Viking

For those who like a historical perspective... How Pandemics End - https://www.nytimes.com/2020/05/10/health/coronavirus-plague-pandemic-history.html?action=click&module=Top%20Stories&pgtype=Homepage When will the Covid-19 pandemic end? And how? According to historians, pandemics typically have two types of endings: the medical, which occurs when the incidence and death rates plummet, and the social, when the epidemic of fear about the disease wanes. “When people ask, ‘When will this end?,’ they are asking about the social ending,” said Dr. Jeremy Greene, a historian of medicine at Johns Hopkins. In other words, an end can occur not because a disease has been vanquished but because people grow tired of panic mode and learn to live with a disease. Allan Brandt, a Harvard historian, said something similar was happening with Covid-19: “As we have seen in the debate about opening the economy, many questions about the so-called end are determined not by medical and public health data but by sociopolitical processes.” Endings “are very, very messy,” said Dora Vargha, a historian at the University of Exeter. “Looking back, we have a weak narrative. For whom does the epidemic end, and who gets to say?”

Yes, good read; having followed Francis for many years it is good to understand what he is doing thinking. Nice that he admitted a number of errors and said the poor multi year performance was primarily due to poor stock selection. I am not sure how value investing and resource stocks fit in the same sentence (predicated on predicting where natural gas and oil prices are going)? At Dec 31 he had 50% in Associates Fund in financials and another bunch in BRK; very concentrated (although he said he was selling banks in Q1). Looking at his multi year results i think he was a little late to the party. Goes to show the importance of being inquisitive, open minded and to keep learning to be a successful long term investor. Evolution is important to surviving.

Nice article by Der Spiegel talking about de-globalization from a German perspective. Pretty obvious why they have one of the leading economies in Europe. Future of Our Global Economy: The Beginning of De-Globalization https://www.spiegel.de/international/world/future-of-our-global-economy-the-beginning-of-de-globalization-a-126a60d7-5d19-4d86-ae65-7042ca8ad73a The corona crisis is changing the global economy. Production security is growing more important than efficiency. Here is what that might look like. —————————————- This article marks the launch of a DER SPIEGEL series examining the vast changes we are facing. Among those shifts is the move away from globalization and the changes in the worldwide division of labor that entails. Another is the trillions in debt that will limit the flexibility of both countries and companies for years to come. Technology is likely to become an increasingly prominent feature of our daily lives. And more attention will have to be paid to the pressure heaped on the shoulders of workers and to ideas for making our economic model both fairer and more sustainable.

Mephistophelese, Sam Zell said the current government bailout while necessary only likely buys the economy 60-90 days. If the economy is still in the toilet in a couple of months the government will not be able to do a second bailout. To your point, Buffett will be ready, able and willing :-) I am wondering if we are not seeing Berkshire being re-valued as a true conglomerate. They are usually valued at a discount to BV. In the past Buffett has talked about 1.2xBV as an important level for buybacks. His recent commentary almost sounded like he wasn’t interested in doing buybacks regardless of the price. Perhaps he spooked some investors. The perception was Berkshire, largely due to its cash hoard, would provide investors some downside protection during the current downturn. That clearly has not happened with BRK down 25% and the S&P 500 only down 13% (from Jan 2 to now). Interesting...

Berkshire seems to be having a bit of an identity crisis. Why would someone buy it today? What is the catalyst (in the near term) for shares? Is Buffett too old? Post Annual Meeting it looks like we are getting quite a few shareholders deciding it is time to move on. It will be interesting to see where the share price goes from here. Since Jan 2, BRK is down 25% and S&P 500 is down 13%. As of today BRK market cap is $420 billion. Cash is $140 billion = 33.3% of market cap (incl. airline sales) Share Price = $172; BV = $152 (March 31); P/BV = 1.13 Buffett said on Saturday: - the shares are not particularly undervalued even at $160 (the low they traded at in March). The value of some of Berkshires businesses have been impaired so the company as a whole is worth much less than it was 12 weeks ago. - that investing in S&P 500 index would likely provide a better return than Berkshire moving forward. - the company is being run more like a ‘trustee’ with capital preservation being paramount; focus is to look after existing wealth of large, long term shareholders. - large cash balance will likely not be re-invested until the virus is under control (which may be 2 years away). But how low can it go? How many more people are tired of waiting for Buffett to put some of the $140 billion cash hoard to work and decide to move on (which will drive shares lower). PS: I do own shares :-)

