link01

first of all, thanks dcollon & mpauls for the spreadsheets! with regard to the medias' assumming berkshire is ALL buy & hold, you need only look at brk's realized gains over the years to see the fallacy of that! the media likes to trot out web's famous saying, "my favorite holding period is forever". what they fail to see or mention is that the key word in that oft-quoted bit is 'favorite'. high ROE co's with moats are his preferred investment choice, at a reasonable price, but they are often not available in the size WEB requires for long stretches of time. sometimes investments become available that dont meet his ctriteria of 'favorite', but are simply mispriced. he has frequently bought many of those falling in that category, & when the price to value gap closes WEB sells.

1.4 mil shares were sold in a block trade in the last couple of minutes before the close.

that's explosive, heady stuff. mark mitchell is doing a a great job in this instance, so far, of tieing together the tangled strands of this big, ugly medusa's head in our midst...in a clear, simple way that maybe even the regulators & politicians could understand.

pimco has some of the best macro-economic commentary on its wesite going, esp by gross & el-erian. some day i'm going to break down & purchase a couple of their books. any recommendations? i love the way this article ends: <<AT a lunchtime meeting this past spring at Pimco, executives tell Mr. Gross that they’re worried about the fallout the firm will face if it receives a financial windfall as part of P.P.I.P. “The risk is that you have a Congress with a populist bug,” Mr. McCulley says. Dan Ivascyn, another of the firm’s managing directors, agrees. “I think there is a risk that we’re going to get criticized,” he says. “I think Pimco could get roughed up.” “I think there is a much bigger chance of us getting roughed up personally,” says Scott Simon, head of Pimco’s mortgage-backed securities team. Finally, Mr. Gross weighs in. “So what are you saying?” he asks. “If we fail, we’ll get the shaft, and if we succeed, we’ll get the shaft?” >> yup, its a sign of the times.

if nothing else patrick byrne backs up his convictions with uncompromising energy & courage. for that reason alone i find much to admire in him. in general, tho, i think he & his friends strain too hard to connect all the dots too neatly, in too fine a detail. i get the sense that many of the characters he cites rub elbows, exchange ideas, & share a mindset, which leads to systemic abuse in many cases, but dont necessarily huddle together to plot coordinated raids. quixotic quest or not i wish him success....there's a large grain of truth in what he fights for.

i'm curious: what's you're interest in carl icahn? do you consider him to be someone whose investing style you'd like to emulate? his thinking someone's you'd like to study? also, do you consider him to be an exemplary example of an activist investor? to me he just looks like a reconstituted LBO, corporate raider type who i woulnt touch with a 10 ft stick. but i'd also be interested to read any of his letters to investors.

i agree with vinod. although using book val as a proxy for intrinsic val is an admittedly very imperfect method when dealing with a collection high ROE businesses, its still a decent simplistic measure. and an investor has to then decide for themselves whether or not book val overststes or understates intrinsic val. looking at annualized the earnings increases in brk's non inisurance ops over the last 10 yrs, i think brk's intrinsic val has increased more. that said, i am no longer a big owner of brk like i had been for many yrs in the past...its just simple math...its gotten too big. never the less, i dont know how these no.'s can fail to impress: <<Annual Percentage Change in Per-Share in S&P 500 Book Value of with Dividends Relative Berkshire Included Results Year (1) (2) (1)-(2) 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 28.7 (7.7) 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 10.9 (.4) 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 4.9 1.5 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.4 15.8 2.6 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 5.5 5.5 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.6) (37.0) 27.4 The following tables illustrate this shift. In the first we tabulate per-share investments at 14-year intervals. We exclude those applicable to minority interests. Year Per-Share Investments Years Compounded Annual Gain in Per-Share Investments 1965 $ 4 1979 577 1965-1979 42.8% 1993 13,961 1979-1993 25.6% 2007 90,343 1993-2007 14.3% For the entire 42 years, our compounded annual gain in per-share investments was 27.1%. But the trend has been downward as we increasingly used our available funds to buy operating businesses. Here’s the record on how earnings of our non-insurance businesses have grown, again on a pershare basis and after applicable minority interests. Year Per Share Pre-Tax Earnings Years Compounded Annual Gain in Per- Share Pre-Tax Earnings 1965 $ 4 1979 18 1965-1979 11.1% 1993 212 1979-1993 19.1% 2007 4,093 1993-2007 23.5% For the entire period, the compounded annual gain was 17.8%, with gains accelerating as our focus shifted.>>

didnt buffett say something very similar regarding the perverse asymetry inherent in cds? i thing they are both spot on with their views.

