Dynamic

Small bolt on acquisition of Shaw Paints Ltd as Benjamin Moore Paints look to increase UK penetration. https://www.businesswire.com/news/home/20201216005758/en/Benjamin-Moore-Acquires-UK-Distributor-Shaw-Paints-Ltd

I was listening to a podcast recently - Focused Compounding - talking about banks - this episode in fact: https://focusedcompounding.libsyn.com/website/how-is-a-bank-like-a-railroad-and-other-crazy-ideas-geoff-has-about-investing-in-efficiency-driven-businesses-0 Unlike, say, restaurants, Banks tend to survive even if they're fairly poorly run. Some will have poor cost-control but still manage to charge a sufficient interest margin between their borrowing cost (e.g. deposit rate) and their lending rate (e.g. loan rates) and maintain sufficient client relationships that few customers will shop around and actually switch. In the case of inefficient small local banks they might earn lower returns than putting their capital in an index fund but they can still keep running and paying the staff and the CEO can still be the guy at the country club who runs a bank and there's nothing forcing them to up their game. Other operators will fanatically cut costs from the non-customer-facing side and anything that doesn't benefit the clients or add efficiency to their systems. There are some interesting examples in that podcast. I wonder if Buffett, Munger and Li have determined that BAC is pretty much the low-cost operator among the big banks with a relentless focus on efficiency, much like GEICO is to car insurance. I think there's a lot of admiration for what Brian Moynihan is delivering at BAC. There's admiration for Jamie Dimon too, but I think the investment banking side of JPM is too big for Berkshire to go huge. In the podcast episode Geoff Gannon was talking about the effects of an ultra-low interest rate environment (made even lower by COVID-19) and whether that would squeeze the interest margin available to the less efficient operators in the industry, while the likes of BAC, able to make massive IT investments spread across millions of clients, would be able to maintain their profitability and possibly win new business better than their competitors and may even be able to make cheap acquisitions of banks with lower efficiency and make efficiency improvements post acquisition. I'm not sure that is the case for BAC versus the likes of WFC, but I think it's a line of reasoning to consider if investing in banks, especially having such an extreme environment as we're seeing now, with the possibility of even negative interest rates looming. Perhaps someone has more insight into it. I'm not in the US, I'm no longer a direct investor in BAC (just via my BRK exposure) and my experience with US banks is limited to a few interactions with Wells Fargo, so I don't want to express an opinion. Another option is that WFC was seen as one of those situations where they decided they'd seen enough rats coming through the kitchen door to worry that the kitchen was infested and get out perhaps before the new CEO does a load of big bath write-downs. Maybe there's concern that unauthorized account opening scandal is just the first example of a culture of poorly-aligned incentives encouraging illegal behavior or maybe the response to it has not been decisive enough to satisfy Buffett. We'll know for sure by Monday whether Berkshire's 13F and their holdings in New England Asset Management's 13F included any remaining shares of WFC at 30th Sep. My suspicion is that they had sold the whole WFC stake by mid August, judging by the rate of sales in Q2. I imagine we'll see the Berkshire filing on Saturday and might have to wait until Monday to see NEAM's filing based on the last time the 45-day deadline fell on a weekend.

There is a Safe Harbor rule which exempts companies from Insider Trading or Stock Manipulation investigations for their buyback activity which limits buying to certain times and certain average daily volumes. Berkshire is clearly not following that rule unless it has negotiated some pretty large off market purchases.

