treasurehunt
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Posts posted by treasurehunt
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6 hours ago, dartmonkey said:
It is amazing to me that they don't mention, in this outlook summary, what jumps out at me in their numbers, which is the fiscal deficit. Combining federal and state deficits, this was 9.2% of GDP in 2023 and is expected to come down slightly to 8.9% in 2024 and 7.9% this year. In the USA, federal deficit was 6.3% of GDP in 2023, or $1.7T, with another $1.2T from state and local governements, so the number is comparable. Both are unsustainable, and it would seem worth mentioning that this stimulus can not go on forever.
If India's real GDP can grow at 6.5% and inflation is at 4.5%, the nominal GDP growth rate will be roughly 11%. This level of nominal GDP growth can sustain fairly high fiscal deficits without increasing the debt to GDP ratio, right?
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23 hours ago, thepupil said:
Again, I’ll just repeat that your data points seem far more cushy than the data or my anecdata suggests.
Here's some more anecdata for what it's worth. I got my PhD some 25 years ago but never went into academia. Some of my colleagues did. I also know quite a few school teachers here in California.
Not one of them is leading what I'd consider a cushy life while making tons of money. Some might be in great shape when they retire, with generous pensions. I, on the other hand, managed to retire at 45 thanks largely to stock options from my tech company employer.
All I know is, if some kid were to ask me "What line of work should I go into where I'll have an easy life and make a lot of money?" I sure won't be saying "Teaching, my son! That's the golden ticket!".
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1 hour ago, Luca said:
Btw is Musk now a CCP member? OpenAi received capital to "serve humanity"? LOL!
Claiming that OpenAI received capital to serve humanity doesn't sound farfetched to me. OpenAI was founded in 2015 as a nonprofit. Their website says their mission "is to ensure that artificial general intelligence benefits all of humanity."
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2 hours ago, Cigarbutt said:
Unaudited numbers for 2023, Geico 90.7%, Progressive 94.9%.
Also, premiums earned for 2023: Geico - 39,264 & Progressive - 58,664.
Stunning, considering that premiums earned were pretty even as recently as 2019.
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7 minutes ago, ValueArb said:
How is that a flaw? China reinvesting capital to produce up the value chain lowers the costs of many useful goods, and makes them wealthier and able to buy more of our goods and services.
The traditional free market example is the Lawyer who bills $200/hour for legal work, but has to spend a lot of time typing up the product of their legal expertise, so she gets really fast at typing and can type 200 wpm. Still she only spends 4 hours a day doing actual billable legal work, and 4 hours a day typing it up. So she hire a secretary who can only type their notes at 100 wpm for $20/hour, and it takes him far longer, 8 hours a day. But now she can bill 8 hours a day, her gross income doubles, and even after paying her secretary her net income increases 80% (though she actually has to hire two secretaries to handle the greater billable output in this example, so net income "only" increases 60% in reality). This demonstrates why even if we can do something better and more productively than another country, it makes sense to let them do it if the net result lowers the cost of that input and allows us to focus our capital, time and energy on higher return activities.
So by your example, now her secretary passes her paralegal exam and he can start charging $40/hour to help clients with simple legal forms and activities. First this isn't bad for the clients, its good. And its probably not bad for the lawyer. She can probably connect clients to her paralegal for simpler tasks and charge them $50/hour, increasing client retention and their budgets, which may even allow them to hire her for legal projects they previously couldn't afford to fund.
Apple is a great example of this. Cheap smartphones and commodity PCs have been around forever, if Chinese companies make them cheaper and better that's great for americans who choose that option, giving them more money to spend elsewhere or enabling their companies to equip more employees with better PCs to be more productive. But Apple has invested immense amounts of capital into building proprietary operating systems and software, CPUs, hardware, services and stores to provide value and experience that a huge number of customers consider superior. Its not going anywhere, and neither are its customers as long as they consider it even slightly better than Android, Windows and Linux devices.
Companies like Dell would rightly go away if cheap Chinese PC makers can build generic PCs to undercut it's offerings. But even Dell has long understood this, and provides most of its value to the enterprise in easily managable and servicable equipment. As China moves up the value chain, we get to make the value chain even longer and better.
Yes, you are right that "flaw" is probably not the right word. I am not convinced that completely free trade between two countries with widely different standards of living will benefit both, but then again I haven't thought very deeply about this. It is still the morally right thing to do in most cases, I think.
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42 minutes ago, vinod1 said:
This is exactly what I believed for 20 years. I know the theory. Pretty basic. If you read the economist magazine this is hammered into you all the time.
There is a major flaw in this line of thinking. Absolutely massive mistake. Try to find it, it was now well known.
The flaw I see is that China is not content being at the bottom of the value chain. They might start with assembling a product, but pretty soon they will be designing, manufacturing and selling their own branded products that compete with the original product. The IPhone has withstood this kind of competition well, but that is perhaps an exception.