very relevant, thanks very much!!

from htrends.com: <<Restaurant Trends - Growing And Emerging Concepts - Data reflects change and activity from January 19, 2009 to May 19, 2009>> <<Indianapolis, IN-based STEAK N SHAKE (founded 1934) has increased by 4 units, from 490 to 494 (1% growth). These quick serve burger restaurants are open for breakfast, lunch and dinner hours, with a $3-$8 per person check average. Seating is for about 70. Trading areas are AL, AR, FL, GA, IA, IL, IN, KS, KY, MI, MO, MS, NC, OH, OK, PA, SC, TN, TX, WI, and WV. Between 10% and 20% of the units are franchised>> http://www.htrends.com/article38988.html guess we'll have to wait until the 08 shareholders letter to find out, tho i have no idea when its due to come out.

that was a very nice tribute, sanj. somehow i think she knew how much you cared for & appreciated her.

thanx for passing on those agm notes...terrific job. i sold out of luk last year after more than 12 yrs as a shareholder, mainly because of some of the issues c&s talk about needing correction: lack of solid op businesses, high cost debt financing passive investments, large sums of money with questionable 3rd party asset mangers. now that they are re-thinking these things they are begining to look interesting again, tho i doubt as much so in the future as they did in the past.

hmmmm, a little disappointed by this attitude re the stock buybacks. whta's wrong with letting cash accumulate on the bal sheet til quantifiably 'good' investment opportunities reveal themselves? i do like this comment by lampert tho: <<Other points, they have reorganized into 26 or 28 operating business units, each with their own P&L, so that the pricing is transparent and people start to make decisions that are based on profit instead of previously, where the merchants only made decisions based on increasing sales. Called the previous system a "socialist" system, where everyone runs as slowly as the slowest runner. Have attracted a lot of new talent lately (half the business unit leaders are new in the last year). Whether this is good or not remains to be seen...seems like they have a retention issue (my observation, not Lampert's comment).>> thnx for the annnual meeting notes, snailslug.

thnx, partner. i might have missed this otherwise (and i'm glad i didnt).

doug kass links to these 10 questions for buffett at matthews "i'm not making this up" blog. personally, i find most of the questions posed range from lame to outright accusatory. what's more, i think the anwers are either fairly self-evident to most careful readers of brk's annual reports & transcripts of meetings & interviews, or they have already been addressed by web before via same. http://jeffmatthewsisnotmakingthisup.blogspot.com/2009/04/what-they-want-to-know-our-top-ten-list.html "The Top Ten Questions We’d Like to Hear at the Berkshire Annual Meeting #1 To what extent does Berkshire's reinsurance business rely on Ajit Jain and is there currently another individual in the division capable of replacing Mr. Jain? #2 Why not either sell the Moody’s position entirely since the franchise value and moat are severely and possibly permanently impaired (redeploying capital into more attractive investments that no doubt exist); or buy Moody’s entirely and use the Buffett/Berkshire reputation to entirely revamp Moody’s into a highly valuable business again? Berkshire may be one of the only franchises that could install the integrity needed to turn around the ratings agencies. #3 Washington Post went from being a local paper to a national paper to a learning company. Wells Fargo went from being a conservative bank to a highly leveraged mortgage lender. Moody's went from being a boring ratings agency to a co-conspirator in the mortgage bubble. How do you justify holding stocks “forever” when the original investment eventually becomes unrecognizable in most cases? #4 You said in your letter the United States' best days lie ahead of it. Upon what do you base that statement: economic data, natural optimism, political pressure, or wishful thinking? #5 Isn't there significantly more risk than what you are suggesting in your sale of long-dated index puts? If one had sold puts on the Dow from 1927 to 1929 (during the run up, a period similar to when Berkshire sold their options), 15 years later, the market was down from an average of say 300 on the DJIA to approximately 140 a loss of a little over 50%. And if one had reinvested the premium in the market, one would have lost 50% of that. So the cheap financing ( less than 1%) does not end up being cheap. Finally, isn't there a risk of doubling down on the stock market as most of Berkshire's business returns are tied to returns in the stock market? #6 You’ve written See’s Candies’ beauty rests in the minimal incremental tangible capital required to grow profits. Recently, you’ve expressed excitement for Berkshire’s investments in utilities, insurance and railroads – capital intensive industries potentially facing massive inflation. Can you reconcile these contrasting viewpoints? #7 What factors, if any, would cause you to change your favorite holding period from “forever” to “sometime in the future” when thinking about the challenges your businesses face? #8 On Conoco, it seems Berkshire made the uncharacteristic move of buying an asset with a price chart that went straight up, rather straight down. Please explain the decision making process on Conoco and what you learned from this admitted mistake. #9 Being a major shareholder in Moody's, why didn't Mr. Buffett play a more active role in urging Moody's to change its rating process and save it from disrepute? #10 How do you sleep at night knowing you sacrificed Ron Furgeson [sic; it is spelled Ferguson] to avoid your own responsibility with the General Re/AIG crime? Jeff Matthews I Am Not Making This Up"

