RadMan24

The Legend's investment process is right up this board's alley: Edit: Adding part 2:

Another way to look at this -- they converted their long duration bond portfolio into a set of income producing real assets at BHE and BNSF. The yields are better and the risks are better than long duration bonds at this point in the bond market cycle. Further, based on Christopher Bloomstran's deep dive, they used the accelerated depreciation credits at BHE and BNSF as a secondary method of reducing tax payments and increasing cashflows. As well, based on Brooklyn Investor's charts, they have built up a large cash component in their portfolio to backstop insurance losses and to provide optionality for opportunistic acquisitions. This is not all black and white but the big asset allocation shift of the last ten years (see attached) has been the movement of funds from longer term fixed income to cash and equivalents. This movement raises two questions (the indirect one raised by wabuffo and a direct one). The indirect (and retrospective) one: Returns would have been better if the longer term fixed income portion would have grown proportionally to float. The direct one: Does the current (and growing) allocation offer potentially significant optionality value? (my answer is yes) Part of the decision in shifting from bonds to other assets (cash, owned income producing assets) is about expected future returns. The move seems correct, but the unexpected happened during the recent COVID panic -- government became a lender of first resort where normally Berkshire would have had its pick of distressed assets. A similar crossroads is appearing now for Berkshire. AAPL is starting to flatline in terms of its EBIT growth and topline sales growth, but it's priced for some large expectations out of the business. Does Berkshire exit, partially exit or hold due to the expected tax hit? In 1998, Berkshire was facing a similar question with very sizable paper gains in Coca Cola, Gillette and American Express in particular. Berkshire had an out where they turned a ~3x BV share price into General Re with a merger where they acquired a substantial amount of float and a bond-heavy portfolio that they turned into cash. So, giving up a bit of equity to acquire a cashable asset was enough to de-risk an overvalued portfolio without incurring a very sizable capital gains hit from selling KO, G or AXP. Do they interrupt compounding at lower rates going forward and take the sizable capital gains tax hit? History says no, but the new answer may be something creative just like the last time. IIRC he has said not selling KO at the peak was a mistake. I think he is an expert at learning from mistakes. Maybe a swap for like the deal they did with Graham holdings somehow? This was brought up when Apple was trading at $120. Apple is good as any investment at this point. If the market crashes and opportunities arise, he's got $100 plus billion to work with to make ample returns.

NVGS - Navigator Gas. I wouldn't be surprised if it trades closer to book value or around $17 a share in next year or two if earnings come in at or above 2015 records The catalysts are beginning to accumulate: Ethylene Terminal fully operational (50% interest) Ethane/Ethylene shipments to benefit from first year of Luna pool Handy-size and midsize shipping rates firming due to increasing utilization Two Handysize-only terminals become operational in 2021 (NJ and Canada) Risks: No global growth, or lackluster growth Delays or disruptions in ethane/ethylene/NGL projects Spikes in bunker fuel cost not offset by rates Spike in handy/midsize order book (~2 year build rate, order book currently clean) Toss-Up: Venezuela sanction relief

Steelers.

Are you sure Buffett sold Apple or did one of his lieutenants sell out of his Apple position?

Explain Sweden. Thanks.

The difference between COBF and the major social media platforms like Instagram and TikTok is that COBF was not deliberately designed in consultation with behavioral scientists and UI experts to target your brain's reward circuitry. There are no strategically utilized flashing lights, bright colors, pop-up notifications, or "likes" on the site; there's no employment of peer pressure to create network effects ("Friend X joined!"), and most importantly, there are no algorithms working over millions and millions of iterations to identify the types of posts that will keep you hooked. The difference between COBF and Instagram/TikTok is the difference between an ice cream shop and a heroin dealer. I see Jurgis' points, and some of the exaggerations of AI and social media are quite high - there are other factors like globalization and the lack of appropriate safety nets that have led to populism rising again - but forums are old school Internet - it can get heated, debates go on and on, and some forums do tend to self-identify for certain beliefs or products, what have you. But that's reasonable, imo. The flip side is CoBF, after I read/publish a post, is not recommending another post or topic that is directly or similar in nature to be read next, creating a rabbit hole effect. If I just debated Tesla, there's no message or webpage after my post that continues the topic to keep me glued. Rather, I'm shown the home screen and the newest post could be a tpoic about Kellogg and I lose interest and move on.

With all do respect, this board is a tool that is available for people to utilize as they wish. There's no different homepage, news feed, story line, etc - its the same for each user. The documentary was typically spot on in that there's absolutely no regulation on how our data is managed, and they take no responsibility for who uses the platform to advance their own interests, as long as they "play by the rules and pay up." The COVID pandemic has resulted in millions of people reuniting with the outdoors, going on adventures, and spending time with loved ones. The flipside is divorce rates, domestic violence, anxiety and depression are also way up. Social media brings some positive things to it as well, but the spready between the positive and negative extremes is too much and it needs to be refined.

