Dynamic

The new 13F-HR filings for Berkshire Hathaway and New England Asset Management came out on Friday, and Berkshire also filed a number of 13G or 13G/A filings, plus Form 5 disclosing Warren Buffett's stake in BRK.A and donations of BRK.B as at Dec 31, 2019. All these filings are available via SEC's EDGAR at this link and it's the 2020-02-14 dated filings that I've checked at time of writing. Most of the 13G or 13G/A filings show unchanged Employee Pension holdings, but the new 13G filing in respect of RH (formerly Restoration Hardware Holdings) reveals that despite a much-increased share count this quarter taking the proportion of RH voting controlled to 9.0%, much of that holding is in Employee Pension Funds (code EP) so the amount I know think is attributable to Berkshire shareholders is lower than I thought last quarter, when I didn't know any was in EP. New holdings - Biogen Inc, Kroger Co., SPY and VOO index funds, all small positions likely Ted and Todd. Oddly, SPY and VOO have look-through holdings in 500 companies including BRK.B itself (an interesting recursion), but the positions are small and EPS is not provided by GoogleFinance, so for now, I'm ignoring their look-through contribution as negligible. As usual, my figures on changes will differ from other published sources, which I consider to be incomplete for tracking Look-Through ownership, because (1) I deduct Employee Pension fund (EP) holdings where possible, some of which are substantial (2) I do include the proportion of Gen Re holdings that appear on the 13F for NEAM which are ignored by every other published Berkshire portfolio tracker I've seen. (3) I make reasonable estimates of non-13F securities such as non-US securities based on limited reporting and occasional disclosure in 10-K filings and whether my end-of-quarter Equity Portfolio valuation is reasonably close. Some notable examples are BYD Co. (HKG:1211) held by BH Energy which is reported on some Hong Kong websites and Sanofi (traded Euronext Paris), for which the ADRs were sold, but I suspect the Euronext shares are still held - and the 10-K may well confirm or refure this as it would be a top-15 holding at year-end 2019 if still held, which it wasn't in 2018. I also make a reasonable assumption of the value of the Occidental 8% Preferred stock, which I assume is carried at a fixed $10.5 billion valuation but which doesn't contribute to Look-Through investee Earnings, as the 8% dividend would come either via OXY stock or 'Other' income reported in Berkshire's own earnings. As yet, I haven't attempted to put a value on the small remaining position in BAC 6% preferred stock. Changes noted (full list in fixed-width font table below): - where I mention the valuation of the position 'now' or 'today', I'm basically referring to Friday 14th Feb 2020 closing prices. AAL - American Airlines reduced shareholder-owned share count by 5.2% so that total share count remains just below 10% voting control. N.B. Employee pensions account for almost half of Berkshire's holding, but EP count did not change. Some EP holdings will disappear when the newspapers are acquired by Lee. $635mn valuation of shareholder's stake. AAPL - Apple reduced by 1.4%, probably Ted or Todd needing to sell something fairly full-valued to invest elsewhere, I guess. Still a vast position at $81,519mn today. BAC - Bank of America reduced by 0.2% since 2019-09-30 due to divesting Applied Underwriters, as already disclosed in Oct 2019 filing. Percentage stake now 10.7% thanks to buybacks. $33,029mn valuation today. BIIB - NEW STAKE - Biogen Inc., worth $216m today. Almost certainly Ted or Todd. BK - Bank of New York Mellon reduced 3.6% to stay below 10% stake, 9.9% stake thanks to buybacks. $3,740mn today. GM - General Motors increased BRK shareholders' stake by 6.0%. EPs own about a third of total stake. $1,669mn today for shareholders. GS - Goldman Sachs reduced 33.8%. Now 5.1% stake in GS. $2,948mn today. KR - NEW STAKE - Kroger Co. worth $535mn today. Almost certainly Ted or Todd. OXY - Occidental Petroleum increased 153.5%. Stake worth $788mn today. The option of paying the $10bn 8% preferred dividend in OXY stock could be responsible for some or all of this position. Might be revealed in the Berkshire or Occidental 10-K soon, or if we could guess the payment dates based on the acquisition of Anadarko, we might be able to reconcile it to the $0.2bn per quarter in preferred dividends and OXY stock issuance. Quite possibly it's a mixture of open market purchases and dividends in stock. PSX - Phillips 66 reduced by 95.6%, and quite possibly eliminated entirely since 31st Dec 2019. $20mn today if still held. RH - RH, formerly Restoration Hardware, increased possibly by as much as 112.6% depending on how much was already