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About longterminvestor

  • Birthday 06/25/1982

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  1. there is some speculation that Mr. Buffett could have bought Mars in 2007-2010 time period however told Ms. Jacqueline Mars that she should not sell a great business, just keep running it. For context, either before or after that advice, Berkshire gave Ms. Mars a loan to buy Wriggly. I am unable to find a source for Mr. Buffett saying Mars should not sell to Berkshire, so it is speculation. I shouldn't be spreading speculation but I am in hopes someone else knows more about the relationship between Mars and Berkshire specifically Mr. Buffett's advice to the Mars family regarding their business.
  2. Random thoughts: - If you want to compare to Mr. Buffett (which it is a mistake) but if you want to, think about this. In 2000, Berkshire's "equity portfolio" was $37B total. $28B of the $37B (75%) were in 5 businesses: Amex, Coca Cola, Gillette, Washington Post, & Wells. Need to further unpack that $28B because it basically was permanently allocated - Amex/Cocoa Cola (still owned and untouched) makes up $20B of the $28B, Gillette turned into P&G which was turned into a tax free exchange for Duracell, Washington Post turned into cash, shares of Berkshire, and a TV station (tax efficient), Wells at $3B was added/trimmed and finally sold with sizable gain in 2022 - if not for a little scandal, arguably, he would still be holding today. That leaves $9B (25%) to allocate in 2000. Lets just say that again, $9B was a lot in 2000 but nothing today in relation to size of portfolio. - Ted/Todd manage roughly $15B each, that's 10% of Berkshires "investments in equity securities". Pittance in relation to Mr. Buffett's $300B+. - Traditional money managers/hedge funds may have $20B, $40B, $60B+. They employ 100's of people. Ted/Todd each have 1 assistant. - Size is the biggest thing holding them back from outsized returns, who knows what other funds actually manage and their are some lists out there but here is the point, they are tiny in comparison. Both Ted/Todd proved they could deliver outsized returns with small amounts of capital in previous life. Also previous market cycle. - Ted/Todd true value will only shine through once the loaming shadow of Mr. Buffett is gone - Finding a "stock picker" successor was not the task for Mr. Buffett in looking for replacement, it was about capital allocation for the next 10/15/20years. Giving Ted/Todd a traditional yardstick to compare performance is not the game although monthly reports are shown to CEO. - Trying to paint Ted/Todd as classical money managers is a mistake. They do many things for Berkshire. And just having them at the ready for future issues is important. I view them as the fire sprinkler alarm handle inside Berkshire. Rarely used but when needed incredibly important. - Ted/Todd are going to make some mistakes with hindsight, they will lose money. Mistakes are fine. Permanent loss of large amounts of capital is not fine and trusting someone to do that job as well as deliver "alpha" is yeoman's work - could prove to be difficult in coming years as capital amounts grow. - Ted/Todd have not had an opportunity, due to the "Fed Put" and other governmental intervention, to operate in a prolonged bear market. Everyone has made money for previous 12-15years - most glorious bull market in history coming off 2008-2009 financial crisis. - Ted/Todd will also have to replace themselves at the end of their tenure and finding someone who can replace themselves is not an easy job. I believe both Ted/Todd have the character traits to attract/find the right kind of replacement when that time comes. Final thought: - Berkshire today is not the same company as Berkshire in 2000. Different game. - Ted/Todd's value will be shown when they can allocate significant sums into situations - $50B-$100B+ and there be a significant margin of safety. - Mr. Buffett has repeatedly said Ted/Todd are Berkshire's intellectual property. Almost like the recipe for Coca Cola, you don't share the recipe hence the reason why they do not get on the mic and to cast their views on markets/businesses. I tend to agree. - Looking forward to watching them both grow as managers/allocators and be stewards of Berkshire's capital (our money).
  3. AIG's accounting is an insult to accountants. Hard for me to see AIG. And Mr. Buffett already passed on it (or parts of it) in 2008.
  4. Mr. Buffett has mentioned before and continues to compare during the AGM Artificial Intelligence effects on society are similar to how the Atom Bomb changed the world writ large. My take away is I have been under estimating AI's future - either good or bad.