With the 13F-HR forms for Berkshire and New England Asset Management both released yesterday, I've updated only the Google sheet that you can copy but not edit. I do not intend to update the publicly editable version I used to do any longer. As the number of units held is one-millionth of the latest share count (from 10-Q cover page), column I represents the company's total portfolio in millions of dollars. The 13F date is 31st March 2020, and we know about some changes since then, mostly the complete sale of the four airlines. Also the sale of a little USB to trim the Berkshire stake plus Benjamin Moore pension stake plus Warren Buffett private stake below 10% combined, all of which I have adjusted for. There are probably about another $2 billion of sales in April that we cannot yet identify along with about $0.4bn is purchases. Other than minor increases in the airlines that were reversed in April, PNC Financial was the only increase at +5.4%. Phillips 66 (PSX) was sold off completely, as expected based on the previous quarter. As we found out in the 10-Q, Wells Fargo was not sold down further, contrary to my expectations. Goldman Sachs (GS) was sold down 81% so I would not be surprised if it has been sold entirely by now, but we'll have to wait until later to find out. Other sales look mostly like minor trimming. One further change is that in the 2019 Berkshire 10-K Note 4 and especially Note 20 the OXY preferred stock and OXY warrants fair values are marked to model and the key inputs are described. The warrants are such a small fair value I haven't tried a Black Scholes approach and just set a fixed value for OXY.warrant. For the preferred, I came up with an 8.54% discount rate to match the Note 20 valuation and adopted the appropriate per-share value for OXY.preferred I then adjusted to suit BAC.preferred and found a reasonable value with 6.54% discount rate, which makes the Note 4 value of the Bank of America equity stake at 31st March to match to the nearest $0.1bn rounding, when it had been rounding to $0.1bn too low without including those warrants. The preferreds and warrants don't contribute to the Look-Through EPS. Here's the table of position changes since 31st Dec 2019: AAL_________ American Airlin…Group Inc -100.00% ________________ AAPL________ Apple Inc._______________ ____unch _unchanged count AMZN________ Amazon Com Inc___________ __-0.70% _________533,300 AXP_________ American Express Co______ ____unch _unchanged count AXTA________ Axalta Coating …stems Ltd __-0.90% ______21,686,000 BAC_________ Bank of America…rporation ____unch _unchanged count BAC.preferre Bank of America…red stock ____unch _unchanged count BIIB________ Biogen Inc.______________ __-0.80% _________643,022 BK__________ Bank of New Yor…llon Corp ____unch _unchanged count CASS________ Società Cattoli…operativa ____unch _unchanged count CHTR________ Charter Communi…tions Inc ____unch _unchanged count COST________ Costco Wholesale Corp____ ____unch _unchanged count DAL_________ Delta Air Lines, Inc_____ -100.00% ________________ DEO_________ Diageo P L C Spon ADR New ____unch _unchanged count DVA_________ DaVita HealthCa…tners Inc __-2.50% ______18,043,482 GL__________ Globe Life Inc …ark Corp) ____unch _unchanged count GM__________ General Motors Co________ __-0.70% ______47,687,000 GS__________ Goldman Sachs Group Inc__ _-81.10% _______2,351,243 HCG_________ Home Capital Gr… (CANADA) ____unch _unchanged count HKG:1211____ BYD Company Lim… Listing) ____unch _unchanged count JNJ_________ Johnson & Johnson________ ____unch _unchanged count JPM_________ JPMorgan Chase & Co______ __-3.00% ______58,259,433 KHC_________ Kraft Heinz Co___________ ____unch _unchanged count KO__________ Coca-Cola Co_____________ ____unch _unchanged count KR__________ Kroger Co._______________ ____unch _unchanged count LBTYA_______ Liberty Global …c Class A __-4.20% ______10,931,000 LBTYK_______ Liberty Global …c Class C ____unch _unchanged count LILA________ Liberty LiLAC Group A____ __-5.20% _______1,541,123 LILAK_______ Liberty LiLAC Group C____ ____unch _unchanged count LSXMA_______ Liberty Sirius … Series A ____unch _unchanged count LSXMK_______ Liberty Sirius … Series C __-1.00% ______23,702,958 LUV_________ Southwest Airls Co_______ -100.00% ________________ LXS_________ Lanxess AG_______________ ____unch _unchanged count MA__________ MasterCard Inc___________ ____unch _unchanged count MCO_________ Moody's Corporation______ ____unch _unchanged count MDLZ________ Mondelez Intern…ional Inc ____unch _unchanged count MTB_________ M&T Bank Corp____________ ____unch _unchanged count OXY_________ Occidental Petr…eum Corp. ____unch _unchanged count OXY.preferre Occidental 8% p…red stock ____unch _unchanged count OXY.warrant_ Occidental warr…50 strike ____unch _unchanged count PG__________ Proctor and Gamble_______ ____unch _unchanged count PNC_________ PNC Financial S…Group Inc ___5.40% ______10,298,484 PSX_________ Phillips 66______________ -100.00% ________________ QSR_________ Restaurant Bran…ional Inc ____unch _unchanged count RH__________ RH (formerly Re…Holdings) ____unch _unchanged count SAN_________ Sanofi Euronext Paris____ ____unch _unchanged count SIRI________ Sirius XM Hldgs Inc______ __-2.80% _____132,418,729 SPY_________ SPDR S&P 500 ETF Trust___ ____unch _unchanged count STNE________ StoneCo Ltd._____________ ____unch _unchanged count STOR________ Store Capital Corp_______ ____unch _unchanged count SU__________ Suncor Energy Inc New____ __-0.50% ______14,949,031 SYF_________ Synchrony Financial______ __-3.20% ______20,128,000 TEVA________ Teva Pharmaceut…Ltd (ADR) __-1.10% ______42,789,295 TRV_________ Travelers Companies Inc__ -100.00% ________________ UAL_________ United Continen…dings Inc -100.00% ________________ UPS_________ United Parcel S…Inc (UPS) ____unch _unchanged count USB_________ U.S. Bancorp_____________ ____unch _unchanged count V___________ Visa Inc_________________ ____unch _unchanged count VOO_________ Vanguard S&P 500 ETF_____ ____unch _unchanged count VRSN________ VeriSign Inc_____________ __-1.70% _______7,768,349 WFC_________ Wells Fargo & Co New_____ ____unch _unchanged count