The biggest sign I've seen of late, which hit me hard in the past (CB&I), was when there's a conference call about new "bad" information, that is "brushed off" and disclosure in the 10Q is much worse than it was made to be. Sell immediately lol. Further, if that doesn't confirm it, when the CEO sells the vast majority of his shares a few months later - don't be stuck holding the bag. It's not a good feeling knowing your intuition was right but you thought it would be a one-over.

so this makes intuitive sense, but in 2005 (Katrina Rita Wilma), the last really bad season, Berkshire was flat in terms of underwriting profit. I don't know about Louisiana, but it's my impression that Berkshire has all but left the Florida Wind reinsurance market given that this was priced down to levels that they deemed not interesting. With all due respect and sensitivity to those involved in this catastrophe, I doubt it will be a material use of cash for Berkshire. 2005 Annual Report That's not the point. It's simply Buffett recognizing that pandemics and earthquakes are not related; therefore, the whole moniker of $20b cash minimum doesn't apply until we are out of this storm, no pun intended.

We now have landfall of Hurricane Laura, a Cat 4 that is stronger than Katrina - god bless those in its path. At this year's annual meeting, Buffett said that (paraphrasing) all because we have the pandemic, doesn't mean another black swan event can't happen, like an earthquake, or hurricane. Hence, his acknowledgement that $130b in cash didn't seem all that much like it once did, given the range of possible economic outcomes and uncertainty.

That was a good read, thanks for that ValueMaven.

Saw that. Meryl Witmer, a member of the roundtable on Barron's and Berkshire director, bought $2m of Berkshire shortly after annual meeting. At the time-, it was believed Berkshire was trading below 1.1x book, with B-shares around $173. Though the return since then is not Apple like, the near 20% return has done better than the S&P. Like many investors, not all of her picks on the Barron's roundtable pan out, though its always telling when she doesn't have that many, as was the case for the mid-year roundtable in June (just one).

Tampa Bay's year.

Indeed.

Again, that's not a mistake. His returns in KO vastly outperform the S&P since the initial investment. Further, are you discounting the dividends received by Buffett and his ability to reinvest those dividends elsewhere? If he had no further cash flow coming in, I'm sure he would have sold KO a while ago, and made new investments. But he hasn't needed to. I also wouldn't underestimate the intrinsic value of having such a rock-solid investment such as KO. Besides, MSFT was dead money for a decade or so as well. Then it got a second life. What happens if KO gets a second life? Whose to say their investment in coffee, sugar free drinks, seltzer, water-based beverages might not hit it out of the park?

Yea but what if you hate Trump and just need an outlet? There is an entire politics section for their daily 2 minutes hate. I think it is more likely that this thread asked us to predict the future, which is hard. I would think having a view as to future is sort of important for an investor... It is, but the odds of being right are greater on a micro level, on a consistent basis, than on a macro level.

Barron's does the annual guessing game on a huge range of predictions - I can't wait to see the results of who won that one this year - still got 4 months to go!

I have seen buys from value legends at FB and Google, though some have trimmed in the recent quarter. However, almost in all cases except Sequoia Fund (GOOG), Berkshire (AAPL), and a few others, these investments are relatively small compared to total AUM.

He's bought $2 b of BAC since quarter end. Maybe he doesn't like the consumer franchise as much as those banks, ex-BAC; and doesn't foresee great things in investment banking going forward. What's the mistake with Coca-Cola? He has billions a year coming in, what investment would be better than holding on to Coca Cola? He doesn't need to sell it, the business if fantastic - if you're an individual investor and bought 15 years ago, you're not looking at major gains, but that doesn't make it a mistake for Buffett; it is for you. He gets a share of the earnings being a part owner, and $650m a year in dividends. Apple could easily be a similar type of investment, a third business if you will. Bank of America is shaping up to be a hard never sell position; WFC used to be in that camp but screwed up big time over and over.

I thought this was a great piece. Sometimes it pays to sit on your A$$ and just think about what's going on in the world. It's very similar to Baupost's letter earlier this year about the excesses in valuation and undemanding capital in Uber, Netflix and even Tesla.

