Munger_Disciple

From Viking's chart there seems to be a huge jump in treasury shares since 2015 by like 4X. We should really be using diluted share count to calculate book value rather than the BV per basic share in the press release.

The only thing that makes sense is the employee stock grants. Quite a hefty tab; I wish they paid them in cash instead following the Berkshire system. We will find out for sure when the annual report comes out. Somebody should ask this question on the conf call.

That's a lot of employee shares in just one quarter.

It's confusing to say the least. Why don't they make a very important item like the share count calculation clearer? Seems like a good question for the conf. call tomorrow.

One would think they would say something in the press release?

One can only estimate a range for these types of things, but we will find out soon enough (like this evening)!

I read somewhere that FFH has a 1% exposure generally to insured losses, which agrees with 1/3 of BRK exposure (BRK has 3%). However BRK had minimal exposure to CA wildfires. My expectation is that FFH losses for CA wildfires will be in the $500mm range, given the current estimates of $50B of total insured losses.

On Dividends: I think buyback accomplishes the same thing as a dividend for continuing shareholders, who can then manufacture their own dividend at a time of their choosing in a more tax efficient manner by selling a small amount of their stock (only capital gains are taxed) w/o affecting their proportionate ownership in BRK. The trouble is that BRK stock is no longer cheap so a buyback is off the table for the time being. I suspect a dividend is almost inevitable at some point in the next few years. Then the dividend can be coupled with opportunistic buybacks to return capital to continuing shareholders. On Outperformance vs Index: A minor outperformance (like 1% per annum) is certainly possible over the next decade, if (1) rates stay elevated, and (2) market multiples return to a more "normal" range. All the reasons you state certainly help the cause. We should however heed Munger's advice: Secret to happiness in life (and investing) is having low expectations. On Safety: I agree that it is about as safe an asset as you can hold for retirement or any other purpose for the long term whether it outperforms the index or not.

Generally agree with the post but I am a little more optimistic about BRK's longevity in its current form than perhaps you are. We know that the charity managed by Warren's three children will inherit Warren's controlling stake in BRK when he passes. So at least for the next decade, the charity will own a very large stake in BRK. And Howie & Susan will be on the board for another decade as well. On top of that, the BRK's board consists of Warren's friends who are deeply committed to BRK culture (Weitz, Davis, Witmer, etc.). It is also conceivable that BRK will start paying a small but regular dividend in the next few years which could extend time period of stock ownership of the charity that inherits Warren's stock. I am not worried about some PE or activist trying to take over BRK for at least 15 years or so. After that who knows? BRK will have to earn its success beyond that time frame. Exxon/ Standard Oil is a good example to replicate. And BRK & Exxon have some similarities; both have excellent long life assets, good management & a deep ingrained shareholder oriented culture. I'll be happy if BRK just manages to match S&P 500 performance over the next several decades. It will be hell of a company regardless for a very long time I think.

Shareholder since 2002. Added several times since then, and sold a tiny bit for the first time in 22 years (excluding gifts) last year. Yes, it has been a good investment but more importantly I learned everything I know about business & finance from Munger & Buffett. Also so many life lessons! Became a Munger groupie (I live in CA so it was relatively easy to attend practically every public event with Charlie since 2000). Spoke to Charlie a couple of times about everything under the sun. That was the "Road to Damascus" moment for me. He is my "guru".

It's called probabilistic thinking & judging the odds of something happening or not. Anyhow, one can only have "fact or data" about the past, not future. Future is always about "judgment". But, I agree let's move on.

Of course no one knows for sure what the future holds but I feel pretty confident as a shareholder that BRK will stay in its current form for >10 years. A humble suggestion: try to be respectful to other posters. No one is selling anything here, we are all discussing potential future outcomes.

Just the sheer size of BRK makes it almost impossible for activists to agitate for change. Its market cap is $1 trillion now, and is likely to be $2-$3 trillion in about 10 years from now. Add the voting control by A shareholders, we can safely say BRK will remain in its current corporate structure for the foreseeable future. For instance, MSFT has had no activist issues despite founder shareholders (Gates & Allen) exiting, largely due to its size.

Great post! I would just add that Buffett's daughter is also on the board to provide additional security against evil PE barbarians.

Got it

Fund manager should not accept funds if he thinks returns are likely to be poor IMO especially with higher asset base. Some funds indeed do close to new investors. In any case, this is how I evaluate funds. In my example, nobody thinks that fund manager did a great job, and it's the clients' fault. Your analysis of Pabrai Funds effectively shows the same thing. Results with tiny amount of capital were great, then Pabrai seemed to have attracted a lot of money at the top & subsequent results were poorer.

If you don't need international trading, go with Schwab. Has local branches & good customer service (for a discount broker) in addition to easy trading platform. If you need international trading, go with IBKR & put up with shitty customer service.

I know that the mutual fund industry doesn't use MWR but I think they should show both TWR & MWR. A prospective investor should care about the MWR even more so than TWR because it shows how the fund does when it scales up. To illustrate the usefulness of MWR, let us consider the following (extreme) example: Fund starts with $1mm and doubles in the first year to $2mm. Because of the 100% return in its first year, $1 billion additional capital pours into it at the beginning of 2nd year, and the fund goes on to lose 40% in the second year. It's clear that the fund lost a cumulative $399.8 mm for all investors over the two years. But its TWR (annualized) is still a very respectable 9.54%. However the MWR of almost -40% captures how bad the fund really was. From your calculations, it appears that Pabrai Funds is a good example of this discrepancy between TWR & MWR.

Thanks for the explanation. Another useful way to see how a fund does is by looking at money weighted returns, or more commonly known as IRR which takes into account the timing of incoming & outgoing cashflows. A manager may have a decent time weighted return (a metric used by almost all funds, which only shows $1 invested at the beginning did over time) but a lousy money weighted return. That may be indeed the case with Pabrai Funds. Munger actually pointed out the usefulness of MWR in one of his last interviews.

I too am still confused. Suggestion to @Vish_ram: perhaps you can post the IRR for both options & when the capital is invested/taken out for the two strategies.

@Vish_ram can you please explain your chart? Is the final value a compounded one? Does't appear to be.

More 5G spectrum sales on the way, which will decrease the residual value of SIRI's spectrum: https://www.lightreading.com/5g/carr-hands-a-spectrum-gift-to-5g-industry

I think you''re right. Looks like he is getting off the coal wagon, onto another (Nick Sleep?) wagon.

I think Ted is a phenomenal investor but this SIRI thing looks more like a cigar butt to me. 2025 outlook from the company looks awful. I presume he thinks there is enough juice in it to wring out before the ice cube melts. While DTV (Directv) investment produced a great return, I think he & Malone got lucky in that the village moron (AT&T) decided to buy it at a massive premium valuation before it promptly went to 0.