I'm very busy right now in real life, but soon hope to reflect the complete sale of all the airline stocks in the portfolio. The figures reported for the April sales during the AGM will probably only include the shares attributable to Berkshire shareholders. A large proportion of the AAL stake was held in pension funds instead.

Another vote for a great teacher. I also think it's very clear that his patience far exceeds most investors I see commenting and essentially saying "Swing you bum". Right now in particular, many asset prices are down from their Jan/Feb 2020 peaks but still relatively high, yet many commenters on the internet are making it seem like everything is at bargain prices right now. Another important lesson he's demonstrating now is never to risk multiplying your run of results by zero, so he's being patient and ensuring that Berkshire has ample capital to survive if this situation gets worse and probably to thrive on the other side, when the future outlook is more predictable.

150,088,061 shares of USB were controlled by Berkshire at 31 December 2019, unchanged from 30 June 2019, having increased slightly in 2019Q2. 17,628,443 of these were held via New England Asset Management 13F-HR so don't show up on most Berkshire portfolio trackers unless they adjust for the latest Form 3 filing like CNBC sometimes does. 590,275 were held by subsidiary pension funds, not for the benefit of Berkshire shareholders, so I subtract these from my tracker but they still count towards the 10% rule for filling Form 3.

The Yahoo Finance meeting webcast has been open to anyone since it began, and that includes the formal meeting (the boring part) as well as the Q&A. The only thing never seen by those who don't go to Omaha is the movie.

I doubt this would have reached Buffett until this report. I am aware of another manufacturer and distributor of fastenings in another country who have issued letters to relevant employees so they can show them if stopped when traveling to work, stating that they manufacture and supply fastenings to medical equipment manufacturers and are thus essential workers. Nonetheless they recognise that it's a modest fraction of their business and seem to be taking a responsible attitude to the lockdown in furloughing many staff and having all vital admin staff work from home where possible to support the reduced level of business they are conducting and administer the furloughing etc. Hard to guess how much is legitimate from the outside of the firm and how much is playing fast and loose with the lockdown orders. Also hard to guess if the employee source has legitimate concerns or is for example petrified of going to work or home a grudge.