Sounds like Trump considers himself eligible for the study and participates voluntary. Trump probably isn't even really taking Hydroxychloroquine. He and others in the chain of command and military have probably been secretly receiving prophylactic treatments of plasma for months. It's a great explanation for why he has been his normal self and has shown no signs of his supposedly legendary Germaphobia. If you've forgotten, supposedly he couldn't have stumpfed the Russian prostitutes at the pee palace because he's so Germaphobic it would have been out of character. I'm left to conclude that either there are pee tapes out there or he's been getting convalescent plasma for months. This is also a good explanation for why we did those repatriation flights to military bases and got people to volunteer for military-led "research". Also, not a bad explanation why we allowed for cruise ships to become Petri dishes. You've got to get the plasma from somewhere and you probably want to get it early and from a verifiable source. Importation from Wuhan is a great technique for that. If anything the HCQ (Optionally with Zinc) will work earlier its given. Viruses are not living things. So they cannot be killed. Read about late diagnosis HIV. So we can only stop replication of viruses - hence if they work, they should work better earlier they are given. https://www.ny1.com/nyc/all-boroughs/news/2020/05/12/nyu-study-looks-at-hydroxychloroquine-zinc-azithromycin-combo-on-decreasing-covid-19-deaths NEW YORK - Researchers at NYU's Grossman School of Medicine found patients given the antimalarial drug hydroxychloroquine along with zinc sulphate and the antibiotic azithromycin were 44 percent less likely to die from the coronavirus. Trump took HCQ+Zinc. In above study they said it did not work in ICU but worked before ICU. That is it worked before the virus multiplied in the body extensively. So, one would expect it to work at the earliest stage - prophylactic. Trump had come in contact with Covid positives. So, his doctors gave him the medicine. It is a prescription medicine. The Indian govt has recently expanded its use https://www.msn.com/en-in/news/other/govt-expands-hydroxychloroquine-as-prophylactic-for-asymptomatic-health-workers-fighting-covid-19/ar-BB14u2ZN Govt expands Hydroxychloroquine as prophylactic for asymptomatic health workers fighting COVID-19 https://theprint.in/health/hcq-breakthrough-icmr-finds-its-effective-in-preventing-coronavirus-expands-its-use/427583/ HCQ breakthrough: ICMR finds it’s effective in preventing coronavirus, expands its use They are reporting further clinical studies of this prophylactic use and results are expected in July. S. Korea also they used it as prophylactic and even though its not a randomized double blind study, again there were encouraging results https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7162746/ Can post-exposure prophylaxis for COVID-19 be considered as one of outbreak response strategies in long-term care hospitals? Because the exposed patients had to remain in multi-bed rooms receiving the care of similarly exposed careworkers and some of them might be in incubation periods, we concerned repetitive exposure episodes to newly developing patients. We started PEP with HCQ for patients and careworkers, on February 26 (Supplement Fig. 1). Physicians and pharmacists were educated about potential adverse events. HCQ was administrated orally at a dose of 400mg daily until the completion of 14 days of quarantine. A checklist for common adverse events was distributed (Supplement Fig. 2). The study was approved and informed consent was waived by the Institutional Review Board of Pusan National University Hospital (H-2003-014-089). ..... It is usual that many patients are infected with COVID-19 in the setting of cluster outbreaks associated with LTCHs. In contrast, we had no additional confirmed cases among exposed patients and caregivers. However, it is not sure if PEP was effective because there was no control group. Both chloroquine and HCQ had antiviral activity against SARS-CoV-2 in vitro [3], [4], [5], [6]. Clinical data from China and France showed chloroquine was superior to the control treatment, leading to recommend chloroquine in patients with mild to severe COVID-19 pneumonia [7], [8], [9], [10]. ...... In this study, HCQ was associated with mild adverse events. One patient having skin rash needed steroid for control without discontinuation. PEP was discontinued in 5 patients due to gastrointestinal upset, bradycardia, and for fasting. ...... There is a doctor in NY (Dr. Zelinco) and another doctor in LA who also say that this medicine (HCQ with ZINC and Azithromycin) works if given early based on their experience with patients. You can easily search and read about that. So, that White House doctor would give Trump as prophylactic HCQ+Zinc because he came in contact with Covid+ is in line with both S.Korea and Indian approaches. NYU grossman study also supports this use. This is not a medical advise. Only for discussion. Please consult your doctor. These are prescription drugs not intended for self administration On what basis are viruses not living things?

Amazing how much dumb crap you spread around. What do you think the value of BNSF is if it were public today? How about the Apple investment? When he makes big bets, he wins huge.

Cigarbutt, do you see ways to play the decline in used car prices from the long side? I haven't jumped in yet but things like LKQ and AMA look interesting from a value perspective. Not sure if there's much correlation but worth a thought. Thanks Carmax.

I don't think I would exclude Airlines. A sector that has been beaten down revolves around energy, materials, and to an extent chemicals. There are sound companies in those spaces. Also, look for companies that have non-recourse debt that might be getting hit heavily (due to optics on balance sheet) but in fact are not in danger of near term bankruptcy risk.