rb

Well yes... you and I wouldn't want to compete with them but they're not trying to compete with you and I. They want to compete with Geico and StateFarm. The history of capitalism is littered with cautionary tales of smart ppl who were good at something and then thought they were good at everything.

Does anyone else get the feeling that these guys believe that just because they're a bunch of really smart people there's nothing they can do?

Sure, because Aviva employees would love to go to prison for conspiracy to commit murder. Think about it, it's the shareholder's money not their own.... I would wager a pretty large sum that it has come up as a joke at least once. I would wager a smaller sum that it was then followed by awkward silence and then assurances all around that it was a joke. :P Now that I can see ;D

I'm sure you understand this but some may not. You have intentionally oversimplified and I agree with your points. But just to be clear. Rate of book value growth is a bit more than return on equity. It is return on equity less dividends, less share repurchases, plus share issuances, +/- changes in comprehensive income, etc. So it is important to calculate book value on a per share basis. The goal of a firm is not to increase book value. You want to increase intrinsic value per share. You want to generate cash flow. You want to make money for shareholders. You want to have each dollar of retained earnings to generate a similar or higher ROE. The truly great business can grow without retaining earnings (increasing book value), and the incredible one can do it and shrink their equity. That is why great businesses trade at a multiple to book value. +1 I think Tim's reply hits the bull's eye on this!

Sure, because Aviva employees would love to go to prison for conspiracy to commit murder. Think about it, it's the shareholder's money not their own....

I don't think in this case it's selling the company. I don't think anyone would be as dumb as Aviva to buy it with those set of contracts on the books. It's more of the case of letting it wither away. The contract is with the French division of Aviva and I am sure the French division is a separate legal entity (esp since it was an acquisition). As the contract increases in value it hits the French division capital. If headquarters doesn't top up capital, then that division will slowly wither and die and get amputated from the company. Now the French and Aviva's competitors may have a real problem with that. I don't know the regulations in France, but usually life policies are insured by the state. Hopefully they have an upper limit on that.

I keep all the Berkshire Hathaway and TD Bank reports in paper form, the rest are electronic.

I think that's probably the best course of action. However, I think that the same arrogance and hubris that made them sell those contracts is now telling them that they can probably beat this and keep their franchise as well... or something along those lines.

I guess I would ask - As a predictor of what? Like all other growth measures, it's more backward looking that forward looking. It shows that business accumulated capital and at what rate. That in and of itself is not very useful. Was that capital deployed at a good rate of return or not? Will it grow at the same rate in the future? Also companies that don't pay dividends grow BV faster than companies that do. It all depends on the context.

Price to book is just one tool in your toolbox. Sometimes it is appropriate to use it, sometimes it is not. P/B is mainly useful as a measure of valuation is commodity type businesses where the profits are earned mainly on the level of assets: so financials, commodity manufacturing, transport, etc. P/B is pretty useless for companies with heavy IP. As the poster above mentioned, AAPL's level of assets has absolutely nothing to do with its profitability. P/B is quite popular with the value investing crowd from the Ben Graham days. Basically short version if P/B is low enough you will make money because a) someone will buy the company to strip it. b) P/B will revert higher (due to pricing, capacity cuts etc) because if you can't make normal profits on book then nobody will want to be in that business anymore. Warren Buffett seems to be more of a P/E guy. Buying companies loaded with intangible assets that don't show up in book but affect profits.

It's an asset intensive commodity business. Their trademark is low ROA. Another trademark is lots of leverage. HOS however has less of it than I would have expected - that helps with the lower ROE. rb

Laxputs, A quick mention first. I don't think you're correct in assuming that there is no hit to earnings when they buy a new vessel. If one were to assume that the company has only one vessel, then in your example because of inflation there is a hit to earning. The new vessel is a lot more expensive than the one you bought 25 years ago. Thus the depreciation for the new vessel is higher than for the old vessel, which hits earnings. In practice this is reflected in the fact that CAPEX is higher than Depreciation and Dep expense creeps up over time. Answers: 1. Depreciation understates the costs to maintain the earnings power of the business. See above. 2. I'm not very familiar with HOS financial statements. You'll have to dig into the notes to exactly figure it out. I took a quick look at the statements and I can see for example that they capitalize drydocking costs and that gets unwound though the amortization line. I'm sure there are other items as well.

Wires should be instantaneous so price movement should be too big. I would give IB a call though, they may have some other thing you could do.

Correct. To solicit Canadian funds you must be approved by the Canadian provincial regulators.

Two good ones to start with are Woodford Funds (more UK focus though) and Platinum in Australia (more global). Both are run by pretty legendary managers.

Hilarious!

Let me ask provocative question: if Warren died tomorrow and stock dropped 15%, would you buy a load? How about if it dropped 10%? At which level you would still buy a load? Personally, if it dropped up to 15%, I would sell everything. Somewhere between 15% and 20%, I'd hold. I would possibly buy a load if it dropped over 20% (highly unlikely, since BRK probably has an auto-authorization to buyback massively if this happens). Why would you sell everything if it dropped 15% after WB passes? Do you think anyone would ship less on BNSF or anyone would cut their power consumption from mid-American or not buy insurance from Geico or NICO, or buy less furniture from NFM.... or or or? If you are going to make an argument about how value evaporates it should be accompanied by an explanation about how the subs are going to be less profitable. But a 20 % drop is ok because they get close to the buyback threshold? I have news the buyback threshold is there a soft threshold for when it becomes a screaming buy because it would add tons of value because it's so cheap. I don't see how at 15% drop it is dogshit but at 20% drop it is gold. And I have news for you, WB is 84 years old. He will die any day now. If you're worried about him not being in the picture you should probably sell now and not wait.