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2 hours ago, gfp said:
It's a tough call. Berkshire was valued at something like $888 Billion at the highs today. In this market environment I don't see any reason they shouldn't be a 20x owner earnings company. So it's not a crazy valuation. I think for a long time we had great results using price to book as a quick shortcut to valuing Berkshire and maybe that usefulness is waning. There won't be high rates of growth, but some of us have large tax considerations and it really is a tough decision to reduce on valuation alone. Maybe Charlie (munger not dealraker but not much difference in this context) said it best to his heirs, "just hold the goddamn stock."
I agree for the most part. I haven't touched any of the Berkshire I hold in taxable accounts. And the stock is still 23% of my portfolio.
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7 hours ago, throw123 said:
lightened up on berkshire
Me too. I have sold about 15% of my BRK.B position in the last few months.
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1 hour ago, StubbleJumper said:
Did I read this right? Today's release states that FFH's share of Exco's profit for 2023 was $129.1m and the Q3 release indicates that its carrying value on FFH's books was $418.3m, and those clowns are grousing that the position should be written down? I must confess that I wouldn't even know how to write down a position with that income number and that carrying value!
SJ
Yeah, seems ridiculous on the face of it. But I hope Prem goes into some detail about Exco tomorrow; I'd love to find out more about this investment!
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1 hour ago, dartmonkey said:
Yes, this is intriguing. We already had, from 1985 to 2022, a 37-y annual growth rate of 16.1% for share value. Share price was $802.07 (CDN) at the end of 2022 and $1222.51 at the end of 2023, a 52.4% gain. If you add a 52.4% gain to 37 years of 16.1% gains, you get a 16.9% annualized gain, definitely an improvement over 16.1%, but still far from 18.0%. Perhaps this is adjusted for dividend payments ($10US in 2023), but it's not enough to get to 18.0%. Shares peaked at $1404 before the MW report, which would get us up to about a 17.4% gain, still not quite there, but close.
What about book value per share? Using the same reasoning, with a 37-year annual growth rate of 17.8% at the end of 2022, we would obviously need a pretty big gain in 2023 to get that rate up to 18.9%; in fact, the number would be =(1,189^38)/(1,178^37) = 1.677-1 = 67.7%. Does anyone think that 2023 was THAT good? As a reality check, Jan1 2023 BV was 657.68 USD, and that was up to $876.55 on Sept 30 2023, for a 33.3% gain (non-annualized) over 9 months. That would require a 25.8% (non-annualized) gain in Q4, which is a bit hard to believe, but not unfathomable, if the changed the mark on something big.
Thursday evening is getting harder to wait for...
I am getting somewhat different numbers.
The 2022 letter to shareholders says this: "Since we began in 1985, 37 years ago, our book value per share has compounded at 18.5% (including dividends) annually while our common stock price has compounded at 17.3%(including dividends) annually." According to the latest press release, these numbers are 18.9% and 18.0% respectively over 38 years.
This implies that BVPS increase in 2023 is between 33% and 37%. The range is due to rounding; at 33%, the compounded BVPS increase is 18.85% and at 37%, it works out to 18.95%.
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10 hours ago, KJP said:
Slides 29-35 of EPD's investor presentation may be useful here: https://ir.enterpriseproducts.com/static-files/7dfd6fce-afdb-4869-af76-5f745faa7ba2
I have no idea how accurate those forecasts will turn out to be, but you can see from their CapEx that they are putting their money where their mouths are.
Thanks. I found this presentation very interesting. At least EPD is financially motivated to do a good job of modeling supply and demand.
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On 2/8/2024 at 11:07 AM, Saluki said:
I think it's hard to come up with a certain price, but directionally it's hard to think of scenarios where there aren't pressures to make it go up. Nat gas is cheaper here than in Europe because we don't have the capability to export a lot of LNG. If that changes, prices will converge, currently that's bullish.
Clean energy like solar and wind requires some kind of backup base load generation. Other than nuclear, the stuff that is ready on demand is coal, oil, or natural gas. So if the ESG trend continues, that's also bullish for natural gas.
Natural gas is needed to make ammonia, which is used for fertilizer. There is no substitute, so secularly, it will increase demand for natural gas in lock step with global population growth.
IMO 2030 is working on what will be the new clean fuel standard for shipping. One of the candidates in ammonia, which should be bullish also.
The two problems are that these trends are well known and slow moving, so they will have an effect some day, but who knows when that is.
In the short term, natural gas and oil correlate closely with industrial production, and since we don't export a lot of LNG, the US price is linked to industrial production in the US. That's difficult enough to predict in the short term, but going into an election with the current political climate, I wouldn't want to take either side of that bet.
The other thing that will affect natural gas prices is the weather, because it's used for home heating. But again, even though the trend points to warming temperatures, it's not something that you can predict in any one year.
Your post is all about demand. What about supply? US natural gas production has more than doubled in the last 20 years thanks mostly to shale. I think you'll need to have a strong view on future production in order to predict prices.