owned by the pension in the previous quarter. $225mn stake for BRK shareholders (5.0% of company), plus 4.0% of company for the Precision Castparts Master Trust Employee Pension (EP), giving 9.0% voting stake. SPY - NEW STAKE - SPDR S&P 500 ETF Trust, just $13.3mn at today's price. Almost certainly Ted or Todd. SU -Suncor Energy Inc increased 39.6%. Now $447mn. TRV - Travelers Companies Inc decreased 94.8% and quite possibly eliminated entirely since 31st Dec 2019. $43mn today if still held. VOO - NEW STAKE - Vanguard S&P 500 ETF, just $13.3mn at today's price - virtually the same as SPY. Almost certainly Ted or Todd. WFC - Wells Fargo & Co reduced by 13.8%. This is quite a substantial reduction on a giant stake. If still holding as much as at 31st Dec 2019, Berkshire holds $16,669mn at today's price. While they may be required to stay below 10% to avoind becoming a Bank Holding Company due to banking relationships, the stake is now 8.4% so they've either bought themselves a lot of time while selling at reasonably high valuations or they're selling for fundamental reasons. Hard to guess whether they took advantage of some reasonably high prices in the 50s last quarter to lighten up prior to the new CEO potentially making some big bath changes or whether they feel the story has changed for the worse and they should either eliminate the position or they're selling based on valuation. Here's the table of changes: AAL_________ American Airlin…Group Inc __-5.20% ______21,758,000 AAPL________ Apple Inc._______________ __-1.40% _____250,866,566 AMZN________ Amazon Com Inc___________ ____unch _unchanged count AXP_________ American Express Co______ ____unch _unchanged count AXTA________ Axalta Coating …stems Ltd ____unch _unchanged count BAC_________ Bank of America…rporation __-0.20% _____947,760,000 BIIB________ Biogen Inc.______________ _**NEW** _________648,447 BK__________ Bank of New Yor…llon Corp __-3.60% ______81,488,751 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_____ ____unch _unchanged count DEO_________ Diageo P L C Spon ADR New ____unch _unchanged count DVA_________ DaVita HealthCa…tners Inc ____unch _unchanged count GL__________ Globe Life Inc …ark Corp) ____unch _unchanged count GM__________ General Motors Co________ ___6.00% ______48,006,000 GS__________ Goldman Sachs Group Inc__ _-33.80% ______12,435,814 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______ ____unch _unchanged count KHC_________ Kraft Heinz Co___________ ____unch _unchanged count KO__________ Coca-Cola Co_____________ ____unch _unchanged count KR__________ Kroger Co._______________ _**NEW** ______18,940,079 LBTYA_______ Liberty Global …c Class A ____unch _unchanged count LBTYK_______ Liberty Global …c Class C ____unch _unchanged count LILA________ Liberty LiLAC Group A____ ____unch _unchanged count LILAK_______ Liberty LiLAC Group C____ ____unch _unchanged count LSXMA_______ Liberty Sirius … Series A ____unch _unchanged count LSXMK_______ Liberty Sirius … Series C ____unch _unchanged count LUV_________ Southwest Airls Co_______ ____unch _unchanged count 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. _153.50% ______18,933,054 OXY.preferre Occidental 8% p…red stock ____unch _unchanged count PG__________ Proctor and Gamble_______ ____unch _unchanged count PNC_________ PNC Financial S…Group Inc ____unch _unchanged count PSX_________ Phillips 66______________ _-95.60% _________227,436 QSR_________ Restaurant Bran…ional Inc ____unch _unchanged count RH__________ RH (formerly Re…Holdings) _112.60% _________945,079 SAN_________ Sanofi Euronext Paris____ ____unch _unchanged count SIRI________ Sirius XM Hldgs Inc______ ____unch _unchanged count SPY_________ SPDR S&P 500 ETF Trust___ _**NEW** __________39,400 STNE________ StoneCo Ltd._____________ ____unch _unchanged count STOR________ Store Capital Corp_______ ____unch _unchanged count SU__________ Suncor Energy Inc New____ __39.60% ______15,019,031 SYF_________ Synchrony Financial______ ____unch _unchanged count TEVA________ Teva Pharmaceut…Ltd (ADR) ____unch _unchanged count TRV_________ Travelers Companies Inc__ _-94.80% _________312,379 UAL_________ United Continen…dings Inc ____unch _unchanged count 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_____ _**NEW** __________43,000 VRSN________ VeriSign Inc_____________ ____unch _unchanged count WFC_________ Wells Fargo & Co New_____ _-13.80% _____345,688,918 So far, I've updated the version that is NOT publicly editable at this link, which you may copy to your own Google Drive and enter your own holdings of BRK.A and BRK.B to estimate your own Look-Through holdings and Earnings from the investees: https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=270007207 I may get around to editing the public-edit version later.