Interesting thought. Do you have any virology expertise or reference to back that up or is it a hunch? You could alternatively look at it as: the virus only needs to get enough of a foothold in a cell to get reproduced and the person is then infected and the virus doubles, quadruples and so on and is then ejected from the cell into other cells where it reproduced further. The cloth mask just gives a very slightly better chance of stopping it from reaching the initial cell and causing an infection in the first place but won't affect the severity of infection if it does occur. The viral load only matters days after infection when the body is flooded with virus that has reproduced within the body and the worst problem is the cytokine storm in certain individual where the immune system overreacts with the side effect of inflaming lung tissue and impairing the rate of oxygen absorption into the blood, thereby requiring oxygen masks to increase the oxygen density gradient or forced pressure ventilators to increase it further, to try to get blood oxygen take-up back to the body's required level.

My guess is Apple at $230-260 still isn't quite cheap enough for Berkshire to load up. JPM probably is reasonably attractive at sub $90 so I would not be surprised to see an increase in due course.

Yeah, I was thinking about that. I seem to remember that 13G rules are different when under 10% and give much longer before filing, but in one of the cases it seemed to indicate that every time the ownership stake moves by a whole percent, I think a further filing is triggered, with the specified deadline so many days after the event that triggered it. Need to look into those rules. At the actual close on Tuesday March 31st, prices were a little on the higher end in recent times, and at Dec 31st they closed rather lower than the prices reached in mid February. I think that if it remained relatively unchanged the portfolio would have lost about $63 billion in market value over Q1, with a $13 billion deferred tax reduction, resulting in $50 billion of market value losses. The WFC position, if unchanged from Dec 31st at $18.6 bn at $53.80/share would have declined in market value by 46.7%, but they may well have continued selling through Jan and Feb and saved some of the $8.6 billion in losses they would otherwise have recorded. They might even have reversed course and started buying it again at around $25 per share during March. Again, the rules on filing about changes in sub 10% positions would be relevant. I think they got rid of IBM before such filings were made public, but they might have to notify the SEC alone, without such reports being public.

As I mentioned in a different thread here, I agree that Berkshire may have made net sales (continued WFC sell off) or only modest net purchases and buybacks in the first quarter given the relatively high prices in the first 8 weeks and the relatively brief period when more stocks they could buy are attractive enough, but by no means all)

Very fair response, vinod1.

