Dynamic

I don't have computer access until tomorrow and will not look into this on my smartphone in detail, but from my memory, I believe I entered the dividends received by BRK from its shareholdings in the last full year (from the Annual Report) so that I could lower the Earnings of BRK-operating-Company to exclude equity dividends and not double-count that form of income and only count income from operating activities and non equity investments such as treasury bills. It would then be the case that these dividends would simply be part of the look through Earnings (meaning Earnings of the investee companies, whether distributed or not) which ought over time to accrue to Berkshire in terms of Total Return, meaning dividends plus capital appreciation. I'll check your question again and may reply in my next post.

Nice. Although the financial details are undisclosed this sounds like a typical friendly acquisition, retaining good existing management, and presumably for a reasonable price that would probably return about 9-10% per annum after tax. I don't have a particularly strong feel for the US market. In the UK I know it's fairly tough on estate agents with internet companies like PurpleBricks.com offering fixed price rather than commission and advertising strongly, though solicitors/conveyancers will still charge a sizeable amount to do the legal work. I've spoken to someone who says it's quite a tough time for estate agents and that these new entrants don't provide what she feels is a proper level of service. However, I think that many people find estate agents bad to deal with very often and would rather have a few thousand pounds more in their pockets than slightly less bad service. One thing possibly looming is whether or not blockchain technologies could spread into areas like this and replace the layers of companies and registrars who are currently in the trust-but-verify business and who maintain or query ledgers of ownership transactions. Blockchains could eventually provide a distributed trust network for property records and transactions which has the potential to make a lot of these transactions far simpler with far lower frictional costs. If it spreads, it could be a game-changer to certain industries of 'middlemen' and a cost-saver for the rest of us.

I wouldn't want to predict too much or try to create a precise valuation, but I'd be wary enough of the potential disruption to ensure I bought with sufficient margin of safety to limit my losses or make back my investment in a relatively few years. I was late recognising that local newspaper monopolies had been comprehensively supplanted by the internet and smartphones for a huge chunk of their earnings and it wasn't just the credit crunch that was hitting their ad sales and portion of the older generation who preferred print ads wouldn't be enough to leave very much value in their business model. That was probably my last big investing mistake that I'm so far aware of. With regard to Berkshire, and even GEICO specifically, I think there's at least 15 years of reasonably good business ahead even if these technologies cause a fairly major disruption in new car sales pretty fast. Even if autonomous Transport As A Service becomes dominant over individual car ownership, the sheer number of miles driven by each TAAS car every year should allow for a fairly good insurance earnings in aggregate, even if the fleet of vehicles declines fairly rapidly and people with older cars in the fleet move over to TAAS because it's so much cheaper. A time of disruption will see some who fail to adapt go bust, but I think GEICO will adapt and take advantage of offering insurance to TAAS vehicles.

I think active collision avoidance carries the risk that people will engage in risk-compensation behaviours and start driving with a small gap to the car in front etc. or other risky behaviour that they believe their car will bail them out of.