+1 +2

I'd guess we're probably talking something like $80 billion +/- $2 billion in 2019 GAAP earnings for Berkshire (now including unrealized gains after deferred taxes). This would beat Apple's 2018 best but probably lag Fannie Mae's 2013 best according to this list: https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses where Saudi Aramco and Vodafone have the top 2 spots at over $100bn in CPI-adjusted dollars. Something in the $29-33 billion range in 2019Q4 would easily put Berkshire at No.2 in the quarterly records list on the same article, beating $22.2bn for Apple in 2020Q1 but well behind Fannie Mae's $58.7 in 2013Q1, pushing Berkshire's $21.7bn 2019Q1 down to 4th place.

As I said on the other thread mentioning the 10% to 25% rule change, the SEC rapid reporting of all purchases and sales once you're above 10% will probably stop Berkshire making meaningful open market purchases beyond maybe 11% regardless of the Fed ruling on Bank Holding Companies. With the Delta Air Lines situation in March 2019 they inadvertently exceeded 10% as DAL bought its own stock back then on realising they would have to file a Form 4 added to their position taking it to 10.4% by the time the second Form 4 was filed. https://www.sec.gov/Archives/edgar/data/27904/000120919119018303/xslF345X03/doc4.xml It's possible they could buy a little more without moving the price too much but it might well be slow, and they'd have to report the price paid. Investee buybacks instead will be the more likely gradual method by which Berkshire's stake grows in normal times, making it a very gradual process. Possibly future preferred stock and attached warrant deals like BAC in the past could allow Berkshire to make substantial increases from time to time that they couldn't do in the open market. And they could reach 33.32% ownership if they can obtain non voting stock,. There might even be scope for negotiated block purchases from other holders at times. SEC reporting for non banking stocks is similar and we've seen very little activity over 10% ownership stakes. If they become deeply undervalued it may be possible to add a bit while retaining a margin of safety, but Berkshire's best bet might be an acquisition approach at a modest premium or a financing deal with convertible warrants.

Thanks for that @valueinvesting101. I just googled the BK share count and found two sources stating 922.2 million as at 31st Dec 2019, which is wrong. I would imagine that either Berkshire will have sold enough to remain under 10% (which we should discover with both of Friday's 13F-HR filings) or they may be waiting for the formal SEC 10-K filing from Bank of New York Mellon with an exact count of shares outstanding before they file with SEC that they are now a 10% owner. The last relevant SEC filing was the 30 Sep 2019 10-Q, stating: I guess we'll find out soon.

The total holding over Berkshire's 13F-HR and New England Asset Managements' 13F-HR is exactly 92 million shares of BK, which it has been since 31st Dec 2018 (when it was 9.6% of BK's outstanding shares) - a few of those shares are held via NEAM so don't appear on CNBC's portfolio tracker or any other public 13F trackers I've seen. That share count is unchanged and I don't think it has ever exceeded 10%. To my knowledge the only bank that exceeded 10% was BAC. BK now has only 922.2 million shares outstanding, so the proportion controlled by Berkshire is now 9.98%. It seems the Bank Holding Company Act rule change will be just in time, coming into effect on 1st April 2020 and allowing Berkshire to hold over 10% without becoming a BHC. Berkshire will probably have to file with SEC as a 10% holder within a few days of crossing the 10% threshold of known BK shares outstanding and from then on report any trades within a few days instead of just quarterly. There is an adjustment applied by my sheet of -7,511,249 shares to account for holdings by pension funds of Berkshire and its subsidiaries. On COMBINED HOLDINGS tab, column H (now corrected) my sheet shows details of the sources of these adjustments: If you check out that 13G filling link from 14 Feb 2018 you'll find the pension fund holdings on pages 30-32 and on page 47. Note 3 on about page 51, confirms: and this is also confirmed in EXHIBIT A: I include that Note also, because it mentions 1,417,000 shares held by companies not defined under SEC Rule 13d. These three companies and their holdings are still listed in the 13G filing, but it's just pointing out that they are not required to file under the SEC Rule 13d. These filings can be tricky to parse because many of the holdings are shown at the parent company level and the subsidiary level, and subsidiaries of the subsidiaries too, so the totals of all numbers far exceed the overall holding. Fortunately, the employee benefit pension funds do not have subsidiaries, so they can be added together quite simply to provide the adjustment so that we only count the shares held for the benefit of Berkshire shareholders.