I think Berkshire's advantage over the S&P500 Total Return Index has diminished gradually over time as it has grown to be one of the top ten companies by market cap and now, if it has any advantage it's probably in the 2% cagr or less region, most likely less, if any. There may be tax advantages for some, me included, by having no dividends distributed and income tax or withholding tax for non-resident aliens like me to pay on those. It very much depends on your approach to investment. If, like me, you'd rather not hold cash predicting "9 of the last 2 bear markets" and instead keep compounding and accept drawdowns, Berkshire Hathaway or S&P500 both make reasonable investments most of the time and a few years of not missing out on compounding at high single digit to 10% rates will make up for a 20, 30 or 40% bear market plunge in the long run. It's also likely that Berkshire is almost permanently priced a little below Intrinsic Value but usually not deeply undervalued, whereas the S&P500 is, to me, much harder to read. Also, I can get a pretty good feel for the 'normal times' downside potential price of Berkshire. Currently we are not in 'normal times' so it has fallen well below the soft floor of around 1.2x last reported Book Value as the market value and expected near term profits of almost all its investees have plunged sharply. But if the market dives much further, I'd expect Berkshire's outperformance (in falling less than the market) to widen slightly. On the basis of Look-Through earnings yield (or its inverse, the P/E ratio) Berkshire Hathaway has for the last few years looked more attractive than the S&P500, and frankly I trust Berkshire's numbers not to be inflated more than I trust those of many of the companies in the S&P500, and generally, Berkshire has conservatism and financial resilience built into its culture. Debt is used very sparingly, and is placed only where it's appropriate and safe, such as the railroad and utilities, where customer demand is sufficiently stable to support debts at rates low enough to reflect the earnings safety. And because those subsidiaries that need the debt are themselves such secure credits, Berkshire ensures that their debts are not secured at the parent company level, so that in times of stress, Berkshire's creditworthiness cannot be affected. So, Berkshire is a financial fortress that retains its 'Rock of Gilbraltar' like balance sheet strength even in times of unusual exogenous stress, such as the GFC and the current pandemic, allowing it to take advantage of the prices and opportunities for excess returns produced by such crises. Berkshire employs some leverage, but it's very safe and it remains un-callable in almost any conceivable circumstances. Prior to this crisis, Berkshire's float - a form of uncallable leverage - was almost a perfect offset to the cash & equivalents - wiping out any cash drag but not applying any additional leverage. If they spend some of the cash, the effectively add modest leverage to the company at a time when it's able to make investments with a higher rate of return than normal. When buying BNSF a decade ago they even added a small amount of debt to ensure they retained $20bn cash to pay any potential reinsurance or insurance claims from a megacatastrophe, which they paid down within a short period. And that's really where slight annualized excess returns above the S&P500 are likely to come from. Berkshire can tread water and approximately keep pace with the S&P500 during calm waters, but in rough seas (and I mean when prices haven't gone from expensive to average, but from average to positively-mouthwatering and where others sources of capital have dried up), Berkshire can make meaningfully large capital allocations and increase its leverage (at sufficient margin of safety to generate excess returns and increase its Intrinsic Value (although this may not be evident for some years) far more than the index can during the same periods. If Berkshire is able to increase IV by 10%, 20% or 30% during times of stress (depending on the opportunities available), that might translate into a long term excess cagr of 1-3% compared to the index, which still means you have 10%, 20% or 30% more capital than if you'd invested in the index. Right now we've gone from a fairly pricey market to a moderately attractive market with a few areas potentially deeply undervalued, but a lot of stuff still far from cheap and quite a few long term compounders still looking fairly pricey compared to times like the month or two after 2001/09/11 and times in 2003, or the GFC in 2008-9. So Berkshire has a wider opportunity set, to invest more, but it's hardly like shooting fish in a barrel. But overall, to me, I sleep better with Berkshire, and I suspect it will do well for me from here, and that prices around $170 for BRK.B are probably a once-a-decade opportunity for something with great certainty of producing a decent long term return. But one can take more risk, for example with banks and airlines and conservatively run oil and gas majors, to probably achieve a better return. Berkshire remains the bedrock of my portfolio, which I'm happy to hold to 100% weighting. And if I do find high-conviction opportunities, I'd need to have a good expectation of them outperforming Berkshire to switch into those, and I'd base my weighting on their risk of failing to do so. In the past I've done it with a 25% position in Apple at $95, which doubled in a couple of years before I reverted to Berkshire, for example. And in effect my holding of Berkshire stock increased in proportion to the outperformance of that round-trip. In fact, I monitor my portfolio's value versus the equivalent number of BRK.B shares as a reasonable guide to whether I'm beating my Berkshire benchmark, as well as a more conventional comparison to SP500TR.

https://www.autocar.co.uk/car-news/new-cars/new-byd-blade-ev-battery-stands-extreme-durability-tests Some coverage in the UK automotive press of BYD's Blade battery and it's extreme testing including high temperature, nail punctures and extreme overcharging. It remains to be seen whether the capacity, energy density, charge and discharge rate and cost are advantageous for mass adoption or whether this will make it preferable for certain niches only such as aero or rugged use cases. I suspect production capacity will be a limiting factor as demand is so high, so unless they licence it to others it's unlikely to dominate

