ratiman

BNSF as bond. Bond coupons if BNSF were a bond https://www.watchlistinvesting.com/p/119-bnsf-as-a-bond

This is a very small tidbit but in the last two weeks I've run into two people who could not correctly calculate change and I don't remember that ever happening before. The person behind the counter could not subtract 12 from 20 or turn 50c into coins.

The replacement value remark was an aside but in general , is buying at a tiny fraction of replacement value a good strategy? I think I would probably get laughed off this board if I wrote up a company with the investment thesis "it trades at less than replacement value" Trading for less than RV means that it's been a bad investment for a really long time. Anyway, does anyone remember who it was that calculated the BNSF return? Was it Semper Augustus?

This is a good post on the "Buffett puzzle" https://www.creditbubblestocks.com/2026/05/the-buffett-puzzle.html The puzzle is why Buffett invested in a lot of heavy capex and industrial businesses like energy, BNSF, and Precision Castparts when he could have just bought Visa at the IPO because Visa is a classic Buffett business.

Even if Iran does get a transit toll, which sounds likely, it probably won't last long. Iran's neighbors have too many options and are highly incentivized to avoid it even if it's just $1/barrel . The neighbors would rather choose a more expensive overland option if the alternative is funding Iran's military.

OK but who is going to stop them? The status quo was premised on US enforcing free navigation. US can't do that any longer. Who is going to enforce it? "Be generous with other people's money" and in this case the US doesn't pay the toll. The Chinese don't care, they just want to sell you an EV.

I have no idea. Oil at $65 never made any sense because the incremental dollar can't make money there. New production probably only kicks in at $80 so I would say $80 is the floor for WTI but again I have no idea but I hope Iran starts collecting tolls because that is the only peaceful way out and US consumers mostly won't pay the toll.

So if boots do actually hit the ground in Iran, where does oil go? I have trouble seeing oil leave the gulf in that situation for a few weeks at least so I have to think it's over $150. I have trouble believing that will happen but every time troops move something happens so I don't want to say it's impossible.

Iran turning the SOH into a tollbooth is one of the better possible outcomes. I'm trying to be positive. There are much worse scenarios.

It won't be popular advice but if the Houthis can control the Red Sea then Iran controls the SOH, there's no getting around that. There is no US public support for a land war in Asia. Just figure out a way to avoid it, either pipelines or trucks or railroads or just pay the fee. I saw a proposal to build another strait.

Iran now levying a $1 par barrel fee or $2mm par VLCC which carries 2mm barrels. That's the teaser rate.

Let's say that the resolution of this conflict is that Iran imposes a $5/barrel SOH transit fee. Wouldn't that make US oil more competitive? This war might actually be good for US oil.

That deal was done at an outrageously high price. This is trading at like 10x earnings. That's the price you do an LBO. Plus this time there will be no 3G, just Berkshire and a stub.

Here's what Greg should do. Do an LBO of Kraft with preferred convertible stock owned by BRK. Then leave a stub that will earn a premium valuation with BRK owning most of the shares. Then use that overvalued stub to acquire CPG businesses and turn Kraft Heinz from a loser into a grower. Maintain BRK ownership via the convertible. This is called monetizing the BRK brand name without issuing more BRK shares. Rename Kraft Heinz to Berkshire Consumer Brands.

Greg must read my posts because he did two of the things I suggested, he created a CPG platform company and he fired half of Todd & Ted. Todd running GEICO never made any sense because he wasn't an operator or an insurance executive. It will be hilarious if BRK begins to wind down SIRI because it's a Todd investment, although I would be surprised if he was investing while running GEICO.

I don't know what "scaled cost savings" means. I don't know what a "cost saving" is and I don't know how it can be scaled. I am completely out of my depth because the whole thing complicates something that is very simple. Nothing is being shared and "cost savings" is nonsense. Cost is expense. You can reduce expense but you can't save it or share it. Not trying to be difficult, just my view.

You can grow profits either by increasing margins, increasing revenues, or both. Scale economies shared is just increasing profits by increasing revenues alone but scale economies shared is a misleading description because nothing is being shared. It's increasing revenues per dollar of fixed assets. It's hard to compete with because the unit profit is often negative. If you want to compete with Starbucks at the least you will make a profit on each cup of coffee. If you want to compete with CDW you will lose money on each computer at the beginning and for a long time.

I usually wouldn't post fund manager interviews but Nygren is one of the more intelligent managers. Good discussion of stocks like AirBnb, cable companies, Merck. https://www.listennotes.com/podcasts/the-world/from-book-value-to-brand-DjfbM1zPFE8/

I just walked past a food bank in the DC suburbs and there was a long line of cars waiting to go through the food bank - BMW SUVs, new Honda Civic RS, new Subaru crossovers, Cadillac SUVs, and a few beaters. I asked a guy outside what the line was for and he said it was gov't employees during the shutdown going to a foodbank.

Here's the plan: buy the legacy KHC brands with a stock for assets transaction, create a CPG platform within Berkshire, buy Smuckers, create a coffee giant with Smuckers (Folgers, Dunkin) and KHC coffee (Maxwell House, Gevalia) and then buy some of the redundant coffee assets from Keurig JDE as it merges. Fold Jif and Smuckers into the new coffee / CPG platform to rival the CPG giants, sell off the pet food. I realize nobody thinks this is a good idea but a CPG company within Berkshire is a natural fit, it should have been done a long time ago.

Literally nobody is going to agree with this, but BRK should acquire the remaining shares of KHC and create a platform to acquire more food brands and create a rival to Nestle and Unilever and Mars. Buffett has owned CPG companies throughout his career but almost always in passive ownership. Because CPG is so stable it is much better suited to BRK's portfolio than industrial or railroad companies. Because it would be a platform, it would increase the value of acquired companies, and KHC still has many of the executives who were brought on by 3G.

That is an incredible map.

If a business is 100 years old, is Buffett ever going to say he doesn't understand it and it's not in his circle of competence? Has Buffett ever said that a new industry is in his circle of competence? I think it's pretty obvious that "circle of competence" is really just a way of saying the business has been successful for a long time.

I found that at the Acquirers Multiple blog. I don't know how he calculates market share changes. 1% market share change in auto market seems very small. .2% in soda sounds ridiculous.

Ackman is playing doubles with Jack Sock at the tennis hall of fame tournament in Newport RI, which is played on grass. It is not an ATP event but it is just below an ATP event, it's 125 points so it's a pretty big deal, top 100 players will be playing. Ackman will be playing on grass and he will be playing against Bernie Tomic and Omar Jasika. So will he win a game? Sock is a very good doubles player but he probably can't serve four aces out of six points or five out of seven and the opponents will pick on Ackman, who is 59. Doubles is no-ad so as long as they get to deuce Sock / Ackman only have to win one point. I am going to say that they won't win a game but they might win one or two games on Sock's serve but Sock hasn't played in a couple years and he was never in good shape even in his best years and he is surely out of shape now so I am going to say that Sock / Ackman will be served a humiliating double bagel. Tomic and Jasicka are not great doubles players but they are top 250 pros and that is a very high level.