Xerxes
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Posts posted by Xerxes
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51 minutes ago, Viking said:
1.) ending the short strategy was a massive win. It eliminated a US$500 million loss EVERY YEAR, on average, for 7 straight years (with 2020 being the last year). Fairfax had to find $500 million every year from somewhere just to get to back to break even. When people look at Fairfax historical results they do not appreciate what an anchor this one strategy was to results over 7 years. And now that this has ended, we are only beginning to see the benefits. We are finally stating to see what the true earnings power of the company really is. Earnings in 2021 were stellar.Viking,
i never understood where you got the $500 million figure. I don't think that it is from Prem, because I usually remember his statement.
Did you just take the average for the past decade of the "short" bucket, it came out to $500 million per annum.
That is what I tabulated in the 2035-year thread, which I guess i will update this Thursday for 2021.
REALIZED LONGS
2011: $703 million (equity) + $424 million (bond)
2012: $470 million (equity) + $566 million (bond)
2013: $1,324 million (equity) + $65 million (bond)
2014: $596 million (equity) + $103 million (bond)
2015: $818 million (equity) + $26 million (bond)
2016: ($184) million (equity) + $648 million (bond)
2017: $200 million (equity) + $419 million (bond)
2018: $1,326 million (equity) + $106 million (bond)
2019: $792 million (equity) + ($55) million (bond)
2020: $392 million (equity) + ($102) million (bond)
REALIZED SHORTS
2011: zero
2012: $6.3 million
2013: ($1.350) billion
2014: $13 million
2015: $126 million
2016: ($2.634) billion
2017: ($553) million (almost all of it in Q4 2017!)
2018: ($248) million
2019: ($20.7) million
2020: ($311+$542*) million *included Other which I believe are the TRS
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4 minutes ago, ValueMaven said:
Apple is cheap - no way he did that. People still fail to understand the power of the ecosystem and the upgrade cycle. They are innovating AND giving cash back to shareholders.
I didn’t mean sell. And hedging nothing to do with buybacks and dividends or their innovation.
Apple is theirs to keep.
I meant if they would hedge Apple via options. Since there is a market for that. There is no such market for BHE or its railroad, the other 3 of the BRK 4 pillars.
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How surprised or relived people would be if they find out that Buffett had built a large hedge against Apple at this stage, when his letter comes out.
If Apple is a not-to-sell digital industrial pillar of Berkshire, but if there is a liquid market out there that allows you to hedge yourself, wouldn’t this be prudent thing to do for Omaha at this point.
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2 hours ago, bluedevil said:
The more years I follow Markel and Fairfax, there more I think some of the way Markel does many things is superior and would hope Fairfax would adopt it as well.
One is bond investing. Markel doesn’t try to predict future interest rates. Instead it matches its bond duration to its insurance liabilities, and is careful as it can be not to incur credit risk by careful investing in top tier debt.
Fairfax can hit more home runs by trying to time big moves in and out of cash versus the bond market, but that’s a very hard game for anyone - even a legend like Brian. Almost like shorting.
Similarly, with private investments, Markel looks for very specific, clearly defined targets: firms that are market leaders in very niche fields: truck flooring; artificial plants; heavy cranes; and so on. It’s a field where they have specific competitive advantages. Far better defined than FFH’s strategy, and it has been very successful.
I think FFH has already made some critical pivots that have made the business a stronger more durable one - for example, end to shorting, focus on organic growth in insurance. I think it could benefit from a couple more…
FFH always advertised themselves as one with lumpy return and Markel does not.
To me as long as they (each) match their “Restaurent” menu with what they are actually selling. That is all good.
Current & prospective investors will gravitate to preferred menu.
I suspect a lot of people have gotten into FFH at a good price vs. Intrinsic value and now that they are in, they may want a “smooth” Markel-like operation. I cannot say I blame that point of view. To me that periodic FFH discount is the discount due its lumpy rerun model. If I am all in at discounted price, there is a tendency to not prefer lumpy model going forward.