I think there will be opportunities and a lot of money will be invested well by Berkshire during the current crisis at decent returns, but it will not necessarily be the case that large purchases will have been made by the close of play tomorrow, which is the end of 2020Q1 that will be reported at the start of May, with the 13F-HR filings to follow on 15th May, 45 days after quarter end. The crisis has only brought about attractive prices for around 2-5 weeks out of the 13 weeks or so in Q1 (depending where you draw the line), so that's not enough time for truly enormous activity to show up in their next report. In fact, strategically for a company as closely followed as Berkshire, the ability to avoid disclosing their purchases until 14th August instead of 15th May could be a sufficient advantage to hold off buying a potentially large new position until after Tuesday 31st March given that this market is likely to remain depressed for at least a month or two more and they will probably have an easier time picking up more shares at low prices between 1st April and 14th August if they don't buy any in the week or two leading up to 31st March. Volumes in most stocks have been high enough during the crisis so far to allow quite substantial stock purchases without moving the market, so Berkshire could well be able to spend substantial sums buying stock from those running for the hills, but only in positions where they aren't required to report it immediately (i.e. those below 10%). They bought a little Delta Airlines until they exceeded 10% ownership then stopped and previously hit 10% in Bank of New York Mellon thanks to buybacks without new purchases and there's little else we've seen disclosed recently. I'd agree that buybacks of BRK.A and BRK.B probably aren't as enticing as certain other stocks out there. And some stocks even though they're down a lot, aren't exactly at greatly enticing prices, Apple being an example. I can't guess the margin of safety Berkshire would want, but I wouldn't be surprised if they'd like a price in the region of $150-$220 per share for AAPL given that they can't easily go over 10% ownership without onerous reporting requirements, and only briefly Apple dipped close to the top of that range. Certain stocks are already over 10% and that rules out for example quite a few of the banks where Berkshire is already a large owner, despite their beaten down prices being very attractive. It seems that Wells Fargo was starting to be offloaded in 2019Q4 at a rate far higher than is necessary to stay below 10%. More likely than not, I would guess that the selling may have continued during January and until February 14th (13F-HR filing) or 24th (crash began). The large price drop after the rate cuts and the position size being well below 10% might actually be sufficient to reverse Berkshire's presumed selling activity, as there aren't many good banks that Berkshire can buy right now without going over 10%, but any such reversal would be hard to tease out of the reports from Q1, as it would be almost indistinguishable from just selling fewer shares (aside from cost basis and realized gains figures). If there's a major deal in the offing at present with a 50%+ chance of spending many tens of billions or even $100bn+ on an elephant acquisition I could see other rational reasons for Berkshire to have extremely limited buying and buyback activity during Q1.

0.26% of outstanding shares retired from 31 December to 4 March. Not enormous but substantial. There's also a Form 3 out regarding 10% stake in Bank of New York Mellon BK. This seems to be a result of BK buybacks.

I saw that on my Google feed, but it seems to have too many "reportedly" and statements with qualifiers that express that's it's mostly hearsay not confirmed by the Company. No immediate confirmation from Marc Hamburg either, though it's not necessarily a decision made at Omaha, so he might be unable to confirm or deny. It just sounds too short of being adequately fact-checked to publish widely. It's also potentially non-news, i.e. some part of Berkshire was expressing potential interest in investing in a pipeline and decided not to go ahead prior to signing on the dotted line.

Of the 75,000,000 shares of GM held: 26,994,000 shares are pension fund holdings. 48,006,000 are for the benefit of BRK shareholders. Source: 13G/A filing: https://www.sec.gov/Archives/edgar/data/1067983/000119312520038354/0001193125-20-038354-index.htm We can presume that when the newspapers transfer to Lee, a number of the pension plan holdings will move with them and a new SC 13G/A will be filed.

I think he likened Berkshire to a church with a million seats during the CNBC interview, referring roughly to the number of A share equivalents he doesn't own - very roughly. Simply shuffling the occupants of those seats adds nothing and probably subtracts from the quality of business partner he has. With the number of shareholders in street name now that certificates are virtually obsolete, it's probably an unknown number now, and the official company records are probably full of brokerage firms.

I don't think it's certain, but there have been various discussions that have led to the impression that they don't employ such a plan, though I don't think it has been definitively shown either way. I'd have thought that 9th October is at least plausibly too early for Berkshire head office to have material non-public information about the 3rd quarter figures that would materially change their assessment of IV by more than typical percentage volatility of the stock. This is not a centralised company of the likes of Cisco of year 2000 who reckoned they could report their numbers within a day or two of the quarter closing. They don't need their finger on the pulse to that extent, being so decentralised and with such autonomy in the subsidiaries.

