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Beastables

The apple /taiwan thought process seemed interesting....he seemed uncomfortable with geopolitical tail risk with taiwan...but was okay bearing it with Apple because of the customer stickiness that withstood the 10k replacement test ....found that interesting because it seems to me that Taiwanese chips are probably even more essential and irreplaceable to its customers than iPhone is to its fanbase.

12%-15% each BABA, META, TCEHY, GOOGL, AMZN - ( mostly bought substantially lower and would not be this size at new buys, except BABA which was bought around 120/sh). 4-6% each PYPL, STNE, ALLY 4% each ATVI , SIMO arbs

Gurufocus sells manuals broken down by size and/or industry

Should remind you all that we are discussing all this on the corner of 1/5th AAPL and Fairfax...

Isnt Covid Zero a Xi mandate? Why would he back down after gaining more power?

GRBK: Selling at 4x EPS; bought back 5% of float YTD, approved another 10% in buybacks. ..Guided to acceleration in Q2, after a 68% rev growth, and 135% EPS growth. Owns decent chunks of undeveloped raw land- which in today's Dallas/Atlanta markets is a competitive edge. Rising rates offset by essentially zero inventory. Home Closings Revenue of $363.1 Million, Up 68.0% Record Income Before Income Taxes of $82.6 Million, Up 134.3% Home Building Gross Margin Up 240 Bps to 27.8% Lots Owned and Controlled Up 42.5% Q1 2022 return on equity of 28.8%, diluted EPS at $1.20 per share which was up 135% from Q1 2021. "we expect home closings revenue and EPS to accelerate into Q2 2022,” - CEO

Investments in Banks went up 10B. So it must be +100b business thats not bac and unlikely to be wfc. My best guess is JPM.

I understnd ur pt..but im trying to articilate his risk assessment Irresponsibility of margin comes from forced liquidation at the bottom tick...which is tied to assets in custody with controllable liabilies ( unrealized taxes, credit lines or bank notes ) not just the balance sheet equity . Stocks have to fall nearly ~50% from here at which pt still has ~200m of liquid assets with his custodian while owing 69m before he faces forced liquidation.so an Equity % of 48% or so...I think he factors that possibility to be remote enough and probably has alternative recourse to raise cash before that scenario.

He didnt duck it- he said "we are okay with a little bit of margin". Folks can disagree on his position both in terms of risks and size of margin but he was clear about his view- risks in his mind were smaller than the market thinks, and he was okay committing small amounts of margins towards his book. Margin is roughly 20% of invested assets- 395M of securities, 14M Cash (incl restricted) and 69M funded through margin

Below are my results agg separately managed accounts of partners...very satisfactory on an absolute basis...only a couple of ppts of outperformance on a relative basis (SPY at 18% annualized over the same period). Year Partnership Results CY 2016 (8 mths) 15% CY 2017 12% CY 2018 27% CY 2019 24% CY 2020 8% CY 2021 27% Cumulative 177% CAGR 20%

What are the chances he has trimmed AAPL at a 3b valuation and piled the proceeds into repurchases ?

Yup. The old man is dollar cost averaging, started buying at $7 in 1965 and is still buying at $400,000 :D

Thanks Lemsip...you are correct on the classB Dec 31th number. Updated figures do map to ~5B QTD. Thx. Mar 3rd 26-Feb 31-Dec Feb 26 to Mar 3 Jan1 to Feb 26 Q1 TD Class A 639747 640,586 643,931 839 3,345 4,184 Class B 1,335,074,355 1,336,348,609 1,350,043,471 1,274,254 13,694,862 14,969,116 Class B Eq 2,294,694,855 2,297,227,609 2,315,939,971 2,532,754 18,712,362 21,245,116 $$ Amount 4,992,602,260

Mar 3rd 26-Feb 31-Dec Feb 26 to Mar 3 Jan1 to Feb 26 Q1 TD Class A 639747 640,586 643,931 839 3,345 4,184 Class B 1,335,074,355 1,336,348,609 1,340,043,471 1,274,254 3,694,862 4,969,116 Class B Eq 2,294,694,855 2,297,227,609 2,305,939,971 2,532,754 8,712,362 11,245,116 thats roughly ~2.5B-2.7B through March 3, assuming 230-240 average Class B eq. buying price

Would love to hear from experts what their view is on Fairfax's normalized operating cash flow excluding investment gains & losses.. Despite comparisons to Berkshire, which earned ~10%+ equity (just operating earnings) through good years and bad, Fairfax's wholly owned business have a very different earning profile. To me it seems like their underwriting profit is consistently offset by corporate expenses, so you're essentially relying on their investment prowess to generate cash flows, so to me an investment in Fairfax really becomes tantamount to giving your money to a general investment manager, and your confidence in the manager to generate alpha over time. Now, obviously their are assets on the books that may be carried for less than they're worth, and can occasionally generate a cash flow spike when liquidated so may be these add a small premium to how, you'd otherwise value fairfax, but would love to view your thoughts as to what normalized cash flow looks like for Fairfax through the cycle, even with a hard market, and rising premiums.