i've often wondered lately if buffett considered jpm an equal peer of wfc & why he's apparently never bought any stock in dimon's well run bank. the answer according to this article is that web thinks wells is in a class by itself among the big banks, not withstanding all dimon's talk about a fortress balance sheet & a higher tangible equity ratio than wells has. nor the fact that jamie perhaps talks more eloquently (certainly more frequently & in depth) than either stumpf or kovacevich do: "How is Wells differentiated from the banks you own and the ones you don't? Wells just has a whole different attitude. That's why Kovacevich calls them retail stores. He doesn't even like the word banking. I mean, he is looking to have a maximum enduring relationship with many, many millions of people. Tens of millions. And at the base of it involves getting money in very cheap. When you do that that's a helluva start in the business. The difference between getting your money at 1-1/2 % and 2-1/2% on a trillion-dollar asset base is $10 billion a year. It's hard to overemphasize that. He thinks more like Sam Walton than he thinks like J.P. Morgan. I'm talking about the individual there. He's a retailer. He's not trying to influence Washington or be the most important guy on the scene or anything like that." some good if simple stuff here....classic web! http://money.cnn.com/2009/04/19/news/companies/lashinsky_buffett.fortune/index.htm

those letters are a very good read, thnx. i'm bookmarking them now. too bad plymouth rock isnt a public co.

this is absolute lunacy! i dont know what's worse: the rating agencies' decade long slumber thru the bubblefication of housing & credit, or their clueless attempt at a majorly symbolic mea culpa now.

you're welcome, ragu. it looks like the wood grill buffett concept is our best bet for growth, tho we must excercise caution in extrapulating from just a few months of sales trends. even the western sizzlin express restuarant came out of the gate on fire but petered out in less than 6 months.

another "tail wagging the dog" phenomena that packer referred to might be the proliferation of the leveraged short etf's. eric oberg an ex goldman sachs alumni has been wriiting a series of articles about these for a while. his latest: "UltraShorts and the Fall of the Uptick Rule had mentioned in one of my early articles on levered short-side ETFs that I thought it would be tough to reinstate the uptick rule with these products outstanding. I never really thought much more about it beyond that one fleeting sentence. Revisiting the thought now, though, I wonder if the massive proliferation of these vehicles would have ever been possible had the uptick rule not been eliminated to begin with. (Don't miss "Uptick Rule: Meaningful or Meaningless?") This week [Feb. 23-27] on "Mad Money," Jim Cramer showed a clip of Fed Chairman Ben Bernanke's Humphrey-Hawkins testimony. Bernanke said that, if asked, he would advise SEC Chair Mary Schapiro that there may be merit to the concept of bringing back the uptick rule. While the clip aired, a line flashed across the screen stating that the uptick rule was eliminated in 2007. That got me thinking a little bit about the timing -- I frankly couldn't believe the uptick rule had only been gone for less than two years. Please note, I am not a conspiracy theorist at all, but I was interested in reconstructing the time frame around the growth in levered and short-side ETFs and the elimination if the uptick rule. ProShares, "the world's largest provider of short and leveraged funds," launched its first Ultra Funds (two times levered) and Short Funds in June of 2006. In July of 2006, it launched its first UltraShort (two times levered short) funds. These initial funds were based on broad indices -- the Dow Jones Industrial Average, the S&P 500, the Nasdaq 100 and the S&P Mid Cap 400. All of these indices had active futures markets at that time, which made the hedging of these products relatively easy, and such hedging would create minimal market disruption. Then in January and February 2007, ProShares expanded its product offerings to include Ultra/Short/UltraShort Funds based on the Russell 2000, the Russell 1000 Value and 1000 Growth, the S&P Small Cap 600 and a few other broad indices, most of which had futures or could have been hedged using a simple beta in relation to the futures contracts. ProShares also launched a series of Ultra/Short/UltraShort products on 11 specific sectors that did not have active futures contracts and would have been much more difficult to hedge using a simple beta vs. a broad index future...." rest of the article here: http://www.thestreet.com/_rms/s/ultrashorts-and-the-fall-of-the-uptick-rule/university/etf/10467076.html

i'm curious to try them out too but they dont have them in my neck of the woods. interestingly, per wests 2006 10k the wood grill buffet JV opened on dec 6, 2006 & showed a loss of $321,805 after just 1 month of operation. the 2 new wood grills in CA will also have been operational for about a month in 2008. i wonder if we can extrapolate an approximate $321,805 x 2 or 640k loss on the 2 new ones for the 4th qtr of 08? regardless, if these are any where near as successful as the harrisburg VA one they will shine in 09.