I would imagine that Berkshire would be very keen to be a very passive investor in banks, with the exception of Todd Combs' Directorship of JPM, which might still permit Berkshire to hold more than 10%, though only a ~2% stake at present. The second link presented at the above URL, is to Visual (PDF), a one-page table which is quite useful in summarizing under what circumstances a company will be deemed to become a Bank Holding Company after 1st April 2020. Between 10% and 14.99% voting rights, there are slightly lighter restrictions than between 15% and 24.99%. It does seem that once we exceed 10% ownership, the terms of business that Berkshire must have with such companies as Wells Fargo or Bank of America should be on Market Terms. I have something in the back of my mind that Berkshire had a significant banking relationship as a client of Wells Fargo, so it may yet be the case that Berkshire decides to remain below 10% if it has negotiated advantageous terms of business that are sufficiently valuable to Berkshire. I dare say it will be more than a quarter before Berkshire's stake in WFC might exceed 10% again through buybacks anyway. Also, the rule states that even in the case of non-voting equity, once one-third of the company's total equity is held, that is considered sufficient influence to become a Bank Holding Company. Berkshire might be able to exchange voting equity for non-voting equity at some point in the future to increase its stake to 33.32% at most. Likewise there is a look-through provision regarding the potential to convert options or warrants etc. into voting securities or non-voting securities and then to apply the rules to the potential stake if exercised. It may be that if a future preferred stock investment with attached warrants like the BAC deal were to be made, the warrants might be exercisable into a voting or non-voting class of stock or a combination, allowing Berkshire to eventually hold a fairly substantial economic interest in a major bank without becoming a Bank Holding Company. It would be unlikely that they could make such purchases in the open market due to the SEC reporting rules for stakes over 10%.

Podcast Addict on Android, usually 1.7-2.2x speed for voice except for listening in Spanish or French or my favourite comedy.

I agree. I've increased my exposure recently and written and rolled some puts too. The 1.3 x Book Value is obviously an estimate until the results come out but I think these prices around $228-$229 are almost certainly going to come in pretty close, and Berkshire's portfolio is now above year end prices and has beaten the S&P since the end of September

I don't think the Fed had jurisdiction to change that, so I think 13D and 13G filings would still be necessary, thwarting large open market purchases of BAC or WFC after exceeding 10%. After 1st April Berkshire might consider purchasing more WFC until a few days after exceeding the 10% threshold, but then I'd imagine they would stop.

So in summary it appears that 25% ownership is to become permissible without becoming a bank holding company unless you seek to exercise any control or influence beyond your normal voting rights. Potentially non voting shares might permit more ownership still. For Berkshire the accelerated disclosure rules for owning over 10% of any US traded company enforced by SEC still apply so Berkshire would have to disclose new purchases within 5 days once they exceed 10%. Large additional stakes bought in the open market are unlikely but negotiated block purchases might be conceivable. I'd imagine that Bank of America and Wells Fargo stakes will remain roughly constant from now on in share count but will gradually grow as a percentage through the investee buybacks. Berkshire will still need to monitor the investee filings to ensure they file form 13D or 13G within 3-5 days when a new outstanding share count is published.

Wikipedia editors have very strict guidelines about consensus opinion and not giving undue weight to fringe viewpoints, including reliance on secondary Reliable Sources, both for establishing the notoriety/notability of having an article and for discussion of notable criticial reception (positive and negative) of the subject, so it's often a useful summary as a starting point: https://en.wikipedia.org/wiki/Zero_Hedge Generally, I became aware of Zero Hedge's recent Twitter ban, but I try not to reward them with advertising revenue or pollute my Google curated news feed by clicking through to them. Likewise, I'm no fan of Zacks Investment Research and one or two others who seem to reveal their automated text generation all too often when they report ridiculous numbers (often zero) for various fundamentals of BRK.B, so I try to avoid clicking through from Yahoo Finance links to their articles. If I want a more reliable Ludwig von Mises Austrian School view of current economics and investing and a measured usually somewhat bearish analysis, I'd much rather read something like The Leithner Letter, which is well referenced (albeit lengthy) and gives pause for thought and some alternative viewpoints to consider, and is written from the point of view of a Graham/Buffett type value investor with a decent 20-year track record despite significant cash and bond allocation. I generally, pay little heed to macroeconomics, but Chris Leithner provides a well reasoned non-mainstream view that's worth considering and weighing against my usual considerations such as time-in-the-market to compound wealth beating attempts at timing the market. Returning to Berkshire specifically, if cash remains closely matched to float most of the time, I would not be concerned. I'd then expect cash to decline compared to float if they can make a well-priced acquisition or substantial additional equity investments, especially during market turmoil.