This is the problem. We can all speculate, but we simply cannot know whether the causes of poor investment performance are ongoing or whether the company can improve. Lumpiness I can deal with. In fact I like it - the market pays a premium for predictability that (all else equal) I’d rather not pay. All I care about is whether Fairfax can adapt. “The best predictor of future performance is past performance.” 10 years is a good amount of time. Much better than using the first 10 years, which an investor probably should throw out (given the company has changed immeasurably since then). Well if you think that then for God’s sake don’t invest. But until recently you seemed quite positive on the portfolio they own; may I ask what changed? Petec, sorry for the late reply to your question. I was just re-reading the thread and saw it :-) What changed for me? The virus and its impact on the global economy. As i mentioned on the Coronovirus thread, on Feb 27 I went to 80% cash (and to 100% shortly after that). Beginning last year and to start this year my read was Fairfax was slowly digging itself out of the hole they had put themselves in (with their investment portfolio). I liked the moves from the company that i had seen during 2019 and to start 2020. (Fairfax India was also a very large holding for me). But much work still needed to be done to get the company in a good place. The virus changed everything overnight (for every company). Unfortunately for Fairfax, it put them deeper in the hole and may set them back years in terms of their recovery/transition. Their investing style is being exposed again as wanting, this time by the virus. Their low quality holdings are getting killed: Eurobank, Stelco, Blackberry, Resolute etc. (By low quality it might be country or industry or company.) At the same time, emerging markets/currencies have sold off so this has hit their substantial Indian holdings. Other large purchases like Recipe (collection of restaurant stocks) are turning into a disaster. Other recent investments like Toys R Us are likely severely stressed. The bottom line is in 2019 Fairfax was moving in the right direction but much more work still needed to be done (more asset sales, repositioning etc). The virus has set them back ( yet again). Not fair. But you reap what you sow. Fairfax has to learn their style of investing puts them at risk to these sorts of events... hence the need to slowly, incrementally over time, shift the investment strategy. The reason i am so hard on Fairfax is i do like the company and i want them to succeed :-) i just can’t understand why they make things so difficult on themselves.

Ottawa seems to want the oil/resource sector to shrink. i am just not sure where the growth is going to come from (to replace all we are losing). Especially when you look at all the $ the oil industry has been sending to Ottawa for decades (via equalization payments) which has gone to the less well off regions. Given how equalization payments are calculated there is a multiyear lag (I think) so the money will be drying up right when federal deficits are exploding. There is an obvious answer to who is going to pay for everything in the coming years: consumers and businesses via much, much higher taxes. One big difference with Canada and US is Canada has historically high consumer debt and not terrible federal debt; US is the opposite. So I see a scenario where Canada spends at the Federal level a massive amount in the coming years because they can. It will help in the short term and likely bite in the medium term.

Thank you, Viking. What are your thoughts on the contraction of NA economies, especially US and Canada. Arcube, i think Canada faces some pretty significant head winds: 1.) oil price decline 2.) virus 3.) housing bubble The big risk for Canada is if the coming severe recession morphs into a housing crash. Imagine the US in 2008 with its housing crisis and then on top of that add the current oil price crash and virus causing worst recession since Great Depression. I call it the three headed horseman. Not to say we get a housing crash (Canada manages mortgages very differently than the US)... but the probability is rising. This is one of the reasons i am being exceptionally careful with my investment portfolio (mostly cash and mostly in US$). Capital preservation is my focus :-) All the forecasts i see for the US are calling for it to experience its worst recession since the Great Depression. With each passing month we will get more economic news and will better understand exactly what is going on under the hood. The big challenge in the near term is the virus is a global event and we are experiencing a global severe recession. When the Recession hit in 2008/09 China ramped up spending and as a result many countries only experienced a mild recession (Canada, Australia and much of EM). Today global leadership/institutions may be at their weakest point since WW2. This just increases the odds of policy mistakes (protectionism, wars etc). The US consumer is in decent shape and the US fixed their banking system. Bottom line, we know the near term is going to be ugly. What happens after that will depend on the path of the virus which is unknowable. I completely understand why Buffett is doing what he is doing (raising cash and waiting to see what the virus does). Graham defines investing as “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return.” He said everything else is speculation.

