KPO

Thanks for the response. That’s my view as well. I already have a position I intend to hold, but bought more specifically for the tender, which I’m also fine to hold short-term for the reasons you outlined if the tender doesn’t work out.

Thank you. I’d be interested in how folks are tendering. At $500, slightly less (e.g. $495, $490, etc.) or at the prevailing offer? I’ve obviously spent no time on this idea, but it became too good to pass up mid-day today….

I haven’t really followed this auction closely, but intrigued now that we’re near the deadline and the stock is where it is. What’s the purchase cutoff date.

VIAC, JWN, KMI, & ENB

Joining the MSGE fun in hopes the Sphere gets completed without drowning otherwise iconic assets in its wake. Initiated starter at $62.

I’m showing about 5X TTM EBITDA for the remainder, and I believe KOF and Heineken are close to fair value currently. I view this as reasonably priced, but not cheap, exposure to Latam through a fairly steady business. It was a fair bit cheaper when I bought, but I’ll hold here for the geographic diversification. That said, I am scratching my head at the distribution acquisitions in the US, but this hasn’t yet been material to their business. I’ll continue to monitor though.

I also bought FMX several times in March of 2020 and still hold it. I’d be interested in your thesis if you don’t mind sharing.

VIAC

I can get my mind around Resolute and Stelco as natural hedges for their property insurance exposure (which has effectively mitigated their inflation exposure the last year or so), but holdings like BB and Recipe just seem like nationalism plays that will never drive material value creation. I hope I’m wrong, but I also don’t think it matters much because they’ve done very well with Digit and seem to be managing the insurance business well. This isn’t Berkshire and never will be, but we seem to all agree it is a good trade in the $400’s.

I had similar thoughts. At minimum it impacts the TRS value further inflating book at the end of the quarter (if these gains hold post 12/23). On a separate note, what was the remaining amount on their repurchase authorization? If this wasn’t exhausted then why announce this until they closed it out at much lower recent prices?

I don’t have a position on Peloton, and the list after them in your post seems impressive, but is there any research to suggest NPS is a good leading indicator of long term shareholder returns?

And $1.8B more repurchases in October.

Based on the purchase valuation and the IPO price it looks like a ~$350M gain, so great ROI, but probably not a material mark for Berkshire book value. I guess if anything this and things like Stone show that Ted & Todd have great potential for finding growth investments earlier in their growth trajectory than the AAPL’s & KO’s of the world. Will be interesting to see if they can do this at the scale a company as large as Berkshire requires.

I guess as in sports I’m not a fan of saying “if you omit the crucial three or four mistakes we would have had wild success.” Great, but once an interception is thrown you don’t get a do over. I’m cautiously optimistic about Fairfax going forward, but these are the same people that exercised a fair bit of poor judgement in recent history.

I don’t understand the BB hold at levels it got to early this year, but I kind of understand why a company heavily into property insurance might want to own companies that benefit from their claims. It’s like when BRK owned Axalta. How much does GEICO spend on auto paint each year? Might as well capture some of that margin in house.

https://www.barrons.com/articles/canadian-steelmaker-stelco-is-a-low-cost-producer-and-has-an-investor-friendly-ceo-how-that-could-boost-the-stock-51633365262

I think we’re generally aligned here in terms of this being a trade vs a buy and hold forever investment, but I’m not quite looking at Prem through the bad actor / Biglari scumbag lens. If I thought his MO was to screw shareholders I wouldn’t be here. BTW, I agree 100% on your strategic review point, but the IPOs are a form of that, so they’re moving in the right direction in that regard.

I don’t know that these things are mutually exclusive. Sometimes I buy stocks that are just plain cheap and I’m willing to invest in the time it takes for mean reversion (Fairfax & T now, KMI, WMB, RDSB & BRK in March of 2020) and sometimes I buy things with an obvious catalyst (MRK is my most recent example), and sometimes you just buy things with a nice tailwind (APTS last fall). The objective is to maximize returns on a risk adjusted basis, so spreading bets makes sense to me as 100% catalyst-based investing doesn’t always work out.

I agree 100%. It’s like Russian dolls. I’m of the opinion that when you account for the recent behaviors of the CCP, such as the “common prosperity fund” (AKA unforeseen tax), India represents a more interesting and predictable investment option than China. And from a book value perspective at ~$400USD you mathematically get a free rider on India in that the discount to book effectively writes Digit and Fairfax India to zero.

That was my thought as well. I always throw lowball limit orders out late in the day when I see things like this cratering on no news. This has happened a few times recently with Fairfax.

This has happened three or four times with Berkshire over the 23 years since I’ve followed it. I remember it being grossly undervalued in March of 2000 and up 50%+ a year or so later. Same around the time they bought BNSF in 2009 and then again for 12+ weeks in the first half last year. Fairfax isn’t quite of the same caliber as Berkshire, but the pattern is similar and they’ve done a nice job with the insurance operations during this time. Enjoy it and buy more. That’s what I did with Berkshire and that’s what I’m doing here.

Same. Limit filled one minute before close.

Thanks, Glider. That was my read as well.

I hope #2 is off the table. Buying shares back would be great here, but I don’t like having the exposure of the counter party’s incentive structure of the TRS instrument. Given the trading volume it wouldn’t be difficult to force payment through well timed short sales. Besides, I thought they promised not to short and use instruments like this going forward. It’s like being married to a wealthy and successful doctor with a gambling problem on the side. Please just run the business, maximize free cash flow and manage the balance sheet the right way. This is one area where MKL is far superior.

Viking, Thank you so much for your comprehensive write-up of the recent value creation. I guess I was lazily focused on the big chunks of value from Digit, ATCO, and insurance operations, so your many points add to this. I was fortunate to be able to add to my sub $300USD positions from last year at $405 on Monday. I plan to buy more if this divergence continues at the same rate. At minimum I’ll enjoy the 2.5% yield in 4 months! Thanks again for this and your many other helpful updates!