Viking

scorpioncapital, as I am sure you realized, I am trying to play devils advocate (somewhat). In the near term, yes, what Buffett built should continue to outperform the market averages. However, with Buffett gone it would not take much for a new leader (or two) to simply not meet (lofty) expectations and for things to start to unravel. I will be the first to admit that I do not have a great understanding of the inner workings of BRK. I just get the impression that Buffett is the man. PERIOD. He can handle the complexity (he has grown up with it... it is normal to him). I just can't wrap my head around how things carry on the same way without him. One would be silly not to expect some sort of underperformance from BRK after Buffett is gone.

Here is the question I would like asked at the BRK AGM: "When most anybody today hears about Berkshire Hathaway they immediately think about Warren Buffett and then relax. Warren, you talk about how people can call you up and make a deal in 30 minutes on the back of a napkin. I get how great you are. I have my punch card in front of me and, fortunately, I have a few punches left. Help me understand how Berkshire is going to stay great without you and why I should use up one of my punches on BKR today."

I actually thoroughly enjoyed the article. It made me laugh a couple of times. Yes, it was one sided. But then, the 3 hours Buffett spent on CNBC could hardly be called good investigative journalism (and by the way, I watched all three hours and was glued to my TV!). I recently purchased BRK.B shares representing (now) 12% of my investable net worth which says, I think, something about what I think about BRK's current share price, Buffet and the company's prospects over the medium term. Having said that, the Star article did touch on a couple of points that I do not have a good handle on: 1.) BRK after Buffett: I recently re-read Buffett's address to Notre Dame faculty in the early '90's (great, long article). Buffett repeatedly said private investors should sell to him because he would give his word to them and they would not have to worry about some other perosn or board changing the rules... etc etc. Unless BRK is able to replicate Buffett DNA to their senior team (when he is no longer around) I am not sure how things stay rosy. Imagine if Buffet had passed away last year (I do not mean to be morbid). Think for a second about what the short sellers could have done to BRK; it recently was donwgraded by Fitch with Buffet still behind the wheel. Berkshire after Buffett... if anyone has some insight (or is able to hekp me peel back the onion) I am all ears! 2.) Conglomorates: I apologize as this is tied to 1.). All these aging presidents love to work for Buffett. What do they do when he is no longer around? What do they do when their presidents walk away? Bottom line is I just wonder if Buffett is, simply put, a genious. And when he is gone what remains is a solid conglomerate that will slightly overperform and then over time slightly underperform Mr. Market. What is in place today to ensure that they will continue to perform at Buffett's long term track record of about 20% per year?

First time viewer. It will be interesting to see what legislation comes out of this in the years to come. It will also be very fun to watch Micheal Moorer take a run at this very juicy topic...

Earnings by financial companies were grossly overstated the past 7 or 8 years. The consumer WAY over consumed the past 5 years and many consumer stocks earnings are therefore overstated. Perhaps commodity stock earnings (i.e. big oil) also experienced peak earnings... I agree that it is hard to look at current S&P earnings (around $30) and understand what they mean. It is also hard to look at S&P earnings for the past 5 years and understand much as well. How low will the S&P go? No idea... could be much higher OR much lower. Eric, I think your point is bang on... we can look at specific companies and better understand THEIR earnings and THEIR stock price and therefore make an intelligent investment decision.

Back in 1999-2000 the optomism was surreal. I still remember reading the Globe &Mail in Starbucks in Toronto in 2000. They had a feature article on Nortel and a full page graph of the stock price which at the time was over $120 and I think it accounted for 1/3 of the TSX market cap. Fast forward to today. Sadly Nortel is going out of business. Lots of good lessons have been given by the market. Bottom line, value investors stand a much better chance of realizing a much better return over the next 8-10 years! From this point in time, I wonder what lessons will given by Mr. Market over the next 5 years or so...

Labrador, thanks for the link. The reporter appeared to be quite prepared and the questions were very good. I have follow Derek Foster and (as has been said previously) wish him well. I am surprised at the about face in his overall investment strategy and also the timing (Feb lows?). Bottom line, I know I would not want to have my every move out there for all to see (and be reported on). Every once in a while I change my mind or decide to do something a little different. Constant process of trying, learning and adapting. Tough enough for me to do on my own...