We are starting to get economic data on what is going on. Looks like 2020 is going to be ugly in Europe. And falling inflation... ‘Recession of historic proportions’: EU predicts 7.5-per-cent contraction in 2020 - https://www.theglobeandmail.com/business/international-business/european-business/article-recession-of-historic-proportions-eu-predicts-75-per-cent/ The European Union predicted Wednesday “a recession of historic proportions this year” due to the impact of the coronavirus as it released its first official estimates of the damage the pandemic is inflicting on the bloc’s economy. The 27-nation EU economy is predicted to contract by 7.5 per cent this year, before growing by about 6 per cent in 2021. The group of 19 nations using the euro as their currency will see a record decline of 7.75 per cent this year, and grow by 6.25 per cent in 2021, the European Commission said in its Spring economic forecast. “It is now quite clear that the EU has entered the deepest economic recession in its history,” EU Economy Commissioner Paolo Gentiloni told reporters in Brussels. As the virus hit, “economic activity in the EU dropped by around one third practically overnight,” he said. ... The pandemic has hurt consumer spending, industrial output, investment, trade, capital flows and supply chains. It has also hit jobs. The unemployment rate across the 27-nation EU is forecast to rise from 6.7 per cent in 2019 to 9 per cent in 2020 but then fall to around 8 per cent in 2021, the commission said. Beyond that, Gentiloni said, “we will have a massive drop in hours worked.” Inflation is also set to be significantly weaker as consumer prices fall amid a sharp weakening of demand and drop in oil prices. Investment too is likely to contract, with firms expected to postpone or cancel their investment plans amid the uncertainty. Exporters will not be spared, with continued disruption to movements of people, goods and services likely.

Here is a very good summary of Buffett’s comments from a long time BRK follower Jim Sloan. The comment section is also a worthwhile read Buffett Gives A Seminar On Risk, Cash, Debt, Discipline And The Future Of Berkshire - https://seekingalpha.com/article/4342835-buffett-gives-seminar-on-risk-cash-debt-discipline-and-future-of-berkshire Buffett's Q&A at Berkshire's virtual annual meeting addressed risk, cash, debt, discipline and Berkshire's future. Buffett explained that Berkshire's calculable risks were very manageable but that a large incalculable risk hung over the economy; he suggested that this required a larger cash set aside than previously. Berkshire's cash set aside for emergencies has a message for ordinary investors: start with a bucket for cash you need to sustain your lifestyle for the foreseeable future. Buffett explained his reasons for dumping the airlines in a way that should focus investors on the true risks for many industries. In February, the world changed to a degree which may not have been fully recognized; Buffett showed that he is in the process of learning and changing with it. "In times of change learners inherit the earth while the learned find themselves beautifully equipped to deal with a world that no longer exists." - Eric Hoffer

The problem is as follows: if mall/whatever reopened, I would go there if I knew I'd be the only person in the mall. But then store(s) don't get enough business. OTOH, if everyone rushes in, then I wouldn't go there. So likely you can't get many people there. It's also possible that there will be a bad feedback loop: people don't go to malls, cases don't rise, people think that it's safe and go to malls, then cases rise again, rinse, repeat? Restaurants are more complicated than stores. Even if I'm the only customer there, there is a risk of getting infected from the staff. More risk than if I ordered for delivery. So screw going to restaurant. What this speaks to is the importance of the response from the government, at all three levels: if people have confidence in Federal, State and Local governments and trusts what they are saying and doing regarding the virus then phase 2 (post lockdown) will go better (keep case count low and maximize economic activity). Lots of learnings to come.

I wonder if part of what is broken is their investment decision "process" at Hamblin Watsa. Francis Chou and Mohnish Pabrai's harvard interview elucidates that at FFH they use a devil's advocate who is usually a senior member of the investment committee who is not going to have psychological imperatives towards deference to the portfolio managers. However, this seems to lack the ability to incorporate a diversity of opinion. Some of which may actually come from junior members or the introverted individuals on the committee who may have a different perspective or special insight that would help the decision process or at least improve their accuracy. Gary Klein and Paul Sonkin had a podcast on Capital Allocator's that was quite interesting about how to structure team discussions to make them more effective towards truth finding. Perhaps Sanjeev, you could pass this idea to them as it may have asymmetric outcomes (hopefully to the upside) and it costs them nothing. On a secondary note, who makes the ultimate decision to increase FFH's financial leverage? Is it just Prem or do the executives play a role in the decision-making process? If Paul Rivett was to remain CEO, would he make the call? If i had to pick one thing that Fairfax has gotten wrong with investing is it might be hubris. They appeared to get stuck in their old orthodoxy. It is/was almost like a religion cloaked in value investing clothes. They had success in the beginning and for many years. They then tried to replicate this same formula over and over and over. Even when it did not work and the world was changing. They were not able to make beneficial small incremental changes to their philosophy over time. Results suffered. Value investing works. Bad investing (even if wearing the cloak of value investing) does not. Buffett was, for many years, able to keep learning (inquisitive and open minded) and updating his model of ‘value investing’. The shift to buying quality was one shift of many. He got progressively better his first 30 years as Berkshire got larger. The evolution of Fairfax’s investment philosophy the past 8 years has been pretty messed up and results reflect the challenges. The good news is with some new blood the investment part of Fairfax may be in transition. They are decent underwriters; if they can get average results on their investment portfolio the stock is dirt cheap. We will see what they do.

