Munger_Disciple

I am thinking of attending the AM. It would be my first time. How long does the meeting last? I know it starts at 9:30am EST.

From a slightly more trusted source (FT): https://www.ft.com/content/18a264f6-2205-47fa-88f3-4f351edfc01e

In the third quarter 2023 FFH interim report, Note 6 shows the carrying values and fair values for investments in associates. So the total fair value of these investments exceeds the total carrying value by 940mm. In other words, book value is understated by 940mm for these investments. Instead of taking a wholistic view, MW focuses only on those investments like Quess whose carrying value exceeds its fair value. Moreover Carson Block starts out his short thesis by claiming that BV only grew 9% instead of Prem's 15% goal. If this is headline of short thesis, those of us who are long have nothing to worry about. MW is report is very disingenuous & misleading to say the least. Blessing in disguise for those longs looking to increase their position.

Even if he is negative on Fairfax, you would think there are far better short options for him after this huge run up in tech stocks.

I am not an expert on IFRS, but doesn't it also have to do with discounting the insurance liabilities to come up with current fair value? In GAAP, the liabilities are un-discounted as I understand them.

And it is not a particularly good book either.

I don't know much about the location of these builds; could be in very underserved areas with little competition. In general, the "good' locations" for overbuilds get decent numbers initially, and incrementally returns get harder and harder after the initial uptake. This is especially the case with an incumbent.

One could argue they practically exited fiber.

It takes a long time for a new entrant to get anywhere close to 50% penetration (if ever) and that time dramatically reduces IRRs. It took CHTR & CMCSA more than 25 years to get to 50% penetration in broadband when they were monopolies for high speed internet & already had a customer relationship thru' cable video & phone. The new entrant has to fight for every sub against an incumbent who is offering an equivalent broadband service plus cell phone bundles. It is a very tough fight & I think you will see most overbuilders go under or sell to the big boys. I used to think overbuilders were the biggest threat to incumbent cable but it turned out the real threat came from FWA despite its far poorer service and that appears to be moderating. The reason for the initial uptake of FWA was the bundling with cell phones IMO & lack of mobile traffic on 5G bands (no longer the case).

This is a big deal.

I am happy with the way GenRe worked out. It was a brilliant deal (Buffett swapped a totally overvalued Berkshire stock for incredibly undervalued GenRe bond portfolio w/o cap gains) but Buffett didn't foresee the deterioration in GenRe underwriting standards prior to the purchase. Joe Brandon took over as CEO and fixed the problems by 2005. Overall it worked out just fine.

GenRe had problems and they cost Berkshire money and focus in the 2000-2004 time period, yes. But they were fixed by Joe Brandon and it has been a good business since. Hardly a disaster IMO. You make it sound like the AOL-Time Warner deal, or Altria-Juul deal. Anyway if you disappointed with Berkshire, it is very easy to exit.

Actually Buffett (a.k.a. the ) used an overvalued book (due to Coke) and an overvalued stock price (> 2X book) to buy GenRe in 1998 in an all stock transaction. In other words, he exchanged a significant portion of an over-valued stock portfolio of Berkshire for an undervalued bond portfolio of GenRe in a tax efficient manner w/o incurring any capital gains taxes.

46% at the end of 1997.

Berkshire shareholders can hedge Apple position by buying deep out of money puts if it is really concerning. But really, it is not like Coke position at its peak, much smaller as % of book value. And Apple while overpriced currently has better long term prospects than KO had in 1998.

Didn't Abel just replace the Pacificorp CEO? Looks like the payout for wildfires there will be pretty big. So even supposedly safe & boring utility business has more risk than I thought prior to this incident.

Do you really think Warren is going to blow one of the most important decisions of his life? I don't think so. Also you have a very competent owner oriented board as a check on new CEO.

You are right that acquisitions will get harder. I think they still have opportunity for additional acquisitions in the energy space in addition to internal growth opportunities. If the interest rates stay higher for longer, opportunities will likely get better. In the mean time they are getting paid quite well to hold cash. And they can always buy back more stock if nothing else happens and stock doesn't get too expensive. I am sure you are right that Constellation Software has more opportunities but how can one pay 35X 2024 earnings? Is there any room for error at that type of valuation?

Good posts @CassiusKing1 and @longterminvestor. I am quite optimistic about Berkshire going forward. It won't be able to hit the ball out of the park due to its size, but it will be a very safe, satisfactory investment one could keep for a long time. Energy business is almost certain to grow and it is pretty much in Greg's wheelhouse. BNSF isn't going anywhere for 100+ years. Yes, super cat business has more competition but I would argue not much talent. Ajit is super patient and will do great in super cat & reinsurance (I am almost certain he made boatloads of money for Berkshire in 2023 through his FL super cat coverage). Moreover he expanded the insurance business into more bread and butter commercial lines, similar to GEICO on the consumer side and both of these would do fine. And all the niche, specialized industrial operations will do fine. And so will special consumer businesses like See's, NFM, etc. On the stock investing side, I am happy with Ted & Todd. They both seem like great people first and foremost and very talented. I am fine if they just match the market. They add enormous value by being a good sounding board for Greg on acquisitions. They added enormous value already by convincing Warren of Apple's virtues which led to the massive stake in Apple. So the future will be pretty decent post Warren. It is really a credit to Buffett that he & Charlie built a company that will thrive for a long time after them. And I would second the great Charlie Munger's advice during the 2023 annual meeting: "Just hold the damn stock."

If you read history, almost everyone on earth was invaded and taken advantage of if you go back far enough (Romans invaded Briton, Vikings raped and pillaged everyone & everything in sight, Genghis Khan's expeditions etc.). At some point, we just need to move on & get on with life. Our views are colored by our own experiences. The worst thing about Nehru/I Gandhi regimes was that even when they were presented with irrefutable evidence of their mis-guided policies, they refused to change their views. They were ideologues and didn't worry about the misery brought on by their policies. And the Indian people paid dearly. LKY pushed Indira Gandhi strongly to adopt market oriented policies several times to no avail. BTW Moghuls themselves invaded and pillaged India before Akbar brought peace as you know.

Congrats & welcome to the club!

Friedman hit the nail on its head. You can just plot the economic trajectory of the Asian tigers like Singapore, HK, Thailand etc vs India during the timeframe 1947-1990. Nehru was a known socialist since his Oxford days. Thanks to Nehru and Indira Gandhi, India screwed itself by adopting socialism.

I am a naturalized US citizen of Indian descent. I came to the US as a graduate student to study engineering in '87 and became a permanent resident in '92 and a proud US citizen in 2000. When I left India, there were almost no technical jobs (I got a job in Delhi selling mainframe computers to govt customers but wanted to pursue a technical path) as the country was brought to near bankruptcy by 40 years of socialist policies that caused huge poverty and statism in the country. Nehru & Gandhi's (Indira) model for economy was based on that of Soviet Union with top down 5 year plans while killing private incentives for profit through nationalization. That changed in 1991 as PM Rao opened up the economy, encouraged private sector and lowered tariffs. The current PM Modi has continued and expanded on these reforms. That's what led to much higher growth rates of the Indian economy in recent times and lifted hundreds of millions out of poverty. I for one blame the socialist policies of Indian leaders in the first 40 years of independence for causing untold misery to hundreds of millions of Indians than the British who left India long long time ago.

Good point. PE is acquiring everything in the private space so opportunity set is almost non-existent there for Berkshire.