Hmm, I'll give the autonomous vehicle thing a rest. This is really meaty. To get a ballpark, we could consider a few things and sanity check them. Please treat this as thinking aloud by a non expert, not a fully reasoned analysis. I'd like to see how others might go about it and see if there's a better model to valuing the insurance business. I'll start with just one part of the picture, and see what you think: The value of the underwriting profit The 2016 underwriting income was $2.131 bn. For a sanity check, over the 14 years of consecutive underwriting profit, a time during which float and underwriting have grown, $28 bn has been earned. The average over 14 years is $2.0 bn per year. And Berkshire tends to underwrite conservatively, with 'loss development' for long-term risks tending slightly to work out in the shareholder's favour, not the norm in the industry. In fact, some of the 'losses' in the insurance division in the last 6 months may be as a result of such conservatism. Berkshire does not need to present the biggest underwriting profit it can, nor to pay taxes now on profits presumed by rosy projections of future insured losses that might not materialise. Yes, only picking the 14 'up years' is slightly cherry picking to avoid the down year that preceded it, but I think GenRe's problems at purchase are now fixed and the trend is upward. So if we are to capitalise some sort of underwriting profit, and still anticipate growth in the coming decade and perhaps the odd down year, despite the reduced megacat exposure, I think we should anticipate an average Underwriting Profit of $2.0 bn per year, the lower of the 2016 and the 14 year average is probably neither too conservative nor too optimistic if we capitalise at a reasonable yield. Perhaps capitalise that at a 10% yield pre-tax or about 7% post-tax (P/E = 14) - what do you think? The underwriting earnings power might be worth $2,000 mn / 0.10 = $20 bn. If there were to be a mega-cat, I anticipate that Berkshire would make up in the future what it lost in that year through increased business (as a good payer, a company that survives and an opportunist value investor) and in increased premiums during a 'hard market' following major losses, so I'm not too concerned to make allowances for possible down years, especially as I'd anticipate decent growth in underwriting earnings to add to the total return. The next step would be to value the investments and/or account for float, but that could be another post.

The NHTSA in reviewing the headline-grabbing fatal Tesla Model S Autopilot crash, acknowledged that the collective crash rate of drivers when using Autopilot was 40% better than the normal rate for human drivers. https://techcrunch.com/2017/01/19/nhtsas-full-final-investigation-into-teslas-autopilot-shows-40-crash-rate-reduction/ It seems that we've reached the point that when Tesla Autopilot is able to remain engaged (which doesn't mean in any environmental conditions on any road yet - that would be level 5 autonomy - and we're not quite at level 3), it already has a lower crash rate than humans. Myu is >0 for sure, but I suspect it's much better than the status quo, so will very gradually lower crash rates as it slowly becomes more widespread and begins to get better, eventually reaching levels 4 and 5, which would mean that I would anticipate a gradually lowering but still real crash rate across the fleet, even if autonomy spreads as rapidly as anti-lock brakes or airbags did. But perhaps somewhere in the decade 2020-2029, insurers and maybe even emergency rooms will begin to see the effects of a declining accident rate, albeit gradually, though the decline might accelerate sharply once the level of human drivers declines below a certain point. Although not fully relevant to insurance, I could also see autonomous vehicle making a major difference to the trucking industry, where the economic effects of a level 5 fully autonomous vehicle being able to drive 24/7 could be enormous, and likewise to the railroads if the cost of trucking declines dramatically and reduces the railroad's inherent advantages.

I'm interested in the potential impact of autonomous vehicles and prior to that many collision avoidance systems built into most Teslas and increasing numbers of other cars, working the way down from the premium end of the market to the mainstream. I welcome this as a way of saving lives, but if self-driving cars were to reach level 3 to level 5 autonomy in the next 5 years and then perhaps the new vehicle fleet (cars, buses and heavy goods transportation) were to be almost all autonomous about 10 years from now, gradually bringing the majority of the US vehicle fleet to full autonomy over it's 15-20 year life cycle we could see insurance premiums and float from GEICO gradually decline to perhaps a third or less of their current levels by about 2040-2050 (inflation adjusted). Such changes might also reduce car ownership if the cars can perform Transport as an Application so much cheaper than Taxis and human-driven Uber/Lyft cars. I suspect the total miles driven over the fleet would be similar in such a scenario, but with fewer, newer cars having much higher utilization (perhaps up 10-fold or 20-fold from the 4% utilization nowadays). I'd also imagine that there could be knock-on effects in other industries - e.g. sale of alcohol, if people can get around safely and legally when they're wasted! And as autonomy is likely to coincide with electric vehicle adoption as it becomes cheaper than gasoline/diesel, the oil industry as a fuel source is likely to decline gradually over the next 2-3 decades, and with falling demand, so might the oil price and the use of pipelines. Use of oil in aviation and sea shipping may be more persistent and also the use as chemical feedstock. But, this is an insurance thread, so I'm thinking we might need to expect that the GEICO portion will continue to grow float for a decade or so, but could be heading for a gradual decline at perhaps 2-5% per year. GEICO's superior cost structure and expense ratios may see it able to thrive and take market share from competitors with higher costs in a market where insured losses and thus premiums are expected to fall as increasing autonomy reduces the accident rate and severity, so expenses in running an insurer could become more significant to the premium. So I don't see float vanishing overnight, and have ground for optimism that GEICO could compensate with market share gains. Do you agree or disagree with anything I've written?