Yes, the data the next 6 months will be very interesting. Regarding wages, if unemployment hits +15% and we do not get a V shaped recovery then my guess is wage growth will slow over time as expectations fall. Currently, grocers are having to pay a premium to attract and keep workers during the pandemic. This will likely be true for all occupations where employees are put at a health risk. I also see a scenario where business that re-open have to charge higher prices because their revenue is lower (due to social distancing requirements) and their expenses are higher (due to PPE they need to source for staff). Crazy stew of unknowable factors right now. Business owners must be going crazy trying to figure out what to do and how it all might play out...

Here is the perspective of a non-American. At some point Americans have to start thinking about what is right for the country and not simply what is best for them. And think about what kind of country they want to hand over to their children. I believe the US will be at a crossroads in November. If Trump is re-elected for 4 more years i think the US and the world will sustain permanent damage. I am not exaggerating when i say this :-) Trump is tearing the very fabric of American democracy and society. He already governs like a king; if he gets in for 4 more years he will act quickly, aggressively and even more ruthlessly than his first term. Perceived enemies will be wiped out (removed, attacked and beaten). Think of all the things he has learned the past 3.5 years and think about all the injustices and wrongs he needs to ‘pay back’. But he HAS to play nice right now due to the fall election. But i guarantee you he is making plans. US Democracy is toast. US rule of law is toast. Non-supporters are toast (if you do not kiss his ass you are the enemy). He is a very smart, evil and ruthless man. Senate republicans are his servants. If re-elected Trump will have 4 more years to remake America in his own image. American standing (influence) in the world is at all time lows. Under Trump the US can no longer be trusted. Trump will divide the West and China and Russia will benefit from the anarchy Trump brings. (Russia is the good guy?????). China, and to a lesser degree Russia, are happy to fill the void left by the US. In some respects, i do believe Trump has been the change agent that many people wanted. Immigration needed to be reformed. Regulation needed to be streamlined. Trade deals needed to be updated. The tax system needed to be updated. Law enforcement (CIA and FBI) had its biases and flaws. Obamacare had its flaws. The news media has its biases when reporting. China, and its political system, and the risk it presents to Western Democracies, is now understood in the US and globally. Allies were not paying their fair share on defense. i am not saying that Trump dealt with all of these topics perfectly or even well; he caused everyone to debate and think about these topics in unimaginable ways (compared to pre 2016). and he has moved the supreme court hard right with the appointment of two justices. On all of these issues Trump has changed the dialogue in the US permanently. There is no going back for the Democrats to pre-2016 on these issues. If Trump is not reelected you still get many of the benefits of having Trump for the past 4 years. His reform agenda will continue. But by electing a Democrat you will get your country back and the much needed healing of the tearing can start. Trump did his job. He changed the narrative (sometimes 180 degrees) on many, many issues. But he is also destroying the US. If you elect a Democrat you get to keep Trump’s work and you do not destroy the country. If you elect Trump your Democracy and society is screwed. And the world will be a much, much worse please (the globe needs a functioning US).

I can also envision mild deflation followed by inflation. As deflation starts to set in the government will start to panic. These is a risk the Treasury will want to do whatever is necessary to get the economy going including dropping money directly to consumers. Hoisington/Hunt says watch the Treasury (not the Fed). The Fed is somewhat restricted by laws what it can do. It will be interesting to see what Trump/Treasury decide to do if we do not get a V shaped recovery in the coming months. Helicopter money right before the election? I would be surprised if Trump did not do it. ————————— In my post above i also forgot to mention how technology is also driving deflation. Look at falling expense ratios in banking, the disruption in retail etc... the move to online is only accelerating. Yes, technology is a growth industry. However, my guess is the disruption and the job losses is many industries is much larger. Net effect is it is deflationary to the economy as a whole. And you can also look at it from a country perspective. The US is the big winner with most of the technology jobs happening there (Amazon, Alphabet, Faccebook, Apple etc). Other countries lose jobs as those platforms expand internationally.

