Munger_Disciple

Barron's: https://www.barrons.com/articles/berkshire-hathaway-buffett-stock-price-0b50b345?siteid=yhoof2

LOL

Ajit & insurance seemed to carry the day. Shoutout to Todd Combs @GEICO. Not much to write home about BHE & BNSF. Warren loves the Japanese trading companies. Get the feeling Greg will be CEO pretty soon from Warren's comments. No buybacks & no dividends (yes!) Warren seemed to compare Greg to Charlie in terms of waiting patiently for opportunities & pouncing on them when he finds them. Good sign! Warning the govt not to debase the dollar by running huge fiscal deficits & use taxes wisely Three best decision of Warren's life: GEICO (business), Ajit (managerial) & Charlie (partner, advisor, friend)

At a minimum, he thinks the shares are not trading at a reasonable discount to intrinsic value.

The thing the surprised me most about the 2023 AR was how negative was Buffett about BHE (Berkshire can sustain financial surprises but we will not knowingly throw good money after bad) and to a lesser extent about BNSF. Just a couple of years earlier, he said this in the 2021 AR: In truth, Berkshire owns and operates more U.S.-based “infrastructure” assets – classified on our balance sheet as property, plant and equipment – than are owned and operated by any other American corporation. That supremacy has never been our goal. It has, however, become a fact. At yearend, those domestic infrastructure assets were carried on Berkshire’s balance sheet at $158 billion. That number increased last year and will continue to increase. Berkshire always will be building. That's quite a turn of events in just 2 years. It seems Pacificorp was slow to recognize the losses from 2020 wild fires; that's probably why it has a new CEO.

Makes sense. I too find position sizing one of the most interesting and challenging topics in investing. Like you said, many factors come into play.

@Viking You are most likely the most bullish (apart from @SafetyinNumbers) guy on Fairfax Just curious how do you position size FFH currently as a % of your portfolio?

Exactly! Book value is the input into the business and intrinsic value is the output of the business. Companies like See's, Coca-Cola, Costco can operate with almost no capital at all.

I am with you; been a BRK shareholder for 24 years now

You & @dealraker might be the longest tenured BRK shareholders on the board. Buffett in the 2022 AR: "There are many Berkshire centimillionaires and, yes, billionaires who have never studied our financial figures."

Congrats @73 Reds! So you bought BRK in 1983? Tell us more

Bloomstran should publish his report a couple of weeks after the Berkshire report after digesting the Q4 results. Looks like he is trying to get visibility & press by releasing a day before the AR. Or perhaps he is worried nobody is going to read his report if it comes out after the AR.

Knowing @gfp's sense of humor, he was just kidding.

As a US shareholder, I don't like the dividend to be honest (with all the BS Canadian tax withholding & all). I would rather they retain 100% of earnings like BRK & press the gas pedal on compounding (i.e., create > $1 mkt value for each $1 retained).

One big difference between FFH & BRK is that BRK has no SBC for anyone, not just for Warren. But Prem basically takes almost zero salary just like Warren.

This is one of the big things at FFH that clinched it for me when I finally pulled the trigger ~ three years ago (after sucking my thumb for far too long) and bought a significant stake (for me) of FFH. As the old German saying goes: Man is too soon old, and too late smart! But then it is better to be late to the party than never .

The reality of SBC plans is a lot more nuanced than you seem to imply. There are abused way too often by management (used to be just tech guys, now it is more wide spread) to the detriment of shareholders. That may or may not be the case at FFH, but minority shareholders should always be on the lookout. IMO the best comp plans are those at Berkshire, i.e., all cash based and no SBC at all. Ajit, Greg and other managers buy the stock just like us with their own money, as do the board members. Real skin in the game and complete alignment with shareholders. If the SBC at FFH is just matching 10% of employee comp with stock, and they are buying back stock in the market to satisfy the SBC, I am ok with it especially if it has a long enough vesting period. I would like to see the details of the plan though. When you are a minority shareholder, it pays to be skeptical rather than assume everything is wonderful IMO.

Yes he retired at least a decade ago. I admire Jean-Marie; when he lost > 50% his AUM in the go go dot.com bubble days of late nineties because he refused to participate in the mania, he remarked: I would rather lose half my clients than half my clients' money. A class act!

Well-known value investing firm First Eagle is for sale: https://archive.ph/YPSXX I didn't know that First Eagle was owned by PE firm Blackstone. The famous value investor Jean-Marrie Eveillard used to work there. Hopefully this is a bottom indicator for value investors.

As @Maverick47 pointed out, the SBC cost (i.e., cost of replenishing the treasury shares marked for employee comp) in 2024 was $240mm, not $2.8B.

Thanks @gfp! I was trying to find the head count from 2014 AR but they don't seem to have an aggregate number, but they did disclose the employee numbers for the various groups under the corporate umbrella. I need to sum these up in a spreadsheet when I have sometime this weekend.

Do we know how much the employee count went up in the last 10 years? If it is mostly due to the growth of the company & if it is truly implemented as @SafetyinNumbers says (just using a portion of employee comp to buy shares for them in the open market to encourage stock ownership by employees; I would like to see a reference though), I would have slightly less heartburn.

Yes, it is part of employee comp and should be treated as such. None of the share buybacks that go into treasury will be beneficial to outside shareholders and should be treated as such when counting the diluted number of shares outstanding. To be fair, FFH does include the treasury shares in computing diluted earnings/share. Personally, I would also include the higher number of shares in calculating the book value per share (even if it's not industry practice).

Did the employee comp go up 20X in 10 years? That's a lot!

It is dilution of buybacks, some of which are going towards SBC. Any way you look at it, it is coming out of shareholders' pockets. It bothers me that SBC went up so much in the last 10 years. I was estimating $500mm from LA fire damage but the estimate they gave seems a bit higher ($500-$750mm range). Hopefully they can jackup the reinsurance rates going forward. Other than these two items, things seem to going well.