That said, I am happy with lumpy return. I added to Alphabet (finally after 4 years). So I get my smoothies elsewhere.
FFH shorts were different story. When you at 100% hedged, for so long, against a long portfolio. That is the anti-thesis of lumpy return. So it had to go.
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I don't know what you guys are talking about, i have had a very comfortable 40% return on Exxon in the past six months and about 20% in the past 3 months.
I liked that they grew their dividend very modestly last year. They binged on debt to finance their $15 billion dividend and now that has been paid back as well. Very conservative. Granted, it took a few years to exorcise the ghost of Rex Tillerson.
Now with their break-even at the $30s, this is their time, let the operating leverage kick-in and fill their coffers.
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There was a gentleman who was managing FFH's bond portfolio.
What happened to him ?
I recall people were saying here how he is the bond-king etc. But i have not heard of his name praised in the past 24 months,
Or is his absence really a function of the bond portfolio sitting in semi-cash for 4 years now.
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I watched his interviews with CEOs all the time. More for what CEOs say than what he says. Still I think he brings in value.
At the end, it is a show.
I think there one element that is missing in Jim Cramer shows. He only talks about buy and sell. What he should comment on is position sizing.
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Just an opinion:
I always thought of the TRS swap position as an accelerator. But that accelerator needs jet fuel. We had a few buckets of jet fuel: (1) bounce back of the underlying BV which usually lags, (2) news related to Digit and the hidden value and (3) the tender offer itself.
Is there a #(4) bucket of jet fuel somewhere ?
I doubt it. Keeping the TRS position now seems counter productive, given its +/- need for cash outlay that it generates on a quarterly basis. Either way, it was good of them to put in place when the did, but has the risk/reward ratio been tilted now ?
When they close it up. Hopefully they ll be clear on much they made on it.
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1 hour ago, Gregmal said:
Always thought an interesting question to ask folks was what they’d do investment wise if an asteroid was reported to be headed towards earth with almost certain probability of impact.
Scan the asteroid for its composition (gold, nickel etc.) and short whatever commodity it has within because the marketplace is about to get a massive supply glut. Head to the freezer. Re-emerge 3,000 years later. Of course RBC Direct Investing is still operational and as is the internet. Close the shorts and capture the windfall.
Get on Corner of Berkshire & Fairfax and showcase the CAGR for the return thread for the Year 5022.
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2 hours ago, JRM said:
Was the US investor only made whole because we won the war and destroyed most of industrial Europe? We may not win next time.
United States immensely benefitted from its geographical location (surrounded by two large oceans)*, its natural endowment & resources, and that it became that natural candidate to take the mantle of global leadership from the United Kingdoms and Europe.
While United States proper (continental US) remains unscathed throughout the war and turmoil in Europe, I think the geopolitical changes were so immense that it is wrong for Jeremy Grantham to sit there and casually observe that how bad the market return it was, as if most people stayed in the market and were watching Jim Cramer on CNBC etc. There were so many hurdles in life that individuals had to go through (relatively better if they lived in the U.S. and relatively worse if they lived in Europe) that point was not need to be made. I realize that Buffett also made the same point in 2020 AGM.
A better comparison is 2000, because while you had 9/11 etc., one could make the statement that all else being equal (since there were no major geopolitical event) this is what happened when the economy rolled over. So really isolating what we want to focus in.
*people complain all the time about Middle East and its politics, but they forget that the region does not have a natural barrier protecting it from the outsiders. It is often easy for people from U.S. and Canada to look down at the rest of the world and wonder why there are so many wars and conflict and look how great we are. Another case in point, Japan and United Kingdoms. Both islands at the far extremes of the Eurasian continent.
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Well that was kind of my point. I was not suggesting that gentleman in 1928 (on the eve of Wall Street crash) was thinking, "well, we just have to dollar average, see you in 1954", if something happens.
My point was that there is so much stuff happened between 1929 to 1954, it is unthinkable to even suggest that an investor who was invested in 1929 took him till 1954 to be made whole. Which is the point Jeremy made on the interview. That investor could have taken his/her life in 1933 for all we know. Entire nations were destroyed in the world war.