Wow, what a contribution. Thank you! +1

But he also said that unlike the 25 years of going nowhere from 1929 to 1954, the Fed now has FDIC and other tools. I actually got the opposite impression that it will be much shorter than a 25 year depression because of what the government is doing. Exactly right. He also said he expected inflation, which would be rather a different outcome. I happen to think an inflationary depression is pretty much the same as a deflationary depression ) But at least the Dow or SP or whatever will go up, just not as fast as all your costs. Actually, my take is that an inflationary depression is probably a bit easier to manage. Labour prices (wages) tend to be sticky downwards, and minimum wages in particular are sticky downwards. At least with an inflationary depression, you the real price of labour gets inflated away, which enables firms to consider hiring more people. Similarly, in a deflationary environment, there is a disincentive to spend immediately while in an inflationary environment you are better off to convert your cash into goods immediately. We probably don't want to experience either of those, but if I were forced to choose.... SJ Given everything we are seeing today, is it not likely that we see mild deflation in the US moving forward? This has been the trend in Japan for the past decade and Europe in recent years? Oil at $20 will be deflationary (lower input costs). Massive unemployment. Massive number of business bankruptcies. Double digit negative GDP growth. Falling consumer spending and business investment. Worldwide recession. Strong US$. Long bond yields at historic lows. Debt to GDP levels back to historic highs. Higher taxes in 2021 (likely). What will cause inflation in the near term? War perhaps? Other?

Maybe RBC was the outfit that extended the $2B revolver to FFH? ::) SJ +1 I have been reading the RBC research reports for years. I find them generally to be very good. However, for years they have been positive on Fairfax with a very high price target (often 50% higher than where the stock was trading). RBC’s commentary on underwriting and CR estimates have been pretty accurate. Their commentary on investment results, especially the equity holdings, has been consistently too optimistic and largely along the lines ‘they have a great long term track record so we will give them the benefit of the doubt’. I have also wondered why RBC has been so ‘nice’ to FFH :-) Fairfax’s investments (in aggregate) - including equities, hedges, warrants and private business purchases - have been value destroying for 8 years or so. Something looks broken in how they are managing investments (how they are picking individual securities and how structuring the overall portfolio). Confidence in management is at an all time low (in how it is managing the total investment portfolio). Many current investments are low quality and will struggle in the near term. If we get a severe recession that lasts into 2021 we can expect more large losses from the investment portfolio which will drive BV lower. Not surprising the discount to BV is where it is today. PS: i was getting more positive on FFH late last year as they were making some moves i liked. Unfortunately, the virus has exposed them badly and it will likely slow their ability to ‘fix’ things (in the investment portfolio). Brutal timing. But what we are seeing with the virus is the fatal flaw in their investment approach.

Normal human psychology. The guys buying at $600 were the ones selling at $350-400! This exchange made me smile. If there was value then there is extreme value now, even if covid-19 has permanently reduced the value of Eurobank, Recipe, Atlas, Bangalore Airport, etc. to a point below their current share prices. Context is important. All insurance stocks have been crushed in the last 10 weeks. Chubb was trading over $160 in Feb and now it is trading below $100. WRB has fallen from $79 to $51. The declines have been 35-38%. Fairfax has fallen from $625 to $350 a 44% decline. It also had a much larger Q1 loss and hit to BV. So compared to other insurance stocks the decline in FFH looks reasonable. The question moving forward is if you want to put new money into the insurance sector where do you do it? My vote, given the broad based sell off, is to put it into the highest quality names. My current picks are WRB and CB (two that i have followed for years and like).

The challenge with macro calls is you have to get not only the call right but also the timing. My view is the timing is the more difficult of the two to get right. In time, we may learn that Fairfax was positioned properly in 2015 (with their very bearish position). They reversed in 2016 and locked in losses. Then got fully invested and may now be facing steep (paper) losses once again. If we get a severe bear market in stocks Fairfax may need to do a complete reset In terms of investment strategy to re-build investor confidence. What a crazy ride the past 25 years :-)

How much intrinsic value will evaporate in those 2 years for shareholders? Yes, airlines may take on lots of debt and then keep paying those debts in the next 5-6 years. Just because they survive , will shareholders get richer? If yes, then by how much and what risk they are taking? I don't think he is thinking short-term here. I think range of outcome is wide. It’s not a matter if air travel comes back. It surely will. It’s a matter of duration of the current and if current shareholders will get impaired and what the economics of the business will look like. Buffet doesn’t know then answer and he realized that he didn’t get the deal that he thought he get when he bought into this. His process might have been correct and have worked out well in a parallel universe without the Coronavirus showing up, but it did not. So he makes the best guess and moves on. It is what it is. Listening to Buffett yesterday, I think the key reason he punted on the airlines is because they are such a capital intensive industry. And they are going to need a massive amount of new money just to survive the next year or two. And governments will want national champions (Italy nationalized it’s airline) so there will likely be lots of dumb things done there. So existing shareholders are at high risk of permanent loss of capital. Not an investment today but a speculation.