Couple of other interesting observations- he has absolutely disappeared from the financial media , seemingly deliberately. Dont see the usual Monday morning cnbc interivew scheduled the day after the annual report is released, one he has done for years. Probably wants to keep the share price in check to chug away at the outstanding shares. Secondly, its also interesting when you think about 1) Apple is our 2nd or 3rd largest business 2) We never trim our positions 3) Coca cola buybacks in late 1999/2000s were value reductive 4) He has sold ~90M shares in H2 of 2020, i'd assume at prices around 135+... if thats the case, he had quite a window in January to substantially further reduce his AAPL stake when prices traded 140+, even though the tone in his letter indicates other wise. Quite possible given he has been transparent about Q1 TD repurchases that he has trimmed further and ploughed proceeds into Berkshire.

BRK may have been priced lower but not necessarily cheaper relative to book, when marked to market. Even when Berkshire traded into the 160s, AAPL their biggest holding was in the 220s. That one position alone reflects a difference of 35B or b/w March lows and end of qtr mark to market. Thats not to say buybacks are happening in volumes, cos that does seem unlikely given how the stock is trading but P/B <1.1 is cheap relative to history, relative to other securities and relative to Buffett's past comments , and may not be as conflicted as it may appear by his inaction through April lows, when his book has been decimated, economy shutdown and acquisition opportunities front run by the actions of the Fed.

Hi Everyone, To give some background I've been shadow managing accounts for a few family/friends of nearly 5 years now, which have done reasonably well and outperformed over the period (albeit largely in a bull market),and the money has grown enough that its now difficult to do trade execution/hedges and replicate portfolio's in different accounts. So I'm thinking of potentially launching a partnership either in 2020/2021 but I am still on an H1-b so need to figure out an immigration work around. My question to those who are already running partnerships is about the tax treatment in a regular GP/LP structure. More specifically i understand carried interest and how performance fees work, but my question specifically is how does the GP pay taxes on his share of the profits on unrealized gains? In a hypothetical example if a 100k account has grown to 126k by year end and all gains are unrealized, assuming the partnership is based on the Buffett type model (25% PF after 6% hurdle)...the partner would be owed 5k in perf. fees. Does he pay taxes upfront on this 5k? Please let me know how taxes work for GP on unrealized gains. Appreciate anyone's help on this.

2014:20% 2015:-4% 2016: 39% 2017: 11% 2018: 68% 5 year CAGR: 24.3% Concentration worked out very well for us in 2018, as I felt safer in our best idea in a richly priced market. Bought heavily into CMG when the stock fell around the $250 mark and took those proceeds and pilled them into BRK in the mid 180s to low 190s.

bskptkl -could you please share the VIC write up?

The only metric that matters to me is EBITDA- normalizend mCapX- working capital changes - Taxes- Interest ...I ignore all other multiples and all other types of earnings. Even i leveraged stub type situations this is a good starting point, and you would ideally want it to grow from here . BTW Rukawa, Where can you get data in this type of downloadable format?

Fair pt about AMZN & TSLA, happy to take sales growth as a proxy for companies still GAAP unprofitable, but must have a reasonable path to profitability... Yes 20% is a definitely a high threshold, but still an achievable one..how many of them are predictable as well as under-appreciated is a whole other question; but this thread is meant to address only the first part of that problem...20% growth (appreciated in stock price or not)

Doing this exercise myself, so thought i would open up the discussion to the broader group...which companies if any in your do you expect 15-20%+ annual EPS growth for 3 to 5 yrs going forward.. Few in my portfolio are below: BIDU, SRG, CNSWF, possibly CMG if traffic can normalizes in a yr or two..... I hear similar arguments about AAPL, GOOGl, FB but struggle to believe such high growth is sustainable from current earning levels.... AMZN, TSLA, UA other growth candidates but priced as richly.. thoughts?