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The Investor

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  1. Thanks. Yeah I had an old link that didn't work for Switzerland! Snapform ;D The treaties in place seem to reduce the tax to exactly half the standard rate almost everywhere. 30% to 15% (ie. USA). 20% to 10% (ie. South Africa). Cheers, that's a useful resource. Bedankt Hielko :) Cool that you can automatically get the correct rate for French companies. Maybe one day this kind of stuff will actually be correct by default rather than having to jump through a bunch of hoops.
  2. Hi there, I'm wondering what the process is to get back tax paid on foreign dividends. I'm based in the UK, and for US dividends it's simple: you sign the W-8BEN form, and the tax that is deducted is automatically reduced to the correct amount according to the double taxation treaty. However for all other countries, it seems the governments do not go out of their way to make it easy to stop paying more than is required. Any tips on the process for getting money back on dividends in the following countries would be appreciated. Although I know most of you will be based in the US, I suspect the process will be very similar. France Switzerland New Zealand South Africa Cheers!
  3. Interesting to revisit after a couple of years and a major crisis. Not much has changed after a lot of reading and not a lot of doing: Apple Berkshire Hathaway Trupanion Alphabet Ryman Healthcare Sold out of WFC at $45.17 on 26 Feb, just as the market started to tumble. Added to BRK B, TRUP, GOOGL/GOOG, and reduced my position in AAPL slightly. Also established a position in CDLX during the market lows (I surprised myself by increasing my position after the stock went up around 30% in one day from the absolute low, that's a tough thing to do!). More recently I've been buying WINE.
  4. The probability of these lawsuits/attempts to retrospectively change contracts succeeding on a large scale is very small indeed I would say.
  5. Yeah, I helped my sister in law set up a TFSA account with IB in Canada. I'm based in the UK, and it's a shame they don't offer the UK equivalent ISA account.
  6. In the 1995 annual meeting there is a question regarding this (the video should start on 1:42:40): Warren is asked how much flexibility Berkshire has in investing float, and the answer is 'a lot'. "We are not disadvantaged by that money being in float as opposed to equity, really in any significant way. If we had a very limited amount of equity, and a very large amount of float, we would impose a lot of restrictions on ourselves..." I interpret that as meaning that Berkshire's existing equity is so much larger than it needs to be to support claims, that they can effectively do whatever they want with float. Most insurance companies need to invest in low volatility investments (bonds etc.) because they can't afford to lose much money, operating on wafer thin equity to cover claims. Presumably the regulations you mentioned are far more restrictive for companies with less equity/more float than they are for Berkshire? Warren suggests he would restrict activity voluntarily if it was necessitated by low equity relative to float. If the quote about float and equity above holds true today, I don't think 8% is particularly optimistic. Berkshire float has grown over time, and I think it is reasonable to assume it will continue to grow over time at a slower rate. If that's true, you do continue to get to have fun with the (increasing) float. Sure that might take a lot of work, but the same could be said of all the other businesses that keep producing over time.
  7. What do you think about this post on another thread? http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/buffett-buybacks-could-berkshire-tender-stock/msg350069/#msg350069 To me that suggests the formula given massively underestimates the value of the float, or am I missing something? Imagine you get to choose one of the following two options: a) You get $1m cash, no strings attached. b) You get $1m in cost free float. This float grows at 5% per year, and while you never get to own it, you own all investment income derived from it for 50 years. Assuming an 8% rate of return in the above scenario, $1m cash grows to $1.08m after 1 year if you choose "option a", and $0 grows to $80k if you choose "option b". You make $80k on the $1m float, and the float grows to $1.05m. So next year you make $84k from the float, plus 8% on the $80k you made in the previous year. It takes 17 years for profit derived from cost-free float to exceed capital compounded at 8% starting with $1million cash. After 50 years, $1m cash compounded at 8% has grown to $46.9m. However, the investment income from $1m float growing at 5% per year, compounded at 8% per year, has grown to $94.5m, with the float standing at $11.5m. So a few key points that to me seem to be missing from the formula: 1) The float is likely to grow over time (and I remember Warren or Charlie saying that if it contracts for any period of time, it would be very unlikely to be at faster than 3% per year, although I can't remember the source). 2) It's an extremely stable, long-term source of funds that is of far better quality than most types of borrowing, as there often tends to be an element of getting the rug pulled out from under your feet at the worst possible time. The more you need the money, the more likely it is the lending institution wants it back, or tries to charge you more when it's time to refinance. That's why float is not the Faustian bargain that a high level of 'normal' leverage is. 3) The longer your time horizon, the more the float is worth (assuming the float will tend to get larger over a long period of time). Interested to hear your thoughts!
  8. Same here, although I like to understand why an investment makes sense. I don't really understand Teva for example, so I haven't invested. Other than indirectly through owning Berkshire that is ;)
  9. AAPL Apple Inc. BRK.B Berkshire Hathaway GOOG Alphabet Inc RYM Ryman Healthcare Ltd. WFC Wells Fargo Top 5 positions
  10. Haha. That along with the obligatory "Has Buffett lost his touch?"
  11. From gates notes: https://www.gatesnotes.com/Books/Capitalism-Without-Capital
  12. I am actually in the camp that I don't want Berkshire to pay me a dividend. Reasons are simple, they pay a dividend when I don't need the cash. Or that amount of cash. I will make my own dividend by selling just enough shares when I need the cash. The price may be lower (on recency basis), and I am willing to accept that knowing that there will be other times when I sell at higher prices. It is all relative. Selling a small percent of your holding bought 10-15 years ago don't mean much. So yes, holding over multi-decade time horizon is a different ball game. Buffett kind of talks only to that crowd. Yes same here. I prefer not to get a dividend either, especially for the shares I own personally. Here in the UK there is no tax on undistributed income for personal holding companies, but the US would withhold 15% tax anyway, so it would still be disadvantageous from a tax perspective. In the case of UK companies paying a dividend, I would be able to keep reinvesting dividends received within my company with tax deferred until it's paid out to me personally.
  13. The Investor, I suppose, by inverting the Berkshire Buyback Ammendment of July 17th 2018, that would be when Mr. Buffett & Mr. Munger deems the Berkshire market price to be above intrinsic value per share, as one condition, out of maybe several. It might even be the only condition? Perhaps it should be fairly significantly above fair value though, due to the negative tax implication of a dividend for many owners. If it's below intrinsic value buybacks should come before a dividend, if there are no more attractive options. There might be a zone where it's slightly above intrinsic value so buybacks don't make sense and dividends don't either. Then I suppose lots of cash would build up until it moves one way or the other.
  14. Even if a strong, steadily growing company was to become cheaper relative to intrinsic value over a long time frame, you eventually realise a high return through rising dividends. As a long term holder of shares you don't even need the weighing machine effect to kick in (although in the real world it always seems to). Berkshire will not pay a dividend until it makes sense to do so (and who knows when that will be?). That means if you have anything less than a multi-decade time horizon, you will be more dependent on the whims of the market to realise gains, than you would with a company that pays out some part of profits. I was somewhat peeved at the recent runup in Berkshire, as I would like to buy more over time. If BRK goes to sub 1.3 P/B without something obviously terrible causing that, I'd be very pleased.
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