A few things I noted when updating my Berkshire Look-Through spreadsheet at https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=2050477249 Interesting that GM's third and final line on the 13-F went from 1,237,600 to 11,237,600 It almost looks like it could have been a typo, though I'm sure everyone preparing it take a great deal of care. And it still fits with the round-numbers held in total, at exactly 60 million (was 50 million shares) There still seems to be a typo in the 13-F on MOSANTO CO NEW. Don't think it fits with the need to abbreviate some longer names. Perhaps a simple typo or a way to reduce attention from protesters and adherents of the Organic marketing spin and the Naturalistic Fallacy who refer to it as MONSATAN. (I'll admit I was concerned about GMOs a couple of decades ago, more from a concern over possible side-effects like herbicide resistance getting into weeds, than health or 'messing with nature', but I've changed my opinion having seen the evidence roll in) For some reason, one line of PHILLIPS 66 appears to be new but shows zero shares under column 7 Other Manager 4,8,11. Perhaps one of the other lines changed the manager code because all the values are as last quarter. That said, I might just not have noticed this zero line last quarter.

For those without a subscription to the Australian, this synopsis will probably suffice. http://www.intelligentinsurer.com/news/munich-re-gen-re-strike-reinsurance-deal-with-australia-s-12765

There are a few new things to incorporate into the Look-Through Spreadsheet. They mostly fairly immaterial, but I'd still like to get them roughly right. 1. There's the 8-K from STOR June 23rd showing NICO's investment of 18,621,674 shares of the Company’s common stock, which I'll add to the 13-F LATEST worksheet as if it were on the last 13-F. http://ir.storecapital.com/Cache/389226355.pdf?IID=4553160&FID=389226355&O=3&OSID=9 2. There are two SEC Form 4's from BRK on May 25th regarding various Liberty stock purchases. https://www.sec.gov/Archives/edgar/data/315090/000120919117035615/xslF345X03/doc4.xml https://www.sec.gov/Archives/edgar/data/315090/000120919117035614/xslF345X03/doc4.xml In the first, regarding LSXMK, I think I should use 23,293,786 and ignore the 7,153,027 in various pension plans for which Berkshire and its subsidiaries have no beneficial ownership. In the second, regarding LSXMA, I think I should use 10,174,586 (a tiny reduction compared to the last 13-F) and ignore 4,308,117 held in pension plans with no beneficial ownership. The full number of shares including non-beneficial pension plan shares has been recorded (possibly in error) on CNBC's Portfolio Tracker http://www.cnbc.com/berkshire-hathaway-portfolio/ . If the pensions are defined benefit types, excess returns may accrue to BRK over time, but if they're money purchase types, the returns will accrue to the benefit of the employee beneficiaries of the pension. I'll assume the latter. 3. Speaking of the CNBC Portfolio Tracker, they made an estimate of the number of IBM shares held from Buffett's interview around the time of the Annual Meeting where he said about 30% had been sold, bringing their estimated share count to 56,862,612 versus the 13-F's 64,561,955. I haven't made any such adjustment, and its effect is far more material than the matters above, due to the size of the position (0.64% difference in total portfolio value). While I'm at it, CNBC's doesn't account for the BAC Warrants or the Sanofi or BYD foreign holdings (the latter of which might actually be from the Hong Kong listing, rather than the Shanghai listing I used, although this is probably immaterial). And speaking of foreign holdings... 4. Berkshire now owns or will soon own 40,000,000 shares in Canadian Home Capital (HCG.CA) subject to shareholder approval of the private placement of 24,000,000 shares over and above the 16,000,000 common shares purchases, so I'm including these in the same way as BYD, for example. http://www.cnbc.com/2017/06/22/home-capital-to-get-1-point-5-billion-loan-from-berkshire-hathaway.html Nos 1,2 and 4, I will probably include as mentioned above. No 3 is one I will leave alone until we get the next 13-F in July/August and find out how much IBM is still being held. The Look-Through Portfolio is always going to be out of date, so user beware!

