Munger_Disciple

I also looked at Lindt & like you concluded it was very richly valued. BTW See's has an online store (https://www.sees.com/dark-chocolate) so you might be able to order from them. I recommend the following: Dark Almond, Dark Walnut, Dark Nougat, Dark Pecan, Dark California Brittle & Almond Royale.

I am with you on this generally. Love dark chocolate (especially the Belgian stuff), can't stand the milk variety. I am a naturalized US citizen, originally from India. But See's has added dark chocolates a few years back and some of them are very good. Try the dark with walnuts, marzipan and dark nougat at See's.

Berkshire press release about the consolidated 13-F: https://www.berkshirehathaway.com/news/may1523.pdf

Also didn't add to BAC. Just consolidated holdings from the two 13-Fs.

Thanks for sharing!

+1 I had the same thoughts exactly. Wonder if there would be nasty u/w surprises at FFH.

I found this blurb in Buffett's 1991 letter to shareholders: Malcolm G. Chace, Jr., now 88, has decided not to stand for election as a director this year. But the association of the Chace family with Berkshire will not end: Malcolm III (Kim), Malcolm's son, will be nominated to replace him. In 1931, Malcolm went to work for Berkshire Fine Spinning Associates, which merged with Hathaway Manufacturing Co. in 1955 to form our present company. Two years later, Malcolm became Berkshire Hathaway's Chairman, a position he held as well in early 1965 when he made it possible for Buffett Partnership, Ltd. to buy a key block of Berkshire stock owned by some of his relatives. This purchase gave our partnership effective control of the company. Malcolm's immediate family meanwhile kept its Berkshire stock and for the last 27 years has had the second-largest holding in the company, trailing only the Buffett family. Malcolm has been a joy to work with and we are delighted that the long-running relationship between the Chace family and Berkshire is continuing to a new generation.

News item tangentially related to Berkshire. I believe Malcolm "Kim" Chace used to be a Berkshire board member. His family was the only one of the large original "Berkshire Hathaway" shareholders who didn't sell stock when Buffett took control and rode it all the way. https://www.golocalprov.com/news/billionaire-chaces-will-was-changed-in-final-days-of-his-life-he-was-comple

Yeah, BAC had $12B cumulative losses on hedges so far with most of it ($10B) coming in 22. I agree with you that their hedging sucks. I don't understand why they bet on interest rates staying low when they were already very low when they placed such a bet. JPM seems to have managed interest rate risk better than BAC but then JPM has a massive derivative book so one should be cautious with JPM as well.

You are correct @gfp. Negative number would have been a gain (regulatory capital is calculated assuming assets are HTM without taking into account mark-to-market gains or losses), so BAC hedges cost them $10 billion in 22.

Thanks for pointing it out. Looks like BAC hedged at least a portion of their HTM securities' exposure to rising rates.

Only if BRK ownership exceeds 10% (sale to be reported within a couple of days). Otherwise around May15th when they file 13F for Q1 2023.

My impressions after seeing the interview: On Banks: Buffett saw that all the banks were reaching for yield as they got massive deposits during COVID and sold all of them that BRK owned last year except BAC. He would have also sold BAC if he weren't knee deep into it (> 10% position) with a very low tax basis. Looking at BAC balance sheet, they owned a boatload of agency RMBS at low yields. Of course BAC's deposit franchise is bullet proof, Moynihan is a good guy and they are too big to fail so there is no LT risk there but their SH equity will take a hit from higher interest rates. Ajit & Greg's Relationship: To me this is the most interesting part of the interview when Becky asked Greg about his relationship with Ajit. It is clear that they now have a closer relationship than before after they both were appointed Vice Chairmen & Board members. And it seems to be a very respectful mutual relationship. I came away thinking: Ajit=New Charlie, Greg=New Warren. We are in safe hands. Paramount: Clearly it was a Buffett position. The funny thing is that he talked about all the reasons not to own it or other media companies including the fact that he thinks streaming is a really shitty business. My guess is that he sold it in Q1. Apple: Looks like Apple has become a sacrosanct position in Buffett's mind on par with Berkshire. These are the only two securities he kept in Allegheny's portfolio and blew out everything else. And he loves Tim Cook. Mr. B thinks he made a dumb mistake when he sold 10% of Apple position at $115. Mumbled something about taxes. Greg's BRK Ownership: Will continue to accumulate more shares in the future with his own capital freed up from BHE sale. Good news for BRK shareholders.

