Over time CSX would have, or could have, gotten all the gains a tad slower giving more respect to both customers and employees. We'll see how this goes. My guess is the same as it has been for years: UNP, CSX, and NSC have not done as well - if you are a long term investor - as it appears that they have. We shall see. Most use short term stock prices as proof of their belief. I tend to use long term stock prices as proof of belief. Long term is long term, not short term. We haven't seen the long term result of all this efficiency obsession yet. Note that Berkshire/Burlington did not do this model.

I'll post the new Wells insurance broker updates when it becomes available as I can't find and access the last report. The thing that sort of stands out is that entities like Morninstar continuously rate all the insurance brokers as over-valued, significantly so. This is while Wells states otherwise. For decades now Wells has been correct. I'll update later.

I might add that in cases like mine there's a difference as to being a long term diversified investor in stocks vs an index. At this point my portfolio is 75% AJ Gallagher and Berkshire. If you add in Erie Indemnity, Markel and Norfolk Southern that's 83%. All of the above with the exception of Gallagher which began with a $500k (rounding on all these figures for clarity) merger value - that was my 50.1% of our business- all were very small initial investments. Berkshire started at $3500, Markel was a $10k start, Norfolk was less than $3,000 and so forth. Erie was larger but I can't remember that at the moment. All made in certificate form now in street name so I have to imput the basis if sold which I haven't done. The largest investment I have ever made initially with the exception of AJG is a recent one into JOE (St. Joe). But I haven't made investments with the exception of energy in some time - except a tad more of Meta at $96 or so. Rambling.

It probably would be close to accurate to say that I'm the least confident of anyone posting here as to which businesses are best for the long term. I've held the stocks I inherited in 1975 but never added a dime to any of them - I've bought other stocks and a bunch of them. Some have been of course great long term investments but I have no credit as to knowing with the exception of knowing enough to know not to sell- to diverify. Although I'm far more experienced and knowledgable than most I chose the model that fails to fail rather than one of outperforming the market as most try to do. I got lucky with AJ Gallagher, choosing the merge was my wifes suggestion. The rest is just passive observation. I am however overall a very disciplined value buyer, a successful one. I often mention Greg and Parsad here and that's because they have strong opinons as to what they do and the eventual outcome. I sort of live vicariously through these posts which I enjoy reading. I've tried to write this correctly. Often after re-reading a post I've made it comes out saying something I didn't intend.

gfp I follow Wells Fargo on the brokers because they do a good job covering them in my view --- for a long time now. Their view for several years now is that AJ Gallagher is both likely the better perfoming business and stock. I'll try to gain access to some Wells (I just looked and couldn't find their last summary) stuff and pass it along. Brown, I think, bought some UK brokers and had nice revenue growth but expenses were far higher than expected and I think that's was the stock price problem. But again not certain but I think I read that at the time. I once was asked by my bro-in-law to "manage" some of his money. I just put 100% of it in Brown and Brown (it was Poe and Brown then) because the stock was selling at 12 times free cash flow and growing earnings at 15% a year. Oh my...wish those days would return! Wells follows: AJ Gallagher Aon Marsh McLennan Brown and Brown Willis Towers Watson BRP Ryan Specialty Goosehead I've owned Gallagher for 28 years and Aon, Marsh, Willis (the predecessor got me there), and Brown for 25 years. Just bought BRP when the price plummeted for some reason down around $15. Other than what Wells reports I know nothing about them. I know nothing about Goosehead except the stock price which is fascinating. For your humor BB&T, now Truist, has a insurance broker sub best known for paying dearly for acquisions. There are still many large private insurance brokers including the one Prem and Fairfax once owned 40% of called Hub International. I'll never forgive Prem for selling this business (being seriously silly saying this) as I'll bet its performance since he sold it (and I had to give up my shares) has easily been 18% annual returns. DAMN! But Hub was constantly selling for less than ten times earnings back then when Fairfax owned so much of it....all while growing 15% a year. The "old" days were fine wine. I'll look for the Wells stuff and post some things when I can find them.

Of course it is a dying industry...I'm guessing Mr. Buffett knows well. But contrary to popular belief maybe, just maybe, the electric car would have progressed without psycho man and that industry too will return to the norm whatever that may be. Tobacco headwinds and all the rest...and even the eyeball industry headwind which includes basically every single stock obsessed about in the world while one or so businesses have a market cap that mandates perfection of moat defense. Limits everywhere along with expertise of prediction. Me? I just play the game in, as I've said, the dumbed down mode. "Berkshire" is on this board's name and there's somewhat of a connection, a rather large one, to this industry.