aceskc
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Posts posted by aceskc
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2 hours ago, Munger_Disciple said:
My impressions after seeing the interview:
On Banks: Buffett saw that all the banks were reaching for yield as they got massive deposits during COVID and sold all of them that BRK owned last year except BAC. He would have also sold BAC if he weren't knee deep into it (> 10% position) with a very low tax basis. Looking at BAC balance sheet, they owned a boatload of agency RMBS at low yields. Of course BAC's deposit franchise is bullet proof, Moynihan is a good guy and they are too big to fail so there is no LT risk there but their SH equity will take a hit from higher interest rates.
Ajit & Greg's Relationship: To me this is the most interesting part of the interview when Becky asked Greg about his relationship with Ajit. It is clear that they now have a closer relationship than before after they both were appointed Vice Chairmen & Board members. And it seems to be a very respectful mutual relationship. I came away thinking: Ajit=New Charlie, Greg=New Warren. We are in safe hands.Paramount: Clearly it was a Buffett position. The funny thing is that he talked about all the reasons not to own it or other media companies including the fact that he thinks streaming is a really shitty business. My guess is that he sold it in Q1.
Apple: Looks like Apple has become a sacrosanct position in Buffett's mind on par with Berkshire. These are the only two securities he kept in Allegheny's portfolio and blew out everything else. And he loves Tim Cook. Mr. B thinks he made a dumb mistake when he sold 10% of Apple position at $115. Mumbled something about taxes.
Greg's BRK Ownership: Will continue to accumulate more shares in the future with his own capital freed up from BHE sale. Good news for BRK shareholders.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.
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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
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Gurufocus sells manuals broken down by size and/or industry
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Should remind you all that we are discussing all this on the corner of 1/5th AAPL and Fairfax...
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Isnt Covid Zero a Xi mandate? Why would he back down after gaining more power?
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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
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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.
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20 minutes ago, wabuffo said:
Margin is roughly 20% of invested assets- 395M of securities
You have to deduct taxes on unrealized gains. What counts is margin as a % of net worth (which must subtract deferred taxes from asset values).
If he has to liquidate now, he pays taxes so that part isn't available to cover margin. If the stocks fall such that there are no taxable gains.....well margin is higher than 20% and that's a whole 'nother
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.
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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
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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% -
On 12/14/2021 at 9:48 AM, ValueMaven said:
Fairly sizable outperformance by Berkshire over the last 5 trading days. BRKB up 2.6%, while the S&P is down 1.6%
What are the chances he has trimmed AAPL at a 3b valuation and piled the proceeds into repurchases ?
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1 hour ago, Xerxes said:
Cant disagree with anything anyone about the earning streams said but i think folks are benchmarking the upside to past P/book multiples.....thats no longer relevant if berkshire buysback 100B worth of stock and moderate to attractive discounts over a 5 yr window..(say 2019 to 2024, since ~45B has already happened)....at that pt, berkshire likely has a 500B cash+equity portfolio.....and net income from owned businesses of 30B (assuming moderate growth)....if you just expect a 5 % return from the 0.5 Trillion pf....thats another 25B annualized...so you have 55B of the most resilient income in 2024... of course if there is a favorable bunch of acquisitions that add to100B ...that earning figure likely goes up to 60-65B at least....where do comparable of berkshire trade at? Are there any comparables given its defensive qualities qualities? What should be the fair premium for that moat? Where does the market relative to earnings? AT 20x multiple that's a 1.2Trillion market cap...at 28 x...we're at 1.5 Trillion or 3 times book.. which would be the fair multiple at these low interest times, if the cash is now getting deployed at a more reasonable pace.
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Yup. The old man is dollar cost averaging, started buying at $7 in 1965 and is still buying at $400,000
:D
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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
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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
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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.
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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.
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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.
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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.
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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.
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bskptkl -could you please share the VIC write up?
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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?
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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)
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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?
What are you buying today?
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