Munger_Disciple

I also think Berkshire is a totally different company now compared to the eighties and seventies to state the obvious. The ROE on Berkshire SH Equity in 70s and 80s was off the charts unlike today. So levering up BRK with debt is more dangerous now than before, especially given that the markets are quite bubbly.

This is very different from margin debt; mom wasn't going to call on the loans even if daughters didn't make a payment on the note for a few months. But a great strategy to keep in mind.

IIRC Warren called his broker and instructed him to sell a few Berkshire shares to raise cash saying that Susie wanted to buy a house. He probably bought back those and more later after getting a mortgage.

I am not sure you are correct. Buffett actually sold a few shares of his Berkshire stock in the 70s when his wife wanted to buy a house in Laguna Beach. More importantly, Buffett said this in the 2014 Special 50-year shareholder letter: "Another warning: Berkshire shares should not be purchased with borrowed money. There have been three times since 1965 when our stock has fallen about 50% from its high point. Someday, something close to this kind of drop will happen again, and no one knows when. Berkshire will almost certainly be a satisfactory holding for investors. But it could well be a disastrous choice for speculators employing leverage."

Do you have a reference? IIRC Buffett expressly recommended against using margin as any stock can fall > 50%.

BNSF news: https://www.wsj.com/articles/bnsf-railway-furloughs-mechanics-in-kansas-nebraska-c56ba7a5?mod=hp_minor_pos13

Yes indeed.

BHE is named a defendant in lawsuit on real estate commissions: https://www.wsj.com/finance/warren-buffett-is-getting-dragged-into-the-real-estate-commissions-litigation-79696153?mod=hp_lead_pos10

Thanks @John Hjorth & @gfp. The number in gfp's post seems to be correct as I remember it. The rest are owned by First Manhattan's clients I believe.

I thought the Gottesman's stake in Berkshire is worth a lot more than $1 billion. Perhaps already distributed to heirs?

@gfp If you don't mind sharing, what % of your portfolio is in FFH? And what do you expect the book value to compound at long term (not the next couple of years)? Any thoughts on relative performance you expect vs BRK going forward? Thanks

Excellent points! I have had pleasant LT experience (22 years+) with Berkshire in my taxable account which I continue to hold. But I expect lower returns going forward from BRK. I view FFH as riskier (in almost all respects) than BRK with potentially higher medium term return, so I own less of it compared to BRK primarily in my tax deferred account. I don't think FFH can duplicate the 1980-2000 success of Berkshire going forward even if its management is as good (& it is not). Even BRK couldn't duplicate its past success today if starting out with a much smaller capital base & younger versions Warren, Charlie, Ajit & Greg. There is way too much competition.

I consider it an honor to be muted by you.

For the benefit of at least one of the newer posters on this board who seems to think he knows everything, I would just say this: @gfp is one of the best posters with deep knowledge of the companies he comments on. I truly respect, enjoy and look forward to reading his posts and I always learn something new from him. There are very few posters on this board board I feel this way & @gfp is one of the best.

I know what you mean; very much appreciate all your posts.

Got it, thanks

I take it you manage SMAs? Is there a web site people can get information? Thanks

I don't think "they" read anything.

Yes. I also think he is more frustrated about BHE than BNSF in the bigger scheme of things: "Our second and even more severe earnings disappointment last year occurred at BHE."

Excellent point. Plus BHE projects tend to be very long term projects like the transmission project Buffett referred to in the 2023 letter.

Yes, I pointed out the possibility of a dividend in an earlier post. I hope they don't have to pay a dividend, and find some decent opportunity to reinvest the earnings. But the reality is that if investing big sums in BHE is off the table, Buffett is signaling that they may have to pay a dividend (instead of buying back a ton of shares) if the stock trades closer to its intrinsic value, as it seems to currently.

On BHE there was a big change in Buffett's thinking from 2021 to 2023. 2021 AR: "Berkshire will always be building." 2022 AR: "And yes, our shareholders will continue to save and prosper by retaining earnings. At Berkshire, there will be no finish line." 2023 AR: "Berkshire can sustain financial surprises but we will not knowingly throw good money after bad...... I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so."

I found the following comments from Buffett's letter noteworthy: Buffett basically declared that the days of acquiring large private businesses is over due to Berkshire's size & increased competition from PE. He said "Berkshire does not currently pay dividends". Perhaps preparing shareholders for the day they might have to given the potential issues facing BHE? He especially seemed negative about BHE's prospects (and perhaps a bit less so about BNSF though he pointed out labor wage increases driven by President & Congress). If Berkshire can't reinvest huge earnings into more capex at BHE at decent regulated returns, it would indeed be a negative for Berkshire. Buffett said Greg is ready to be CEO tomorrow in all aspects; not a surprise but perhaps preparing shareholders for the eventuality. Given the problems at BHE & BNSF, he seemed to appreciate the virtues of Coke & Amex holdings even more than he used to. He really seemed to have a high opinion of Vicki at OXY. I thought it was funny Buffett was trying to entice shareholders to attend the annual meeting by dangling the prospect of getting to meet his very rich & attractive nieces in Omaha.

Perhaps Buffett has become more mindful of the advantages of long term holdings Coke & Amex which keep chugging along in light of new problems at BNSF & BHE.

This guy is seriously funny!