That point (about dollar average) though is very valid for 2000 bust and thereafter as society evolved to where we are today.
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Dean, i saw that interview as well.
But i do recall another interview months later with Bob Iger, where he said, he didnt know what Diller was talking about. (of course he would say that :-))
It is kind of weird how Diller just threw that in.
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I listened to the new Jan 2022 interview with Jeremy Grantham (admittingly I had watched his Jan 2021, i think 3 times, in the past year; Yes i am a Jeremy's fan). So I cannot say that I disagree with the things he says.
That said, I would disagree with his assertion that in 1929, you would have only made it in 1954. I think that point is irrelevant and it does not belong to this discussion. For one thing that means the investor never invested money again between 1929 and 1954 (possible in a Great Depression, but certainly not after).
Furthermore, from 1929 to 1954 you had: a deep global Great Depression, and World War, a complete obliteration of the industrial base in Europe, collapse of the Japanese Empire, creation of atomic bombs and its impact on geopolitical calculus, and establishment of a New World Order centered around Moscow and Washington and defanging of the British Empire. So all bets are off, in terms of what can one predict. And since we cannot predict I think the better example is 2000-2003 where the market rolled over lost half of its value ever 2-3 years with a sandbox of economic cycle. .... and not 1929 apocalyptic scenario and where the world change half dozen times over till "break even" is reached in 1954. You may have already died in 1944.
In my view, 1987 could have been a 1929 moment, but it didn't take hold, because the action policy makers took and so many other things that we dont even know about.
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Greg,
I believe that Bloomberg Front Row interview was done few weeks ago, tidbit of which was released only. And this week additional tidbits are released. I still cannot find his full interview. He did one last year which I thought was pretty good (but early).
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I sent this picture to a few friends, telling them that this is Berkshire Hathaway holding the line in a blinding blizzard of a bear market. (not exactly bearish with 10% down but still cool picture)
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2 hours ago, Parsad said:
Bought Macy's at $4.99 and Overstock at $2.99...crazy!
Cheers!
By the way, the movie "Dark Waters" that you recommended last year is finally on Crave TV.
Dont know if you remember, finally i will be watching it.
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2 hours ago, Kupotea said:
I think the FEDs action from the last decade can be seen as a fight against deflation. It makes sense to prop up the stock market when you need more cash in people's pockets.
Technically speaking, this is not their mandate.
Their mandate is inflation and unemployment (I believe). I think that asset inflation is just a by-product of Greenspanism and his successors.
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21 minutes ago, Viking said:
My biggest mistakes in investing the past 10 years have happened by not paying enough attention to what the Fed was doing
Maybe that was not the biggest mistake and perhaps it was the biggest pillar of your success. Depending on the way you are/were wired, paying attention too much on the Fed would have had you hedge your entire portfolio.
Perma-bears and perma-bulls are eventually both right in the fullness of time.
I personally think, unless if you are close to retirement, paying too much attention to the Fed can be a net costly mistake. Six months now, a portion of inflation which was more supply chain driven and not monetary related could be sorting itself out, in which case, it would help Fed, and the picture would change again, ... now with that new data point.
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6 minutes ago, Spekulatius said:
https://www.fool.com/investing/general/2013/08/19/what-i-plan-to-do-when-the-market-crashes.aspx
I sort of doubt the frequency of 50% crashed. hard to say with outlier events. If true, we had our fill for this century.
Most people run out of dry powder by the time it gets to 40%, depending how fast is descent.
A rapid flash crash of 45% (March 2020) can be timed to a certain degree and deploy capital efficiently.
A grueling 45% descent over 2 years with multiple bear traps will sap the investor's spirit dry. Someone with a $1 million portfolio may not have $200,000 cash on standby to deploy, and would feel throwing money into a firepit over the two years period, before his wife leaves him.