That is a wonderful speech that really changed my views on a lot of things about 15 years ago. Assuming it's the 1995 Harvard Law School speech, I must have listened to it 20 times or more and made a transcript of my own. Really looking forward to seeing what they've done with the video.

I've made a small adjustment to all three sheets. I've made sure to use live EPS data from GoogleFinance for all shares, but then three showed N/A errors - LBTYK, LILAK, NASDAQ:LILA (new ticker required for LILA to play nice with Google Finance functions) because they don't have EPS data. I've hard-coded an alternative very rough valuation metric for all three and shaded the cells in columns K:M and Q:AA pink to indicate this. These three stocks don't contribute to the look-through EPS figure, but they're very small holdings anyway (0.16% of portfolio by market value at present) so I'm not concerned.

This is now the one anyone can edit (with corrected editing rights): https://docs.google.com/spreadsheets/d/10gMfyZOFCW1-KrY_P8SGRf3pTstspdAGw_DuKSQxO8s/edit?usp=sharing And this is the one people with permission can edit: https://docs.google.com/spreadsheets/d/1Um4ENkSz4tppynxqKAMVLrUcuNqn2JaVBBRu4CEVvGQ/edit?usp=sharing Sorry for the mistake, and thanks, Jurgis for pointing it out.

All the version of the spreadsheet are up-to-date with the latest figures and I've got my head around all the Liberties and their tickers. I've also made some substantial changes to how I handle odd cases, like Sanofi and Bank of America Warrants. • The one only I can edit: https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit?usp=sharing • The one only approved users can edit (click the Share tab to request permission from me): https://drive.google.com/open?id=10gMfyZOFCW1-KrY_P8SGRf3pTstspdAGw_DuKSQxO8s • The one anyone on the internet can edit without signing in: https://docs.google.com/spreadsheets/d/10gMfyZOFCW1-KrY_P8SGRf3pTstspdAGw_DuKSQxO8s/edit?usp=sharing Again, please remember that if you edit the public versions, your data can be seen by anyone on the internet (including the use of File/See Revision History to revive previous versions), so keep your privacy in mind. If you wish to copy both sheets to your own private Google Sheet, start with the 13-F worksheet tab and hit Copy to... from the menu on the tab, then rename it to remove the added words "Copy of ", the copy the Look-Through worksheet which picks up data from the 13-F worksheet, hence the need to rename it to match the name used in each such formula). Here's the full procedure to copy it: [*]Open Google Drive or http://drive.google.com in the usual way. [*]Go to or create the folder you want then press NEW and select Google Sheet. [*]Your Untitled Spreadsheet will open. You can click in the title to change its name. [*]Open my view only Sheet at https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit?usp=sharing [*]Once it has fully loaded, go to the tab marker at the bottom called "13-F 2017-05-15" and click on the light downward arrow on the right of its name [*]Click on the option, "Copy to..." [*]Select your newly created Google Sheet from step 3 above (e.g. you can find it in Recent) and hit OK. [*]It will then say worksheet copied and offer a link "Do you want to open the target Google Sheet?". Say Yes and it will open your Google Sheet. [*]At the foot of the new tab called "Copy of 13-F 2017-05-15" click the arrow then "Rename" and delete the words "Copy of " including the space at the end. [*]If you return to my sheet, go to the tab marker at the bottom called "Look-Through BRK earnings and holdings" and click on the light downward arrow on the right of its name and again click Copy To... and select your new Google Sheet. There's no need to rename this sheet if you don't want to. [*]Close my version and feel free to edit your own in private. If you adjust the blue shaded cells to your preferred currency and holdings, that will cover most use cases. While going through the 13-F compared to the previous one I noticed a couple of things: • IBM - was listed in various ownership codes on the previous 13-F but is now all under code 4,11 on a single line • A couple of other holdings under various codes seem to have moved around including Wells Fargo (WFC). Could these changes indicate tax-efficient selling