  5. Looks like AAPL has been reduced by over 100M shares. Holding is down to roughly 790M-800M shares.
  6. 2 corollaries on concept of float value in higher interest rate environment to note: - increased competition for float ie lower premiums because of competition - reduced underwriting margins due to lower premiums Great summary, thanks Viking!
  7. This might be the reason why the rail road was disjoined from the insurance company parent. Mr. Buffett installing the proper bulkheads in the new litigious world. Previously thought to be smart to lodge the operating co's inside the insurance companies to boast regulatory surplus and make it more difficult for a break-up post Buffett. Reminds me of the Honeywell ear plug class action law suits as well. Good case study for this type of structure and ensuing litigation.
  8. BERKSHIRE HATHAWAY INC. Information Regarding First Quarter Earnings Release and 2024 Annual Shareholders Meeting FOR IMMEDIATE RELEASE May 1, 2024 Omaha, NE (BRK.A; BRK.B) – Berkshire Hathaway Inc.’s first quarter earnings release and its quarterly report on Form 10-Q will be posted on the Internet on Saturday, May 4, 2024, at approximately 7:00 a.m. Central time where it can be accessed at www.berkshirehathaway.com. Berkshire Hathaway will hold its 2024 Annual Shareholders Meeting on Saturday May 4, 2024. Prior to the Annual Shareholders Meeting, Warren Buffett, Berkshire’s Chairman and Chief Executive Officer, Greg Abel, Vice Chairman Non-Insurance Operations and Ajit Jain, Vice Chairman Insurance Operations, will hold a question-and-answer session that will commence at approximately 9:15 a.m. Central time. The question-and-answer session will be broadcast on CNBC and webcast on CNBC.com. The broadcast on CNBC and webcast will begin at 8:30 a.m. Central time and at 8:45 a.m. will feature Berkshire’s Annual Meeting movie. In prior years the Annual Meeting movie was only seen by those in attendance at the meeting in Omaha. Visit www.cnbc.com/brklive. About Berkshire Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, freight rail transportation, utilities and energy, manufacturing services and retailing. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B. Cautionary Statement Certain statements contained in this press release are “forward looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Berkshire assumes no obligation and does not intend to update these forward-looking statements. — END — Contact Marc D. Hamburg 402-346-1400
  9. Did a little study on historic financials on the top 5 brokers using Value Line metrics and transposed numbers into spreadsheet. Attached is the PDF I typed to show numbers side by side (hope there are no glaring typos - apologies if there are) and Value Line for each company where data came from. Notes below by company: AJG - Diluting more than I knew with share issuance (41% more shares out over 10yrs) - Tax rate from 2014-2019 was a huge advantage to AJG over other brokers (clean coal credits) - EPS is being hurt by share issuance - Revenue is up 117% over 10yrs - Net Profit margin lags the group BRO - Leader in Revenue Growth (170% increase over 10yrs) - Leader in Net Profit Growth (320% over 10yrs) - Consistently leads on Operating Margin (believe this to be at the core of BRO's success long term) - Being small has been a tailwind for BRO WTW - Numbers start 2016 with merger of Willis and Towers Watson (merger of equals) - Nice share reduction over past 3yrs (25% reduction over past 8yrs) - Leader in EPS Growth (8yrs vs 10yrs with group) - because of buybacks alone not growth - still impressive and surprising!! - WEAK revenue growth - actually kind of embarrassing considering peers. AON - Leader of group with 29% reduction of shares outstanding - Looks like AON got religion regarding Operating Margin around 2017 - Unimpressively lags group on 10yr revenue growth at 11.05% - Leader on Return on Total Capital is impressive - No revenue growth which is tough (recent purchase of NFP could help solve this - entering middle market) MMC - Leader in topline revenue - Size is hurting growth according to data - Leader of group on Return on Share Equity metric and by almost 2X (solid) OVERALL INTERESTING OBSERVATIONS - MMC vs AON - revenues basically the same in 2014 but MMC pulls away however AON stays close on Net Profit even with substantially less topline revenue. - Net Profit is just explosive for the group respectively which speaks to the broker model being an incredible franchise. - Prediction: when acquisitions become more difficult due to lack of supply, brokers will redirect capital to buy backs/dividends which will continue to be accretive for investors. TRYING TO SUSS OUT WHAT WILL GO WRONG FOR THIS GROUP? - Years 2008/2009 was the only example where we had a reduction in both an insurance rate environment and a reduction in exposure units - the "double whammy" was really really tough for brokers. PUBLIC BROKERS - selected numbers side by side.pdf VALUE LINE - AJG, BRO, WTW, AON, MMC.pdf
