scorpioncapital

Not any loan, generally it must earn investment income. So there is some debate as to whether holding Berkshire on margin in Canada would qualify as a margin expense deduction because Berkshire has never paid a dividend except once in the 1960s and doesn't seem that it will at this time.

I used to be concentrated but never making that mistake again! The only one I might consider is Berkshire. The problem is actually not so much the concentration as the risk that your choice is worse than you think. Of course as your skill level and though process improve as to stock selection and pricing, the less you can diversify. It's almost an axiom that this accelerated wisdom comes from a huge loss though. Without a big mistake, I've found few catalysts to actually "getting it". Right now I hold about 10-12 positions but Berkshire is the biggest one. As I learn more, I slowly rotate out of Berkshire and into these smaller holdings. I'm comfortable with 8-12 positions but not much less or much more. I also look for 1 or 2 arbitrage opportunities per year.

Concentration can also be vertical instead of horizontal. E.g. if you own 100% Berkshire, it may not be diversified in terms of stocks but it certainly is very diversified in terms of what you own and adding even more stocks may be quite unconcentrated. Another example might be something like the former TCI if you could know their plan. 1 stock and now you got like 20? stocks in your portfolio from the children that were spun-off.

Except for 1 small cap (700m), I'm 70% large cap and 30% mid-cap on the theory that larger equals strength and past success which lead to continued success and - depending on what you bought - less downside in a correction. That's just me. In a parallel universe, I can imagine decent portfolios of growing small caps or severe mispricing in smaller companies. Of course you have to keep your eye on the economics, asset quality, and future prospects, no matter what you own.

I sell stocks that have losses and add to stocks that have gains, pretty much indefinitely... but I will give it some time since a) I wouldn't own anything if I didn't like the business to a good degree and b) I bought at a price I thought was reasonable...so I'll wait 6 months to a year. If it drops more than 20%, I'll sell regardless of time but only because my portfolio requires less draw-down than others due to some leverage.

What is stopping governments from selling for cash and then turning around and restricting price gains in the face of inflation? Brookfield seems to operate in many developing nations but also in developed ones. Either way, I'm not sure it's much different than a leveraged fixed income portfolio held inside an insurer, but there at least there are no cranes, no construction, no overhead, and if run right no interest expense, just paper and brokerage account.

from what I've seen companies like royalty franchises or service income, as well as domestic investment bank profits pay very high taxes, sometimes like 40%+, so that will benefit. Other multinationals or industrials already seem to pay in the 20 to 30% range and so not so much.

DHR

Maximal suffering is approached when you buy the wrong thing at the wrong price on two times margin but you are absolutely certain it's the right thing and the right price.

Didn't he say in that interview he thought the US economy based on Berkshire subs was softer than people think ( ) and that he thought Q3 GDP would be revised downward and that it was lower than reported? Today GDP came out and it was revised upward from 2.9 to 3.2% I guess we can see here an example of how hard macro is to predict even for the most brilliant investors!

Note that the self employed/sole proprietors pay a 10% pension-payroll tax instead of 5% even though they have no employer or salary. This has always been a bit of a head-scratcher for me. Same in most countries I presume.

Do you compare look through earnings per B-share to Investments per B-share to see what the market is implying for the yields in the 3 cases?

income taxes are also significantly higher in Canada and kick in much lower. Above $150k USD you pay around 50% but in the States you pay 30% up to $413k USD. The difference is a not insignificant $53,000 extra per year. Probably you save even more on interest expense in the States if you buy a house as you can lock in a 30 year rate and deduct interest from your income tax. In Canada I think you can do 10 year intervals at a higher rate and I believe you can't deduct the interest.

Sorry, I meant 38, 58, 97 as look through earnings low, base, high cases.

In a world of permanent leverage, anything can be justified.

Just wan't to understand something, is the look through earning per share of 38,58,96/share embodied in the investments per share part of the 2 column method so that the difference between this calculation and that one is the implied under or overvaluation of the market value of the investment portfolio?

How do they enforce the vacancy tax? Do they now hire an army of secret police like the KGB to stake out apartments? If they monitor power, you can say you are a monk and do not use modern technology :)

I trimmed a bit of everything, around 5% of the portfolio. I'm too afraid stocks double from here to trim substantially.

In the following year, your installment will be higher but you can switch to the estimated actual amount owing and ignore the installment calculated.

I think such a list would eventually simplify to the common denominator of the quality of the business moat.

How does acquiring KO increase the value of Berkshire, exclusivity? as in take out all the current owners who must become Berkshire owners if they so choose? I see a very specific criteria for public stocks to be acquired in whole by Berkshire, namely that they can bring something to the table or help a public company do better operating privately, otherwise I see more private acqusitions, joint ventures, or large % public stakes but not full stakes.

I don't feel the Canadians would ever have the guts to repudiate the establishment or have a homegrown revolution and hence I admire the process in the States.

To some degree, investing in leveraged cigar butts (or LBOs) becomes an exercise in credit analysis, the ability to cover debt, to pay down debt, to turnaround the situation so that by securing the loans, the equity is secured. The first point about franchise value ties into this directly because pricing power will determine earning power and increase or decrease the leverage risk.

I don't get the thesis of this article, there doesn't appear to be a clear dividing line between a 'hard' asset and a stock owning 'hard assets'. Even so, in an inflation, a business does not even need to have any assets at all as long as it can earn money well above inflation, raise prices and contain costs. A knee-jerk reaction to say commodities because you believe inflation is coming doesn't seem to be an intelligent move without putting some thought to what you are trying to own/achieve.

The major risk I've observed to net-nets is that the discount catches up to the shrinking business/balance sheet as opposed to the discount closing. Example: Say a biotech is losing 20 million per year and is 20 million below cash in the bank. By the end of the year, the discount not only fails to close but the stock may drop another 20 million to maintain the discount. Shrinking is a moving target and the stock sort of follows along. If you can find a net-net that has no shrinkage, or temporary shrinkage, or cold hard assets worth something, that's a better situation. However, you are still assessing whether some management you may not know anything about is capable of expanding or stabilizing a business.