Just to make people who use the spreadsheet aware, when the deal to sell off the newspapers to Lee Enterprises closes - possibly in March 2020, various items in the Adjustments column relating to pension fund holdings are probably going to need modification as of the future 13F-HR filings. The 13F after this may be the one that comes out on 15th May 2020. I suspect a number of 13D or 13G filings will be made, which at that point might no-longer include the pension schemes for the likes of Buffalo News employees, though it may be possible that for a period, some of these will continue to be managed by Berkshire and show up in their 13F-HR. It is not clear to me yet whether any of the assets of the Berkshire Hathaway consolidated pension scheme will also be transferred out, if any of the employees of other newspapers are members of that scheme, but I imagine a number of SEC filings will begin to clear things up at the time, just as they did when Applied Underwriters was spun off, and some BAC stock was transferred out with it. - edit - I would imagine that the holdings are relatively minor. For example, the American Airlines holdings by pension plans are almost half of the 13F holding, but those in the Buffalo News plans are dwarfed by other pension plans like GEICO's. That's the only one I've really looked into. I don't imagine it will have a material effect on Berkshire's ability to increase holdings without crossing 10%.

I think you're correct that Berkshire won't sell the main Apple holding unless the story changes for the worse. It's not easy to deploy $81 billion, or perhaps $72 billion after tax on gains into anything that's 30-40% more attractive, which I'd imagine is the hurdle that would be required at minimum to make it worthwhile to pay those taxes. It might make sense to buy something that would compound 5% faster for. 10 years, say.

Yes, I've enjoyed his writing especially about Berkshire for the best part of 2 decades I think. On Berkshire news, there's a bit of branching out in the London UK property market. https://uk.finance.yahoo.com/amphtml/news/warren-buffett-berkshire-hathaway-is-boosting-his-london-property-business-mortgages-132918951.html

https://www.rationalwalk.com/?p=18732 An interesting review of Cunningham and Cuba's new book A Margin Of Trust about Berkshire's culture

I do some spreadsheet things for stock tracking and have found some scripts online to query Yahoo Finance for prices, which did work for some things more exotic than the stock and currency quotes from Google Finance including some put and calls options for writing covered puts and calls a few weeks out, so I imagine it would work for LEAPS too. The has been a thread on CoBF about scripts for bringing price data into spreadsheets. Maybe you can record them historically from now on. I don't think I've ever seen historical price data for them. There might well be a high cost paid service for pros with expensive trader terminals to obtain historical data. For normal purposes like rough portfolio valuation, I'd tended to find that Black Scholes can provide a reasonable estimate of option prices by using the stock price as an input if you have roughly right 1 year T-Bill rate and a reasonable estimate of volatility to fit the initial price to the market price. So you might be able to estimate historical LEAPS prices pretty well from historical underlying prices and historical T-bill rates which you may well be able to obtain. It's only the volatility that is unknown unless you can work out how it is calculated based on historical stock prices, which I couldn't easily do (though I could work harder if it mattered to me). For me Black Scholes was good enough to estimate the running value of my short option position compared to the premium I had received and to estimate what-if scenarios such as what if the price of the underlying rises to X or falls to Y in D days from now. I just plug X or Y and the (days to expiry - D) into the Black Scholes formula to get a reasonable estimate. Good enough for me, especially as option spreads can be quite wide, but I don't know your purpose. This is usually good for me as the Yahoo Finance script often returns zero so is hard to rely on, but maybe you're looking for pricing discrepancies compared to BS. For the short term covered option writing I'm usually interested in only a few companies and I found that I could often get similar things from copy and pasting values from option price tables on web pages into my spreadsheet so it wasn't worth automating. Marketwatch was also good there for tables of options to copy and paste, but I haven't seen scripts published to query their database, so perhaps they don't support that. I can occasionally paste some of those to improve my volatility estimate and recalibrate my Black Scholes estimates. Another approach to building a record of it might be to use a Paper Trading account in IBKR. This notionally has something like $1 million USD to start with. You can probably simulate buying long or selling short pairs of these options for a cost of maybe $10 per pair (commission and spread), so you could randomize or alternate a few different strike prices near your target to be long or short, so that you don't tend to gain or lose much of your $1 million notional balance over time other than in notional commissions and spreads. With $1 million I'd imagine you could populate a portfolio with around 200,000 different specific options this way, which would probably be far more than you need if you want 200 hundred underlying stocks at maybe 3 different expiry dates each and 10 different strikes that's only 6,000, and maybe you could export the data from there or query it using their API, if the API works with the Paper Trading account.