According to a SEC Form 4 filing as a 10% owner, and my own calculations, Berkshire (NICO and GEICO, so presumably from shareholder's cash, not pensions) bought an extra 976,507 shares of DAL on Thu 27th Feb at a weighted average price of around $46.3985 per share, spending a total of around $45,308,500 on the additional stock. I've changed the Adjustment column by +976,507 to account for this look-through ownership. This appears to be around 11.23% of Delta's outstanding shares, up from 11.08% or so. I still haven't updated the publicly editable version to the latest 13F or this Form 4, just the version you can copy to your own Google Sheet. https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY

https://www.bloomberg.com/news/articles/2020-02-18/berkshire-wades-into-etf-market-with-two-newly-disclosed-bets The above link tells us that the SPY and VOO index ETF positions are both pension fund holdings, so I've included adjustments to cancel those holdings. There's also a small -323,300 adjustment I've added to Visa Inc. (V) to match page 10 of the 2019 Annual Report Chairman's letter. This adjusts for shares held by pension funds of Berkshire subsidiaries. As Berkshire only owns 0.6% of Visa, there will not be 13g filings that would disclose the pension holdings specifically. I've also removed SAN (Sanofi Euronext Paris) - see below. Each of the lines except Others*** on page 10 now match the share count and also the closing market value on 2019-12-31 matched to the nearest million dollars using normal rounding. Also, I note that SAN (Sanofi Euronext Paris) is absent from the list on page 10. It last showed in the 2017 Annual Report after which the SNY (Sanofi American Depositary Receipts) position disappeared from the 13F during 2018. At that time I did not remove SAN, which isn't a 13F security, and left it in my portfolio as it would not have appeared in the 2018 Annual Report as it was below the top 15 positions by market value. This year, the position would have been the 13th largest, but it is absent, so it may have been eliminated or it may have been reduced to below the $1.924 billion value of the Visa Inc. holding. I will for now assume that Sanofi has been eliminated entirely. I also note that the *** note on page 10 states: It does not explicitly state the 'Market value' of this, but we do know that $10 billion was the cost basis of the preferred/warrant Equity investment in OXY. For now, knowing the additional $0.5 billion in redemption cost, I'm leaving the OXY position at $10.5 billion assumed Market Value. Maybe one day I'll run something like a Black Scholes method approximation of the value of the warrants to see if this implies any appreciable additional 'fair value' at present. From disclosures of the 'mark-to-model' fair value estimation method used for untraded European-style index put contracts, this is likely to be the way Berkshire would comply with any requirement to estimate fair value. Black Scholes is likely to be very wrong on such long-term contracts, but it's the typically accepted method. Having adjusted a private copy of the portfolio that I froze at year-end prices, the total portfolio value I track at 31 Dec 2019, excluding KHC (which is excluded from the page 10 portfolio) comes to: $242,992,080,157 my portfolio at 2019-12-31 close $248,027,000,000 Berkshire's actual portfolio at 2019-12-31 close $ 5,034,919,843 difference or about 2% So be aware that 2% is not accounted for. Some of my error could include: Valuation of non-common-stock Occidental Petroleum Corporation holdings - both 8% preferred stock and attached warrants. Valuation of the very small remaining number of share of 6% perpetual preferred stock in Bank of America Corporation The possibility that Berkshire holds at most 19,130,338 shares of SAN on Euronext Paris - making it at most the 16th largest common stock portfolio holding at year end 2019. I now assume zero holding in SAN. Other US holdings that aren't included in the SEC's list of 13F securities Non US holdings we don't know about - we know about BYD Co. in Hong Kong, have surmised BIT:CASS. I think I need to look into PayTm in India - I think there's a report of similar sized investments in that and STNE. LXS (Lanxess AG in Germany) was also reported in the past. In the opposite direction, other pension fund adjustments that, similar to VISA, I was unaware of. I'd appreciate any thoughts on this, especially if you have links to support holdings that wouldn't show up in 13F filings. Certainly being 2% out is pretty close and won't make a whole heap of difference in estimating look-through market value, look-through earnings or adjusting your effective exposure to holdings you own directly and through Berkshire too. It may be possible to simply model the missing $5 billion as an equivalent holding in a suitable index, with perhaps a sensible estimate of look-through earnings in that index.