and/or buying in certain divisions of Berkshire? Some items are not in the 13-F but I've made my own entries on my 13-F worksheet in gray background, and I'll summarise them as I've changed how I handle them: 1. BYD (China), as before is included on the assumption it is still held at the same position size. 2. Sanofi ADR. The 2016 Annual Report p19 (Chairman's Letter) mentions the total holdings including both ADR (ticker SNW) and direct shares traded on Paris Euronext. The latter are not reportable on 13-F, but I've put the equivalent number of ADRs (2 ADRs = 1 share of SNY) on the assumption they're still held. I sanity-checked this and the holding is about 1.76% of the market cap, which is about the 1.7% shown in the AR. 3. Bank of America warrants being included in effect as if it were BAC exposure. Berkshire holds preferred stock with 700 million warrants to purchase BAC common stock at $7.14 until mid 2021. I'm including these in the look-through effective exposure by using ticker BAC but adjusting the number of shares as if this was a cashless exercise at the current price. e.g. at $23.99 for BAC, the warrant is worth $23.99 - $7.14 = $16.85 700 million of these amount to $11.795 billion. That will buy 491,663,193 shares of BAC, so that's the number of shares I put in the look-through portfolio. In fact, I run this calculation to adjust the effective number of BAC shares ‘live’ to give some sort of indication of the effective exposure and total value of the warrant. The formula for the effective number of BAC shares I've used is: No of shares = 700 million x (BACprice - $7.14) / BACprice Thus, it reflects the current value of the warrants reasonably well, and gives at least some indication of the exposure to BAC - so if you held BAC yourself, you could work out the additional effective exposure via BRK approximately, although you'll be aware that it will increase in 2021 unless the warrants expire worthless. In reality Berkshire will exchange $5 billion of cash from the operating company to exercise the warrants before they expire, but this will reduce the cash held and reduce the value of the operating component, which I’ve called BH.Own on line 8 of the spreadsheet, by $5 billion while the portfolio BH.Portf will increase in value.

The electric vehicle (or new energy vehicle) market in China is being quite heavily promoted in polluted cities by the Chinese government and the sales are high compared to much of the world, but include plug-in hybrids and while it's the biggest EV maker in the world, it's not clear to me whether BYD has any enduring advantage over its competitors. Also, the direct EV subsidies seemed to have side-effects in encouraging a plethora of tiny companies to rely entirely on them, so the Chinese gov't is withdrawing it and putting in a zero emission mandate, which has seen BYD's sales drop 34% but is hoped to cause consolidation in the EV market. https://electrek.co/2017/05/08/byd-electric-vehicle-sales-drop-china/ China's EV market was 500,000, but the new mandate will make manufacturers gradually increase their percentage of ZEV sales over the coming years. This will force other makers to provide ZEVs. I don't know if this might hurt BYD in the long run or just be a temporary hitch.

It's now way after the livestream is over (and I first started watching on my Android phone's Chrome mobile browser), but Chrome on Windows 10 reported that Flash Video was disabled (it is a helper app with frequent security flaws that can be exploited to steal your data on nefarious sites, so I understand why). I then added the yahoo URL to the Allow list under Manage exceptions using this method:https://support.google.com/chrome/answer/142064 and stopped watching on my phone. I only needed to use Chrome for a few seconds before it allowed me to Cast it to my TV's Chromecast, bypassing Flash entirely! For some reason, the cast option wasn't shown on my phone. My wife really got a kick out of some of Charlie's cutting remarks. I'll now owe her a few chick-flicks by way of compensation or perhaps some Grace & Frankie on Netflix (which I'll enjoy as much as she will). I really should've insisted we turned off before the shareholder propositions, though! In our time zone that was after 10pm and we didn't need any help getting to sleep.