Wow, that's a great example of "who cares about lumpy returns if you're earning 30%+ annualized on average". Multiplying your rough returns, you probably turned every €100 into about €1065 over the course of around 8.5 years. That would be about 32% compound annualized return (with a few percent margin of error I imagine, given that the early numbers are very approximate). Also great that you haven't lost money.

I visited Chile for the first time in Sep 2018 at a time when it seemed very peaceful and very clean-looking and orderly. In Santiago, mostly did touristy things and enjoyed them. The city looks very clean, but take the teleférico (mountainside cable car) up to Cerro San Cristobal with the giant statue of the virgin Mary and you really start to see the veil of pollution held between the two mountain ranges and enveloping Santiago, though the view is still great. Also enjoyed a bus trip to the Valle Maipo wine region and the Concho y Toro vineyards. Also went to Valdivia in the south on an internal flight. Quite chilly coming out of winter and lots of log-burners added a different form of pollution, but a rather charming little city. The Kunstmann brewery is one of many that make great German style beer thanks to the quality of the water. I'd love to return to Valdivia for longer, and to explore the mountains and forests around there. The river boat tour is worth taking to enjoy the natural beauty and visit the fortifications near the headland that guarded Valdivia from naval attacks from the Pacific.

The simplest way of getting roughly right answers for one year returns when you're adding money is using the following three figures: A = money added during year (negative if money withdrawn) S = starting valuation (31 Dec 2018 closing prices) E = ending valuation (31 Dec 2019 closing prices) ReturnX = ( (E - A) / S) - 1 This return is a fraction. Multiply by 100 to get a percentage. ReturnY = ( E / ( S +A ) ) - 1 This return is a fraction. Multiply by 100 to get a percentage. Return = 0.5 * ( ReturnX + ReturnY ) I.e. the average of the two calculations ReturnX is the return assuming all the money was added on the last day of the year. ReturnY is the return assuming all the money was added on the first day of the year. Taking the average of the two is pretty accurate for typical spread of cash additions. I've compared this to XIRR based on all my account ledgers and it's accurate enough. For example if you started with $90,000 and added $10,000 and finished with $120,000 the calculation is: A= 10,000 S= 90,000 E= 120,000 ReturnX = ( (120,000 - 10,000) / 90,000 ) - 1 = (110,000 - 90,000) - 1 =1.222222 - 1 =0.222222 This is 22.2222% ReturnY = (120,000 / (90,000 + 10,000) ) - 1 =(120,000 / 100,000) - 1 =1.200000 - 1 =0.200000 This is 20.0000% The average is 21.11% That's accurate enough to answer this survey unless you know the cash inflows were heavily weighted to one end of the year.

Absolutely no rush on this. You could present the options as both annualised and total return. e.g. over 5 years, >=8.0 to <10.0% annualised would be 46.9%-61.1% total (1.08^5 - 1)*100 = 46.9% ; (1.10^5 - 1)*100 = 61.1% Maybe aim for 2% width poll options within +/- 14% of the SP500TR annualised return, then widen out to 5% bin widths then 10% for the more extreme outliers as you deviate very far from the index return. I'd anticipate that many of the typical results would be clustered fairly tightly on an annualised basis as the holding period extends and randomness gives way to skill, so we'd need smaller bin widths anywhere in the vicinity of the index to get a decent picutre, but that some of the outliers would have extreme difference from the index by sustaining exceptional outperformance or potentially even underperformance.

