Munger_Disciple

@gfp Here is what Buffett actually said during 2024 annual meeting on this topic: BECKY QUICK: All right, the next question comes from Slavin Vucelbrot. As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing, or will this function be exercised by Mr. Combs and Mr. Weschler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions, such as large acquisitions, be separated from the common stock selection process? WARREN BUFFETT: Yeah, I would say that decision actually will be made when I’m not around, and I may try and come back and haunt them if they do it differently. But I’m not sure the Ouija board will get that job done. So that job, I’ll never know the answer on whether it [will] get covered, but I feel very comfortable about the fact that it will be made by a board, that they’ve got loads of brainpower, they’ve got a dedication to an unusual institution, and they will figure things out. But I would say that if I were on that board and were making the decision, I would probably, knowing Greg, I would just leave… I would leave the capital allocation to Greg. And he understands businesses extremely well. And if you understand businesses, you understand… you understand common stocks. I mean, if you really know how business works, you are, you are an investment manager. How much you manage, maybe just your own funds or maybe other people’s [funds]. And if you really are primarily interested in getting assets under management, which is where the money is, you know, you don’t really have to understand that sort of thing. But that’s not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely with Greg. The responsibility has been with me, and I farmed out some of it. And I used to think differently about how that would be handled, but I think the responsibility should be that of the CEO. And whatever that CEO decides may be helpful in effectuating that responsibility. That’s up to [him or her] to decide at the time they’re running the money. So I would say that my thinking on that has developed to some extent as the sums have grown so large at Berkshire, and we do not want to try and have 200 people around that are managing a billion each. [It] just doesn’t work. And I think that when you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things, and I think Greg [is] capable of doing that. I think I’ve missed a lot of stuff in the past, so I’m actually wiser about doing that now. But I, you know, I would do it better this time around in 2008 and 2009 if something akin to that happened. But it won’t be exactly like 2008 or [2009], you can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly… Maybe it will be once every five years, probably [more like] once every ten years or something. But as the world gets more sophisticated, complicated, and intertwined, more can go wrong. And there’s no sense going through here exploring the possibilities of the different things that could happen. But you do want to be able to act when [something] happens. And I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn’t that people didn’t have money in 2008. It’s that they were paralyzed. And we did have the advantage of having some capital and eagerness to act, and a government that, in effect, looked at us as an asset instead of a liability. And I think that all of those qualities will be even more important as our capital pile grows. So I think Greg may have even more fun than I had in a period when extraordinary things were happening, and we were the logical place to go. You never know whether it’ll be next week, next year, [or the] next decade, but you [know], it won’t be a century from now, that is for sure. [The more] intertwined and sophisticated the world financial situation gets, the more vulnerable it gets in a certain sense. It solves a lot of small problems, but it leaves [the system] more vulnerable to large problems.

I came away with the understanding that Greg's responsibilities will mirror Warren's when he takes over and that makes sense. Only the CEO in-charge will be able to compare different capital allocation alternatives which include internal reinvestment, acquisition of 100% of businesses, minority ownership of marketable securities and buybacks; and determine the best option for retained earnings.

You guys are all talking about Todd & Ted but Buffett said at the 2024 AM that Greg will be managing marketable securities once he becomes CEO just as Buffett is doing now. This means that their current roles are unlikely to change once Greg takes over. They will still be managing relatively small % of BRK's equity portfolio as they are now.

This was a surprise for me: Howie says: Berkshire should continue holding annual meetings at which the leadership takes questions at length from shareholders. "One hundred percent, absolutely. I just hope I can do it and Greg can do it for eight hours like he does.” So Howie will be on the podium with Greg & Ajit post-Warren taking questions from shareholders. Before this, I thought it would just be Greg & Ajit.

Merry Christmas to all!

No, but LBRDK is down almost 20% in the last few weeks and Charter is down is a lot too. Plus both are down > 50% from their all time highs in August 2021. They are good tax loss selling candidates for longer term holders who have gains elsewhere in their portfolio like the big tech names.

CHTR, LBRDK

@Charlie Others have responded to your question already but in essence your understanding is correct. I would add that in the US if the estate is below a certain exclusion threshold (roughly $28mm for a married couple), there is no estate tax at the federal level. Whether estate tax is paid or not, the heirs of the estate get a step up in basis.

I agree with you @John Hjorth & @73 Reds about deferred taxes being a zero cost float that is very much accretive to investor returns. The only negative is that one must be sure that the company is "bullet proof" which BRK passes with flying colors. I would add that your heirs will get a step-up in basis when your estate is settled in the US, so they wouldn't owe any taxes on gains up to that point. In other words, deferred taxes become zero taxes at that point. It won't help you very much but it will help your heirs.

Unlike you, I take Buffett's word for it. Let's just leave it at that.

I can assure you Buffett knows the difference between resulting and a poor decision. The reality was that he misjudged how horribly GenRe's underwriting had deteriorated in the years leading up to Berkshire's acquisition of GenRe in 1998. You should read BRK reports from 1999-2006. GenRe almost certainly would have gone bankrupt w/o the deal with BRK.

agree that GenRe was not a good deal. Buffett said this in the 2016 Annual Report about the GenRe deal: Unfortunately, I followed the GEICO purchase by foolishly using Berkshire stock – a boatload of stock – to buy General Reinsurance in late 1998. After some early problems, General Re has become a fine insurance operation that we prize. It was, nevertheless, a terrible mistake on my part to issue 272,200 shares of Berkshire in buying General Re, an act that increased our outstanding shares by a whopping 21.8%. My error caused Berkshire shareholders to give far more than they received (a practice that – despite the Biblical endorsement – is far from blessed when you are buying businesses).

I don't think Hussman is a good investor but his writings are interesting.

John Hussman's op-ed in FT: https://www.ft.com/content/abec3526-32ae-493e-bf59-2d30ccb4e50f

At this point stock trading at 4x BV is purely hypothetical. We are discussing such a what if scenario only because @SafetyinNumbers brought it up. I think it is crazy to root for a highly overvalued stock (I think he even brought up 6x BV) especially if you are a long term shareholder still in accumulation mode. Having said that, I won't be unhappy if FFH trades at 4x or 6x BV. I would definitely cash out 100% of my shares at those prices. I prefer though for it to trade in a reasonable range relative to its BV, with the growth in share price mainly resulting from organic growth in BV, especially now that the stock trades at close to 1.4x BV.