I'd love to see a world where the only kind of active managers are: [*]those who can beat the index and earn their fees, and [*]those who are managing for something other than total return (e.g. lower volatility/shorter time horizons) But of course, that isn't going to happen. I'd imagine the guy is right that a lot of investors tend to jump ship and jump on the bandwagon at precisely the wrong times, but it all seems like a smokescreen to try to divert our attention from the brief mention of the exorbitant fees and the way those fees accumulate in favour of the people handling other people's money. This happens especially due to the natural volatility of equities that ensures that every so often they get large 'performance fees' for absolute return on the back of years when 'the rising tide lifts all boats' or conversely for relative return on the back of being partially short the market when the tide goes out, and when they get a good year in either sense, that attracts more suckers who are investing by looking at short-term performance in the rear-view mirror to put more assets under management to raise the amount on which their 2% AUM fee is charged. It's so very 'Heads I win, Tails you lose'.

I don't think it has been confirmed which positions are theirs, so they aren't going into much detail. Also they manage some pension assets for parts of Berkshire. I certainly didn't follow them before but would love to hear from anyone who did. It does appear from a magazine interview posted on this board a couple of months ago, that Ted Weschler may have been behind the original Apple investment which I presume Buffett then got behind with larger sums. He explained he saw it as an​ enduring consumer brand like Nike more than a technology hardware company and also mentioned the strong services revenues IIRC. I'm prone to memory errors re Apple because of my​ own reasons for buying so much of it being fairly similar. I think someone here also mentioned him talking about a particular presentation from United Airlines that opened his eyes to what appeared to be a permanent change to the economics of the major airlines, presumably indicating that he helped instigate Brk's interest in the big four, whether or not they are considered as Ted's positions. I suspect there's a lot that we won't know about, but that we can infer some things from the history of their old fund portfolio holdings.

CHTR Pretty much all Liberties (LSXMA/SIRI/LBTYA/LILA) GM Airlines I am sure I am missing some more... http://www.dataroma.com/m/holdings.php?m=brk Care to comment? 8) Yeah, you got me there. I oversimplified a great deal about how I think T & T seem to view risk management. It's more about how much risk is acceptable and whether the risks in individual shares could wipe out or severely damage the portfolio (or for wholly-owned businesses, the whole of Berkshire). Some of this is reflected in position sizing and portfolio composition. I think in some of these cases they are just dirt cheap enough to have a large margin of safety. This boosts the likely total return and boosts the dividend yield meaning that over a few years a substantial portion of the purchase price has been returned as cash. In certain industries - e.g. banks like Wells Fargo or Railroad or Regulated Utility businesses with extremely steady earnings, the leverage is sustainable with very low risk of default. Where these are subsidiaries of Berkshire, the debt is non-recourse to Berkshire, protecting the parent should the worst ever happen. And also, Berkshire's utilities at BHE keep their costs so low that the rest of the industry will be swimming in red ink by the time that BHE is in trouble. I think Ted Combs in particular, with his previous history poring over banks, looks deep into the financials thinking about the vulnerability under extreme conditions, and would, in the case of purchasing wholly owned subsidiaries, be someone, like Warren, to trust to ensure that a low probability disaster at a subsidiary wouldn't bring down Berkshire as a whole, by putting the correct structural safeguards in place. And I think when he's providing content for the annual report, he'll be sure to communicate that to the shareholders as Warren does now when he mentions the non-recourse nature of BHE's debt which instead is backed up by a long history of rock-solid revenues that reassures its lenders. In certain cases, the risk of a total loss is acceptable from a portfolio perspective or from the perspective of a basket of similar stocks. A good example here is the basket of four airlines. Even if one of them went bankrupt or breached debt covenants and wiped out its equity holders by converting debt to equity, it's not likely that all four would go bust, the survivors would likely pick up the assets of the one that did on the cheap, and they all had enough margin of safety in the purchase price that the basket would still be a good buy even if one went bust. (Unless BRK has misread the industry's turnaround and it reverts to a cyclical low in profitability, making it the sort of value trap where a tasty-looking low P/E ratio is caused by an unsustainably high E that is going to plummet for the rest of the cycle) I don't understand these stocks well, so I certainly don't feel qualified to comment on the Liberties or CHTR. I'm wondering if some of the Liberties might have been medium term plays that could be on their way out of the portfolio if they reach fuller valuation, e.g. FWONK etc could get rather lofty market prices due to the current appeal of a close Formula 1 season, which might make it appealing to take a profit and reinvest in a cheaper opportunity elsewhere, considering that next season's races might be more of a procession. I haven't got my head around the apparent changes in BRK's holdings of these companies or their capital structures and classes of shares, but for my own purposes, they're a small enough proportion of BRK that I'm not worried by not understanding them.