FFH = 20% BRK.B = 12% ORH = 6% GVC = 2% (Can small cap) Cashable GIC's = 60% In the last couple of days I sold: 1.) smallish positions in WFC, AXP & GE. I bought these a month ago as short term speculation (sorry value guys) and got lucky. 2.) small positions in BRK.UN & CFX.UN as FFH gives me exposure to same names or exposure to sector via other companies. Yes, I took a hit selling these two. Bottom line is I really like how things look with my current portfolio.

I have been reading his weekly newsletter each Sunday night for the past year or so. I find he can get repetitive at times (who has something interesting to say every week?). Bottom line is I really do enjoy his commentary as it is not mainstream, he educates and he explains his logic.

Al, I agree that I do not understand many of the Canadian investments at the prices that were paid... TS, CGS, ABH, IFP.A, SFK, BRK.UN, JAZ.UN, Mega Blocks etc. All are severely under water. Some have lots of debt... Some have pretty poor management... I am just trying to understand what the common theme is and how they are going to pay out over the medium term (i.e. 5 to 10 years). I am not trying to be an armchair quarterback... FFH has made many, many more great decisions over the past two years. Unfortunately, the above names have done quite a job on Northbridge performance the past 12 months.

Sharper, good question... Why do the interview and why now? I was surprised at how angry he said he was at AIG. Obama is reportedly looking into the bonus payments. In this environment, how does AIG keep its good people? I was also surprised he said he expects the economy to bottom this year and recovery to start next year. If things do not play out this way he has set himself up big time (look at how people are quoted from back in the 20's and how silly they sounded after the fact). It is interesting that he is not from Wall Street, leading one to conclude that perhaps he is less biased than most everyone else. Perhaps he is trying to build his credibility directly with the American people so he has the 'political capital' to play hardball with Wall Street interests as this crisis enters its next phase...

Regarding what has gotten us into this problem in the first place, perhaps Jon should have simply followed the money... The ratings agencies did what they did because of the $ they stood to earn. Companies juiced short term results (leveraged up and too on enormous risk) to get more ever increasing stock options. How does CNBC mke money? Advertising and by getting CEO's to appear on the show, both of which would dry up if they played hardball. End of story...

I just finished watching Jon and Cramer go face to face... I am not sure what Cramer was trying to accomplish by going on the show. Jon provided many examples of how CNBC is blowing it and Cramer just kept agreeing and was unable to say anything that made any sense the whole time. Cramer should have simply said that very few people knew how bad things were. Cramer also should have fessed up that his show has a lot in common with the World Wrestling Federation (is it really real???)!!! I was also surprised at how angry Jon was during the interview (there wasn't a lot of comedy)! Serious stuff I guess. Let's see where it goes from here...

Earlier today I also decided to begin dating the blonde (sorry). Personally, I do not have a problem with the fact I already have a pretty serious relationship with the brunette. But please just don't tell my wife (a brunette) as she is the jelous type (Italian) and likely will not understand!

Broxburnboy, given the very large investment losses we have seen at NB the past two quarters do you not think that most of the losses have not already been taken (i.e. CGS, SFK & AB have been trading in distressed territory for at least the past 6 months of 2008). Yes, given current market levels, more 'other than temporary losses' are likely in Q1. However, offsetting this will be the remaining CDS positions and the higher yield in the equity and muni bond portfolio.

FFH sold off quite dramatically and that got my attention (20% position). In the past week ORH has followed suit. I likely will buy more on weakness and I am trying to understand why I would want to buy ORH. Mungerville, I believe you hold ORH. Can you help me understand why you favour it over FFH? My guess is ORH is much simpler to understand and value and has solid underwriting and better predictability... What do others think?