I have mixed feelings on this front too, and I've occupied various positions in the spectrum of how to handle the question of whether or not to sell. Phase 1 - I used to be very much a buy-and-hold investor, with very few positions in great companies that I left alone and one or two duds I thought were great long-term investments where the story changed along the way. Phase 2 - Then I became a little more active, especially as I had more new money to invest and had absorbed many lessons. I'm still an Intrinsic Value investor looking for companies with long-term compounding, moats and negligible debts or blow-up risks, with a fair orientation towards GARP as before, but my approach to selling became: 1. Sell if the company has changed for the worse or you were wrong in your initial assessment (have always tried to do this). 2. Sell if it's ludicrously overvalued (have never done this for a GARP position, though I have sold one or two more speculative positions as the likely reward became modest and the downside risk became elevated, which helped me dodge some of the 2018 mini bear market). 3. Value Trading - generally to consider the relative price-to-IV ratios of my positions, combined with a sense of risk-reward balance and only to sell if I have a reasonable margin of safety if enhancing my portfolio IV. If I need to make a decision on where to raise money to fund a new position, this helps. Could also trade a lower quality company for a higher quality company in this way to reallocate my funds towards the better quality positions. Phase 3 - I'm evolving slowly and I'm certainly trying to train myself to identify and pay up rather more for very strong compounders where I can be confident of the moat and the integrity of management. This would probably be in conjunction with modest-growth safe compounders usually bought at pretty fair to cheap valuations that don't price in much growth. Too many people miss out on 10-baggers or 50-baggers by selling them as 2-baggers after a quick gain and never getting back in because it never reaches that high conviction price again where they originally bought, and Akre's article is a rather good summary of this. Many investors wrongly expect their portfolio performance should be statistically spread over many well-performing stocks, whereas in practice many of the best outperforming managers have one or two statistical outliers that contribute the majority of their gains while the other positions are very so-so, but they managed to hold on to the winners for decades despite becoming unusually concentrated in those positions as they delivered amazing growth. In other words, don't necessarily trim your big winners to add to your losers if the winners are justifying their winning status by their fundamental performance. That's like cutting the flowers and fertilising the weeds to paraphrase Peter Lynch, I believe. Berkshire has bought Coca-Cola KO and held for decades, despite it trading for 40x earnings with only modest earnings growth expected at various times. American Express AXP has similarly been an enormously long-term holding, and I wouldn't be surprised if AAPL, WFC and BAC are seen to be similarly 'near-permanent' by the end of 2029 probably all having paid accumulated dividends amounting to a sizeable portion of their purchase price. It can also make an investor nervous when a position grows to become a large proportion of the portfolio and they fear it may be re-rated downwards, but often the best long-term investors let them run even well above prices where they wouldn't buy, as Chuck says. My intention in future (save for when a business is not as good as I thought or has become worse than it used to be) is to try to make it much less likely that I'll switch when there's a big difference in underlying compound growth rates in favour of the more richly-valued position so that I don't miss out on good compounding by selling unless I have an even better compounder to trade into. And if there is a new high conviction compounder I want to invest in and I need to trim something else to fund the purchase, I'd often be better off selling something with very pedestrian growth yet a cheap valuation than to trim something with high compound growth and a fairly high multiple. I would then try to avoid the pitfall of selling out of very strong compounders when they're a bit richly priced in exchange for more modest compounders that are just outright cheap right now unless I also ensure that I'm willing and prepared in advance to get back into the strong compounders later without insisting they be quite as cheap as my original purchase price when measured on the basis of near-term earnings yield or P/E ratio, otherwise I'm swapping strong compounding for modest compounding and a one-time kick from re-valuation of the modest compounder, without using that to restore or increase my holding in the strong compounder. Ideally, I'm think I might sell, for example, 1000 shares of a strong compounder STRONGCO at a rich valuation to buy a modest compounder MODCO with an unusually large margin of safety, high certainty and great downside protection and a catalyst for 25%+ gain within a few months to a year tops. I'd count it as a success if the proceeds of selling MODCO after this round-trip are sufficient to buy back, say, 1100 shares or more of STRONGCO the strong compounder, a 10% increase in one of my best long-term positions, but I'd probably want to aim at the start for something that I'd expect to provide about a 20% increase in share count (a reasonable margin of safety) to account for continued fundamental growth of STRONGCO while I've taken some of my money away or to allow for a longer time to realise the re-rating of MODCO. If MODCO fails to make the gains I expected, I may simply have to settle for only being able to afford 900 shares of STRONGCO after the bad round trip where STRONGCO continued compounding its fundamentals, costing me 10% of my position but a least allowing me to keep 90% in a great compounder and maybe make it up with a future round-trip value opportunity that does work out. It's probably good to have a more appropriate metric than Price to 1-year's earnings, such as price to 5th-year projected earnings or free cash flow that gives you permission to pay justifiably higher current multiples for good growth stocks with moats yet without paying silly 100x multiples that are priced beyond perfection by projecting beyond time horizons one can realistically project. Mungofitch on the Motley Fool Berkshire Board outlined quite a decent approach to comparing high-growth valuations to low-growth valuations along these lines and it resonated with me, and it's not out of line with the typical fair-PE ratios for growth companies theoretically outlined from DCFs, without the DCF's tendency to produce ludicrously high valuations.

