Munger_Disciple

WSJ article on Berkshire: https://www.wsj.com/finance/stocks/berkshires-new-normal-no-buffett-shareholder-letter-and-no-buffett-premium-b53c2edd?st=o34SuL&reflink=desktopwebshare_permalink Nothing new but Buffett's assistant (re)confirmed that Greg would be writing the 2025 annual letter. She also said Buffett would be publishing a Thanksgiving letter on Nov 10, addressed to his children & shareholders, similar to the one he wrote last year.

This quote should be framed by everyone and we should stop arguing about what Fairfax should be doing about bond duration. It's like a club player telling Roger Federer how to hit a forehand. "In Brian we trust" is my motto on the bond portfolio. Like Sanjeev said, worry about equity portfolio if you have to rather than the bond side.

Thanks. I ordered mine & looking forward to reading it.

Thanks

Does Biglari still siphon off 25% pf BV increase from shareholders?

My guess is that most people who bought & never sold BRK aren't professional or institutional investors analyzing the company to death. They were/are simply either Buffett's original partners who received the stock when he closed down his fund in 1969 or folks who liked, admired & trusted Buffett and felt that he would treat the shareholders honestly & fairly. Plus they were comforted by the fact that he had virtually 100% of his net worth in the stock. Therefore they just bought the stock and never sold come hell or high water. Just my 2c.

Yeah, in the end what matter is how good their u/w is, whether they have sufficient liquidity and whether the reserving is conservative; not whether their liabilities are discounted or not.

In this sense, GAAP accounting better reflects insurance liabilities.

Good explanation: They are bond "value" investors. When the yields were puny (and hence risks were great), they reduced duration bigly. And then when ST yields rose, they slightly extended duration to 2-3 years to lock in what Bradstreet thought were good rates. Less generous explanation: They are just bond & macro trading junkies . I don't think they try to match assets to liabilities like MKL does but I could be wrong on that.

This guy says layoffs highest since 2020: https://www.cnbc.com/video/2025/10/03/layoffs-reach-highest-since-2020-challenger-gray-and-christmas.html

Some ink in the press for Greg Abel: https://archive.ph/nYJji

The article makes a good point about tax implications of cash sale by OXY; that it depends on the tax basis of Oxychem (which we don't know). If it is indeed a low tax basis asset, it does make more sense for the deal to be structured as a swap of preferred stock for Oxychem.

Preferred is very different from debt. First it is equity on OXY BS. So not making an interest payment doesn't trigger bankruptcy. Second I believe OXY can make preferred interest payments in-kind in case of cash crunch unlike debt payments. Third, I don't think there is a due date on them though OXY is incentivized to retire them as early as possible (higher interest than debt that can't be deducted). This is exactly why Buffett always structured the investment as convertible preferred (or equivalently preferred with warrants attached) when he rescued several firms during GFC. He did the same thing with OXY. Whether OXY wants cash or retire the preferreds depends on how bullish Vicki is feeling I Guess.

I agree. Buffett & Abel want to keep earning that 8% dividend on preferreds as long as possible. By paying for Oxychem in cash, they make the preferred investment bullet proof because it reduces the total debt at OXY.

Perhaps Buffett can exchange $10B of equity for Oxychem if he wants to reduce Berkshire's exposure OXY (ex-Oxychem). But that doesn't work for OXY because Vicki needs to lower the debt. So it will be a cash deal I think.

Sale of 15,000 B shares by (Ajit) Jain Foundation: https://www.sec.gov/Archives/edgar/data/1067983/000172845125000008/xslF345X05/primary_doc.xml

I agree there won't be a dramatic reduction in the next couple of quarters but eventually (in roughly 2-3 years) the higher yielding treasuries mature and will be replaced by lower yielding treasuries. if the insurance market softens and assuming their u/w really improved (which means they will write less business, perhaps significantly so), the float may not grow that much.

I agree with your sentiment @Viking. Yes we are all just trying to understand the company better at the end of the day. At the risk of repeating what @petec already pointed out so well, FFH earnings are probably at a cyclical high at present mainly due to: 1. Interest Rates: Fed just reduced the ST rate this month and we are almost certain to have lower ST rates during the next 12-24 months, given the current "dot plot" and the fact that the next Fed Chairman & other future Trump appointees to the Fed are almost certain to be a lot more dovish. FFH generates high income currently from ST treasury bills and notes it holds and this income is almost certain to diminish going forward. 2. U/W Cycle: It's likely that we are entering a softer insurance u/w cycle. If so, u/w income will be lower going forward. 3. Reinvestment Opportunities: This is a bet on Prem & HW and I am fine going with the flow on this. They will make some mistakes of course as they had in the past but I suspect overall record will be fine. They can also buyback stock if there are no other opportunities. FFH has just begun diversifying its earnings stream in recent years by acquiring wholly owned non-insurance businesses following the Berkshire model, and I like it because it will make the company not as reliant in the future on items 1, and 2. But it will take them awhile to get to critical mass in this area.

@Viking Since you love when people push back, I thought you loved it when I agreed with @petec ! Perhaps may be not. This line of thinking sounds smart... but I think it is missing the point. I doubt it. Whether it is smart or not I don't know but I don't think one should extrapolate cyclically high earnings into the future. That's all I was saying and agreeing with @petec. Think back to 1980 and 1990's version of Berkshire Hathaway. BRK in 1980 was a bet on Buffett, not on its earnings in 1980. Anyhow let's keep the discussion to FFH. At $1,725, it is trading at 1.45 x Sept 30 BV (my guess is $1,200). I own FFH and plan to hold for several years. I think it's fairly valued at these prices. I think @petec made a good summary of some headwinds like lower interest rates. I probably don't think it's as cheap as you think. But that's fine.

This is the most important thing anyone has said on this thread. It's also the reason I don't like the argument: "Since the current ROE is so high, it should trade at a (big) X times book."

There isn't much news to discuss, so it's not that surprising. I would like to restart the discussion by asking you all how do you think Greg will manage Berkshire & its future under him.

That's outstanding! Your investors are very lucky folks indeed.

No, it was closer to $1,100 USD per share ($1,512.89 CAD per share to be exact) for total proceeds of $304mm USD.