Munger_Disciple

Wow, the silence is deafening.... Is it possible that very few subscribe to Value Investor Insight?

I am thinking of subscribing to Value Investor Insight. I am wondering if it is worth the price. I would appreciate any feedback from board members.

Buffett may be hinting that Berkshire is unlikely to beat the index by much going forward due to its size. He also said (for the first time I think) at this year's annual meeting that if the cash pile starts becoming too big like $150B, he has to think about a dividend.

Congrats Keith!

I wholeheartedly agree with Packer's advice. If you have passion for investing, just start doing it. Assuming you have a logical value investing mind set, strong analytical abilities and good background in accounting, I really don't think you need business school background or a CFA designation to be successful.

In the case of winners as a whole, both the BV and IV increase. BV increases because of the reinvested earnings. IV increases due to the return on those reinvested earnings (in other words, earnings power of the entity increases). But the ratio of IV/BV remains fairly steady. If the return on incrementally reinvested earnings is above average, one dollar of added book value will increase IV by more than one dollar.

Of course, I agree. But year to year, MV varies wildly as evidenced by -12.5% return in 2015 and +23.4% in 2016 unlike intrinsic value. But over the very long term, they do converge as we can see from the table on page 2 of AR. I think % change in BV will continue to work as a proxy for % change in IV imo. If Berkshire has a loser that goes to 0, both BV and IV of the loser go 0.

I found the following item on page 91 of the AR to be quite interesting: Lubrizol’s earnings in 2016 included pre-tax losses of $365 million in 2016 related to the disposition in the fourth quarter of an underperforming business. So it looks like Berkshire sold an underperforming division of Lubrizol!

The gap between BV and intrinsic value (IV) will increase over time as Buffett pointed out in the AR. However % change in BV most likely will track % change in IV over the long term while the absolute difference between BV and IV will continue to grow. Thus % change in BV is still a good proxy for % change in IV. Assuming MV tracks IV over long periods of time, you can actually see this phenomenon at work in longinvestor's table.

Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.

I am kind of bummed that Buffett may have loaded up on airlines. God, I wish he bought back $12B of Berkshire instead.... I know it won't happen but I can dream.

+1

I never saw this program before last night. I tuned in to see last night due to the publicity surrounding Buffett. I thought the whole program was very boring and will not watch another episode again.

Fortunately, Buffett has lately been dumping WMT shares. He sold 2/3 of the WMT position during Q3-2016.

I certainly hope Berkshire doesn't buy WMT! If it happens, that would be the signal to sell Berkshire.

So do you think 24.5% CAGR in earnings from 1999-2007 at BHE is not impressive? With or without dividends, 24.5% CAGR is stunning in my mind especially given that return on invested capital is decent.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.

My guess is yes. There is a line called "Real estate brokerage" under BHE earnings in all the annual reports.

Buffett Most of the earnings growth at BHE/Mid American occurred prior to 2007. Per the 2007 annual report, Mid American earned $15 per share in 2007. So its per share earnings doubled in 9 subsequent years, a pretty decent result (8% CAGR) given what we went thru' during 2008-2009. But it is not amazing. However from 1999-2007, Mid American earnings per share increased at a CAGR of 24.5%, a stunning result.

New CEO named at Fruit of The Loom: http://www.wsj.com/articles/fruit-of-the-loom-inc-names-melissa-burgess-taylor-as-chairman-ceo-1480636167

Complete letter from Howard Marks: https://www.oaktreecapital.com/docs/default-source/memos/2015-09-09-its-not-easy.pdf?sfvrsn=2 Excerpt What Charlie and Professor Galbraith meant is this: Everyone wants to make money, and especially to find the sure thing or “silver bullet” that will allow them to do it without commensurate risk. Thus they work hard (actually, study is intense), searching for bargain securities and approaches that will give them an edge. They buy up the bargains and apply the approaches. The result is that the efforts of these market participants tend to drive out opportunities for easy money. Securities become more fairly priced, and free lunches become harder to find. It makes no sense to think it would be otherwise. And what about the next seven words: “Anyone who finds it easy is stupid”? It follows from the above that given how hard investors work to find special opportunities, and that their buying eliminates such prospects, people who think it can be easy overlook substantial nuance and complexity.

Munger never claimed it was easy. To the contrary, he thought it is exceedingly difficult. Per Howard Marks: In 2011, as I was putting the finishing touches on my book The Most Important Thing, I was fortunate to have one of my occasional lunches with Charlie Munger. As it ended and I got up to go, he said something about investing that I keep going back to: “It’s not supposed to be easy. Anyone who finds it easy is stupid.”

+1 I sure hope he is not levering up his levered small cap stocks with margin debt......

This whole levered strategy does not make sense to me. Does it not violate the first commandment of value investing? i.e., Margin of Safety? Buffett never invested in levered small caps in his partnership days. All his small/micro cap investments had huge margin of safety, starting with a very solid balance sheet.

Thanks VNY!