  10. No opinion on KNSL, they are not a broker - they are a risk bearer.
  11. Recent writeup VIC on RYAN. RYAN SPECIALTY HOLDINGS INC.pdf
  12. According to Mitsui, it is not a subsidiary. Below is link and note from Mitsui. My understanding was Mitsui loaned $250M to Grace in 2010 to buy ships. https://www.mitsui.com/jp/en/topics/2024/1248961_14380.html Regarding certain media reports Mar. 28, 2024 Regarding the incident in which a large cargo vessel collided with a bridge in Baltimore, Maryland, USA, certain media reports have mentioned that the vessel owner, Grace Ocean Private Limited, is a subsidiary of Mitsui & Co., however, Grace Ocean is not our subsidiary, and these reports are not factually correct.
  13. See below the layering mud map for IG P&I Club on risk for accident. Do not know carriers in the tower but there is $3B of cover - 80 reinsurance companies in tower including 20 of the worlds top 25 reinsurers.
  14. More to mechanics of risk. Surety acts like insurance but its not insurance. Its much more of a financial transaction/credit facility than insurance. Its a big dance of 3 parties saying "I trust you, but not really, so to earn my trust you gotta pay me so I trust you a little more than I want to". Surety requirements take any situation from single A ball to the Major Leagues quickly. Surety basics: 3 players and I'll name them in reference to this case. Principal (Mr. Trump), Obligee (NY Court) and Surety (easiest one to understand as insurance company, and no market stepped up). The financial incentive for a Surety to enter a transaction is extracting the most money possible from the Principal in form of premium AND to be sure the Principal is money good for collateral sum in event of payment demand from Obligee to Principal and enjoined Surety. The Principal's incentives are the inverse of Surety, wanting to pay the smallest premium and post the least amount of collateral. Principal may achieve reduction in collateral by explaining to Surety winning in appeal is fait accompli because ect ect. The Surety Company eliminates the risk of non-pay to Obligee and ultimately the Plaintiff. Important to note in Surety underwriting, there's an old saying called the 3 C's - Character, Capacity, and Capital - Principal has to embody all 3 to qualify as a good risk. So lets say we wanted to write this appeal bond or supersedeas bond. We could charge lets say 2.5% of $450M ($11.25M due at inception from Principal) and also as part of agreement we require $300M in cash to be wired immediately to us, and lastly we might add something for a margin of safety like "if the principal wins appeal, we will return collateral 2 years after last court doc is finalized" - lengthening the use of collateral float. We have use of $310M (gotta pay broker commission) for an undetermined period of time + 2 years if Principal "wins" or in event of Principal "losing" immediate payment at any point. The bet is how long will the money stay on our side of the fence - will this take years or days? Cause if its years, then maybe $310M is enough against $450M guarantee. Or if its months, in an unfavorable judicial venue for Principal, we need more premium paid/collateral posted. This is more about amount and type of accepted collateral. With the right amount of collateral and an understanding of the facts in the case - like serious legal understanding of ultimate outcome and when it will occur, there is a perfect price of risk on this deal for a surety company - similar to a discounted cash flow from judgement day backwards on the perfect price on a business, gauged against interest rates. Both are unknown so that's why the game is fun. I believe the entire reason why the 30 carriers declined, 4 brokers engaged, got put in front of the judge was court room theater to show $450M bond is an unreasonable amount and plea to reduce the bond amount to $100M. I personally believe the judge kinda knew the $450M amount was impossible to get from the beginning and the large size was done intentionally, more theater. And with that, from the vault of Mr. Buffett's lessons on this type of topic directly/indirectly:
  15. Letter was forwarded to me, didn't question it because its on Chubb Letterhead, with personal Greenberg letterhead as Chairman and CEO, and signed by Greenberg. Didnt occur to me to check signature against annual report. I did just now and I'm no handwriting expert, but they match. The letter has also been quoted by multiple news sources referencing passages contained here in. Looked real to me, do you think its fake? If a reporter calls me, my source is Deep Throat. ha.
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