This article looks like it could have been written by FFH (or BRK). As they continue to invest their cash hoard we likely will hear many complaints about how they are too early... It will be instructive to see what moves they make quarter to quarter. The big changes in Q4 were: 1.) exiting US Treasuries 2.) moving into tax exempt municipal bonds 3.) removing the equity hedges 4.) purchasing more common stocks What opportunities will Mr Market provide in 2009? Quotes I liked from Grantham's article: "Sensible value-based investors will always sell too early in bubbles and buy too early in busts." "Life is simple: if you invest too much too soon you will regret it; “How could you have done this with the economy so bad, the market in free fall, and the history books screaming about overruns?” On the other hand, if you invest too little after talking about handsome potential returns and the market rallies, you deserve to be shot." Here is the link to the Grantham article... [ftp=ftp://http://www.gmo.com/websitecontent/JG_ReinvestingWhenTerrified.pdf]http://www.gmo.com/websitecontent/JG_ReinvestingWhenTerrified.pdf[/ftp]

Interesting that she did not comment on the fact that FFH has been loading up on some common stock positions that match BRK (J&J, KFT, WFC etc)... Unfortunate that she mis-represents what Buffet said... my understanding is he was not 'calling the bottom' but instead stating that purchases made at that time in well managed low debt companies would produce good long term results. I do like all the Buffett bashing (similar to 1999) as BRK has traded down significantly and I have finally been given the opportunity to make my first purchase in the past couple of weeks. Diane, thank you. Cramer, you also keep up the good work! (As I would like to buy more at even lower levels!)

sfwusc, I do not mean to sound disrespectful. Based on you logic it almost sound like one should not get out of bed in the morning. On your way to breakfast, you may slip on that banana peel and bang your head. You may get into a car accident on your way to work.... Insurance companies should close up shop. The big earthquake may hit the West Coast and put all insurers out of business... To not do something because their is a very small chance you may lose is not a good decision. The key is what you are getting paid to take on the risk. 5 billion in premium is not chump change. Yes, there is a risk. BRK likely will do very well with this investment. Bottom line, lets perhaps start evaluating it in about 10 years...

woodstove, regarding strategy and FFH & BRK, I view them each as very different animals. BRK to me is the 800lb Fort Knox. They are so large their investment options are quite limited (although not the case in the current market environment). Buffett also is looking for cash flow machines. And he is looking for companies to buy outright (again he has the size to do this). FFH to me is much more like a shareholder oriented hedge fund. I do not hold them primarily as an insurance company with solid underwriting skills. I hold them because I think they are great investors who care about their partners. The current environment must have them salivating at all the opportunities. Compared to BRK, I think they offer a higher return but also higher risk. Love both companies but hold for two very different reasons.

I also was wondering what was up with the CDS's. 8 billion notional is still half of what they had at their peak. Nice opportunity given current fall out with global financials...

Mikenhe, to understand what has happened to FFH the past 4 weeks you simply need to look at the industry. All insurers are down and by a lot. The best example is probably BRK.

SFValue, your question has been asked on this board once or twice a year for the past 6 or 7 years and I still do not know the answer. Bottom line is FFH is a very volatile stock. When you look at the price of the stock and compare to book value it is trading at an attractive historical valuation. I was asking myself this morning if the stock at current pricing offers a better value than when it traded at $100 two years ago. It may not be as cheap at current levels but offsetting this is the much better financial position the company is in and the fact it also now owns 100% of NB and 70% of ORH. Can FFH go lower? Yup. Past history has taught me that buying at current levels has been a good move.

It was interesting to see the overlap in holdings with BRK. I must admit to being a little surprised by this given all the choices out there and Hamblin Watsa's historic record.

Woodstove, I agree that going 'all in' on one investment is a risky proposition; fortunately it has worked for me on multiple occasions over the years with FFH (over short timframes). What is also missing from the above analysis is what low probability but wonderful events we may see from management (referred to by many over the years as 'pulling rabbits out of the hat'). I look forward to the future to see what the FFH team will do to grow shareholder value (that we do not see today). Perhaps these somewhat offset the risks to what you mention. I also expect FFH to continue buying back large amounts of shares at these prices (one million plus) should the stock trade this much below book for any length of time. Look at where they have put their earnings last year... ORH, NB and FFH buybacks... then buying NB... I am not sure they will buy the remaining 30% of ORH next. Perhaps the next step will simply involve buying FFH shares to offset all the dilution that took place during the lean 7 years.