Munger_Disciple

FT interview with Katie Farmer, BNSF CEO: https://www.ft.com/content/5f3f13f8-8ad1-489e-b3ce-123c42c48841?syn-25a6b1a6=1

Yes, I think Berkshire entered a phase where there are no more family run businesses of size to buy. There aren't that many left and there is huge competition from PE for whatever (even $1-$10B size) is left. So Warren & Greg decided that they might as well try to "optimize" or "rationalize" the businesses they already own.

BRK stock might go up if it buys SPCX given the how crazy the market is right now

As a LT BRK shareholder, I'll be happy even if BRK underperforms the SPX a by a percentage point or so in the long run due to large amount of deferred taxes on my position.

If Greg starts buying SpaceX IPO shares at $1.75 Trillion valuation, I will have to seriously rethink my BRK holding

Even more if you account for the actual cost of stock based comp.

I am a little surprised that Berkshire is buying stock at a 25X multiple. I was hoping that it would be a convertible preferred stock with a big coupon attached. Why not a $10B buyback instead?

Thanks for the explanation of the contract. I didn't delve deep into this. So it all depends on when they pay out the remaining $7B or so.

It's funny that the article talks about the $10B AIG deal as not that great for Berkshire. But assuming remaining liabilities are close to 0, it's like a 10-year loan that cost Berkshire less than 3% interest.

Rephrasing Munger, it boils down to your opportunity cost. I do think Berkshire will be a solid holding going forwrd with very low risk of permanent loss of capital. But it won't shoot the lights out; its size makes significant outperformance highly unlikely. I started buying Berkshire in my thirties and it has been a rock solid investment. But now there are possibly better alternatives like Fairfax. But you have to do your home work and be realistic about alternatives & your investing skills in identifying them. For LT Berkshire owners it makes all the sense in the world to continue to hold Berkshire even if it underperforms the index over the long term from this point forward due to significant amount of accumulated deferred taxes. For newcomers, the math is much harder; there are better alternatives depending on your skill level.

Based on the WSJ report & this filing, I am pretty sure it is Ted who bought Delta. Greg did an interview with Becky before the AGM and he was pretty cold on the whole airline industry when she asked about it. Said he was happy with just owning NetJets.

I own BRK & FFH but not MKL though I think it's a decent company. I have been an extremely happy & content BRK shareholder for > 25 years now (sold a tiny bit last year for the first time in my life & it felt a little weird to be honest) and a Fairfax shareholder for about 4-5 years now and expect to hold its stock for the very long term. Agree with your perspective on BRK. Unlike others on the board, I think it will be very hard for Fairfax to compound at 15% for a very long time. I think they will run into the same problems as BRK eventually but I expect them to do better. I can see FFH compounding at close to 15% (unless there is a CAT event) in the next 5-7 years but after that who knows?

LOL

Looks like Bancroft shut down Makaira: https://www.dataroma.com/m/m_activity.php?m=MP&typ=a cc: @gfp

Warren taking one final shot at airlines?

I am not talking about stock price correlation, but business correlation. There are all subject to the softening insurance cycle. The effect of insurance cycle is obviously lower for Berkshire due to the many non-insurance operations it owns. You are not the only one. I suspect a vast majority of this board thinks similarly.

Interesting to see MKL > BRK in your portfolio. I think the reason FFH was not that correlated in the past was due to a confluence of factors: bad u/w results and macro bets (CDS followed by equity hedges). I expect FFH to be quite correlated to the other two going forward.

Actually SPX is a good diversifier for all the insurers given it's quite tech heavy though not right now due to its high valuation. What is your portflio allocation among the four?

No doubt, I don't mean diversify into AI related stocks. Perhaps into other bombed out sectors like SaaS companies. Ex-US has become interesting again.

One problem with investing in all three (without other diversifying investments) is that all three businesses are highly correlated with each other as they are primarily insurers (less in the case of BRK). Correlation is especially high for FFH & MKL. It thus makes very little sense to invest in both of them.

Yes!

We clearly have a different view on what's appropriate behavior for a board member is. Let's leave it at that.

As far as I know, Davis never told anyone to go and buy Berkshire. And he didn't make power point presentations on how great the numbers are at an investor conf. In the media interviews I find him quite measured.

I thought it was highly inappropriate just like you. I don't think I have ever seen an independent board member of a public company pumping the stock like that. Very unseemly & very un-Berkshire like. Besides it makes no sense to pump the stock up when the company is apparently buying back stock. Someone should tell her to stop this.

I was hugely impressed by Ajit's intellect, clarity of thought, wit & wisdom at the AGM. No wonder Warren thinks so highly of Ajit! What a treasure for Berkshire!!