"About six months ago a new restaurant opened up by us called the "Wood Grill Buffet". I've always wanted to go try it out, but every time the line was out the door so I never had the patience to try it. Well tonight we decided to go for it and man oh MAN I haven't eaten so good in a long time. This place is sort of like a "Hometown Buffet" except the food tastes good and you don't get diarrhea afterwords. Tonight I ate the following: • three steaks (prob. like 6oz each) smothered in grilled mushrooms that melted in my mouth • About 20 jumbo shrimp (the BEST shrimp i've had in awhile..these aren't "buffet" shrimp, these are like, "red lobster" shrimp. • A couple chicken strips just to try them (also fantastic) • "cheezy potato casserole" also delicious • to top it off, a slice of cheesecake. I know I'm going to have a heart attack at 29, lay off! In addition to all the above, they also had pot-roast, chicken, cooked just about every which way you can imagine, a taco bar with real carnitas, I mean, this place was FANTASTIC! none of it tasted like "buffet" food. Everything was completely fresh and of the utmost quality. The people there were also higher-class, I was surprised. Not to disparage the "Hometown Buffet" goers, but I get the feeling there are a lot of nascar fans around me when I'm eating with my grandparents there. But this place seems to be the kind of place you take a date or your family when it's somebody's birthday...about the caliber of Red Lobster, I'd say. Collar not required, but you might feel more comfortable wearing one. I found this juxtaposition of "buffet" and "Nice dining" (won't go so far as to call it "fine" dining, but it is higher-end) to be fascinating. We actually stood out in the cold for 30 minutes to wait for our table to open up, and we weren't sorry for a minute that we did. This place is either going to A) spread like wildfire and be the best thing since sliced bread or B) go bankrupt because they spend so much on high-quality ingredients and preparations. I sure hope it's option A. By the judge of the line out the door every night, I think it will be something to keep your eye open for. Remember you heard it here first. Right now there are only four franchises open in the US, and my little town of Hesperia happens to be one of them. Oh i forgot to mention pricing. it's $12.95 per person including drink. For the food you get, it's worth every penny. Actually it's worth quite a bit more." http://www.euphoricarythmia.com/showthread.php?t=24457 anaecdotal, but nice to see none the less. i wonder how quickly these new restaurants gain traction on the bottom line?

i cant wait to see how wfc plays out & whether web continues to buy it....or not. and i wonder what he makes of wfc's wachovia acquisition? they got it cheap, but was it cheap enough? they get to book some huge tax losses but will that compensate for the risk of even greater future writedowns, particularly wachovias derivative book? interesting discussion from tom brown (wow, like bill miller, has he ever fallen from grace!) vs nuriel roubini, including some of the comments: http://seekingalpha.com/article/123298-dr-doom-responds-on-wells-fargo?source=article_sb_popular

thnx for that link. i have a morningstar subscription, but i dont comb thru it every day so i may have missed this. havent read all the letters but one that has stood out so far is paul mcCaullys of pimco. those guys, particularly gross, el-erian, & mccaully are terrific. http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2009/GCB+February+2009+McCulley+Saving+Capitalistic+Banking.htm

kass MAY buy it for a quick pop. he frequently layers his so called fundamentally based theme trades with shorter term (sometimes intraday) setiment based counter trades. but i doubt he will sing mea culpa anytime soon on web & berkshire. i think he REALLY believes warren has lost the mojo & that berkshire is doomed to sub-par long term returns stemming from an out-moded buy & hold mentality. as he has so often gloated: its a traders paradise & an investors hell. and if kass doesnt really believe that then HE'S got some explaining to do, because he has been banging on that drum relentlessly, with the beautific fervor of a man who has seen the light, & believes himself to be its shining example. in his recent writings he has painted web as a man who has lost the light. as a trader i know kass can turn on a dime & go long that which he was short, and visa versa, but i doubt the same is true of his very public pronouncements that web is a has been.