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I think if everyone would be patient, you get the additional Q4 data point as earning kick-in. Don't think prices is going to run away to the upside, but at least you have more data points to make a better decision, especially for companies who growth trajectories had a Covid-induced step change, so you are lapping Q4 2021, with Q4 2020 and pre-Covid Q4 2019. I own Mercadolibre and saw the lapping take hold in Q3 of last year as % growth in topline just trailed off.
Some of these growthier names (SQ, etc.) have crashed through their 200-day-moving-average.
If only Prem Watsa was shorting these names at the right time. Poor Prem. He cannot win. Xerxes will always complain.
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You guys all miss the dip on Resolute Forest, it is now 7% higher from its lows.
Lost your chance.
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i am looking at RTX, it barely budged lower. Maybe it will budge when the earning come out (i.e. Aftermarket impact from Omicron etc.) but not much affected in the broad sell off.
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45 minutes ago, Spekulatius said:
Significantly reduced LMT and NOC.
just raising cash or fundamental with the company ?
LMT at this point is an income play until the top line moves and defense cycle are less sync with the economy. So better no ?
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9 hours ago, Gregmal said:
I think the false aspect of @Viking post above is with respect to “all this is happening because the Fed is talking”…. what is “all this”? The Fed s been talking about rate hikes for almost a year and last year the market did 25%. We ve pulled back like 3-4% to start the year and are like 10% off even on the overvalued Nasdaq.
In a certain day and time this was really just something markets did. I remember the flash crash in 2010 maybe, when stuff like ACN went to a penny or something nuts. Dow lost 1000 points mid day FOR NO REASON! Everyone tried to make up a reason for it but really it was just markets doing market things and algos going berserk. Now I feel like folks spent way too much time trying to “survive” what was once just considered a standard pullback or correction.
It, in terms of a market or whatever, seems to be acting like a market can act from time to time. The last Fed meeting and notes were all pretty much orchestrated and laid out a plan that’s been known for months. Tech has been blowing up since February of 2021. That was the start of the bubble deflating. It actually I thinking started with the vaccine announcement if you followed stocks like ZM and PTON…they never saw those highs again. But it’s not like anything new has been happening really.
I would just caution ascribing too much to the narrative of the week which is currently “it’s the Fed”. A pullback can just be a pullback. Corrections happen. Tech garbage that was getting destroyed is still getting destroyed and excessive valuation is being questioned. This is a good opportunity to pick up stuff getting dumped over fear of “the stock might go down tomorrow”. Maybe another leg down happens but I don’t see anything fundamentally having changed. I do feel like we ve conditioned a generation of investors to run for the hills at the first sign of turbulence. I should start getting everyone their “i survived the 10% crash of January 22” shirts though. Would be nice gifts.
Gregmal,
The fear is that Fed cannot raise rate too much every time the economy is coming out of a downturn, before that rate increase engineers the next recession (leaving yet less ammunition to fight the next downturn). There clearly is a trend.
The Bitcoin and the Katie Wood crowd are not having a great day these days, but they believe this (above) (and so do I to a certain extent). Who knows how much of todays inflation is monetary related and how much is supply chain. If there are over 100 ships at the Port of Los Angeles jammed waiting to be unloaded, that is not going to get solved by Fed raising rate, but rather will need time. Once that unravels itself slowly, what is left is monetary inflation. And the view is that technology-driven deflationary forces in the medium/long term will overwhelm the inflationary forces, as they did in the 2010s.
Case in point, late 2018 and the pivot that Fed did on Christmas Eve (or around there) with markets were buckling up.
Yet there is another macro point of view (that is counter to what i said above) that I find interesting as to why the long term interest rate will permanently live on a higher plateau for many decades:
- The duplication of supply chain, un-doing of Just in Time, building up buffer inventories, will all take time & capital. This is happening at a global scale.
- Electrification and the green tidal wave will take time and capital that was not there 20 years ago.
- Contrast these two points with how little capital/Capex technology companies needed in the past 20 years, which contributed to the glut of capital and low interest rate.
- A steady supply of capital has been the baby boomers that have had their peak salary in the past decades, that will continue to wane, as they become a taker of capital rather than a source of capital.
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