@Viking Why do you use 95CR as the "normalized" number for insurance? I would think it is almost impossible to predict insurance underwriting results on a yearly basis (shit may hit the fan in any given year just due to randomness even if underwriting is disciplined) & one can only make an educated guess about any company's longer term underwriting results. I would think something like 100CR is a very good LT "normalized" underwriting result for any insurance company (especially when treasury bills yield 5%).

You are right that most are self-made millionaires thru' ownership of businesses in the US. However there is a huge difference between being a private business owner and a passive investor. When you are the business owner, you make all of the important decisions; whether the business succeeds of fails it is 100% on you. When you are a passive minority shareholder you are coat-tailing someone else and hope that the guy in charge is competent, and acts in the best interests of all shareholders. You also hope that the business is a decent one. I think it is easier to go all in when you are the control owner-operator in a business you truly have an edge. Most people I know took such risks when they were younger. So one might have to concentrate in a private business when he is smart/business savvy, poor & hungry. For most people diversification is the way to stay rich though I would agree that that there might be instances when one might concentrate a bit more.

This is a great post. Survivorship bias is a real problem with the concentration strategy and it won't work for most people. It takes a unique skill and temperament to succeed at it (Munger, Buffett). It is worth remembering that even Munger & Buffett's buddy Rick Guerin blew up with this strategy even though he somewhat partially recovered from it with his real estate investments. We only see mostly the successes resulting from the strategy but never the huge number of blowups. Even Buffett & Munger are hugely diversified later in their life through their ownership of Berkshire which owns a variety of businesses.

@Viking Thanks for sharing your experiences. Congratulations on your success and all the best to you & your family. Concentration & position sizing is a very interesting topic. To get rich, I think one would have to concentrate but only after doing extremely thorough due diligence in a name/industry they develop deep understanding in. Even then, something could always go wrong. So it has to be a situation that is almost 100% certain to work out over the long run & trading at a deep discount. I suspect opportunities of this type are very rare so one has to act when it falls inside their strike zone. Everyone likes to quote Munger and Buffett about concentrating but no one is Buffett or Munger. We need to be careful with survivorship bias when it comes to concentrating (and hence copying others). We each need to understand our own advantages & limitations and act accordingly. Added thought: A less stressful & perhaps easier way to achieve concentration is by starting with a semi-concentrated portfolio (say 10 positions) and have one of the positions become huge relative to others due to a home run.

Yes Schwab margin has always been negotiable.

Only for very high $$$ margin amounts. Its higher for lower amounts: https://www.interactivebrokers.com/en/trading/margin-rates.php

If they quoted Fairfax stock price in Zimbabwean dollars the results will be even more amazing! But seriously Watsa should quote stock price appreciation in USD since BV is always quoted in USD. He can add a CAD column for price as the third column.

On pages 20 & 21, why is Watsa comparing intrinsic value (book) growth in USD to stock price appreciation in CDN? Doesn't make any sense to me. Both should be in the same currency, preferably USD.

To each his own. We are all free to bet the way we want & that's what makes it a market.

+1 In addition, I think there is an excellent symbiotic relationship between insurance & BHE where insurance generates the capital via float and can be invested in BHE at decent rates of return. That's why I think it would be stupid to try to break up Berkshire. As a whole, Berkshire's intrinsic value is greater than the pieces.

I will take the other side of this bet, i.e., Berkshire will endure in its current form for a long, long time.

You guys should all relax about the break-up of Berkshire. It isn't going to happen (with very high probability) during our lifetime and beyond. Buffett knows his most important legacy is Berkshire and he is firmly against break-up; he wrote extensively on the advantages of the Berkshire conglomerate structure. He structured Berkshire so that it is almost impossible to break-up and successor is firmly in place. Do you guys really think he is going to blow the important thing for his legacy? I don't think so.