I think the part about 'how they made their returns' is as important as anything. I think making those returns without significant leverage and with an adequate margin of safety, and sticking to companies that themselves have little net debt that might juice their ROE but might also put the company at risk in the long run. Avoiding blunders and managing true long-term risk where possible and owning up to blunders to learn from them is a big part of Charlie and Warren's process, and I remember about the time Todd and Ted were hired, that was one of the things that stood out for me in my reading of Warren's words on the subject. The whole idea of Warren being Chief Risk Officer struck me at the time, which partly reflected the mega-cat reinsurance risks and BRK's ability to pay up on its promises in even the worst of times, but also other ideas including the reluctance to use leverage to juice the returns if it put any doubt whatsoever on the ability to meet future obligations and could put the company even at remote one-in-a-thousand year risk. They had vast numbers of applicants with good records, but these two stood out for the way they went about the task and how they would be good stewards of the capital entrusted to them, even if their returns may not have been the very highest of the applicants. And of course, they want to do it because they love the process and the distraction-free environment more than the kudos or the salary so they're not going to jump ship when headhunted. And I think they're clear in their thinking and can explain the reasons behind their decisions to their chairman, be it Warren or his successor and be open when they have doubts too.

Valuehalla, I'd say that maybe $20bn of cash is required to run the company in the sense of seeing BRK through any megacatastrophe insurance losses. As for the rest of the cash and investments I can't see much of the rest of the cash held as being necessary to the operating companies who are generally generating a lot of cash and sending it to Omaha for whatever rational investments can be made with it and can continue to do so without additional funds. They can also request funds from Omaha if a truly worthy investment becomes available to them and they can persuade HQ that the returns will be sufficient. BNSF and the Utilities are probably the main exceptions, retaining earnings and also levering up on non-recourse debt and accumulating deferred taxes to invest in assets for which they should obtain a modest but stable return on invested capital. The pile of cash over and above $20bn has some optionality as ammunition for new investments in stock, acquiring companies, or bolt-on acquisitions within subsidiaries, all of which should pass a hurdle rate of return before the trigger is pulled, so I think it can be expected to return perhaps 10% annualized or more on average over the next decade, maybe a little less due to cash drag and the delay between such suitably value-enhancing investments, or maybe a little more if there's a financial panic and great opportunities abound. I think it's worth considering at least a second valuation approach as a sanity check to your preferred method of valuation, and there are three that are typically employed for Berkshire. You might choose to think that the market is a bit toppy and is overvaluing BRK's equity holdings. If so, you can do a look-through earnings approach and value these investments en masse at whatever you feel is an acceptable P/E ratio or E/P earnings yield, or even independently value them with as much detail as you deem prudent (perhaps only value the top 5 holdings carefully then apply a simple P/E ratio to the rest). When I've done this and applied a low-ball valuation earnings yield of 8.5% (P/E = 11.8) to both the operating company's earnings (with dividends stripped away) and the total look-through earnings of the portfolio, my low-ball valuation has usually come in remarkably close to the 1.2x Book Value soft floor valuation - usually less than a percent or two higher. This was quite a surprise to me, and might only be coincidence. The current market value of the investments has seemed fairly fully priced for the last many months, yet the implied current market value of the operating company of BRK has seemed to be close to my low-ball valuation for a while so that the overall market price of BRK.B has been moderate - not overvalued but not really cheap.