I've read a number of things along these lines in various places all with the general idea that historically it has been a bad idea to get out of the market and into cash after a year of unusually strong returns as the subsequent year is most often also positive. The usual refrain that time in-the-market is more important than timing the market seems to apply. So accept the losses in bear markets knowing that you're making up for it by not missing out on compounding, especially if you can keep buying good compounders with moats below their intrinsic value.

I find it interesting that in most years, the mode and median of the distribution of returns from the voting histogram appear to be (currently) very close to the S&P500 Total Return, with a fair spread above and below and a few notable outliers with very high or very low returns in an individual year. This gives some confidence that this anonymous self-reporting is relatively close to reality. I think I've noticed relatively similar things in previous years' polls. Obviously, it's relatively rare to consistently beat the market by more than 5% or 10% year after year (one or two bins in the histogram), but 5-10% annually represents an enormous outperformance over a decade or two, so it doesn't mean that CoBF members don't tend to beat the market by a lot in the long run. We have a lot of people making different decisions, with different time horizons and strategies, some who pay no attention to market price from year to year, and we tend to be pretty well clustered around the market return and close to normally distributed. I suspect a lot of that expected randomness is caused by the relatively short time span of 1-year where the random walk of market multiples and sentiment is more dominant than any long-term outperformance trend. If people had a record of their 3-year, 5-year or 10-year market value returns, I suspect we'd only then start to see whether CoBF members have a marked advantage or disadvantage compared to the market, though then the methodology can also influence the returns reported (e.g. how do you account for money added or removed from the portfolio or for dividends). I know one or two of the members here don't track it, and are quite content with just a vague estimate for their returns, which they continue to knock out of the park by such a margin that dividends and cash movements really don't matter. It would also be interesting to see if the spread is tighter over longer time-frames and whether there are consistent outliers who regularly post 35%+ annualised returns or more or whether most of the 1-year outliers are highly concentrated and volatile, alternating randomly between +50% and -30% and end up averaging closer to market returns in the longer term.

I answered +15%-<+20% on a USD basis (+18.02% return) - which is the currency I focus on, but I was +13.59% in home currency GBP terms (which has been a rollercoaster currency since mid 2016!). Probably paying the price for coming into 2019 on the back of a sharp uptick in the last week of 2018 that helped me outperform the market that year. Also, a concentrated portfolio is a double-edged sword! Biggest error of omission in 2019 - setting my AAPL buy price around $135 (with a target of about 25% portfolio exposure) in January and thus missing the ride from $142 to $292 (though I thought I had a better alternative prospect, unless the price reached about $135, which didn't pan out as well). I have ample indirect exposure via Berkshire anyway, which will eventually be reflected in Berkshire's price. I lagged the SP500TR by -13.46% overall in 2019. Did very nicely on BAC position around 10% of portfolio over whole year plus some covered put/call writing, but otherwise lagged the market mainly due to BRK.B coming into 2019 fairly high after a strong 2018 and coming out fairly low after KHC write-downs and general pessimism and down-rating of its multiple despite what looks like a pretty strong year fundamentally, especially Q4 by my estimations. 4 years of more active management: 2019: +18.02% USD / +13.59% GBP / -13.46% vs SP500TR 2018: +25.30% USD / +32.95% GBP / +29.69% vs SP500TR 2017: +24.83% USD / +14.14% GBP / +2.99% vs SP500TR 2016: +24.16% USD / +54.19% GBP / +12.20% vs SP500TR 4-yr cagr: +23.35% USD / +27.45% GBP / +8.92% vs SP500TR Prior to 2016, was much more passively managed with little cash added since 2003 and very few trades made. Overall estimated IRR since 2003-ish weighted according to timings of added cashflows ~= XIRR: +13.17% USD / +14.47% GBP / +2.22% vs SP500TR. XIRR includes all frictional costs including witholding tax on US dividends, but not capital gains tax, though a small capital gains tax bill will soon be due on 6 Apr 2018 -5 Apr 2019 tax year's unsheltered gains, which exceeded the combined generous UK CGT allowances of myself and my spouse for the first time but is only taxed at 10% of gains above that, or 20% maximum if we gain enough to put us into the top tax bracket. Most of portfolio had previously been tax-sheltered in ISA and unsheltered gains within CGT limits. XIRR also based on approximate reconstructed valuations in early 2003, some historical prices not being available to me due to old investments being taken private. If I include 1999-2003, I had losses before I really understood GARP/value investing that would reduce my outperformance modestly. Notional SP500TR comparison assumes I bought or sold at total-return index closing price on days when cash was added to or removed from brokerage accounts (but not when transferred between them) and assuming no frictional costs such as tax on dividend distributions.