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3 hours ago, Phoenix01 said:
Here is a good review of the MW report.
Very good reponse. Thanks for posting the link.
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2 hours ago, Viking said:
For the past 3 years I have been writing pretty extensively on Fairfax (putting it mildly). I have compiled my writings into a 330 page document called 'Hiding in Plain Sight'. I will attach a copy of the updated PDF file to this post (and also the companion Excel file). I have not seen anything today that suggests I need to change anything in my PDF file. Anything I might want to say is in there.
Thanks, Viking. I have read most of your posts here but it will be interesting to go through the compendium.
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5 hours ago, TwoCitiesCapital said:
Cash would flow out of Fairfax to the counterparty. But this dip so far only takes us back to where we were in January, so nothing to be concerned with on Q1 at this point as it's just reversing cash that would have been due to Fairfax.
Plus, we've got blowout earnings coming in a week that may take us right back up.
TRS is only concerning when the economy actually tips IMO. Then you'll likely have falling asset values AND falling liquidity as it drains cash from Fairfax's coffers.
This is why I am not a fan of Fairfax holding on to the TRS over the long term. Sooner or later a situation might arise where the company has to come up with a lot of cash at a very inconvenient time. Why take this risk? Fairfax will do just fine without it.
I'm also very curious to see Viking's take on the Muddy Waters report, but based on my read it seems to be much ado about nothing much.
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Chubb reported Q4 results today - P&C combined ratio of 85.5%, consolidated net premiums written up 13.4% YoY, P&C premiums up 12.5%.
The press release had this bit: "In the quarter, continuing the trend we experienced all year, commercial P&C rates and price increases across the majority of our global portfolio were strong and exceeded loss costs, which were stable. Pricing in our P&C lines was up 12.4% in North America and 10.1% in our international retail business, while financial lines pricing globally continued to decrease led by public D&O."
Augurs well for Fairfax.
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More TCEHY. I have increased my position 50% in the last month. I think I am done for now, unless the stock drops below $30 with no significant deterioration in the business.
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14 hours ago, Parsad said:
Fairfax buying their stock at or below book value means that they are effectively getting a 15% ROE on the buyback. If they are paying at book or higher, their return is lower than their long-term goal of 15% ROE. Being below intrinsic value, but above book value, is not accretive to present earnings, cash or book value...effectively, you are getting a return below what their long-term goal is.
Why would Fairfax buying stock at book value imply getting 15% ROE on the buyback? This is only true if Fairfax's return on equity right now is 15%. According to Viking and others, current normalized earnings per share might be in the $170 range, implying a current ROE of close to 20%. On the other hand, ROE on incremental capital may be 15% at best, especially if Fairfax does not keep its capital base in check. So buying back close to book value is a better move financially than keeping the capital for deployment. There may be real-life constraints that prevent a buyback, of course.
Basically you are assuming that ROE on the current book is less than or equal to ROE on incremental capital, and this seems unlikely.
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I missed posting mine last year as well.
-11% overall, -15% in my IRA that has no additions or withdrawals.
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I ended the year with a return of just over 30% on my entire portfolio, adjusted for inflows and outflows. My IRA, which had no inflows or outflows, returned over 36%.
My best performers were
FRFHF - 15% of portfolio, 55% YTD
GOOG - 6% of portfolio, 59% YTD
TSLA - 5% of portfolio, 102% YTD
INTC - 5% of portfolio, 93% YTD
It also helped that I significantly increased my allocation to US banks after the regional bank meltdown in March and April.
My worst performers were
DVN - 3% of portfolio, -22% YTD
BABA - 3% of portfolio, -12% YTD
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TCEHY. Increased my position by 35%.
I have managed to avoid adding to my BABA position that is well underwater, but couldn't resist the recent drop in Tencent.
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One of my best was buying Robert Shiller's book Irrational Exuberance right after it came out in March 2000. I don't recall who or what turned me on to the book; it might have been a post by benkea or dealraker or someone like that on the old Yahoo Berkshire board. Anyway, I was working at Qualcomm at the time, surrounded by folks who were "conservatively" counting on their stock options doubling in value in the next year. After reading the book, I sold my vested options and also most of the high flying tech stocks that I owned. I did not catch the high, but avoided most of the pain of the next couple of years (I kept my Lucent stock, which turned out to be less than brilliant).
I had started nibbling on Berkshire B shares in Feb 2000, and selling my tech positions enabled me to increase my position in Berkshire considerably. So the ROI on the $19.56 I spent on the book was spectacular.
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Trimmed BAC, GS and JPM. US banks are still about 30% of my portfolio.
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Fairfax acquires another 2.5 million shares of Orla Mining.
Fairfax 2024
in Fairfax Financial
Posted
Is there good statistical evidence for this? For instance, 15 years ago one US dollar was worth about 95 Japanese yen. Today it is worth over 150. During that period, inflation in Japan was much lower than in the US. Obviously even over long periods, factors other than inflation can be very significant.