Well I think that if would start to analyze BH I would find out about Warren and Charlie... and Ajit. Re corporate governance I just assume there's nepotism on every board. Just because the names don't match doesn't mean that the results are different and management doesn't own the board. I have yet to see an instance when the board voted down a CEO's pay package. I think the fact that BH doesn't provide insurance to its directors makes for much better governance than any chairman/CEO role split ever would. If anyone does pls let me know. I am curious. The reinsurance business is such that no amount of information short of seeing the actual contracts would help you. It really is one of those cases where you definitely bet more on the jockey than the horse. You look at the track record over very long periods and you look at management and then if you're comfortable you kinda take a leap of faith. I think that Buffett is probably the best insurance analyst on the planet and even he gets it wrong often enough (Gen Re anyone?). I do agree that BH could provide more information. I would personally like more detail on the smaller operating subs. But then would I arrive at a significantly different estimate of BH's IV? Probably not, it would just make my work a bit easier. However, I am sure that the competitors of those subs would also be highly interested in those details as well and I don't know if that would be so beneficial for BH's IV.

Calling Ed Jones an investment bank? Hahaha, good one. Haha, no kidding. May I suggest to the good Mr Shanahan that maybe the reason he cannot see into the economics of BH is the same reason why he works at Ed Jones and unfortunately for him it has nothing to do with BRK disclosures.

New article in Newsweek about BH and WB.WOW! http://www.newsweek.com/2015/03/06/berkshire-hathaways-transparency-problem-309127.html Basically investment banking analysts bitching that BH doesn't have an Investor Relations department and that it doesn't hold quarterly conference calls to give them neatly packaged figures to plug into their excel models. A couple of other tidbits from the article: -BH website is ugly -Buffett is an imperial CEO and an empire builder last seen during the Gilded Age -BH disclosure is in the league of Chinese and Russian banks and below all other companies. I thought Newsweek was supposed to have something at least resembling journalistic standards :S

This is sidetopic a bit. Unfortunately, it is not clear that research adds value beyond "buy index funds 80%-100% of portfolio, rest bonds/cash". E.g. I have couple 401(k)s that I have to manage (mine and wife's). Can't buy stocks there. There's a list of funds. How the heck am I supposed to research it? OK, I held index funds 80%, bonds 20% so far. 80% split roughly 40% US, 40% international. Now: - SP500 is high. Should I move 40% US to actively managed funds which might perform better during any correction? - International index funds hugely underperform actively managed funds. Should I move to actively managed funds? - Should I change US/international allocation? - Bonds: should I hold generic bond fund? high yield bond fund? cash? I am sure there are financial advisors who would give me 100 page report on how this should be adjusted. But I am not sure their report will have any insight. And neither do I... Anyway, I don't want to sidetrack this topic too much. :) I agree with you we shouldn't sidetrack this too much. Maybe we could start a new thread if necessary but as I mention below I don't think this is too relevant to the membership of this board. In your example and with other 401(k)s I admit that you're stuck and for what it's worth I think your allocation is spot on. Anyway the indifference of ppl I was mentioning is more basic than even that. I'm talking about the ppl that blindly buy whatever they local bank branch or two-bit IA is pushing, not asking any questions, not caring. The type of research I talk about is basic one, do a bit of reading to learn what the characteristics of good fund managers are, learn what questions to ask, don't just blindly buy stuff, I'm not talking about becoming an investment savant. Hell, just by reading the BH letters over the past 30 years would enable one to do better than probably 80% of the ppl out there. And those letters are free! Obviously anyone that is on this board is way past this basic level of research. But most ppl don't do it so the fund managers take advantage because it's so easy.

Of course you can't close the fund, you're just an employee and the company is making tons of dough. I guess you have virtually no shot at beating the market after fees with a large manager. Chances are better I guess with a smaller manager but even in that case as you point out the investor is his own enemy. It amazes me to no end how people would spend so much time researching that car or that tv they want to buy but are so indifferent when it comes to financial products.

Actually, if you read the story of Mike Burry, you make hugely outsized returns for your investors and they still fire you. IIRC, most of his clients complained hugely when they got locked out during 2007-09 crash and left immediately when he removed the lock even though the results were extraordinary. I was referring more to the big fund managers that control most of the money. Excellent point thought on Mike Burry though!

I'm a little surprised. Usually Exxon collects some carcasses during times like these but even they have been quiet. I'm thinking there could be a couple of reasons for lack of M&A. 1. Producers took on a lot of debt in the past years so there's not a lot of spare capital for M&A 2. Prices for the good producers have held up really well so there's not a lot of deals to be had 3. Producers whose prices went down may be such crap that you don't want even at present levels to needlessly complicate your operations. I guess this is kinda related to #2.

US Oil production last week 9.3 Mn bbls per day. US Oil inventories increase by 8.4 Mn bbls.