Personally, I'd be happy enough if Berkshire continues to trade for less than IV, and I think adjustment will be slow to change away from something like Price/Book Value. I'm thinking that P/BV of 1.2 still seems to be holding up as a pretty good soft floor to valuation and is pretty much the amount one can count on being available to sell at and spend on something that has become cheap. That's why I like BRK.B as a default investment rather than cash - a limited downside that is compounding very much in line with the market that meets my needs while I'm waiting for the fat pitches to come along. Then I can sell some of my Berkshire to buy the high conviction fat pitch. If it's a very high compounder, I should probably hold onto it even when it gets a bit pricey, and otherwise upon revaluation I could trade back into Berkshire when the downside risk there is lower and the upside is broadly similar. Actually, measuring my portfolio against the number of BRK.B shares it represents is a fairly good way of assessing progress compared to the good alternative avilable to me. So is comparison to the SP500TR. I'm quite a fan of the Look-Through Earnings approach too, as well as Sum-of-the-Parts, possibly making adjustments* for heavily mis-priced portfolio holdings. Two column or two-and-a-half, also seems to be a good variation on this theme. * at a trailing twelve month P/E ratio close to 17-18, I don't think major adjustment is necessary, though it's a blend. Banks tend to trade at lower P/E ratios, and Apple probably ought to trade at about 18-22 typically. So far we've had only around 1% of the company bought back, so the excess over BV paid to retire shares hasn't greatly shifted the P/BV ratio that roughly equates to IV. Now P/BV is crude and IV is certainly not at a fixed multiple of BV. For example, the huge run-up in the portfolio in 2019 Q4 greatly increased BV while IV increased moderately, whereas in 2018 Q4, the opposite was the case. Every 10% gain in portfolio valuation probably adds about 4.5% to BV before considering after tax operating earnings in the period, so the effect of market swings is dampened to a degree. At slight variance from SwedishCompounder, I'd usually estimate that a typical year sees about a 6%-7% increase in the capital value of Berkshire's portfolio (rather than 8%) while the dividends received make up the rest to match the S&P500 typical total return, but also that few years are actually typical, but we're pretty much on the same page. I also think that cash is not a drag as it's matched by float - a liability - and gives the opportunity to lever-up significantly when risk-reward balance becomes asymmetrically favourable - i.e. when quality asset prices are unusually low and forward returns are unusually high. I think a change in the tax treatment of dividends to individual investors might be needed before Berkshire will change its dividend policy any time soon. Buybacks could increase somewhat, but I think they're very keen to keep volume modest to ensure they cannot be seen to be manipulating the stock price, especially as they don't seem to take advantage of 10b-18 Safe Harbor plans. And Berkshire does not consider its job to be to encourage a stock price that's as high as possible in relation to IV, but one that's reasonably rational and perhaps slightly conservative and that encourages long-term holders who will benefit from the underlying growth in the business (a positive sum game) far more than from intermittent pricing swings (a zero sum game) where either buyer or seller is 'losing out' on the deal. Going into 2019, the price was relatively high, holding up against a declining market. Coming out it was relatively low to moderate. But over 2 years or 3 years, it pretty much performed in line with the market producing results pretty well in line with the business itself. To me Berkshire is also well positioned to cope with inflation or rising interest rates. These are times when other insurers can lose their pricing discipline and underwrite at a loss, being rescued by bond yields on invested float, and times when other assets, and debt-encumbered companies can start trading fairly cheaply. Initially, a major rise in rates would depress most stock prices to raise earnings yields, though it may help banks. It would also curtail leveraged private equity's ability to obtain high prices for their debt-laden investments. Such a time could be a huge advantage to Berkshire, and one it's well prepared for, but not reliant upon. Whatever the environment I think Berkshire will do well, but perhaps in a low rate environment without a major shock to the system, it shouldn't be expected to do anything spectacular. And knowing that Berkshire is usually available at a fair to attractive price relative to IV, is also comforting to me, allowing me reasonably frequent opportunities to invest new funds at reasonably attractive prices.