The 13-F is here: https://www.sec.gov/Archives/edgar/data/1067983/000095012317002417/xslForm13F_X01/form13fInfoTable.xml However, although relatively immaterial, I have a few differences compared to, say, the CNBC Portfolio tracker: http://www.cnbc.com/berkshire-hathaway-portfolio/. Foreign holdings never shown on the 13-F: [*]BYD Company Limited (SHE:002594) is assumed to be a permanent holding at 225 million shares. [*]Sanofi (SNW on EuroNext Paris) - I understand that some shares bought in Paris are held, but only the ADRs (NYSE:SNY) are shown on the 13-F. Does anyone know how many SNW are held so I can record this as an assumed permanent holding? I seem to be OK with US holdings that have been sold: [*]Deere & Co (DE) [*]Now Inc (DNOW) [*]Kinder Morgan Inc (KMI) [*]Lee Enterprises (LEE) Differences to CNBC Portfolio tracker & name-changes/ticker-changes: [*]Liberty Media Corp Delaware, Class COM A SIRUSXM - this seems to have been discontinued or ceased trading on the market since 31 Dec 2016. Anyone sure how many shares of what ticker the 10,058,800 shares turned into? [*]Liberty Media Corp Delaware, Class COM C SIRUSXM - this seems to have been discontinued or ceased trading on the market since 31 Dec 2016. Anyone sure how many shares of what ticker the 22,236,109 shares turned into? [*]All the Liberty Global plc and Liberty Media things seem confusing, but only the plain Sirius XM shares reported seem OK in the 13-F If anyone can advise on any of these points, I'd be grateful, and can probably update the look-through sheet in a short while. One version of my sheet has a second tab where I've entered the 13-F details as best I can: https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=2050477249

I hope to update the look-through tomorrow, if I have time, but work intervenes. For now, I've put an extra tab on this version where I've entered up the 13-F data in crude fashion: https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=1273825621 As yet, I haven't fully matched up with ticker symbols and name changes (especially around Liberty Sirius XM and similar names) to determine which holdings appear to have been sold, renamed or reduced. Some shares show 0, but among these is BYD (China), which we assume is still held, but not reportable to the SEC. For a summary, various sources are available including this on SeekingAlpha: http://seekingalpha.com/article/4046111-tracking-warren-buffetts-berkshire-hathaway-portfolio-q4-2016-update and this indicates a couple of exits such as Deere and Kinder Morgan, reductions like Walmart and increases such as Apple. The CNBC portfolio tracker hasn't yet been updated, which I find a handy sortable table to compare & check my own work. http://www.cnbc.com/berkshire-hathaway-portfolio/

There are clearly certain problems in rocketfinancial, e.g. BRK.A Shareholders Equity in the early 2000's: http://www.rocketfinancial.com/Financials.aspx?fID=1058&p=2&i=7&pw=34872&rID=2&tID=2&stID=1&segID=-1 but a lot of the data seems good and subject to checking, could well be useful for examining trends and cyclicality of basic metrics. I like that it offers to show the data "as presented" or "standardized view" For a light user only interested in a modest number of companies, it looks like a very handy resource for some basic sanity checking and early stage research, which can be followed up on later by digging through the filings.

I'm suspecting that they've learned to value more highly something that Buffett and Berkshire has demonstrated for a while, namely that although organic growth can be great if it provides a good return on retained earnings, it can be just as great to use the now-healthy cash flows from one business with little growth to fund the purchase of other businesses the offer the prospect of decent returns, and that this can equally achieve compounding of net worth at substantial rates.