My read is Berkshire is being run for the very long term shareholders many of which are very wealthy (hold lots of shares). Preservation of capital is much more important than return on capital. Both Munger and Buffett both have spoken about the obligation they feel to these people and also their estates. I am pretty sure both have also used Trustee to describe that responsibility. So having an exceptionally high cash balance is very rational in the current environment. Berkshire is a very different company from 40 years ago and Warren also is also much older. I hold Berkshire as a bond substitute. Happy to get a 6 to 8% annual return. I do not hold it as a substitute for the S&P 500 which is dominated by 4 stocks: Microsoft, Apple, Alphabet and Amazon. I like the core holdings as long term businesses: Apple, US banks, BNSF, Mid-American and Insurance Do i have confidence in Buffett? Yes. If i did not i would not own the shares. PS: i see some parallels with both Berkshire and Fairfax today. Both companies still have strong willed founders running them and are much, much larger now. Both also have very good long term track records. Both are morphing as companies. Both also have underperformed expectations in recent years with lots of questions over how they are allocating capital. Interesting. (Berkshires performance - near term and long term- has been much better than Fairfax’s and it still has a large number of long term shareholders who likely are quite happy with Buffett’s performance; My guess is Fairfax has lost many long term shareholders due to its terrible performance the past 7 years.)

His comment about not understanding the impact of negative interest rates was also very clearly stated. He said understanding the impact of negative interest rates is likely THE most important economic question of our time. (The reason it is so important is we do not know). He then punted the question to Greg who quickly agreed with Buffett.

One key takeaway for me is that Buffett feels certain industries are uninvestable. He discussed airlines. (He sounded very surprised - and almost a little guilty - when saying how quickly they were able to sell all of their airline positions in April.) But his logic likely also applies to hotels, sit down restaurants, cruise ships, travel, events (sports, music etc). These businesses are all going to need large amounts of cash to stay alive, some have high fixed costs and will likely be revenue impaired for some time; so their models are completely broken. Why would a rational person put any new money into these businesses given the high probability of loss of capital. The future path of the virus is still unknown. This is a very large swath of the US economy which is consumer and service focussed. This then perhaps feeds his current very somber mood and likely explains his building of cash. That Buffett used the Great Depression as a tool to help people understand recent decisions/current thinking is interesting to say the least. One book he mentioned worth reading was Galbraith’s the Great Crash 1929. Buffett definitely is in no hurry to invest Berkshire’s cash. PS: it was nice to have Greg Abel answer questions. Didn’t disappoint or wow me with his answers.

Barron’s estimates of BV: - March 31 = 1.2 - May 1 = 1.15 ($183 / $159 for B shares) Buying BRK at less than 1.2x BV has historically been a very good entry point. Especially considering: - cash is at all time high now representing 30% of total market cap - we are just starting what is expected to be the worst recession since Great Depression. Likely see lots of opportunities in coming years. - equity values in BV are not excessive (after coming down during sell off) - insurance is entering what looks to be long hard market Warren Buffett’s Berkshire Hathaway Reports Big First-Quarter Loss After $54.5 Billion Hit to Its Investments - https://www.barrons.com/articles/berkshire-hathaway-reports-huge-first-quarter-loss-after-writing-down-the-value-of-its-investments-51588423177 With Berkshire’s class A shares finishing Friday at $273,975, the stock trades at 1.2 times the March 31 book value. Barron’s is estimating the book value per share based on $371.6 billion of shareholder equity and 1.62 million shares outstanding, with Berkshire’s Class B stock (BRK.B) converted into an equivalent amount of class A shares. The class B shares ended Friday at $182.67. Berkshire’s book value likely has risen since March 31 due to the rally in the stock market. Barron’s estimates that book value as of Friday was around $238,000 per class A share, meaning that Berkshire now trades for a little more than 1.1 times estimated book value. That’s low relative to where the stock has traded in recent years at an average of 1.3 to 1.4 times book.