bizaro86

Thanks Cardboard! It has definitely been rare, so must imply a relatively strong disagreement, imo.

Thanks for sharing this data. To use this data in a business context. This company( team) has a lot of assets that aren't earning a return. A activist would salivate to take control of this company and increase the earning power of the business. So this company (team) is a cigar butt. Time is its enemy. Except the assets that aren't earning have a hard catalyst (the draft) when they will convert into valuable players. I think a better analogy is a company that had done a bunch of capital spending on something (new plant, real estate development whatever) that hasn't started earning yet.

Is that the first time BRK has publicly said they are voting against management? I can't think of another... I guess WEB replaced people at Solomon, but that wasn't quite the same thing.

I agree this is a key question, and one you should evaluate with a RE lawyer in whatever jurisdiction this is in.

I would consider buying this if I had leasehold registered on the title and control of the property. I would also want to be sure the property could be leased to someone else for a comparable rent. I would probably want a 10% IRR though.

The utilities are also separate entities. So theoretically if one region had something catastrophic happen (and I think a regulatory catastrophe is more likely than a physical catastrophe) they could always jettison one of them. IE if Nevada decides that utilities can't recover their capital or something, (and BHE loses the resulting lawsuits...) they would still have Iowa, or vice-versa.

Thanks cigarbutt! I agree BH is a special case, as for most insurers I think looking at the firm wide roe would suffice. That table in the link is a great one, as it indicates that float and cash/bonds have been roughly equal. If you assume the float funds the least risky assets, that means equity is nearly all invested in equities and subsidiaries, aside from a small cash buffer that the operating businesses probably need. I agree money is fungible, but do think it makes sense to mentally assign the float to the lowest risk assets since it is money that the firm is holding for its clients. So while I still think a theoretical adjustment makes sense, given the facts it isn't necessary for BH, imo. That might be one of the advantages of the BH structure, as I suspect given their balance sheet strength they get more leeway on cash balances than others might.

Not a firm wide measure for BH, more like insurance subsidiary wide. I'm not totally sure how to calculate it, and I just thought of this idea while I was reading the thread, so I don't have it totally fleshed out. I think it is fair to say that BH carries more cash and bonds than it otherwise would if it didn't write a bunch of insurance. To the extent that any of that is funded by equity, suboptimal returns on that equity should be included when valuing the float, imo, because those suboptimal returns are part of the cost of using that float. I was thinking about it more on a theoretical level, and BH may have enough equity in subsidiaries that they are only using float to fund the cash/bonds necessary to run an insurance subsidiary.

I'm not a CAPM guy, although you could go that way. I'd probably use what I think their equity portfolio will return over a long period of time, ~8-10% or so. That's an interest point. If you count just what is in the insurance businesses I guess the equity is 258B (cash and investments) - 114B (float) - X (other liabilities)? I'm also not sure what you would pick for the cost of equity.

One other factor that should be considered imo is the equity used to support the float. If you don't think that's a real cost just call up your states insurance regulator and say you want to write $1 BB in P&C policies and since you expect a positive underwriting ratio you don't want to put up any equity... I think the cost of float probably needs to account for the cost of any equity being held in lower risk lower return vehicles that supports the float. I'd suggest something like equity required × (cost of equity - risk free rate) needs to get added to the cost.

Is your broker one of the big banks? While the industry funds mentioned would be sunk if one of the big banks brokers went under, I think it's a virtual certainty that the govt would consider all 5 too big too fail and would cover client losses in that unlikely event.

Appears to be sold out now, too bad!

In the financial markets the clearing houses provide this service effectively and pretty cheaply. Is the argument it replace them (why fix something that isn't broken) or that it will provide a similar escrow type service elsewhere. Out of curiosity, how many transactions have you (either personally or professionally) ever not completed because of lack of escrow or unacceptably high cost?

How did the Costco trade work out for you? I bought a relatively large COST stock position during the event you mention (also Target). I've sold Target and am keeping Costco. I've been pretty happy with the results, but am curious what type of returns you got on the LEAPs. My biggest concern is that felt like a pretty low downside trade to me, so I put it on in size. I would have sized it smaller with options, and wonder if I'd end up making less money ...

That's a good point. However, for Lotto Max specifically, I have checked it in retrospect enough times that I'm reasonably confident the expected value does end up positive, and that is partially for psychological reasons as more tickets are not necessarily sold as the pot goes up, because the headline jackpot stops changing. The way Lotto Max works is the jackpot reaches a maximum, and then they keep adding additional $1 MM prize jackpot draws as more is wagered. I think that reduces additional players. The expected value is very sensitive to sharing the big jackpot (usually $60 MM). I think it's interesting, but cheerfully admit its totally useless information. You'd need to buy tens of millions of tickets to ensure winning, and if you bought too many that would change the expected value as you mention. And that's aside from finding tens of millions of dollars to wager and being able to physically buy that many tickets.

Any lottery game that carries forward prizes should eventually reach positive expected value. That happens once in awhile on the lotto max lottery game in Canada, where the expected value of a ticket exceeds it's cost because of jackpot rollover. However, almost all the expected value is in the jackpot, so to capture the value you'd need to buy tens of millions of tickets, which is a logistical problem.

@John H, just venting... frustrating to me to see someone get an opportunity like that (multi hour interview) and use it so poorly. I read the whole thing...

If anyone has a copy of the transcript with Kernan edited out, that would be much appreciated. Man he is terrible.

I like Ferrero, hadn't thought of that. Anther good place to put a bunch of capital would be airplane leasing, although I'm not sure if anyone is cheap in the space. I came to post DIS and saw someone had. Perfect for BRK. Big media Co, brings cap cities back in the fold. Some of his biggest wins ever (KO) have been big cap "obvious" growth companies on the verge of a change in business model/stepchange in profits. For KO it was international, for DIS it is building a huge international streaming business out of their/fox back catalogue. Plus, DIS is capital constrained. You could put the cash flow from BRK to work building cruise ships, parks, resorts and hotels. The fact they haven't built a new Disney Vacation Club in California for 11 years, is one example of that. (I know they finally have one planned...)

Where are you shorting this? No availability at IB? Do the Canadian brokers have it available?

I have a relative who mapped agricultural exports to Canada by congressional district for the government of Canada. I can only think of one reason they'd want that, especially since the next request was an analysis of which seats were the least safe for incumbents...

I also think if article's about long term underperformance and no catalysts are coming out, the relative value in Canada is probably pretty good.

Shut in of oilsands producers wouldn't be possible, imo. What might be would be a restriction on the TCPL Nova system coming into AB from BC. Cut BC nat gad production, which will hurt station 2 pricing and kill BC royalties, while helping AECO gas prices in Alberta.

Decency vs indecency is a good metric, but so is logic. And it would be farcical to expect the US to import coal from China, so the idea that anyone with it enough to become rich would spend money promoting that idea seems pretty unlikely to me.

DREAM solves the liquidity crunch. They are now very net cash at the holdco and have virtually no recourse debt. There's no liquidity crunch - just a question mark over whether you really want these guys allocating that cash. Judging by the carrying value vs. cost of the investment and equity-accounted portfolios as of q3 they are very good at buying high. I would value a stack of hundreds in my safe deposit box at face value. I would value a stack of hundreds a crazy guy had lit on fire at zero, even if they theoretically belonged to me. I'm not totally sure where Dundee fits on the scale, but their record is pretty bad on some of this stuff. That being said, they do have $2 in retained earnings for every $1 in capital raised. If they would stick to building and selling financial services businesses instead of investing in speculative nonsense this would probably be a great investment.