Spooky
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Posts posted by Spooky
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38 minutes ago, Xerxes said:
to flip this comment, we could ask if Berkshire had $25 billion market cap today in 2024, does one expect it to have a portfolio filled with “Coca-Cola's, Amex's, See's Candies, Apples” and the likes of it.
probably notBuffett bought $1B in Coca-Cola in 1988 so before they were the size Fairfax is currently. They also bought Amex a few years later in the early 90s. They had See's Candy much sooner.
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I like Fairfax's setup here and have added some more to my position recently. But aren't we all jumping the gun comparing it to Berkshire and their position in 1995? To match Berkshire's track record going forward, Fairfax is going to need to significantly shift its asset allocation from 75% bonds to predominantly equities. As a Canadian company, will Fairfax be allowed to do this by insurance regulators (I'm ignorant on the rules here but there must be differences between the US and Canada)? Also, this shift presumes that there will be good opportunities to buy wonderful companies at fair prices that Fairfax can easily shift capital into. Is the investing environment going forward going to be conducive to doing this? Buffett himself has written that the investment arena is much more competitive now and there aren't as many easy opportunities as there were in the past. There are also many people out there now trying to implement the Munger playbook. Lastly, have we seen that Fairfax is able to identify and buy these compounders / wonderful companies? Where are the Coca-Cola's, Amex's, See's Candies, Apples in their portfolio today? Which companies in their portfolio have high returns on assets, are growing and have durable moats?
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15 hours ago, ValueArb said:
I wasn't referring to Buffett, I was referring to what happens after he's gone. Clearly it's unlikely he'll ever issue any dividends because it's antithetical to his life long goal of making his "painting" as large as possible. He didn't even start buybacks until his 6th decade as CEO, but at least in that case it directly increases per share value.
What happens from here is really the huge question. The company is so big now, Buffett even wrote in the last letter that their era of eye popping returns is over. Breaking up the company after Buffett is gone would impair some of the advantages it has using insurance float to buy safe businesses. Paying a dividend would be counter to the desires of most of the shareholder base that Buffett has built up. No easy answers. However, there is still a possibility that in a period of financial turmoil Berkshire will be in a position to deploy a significant amount of capital. Given what is happening in the world today I wouldn't count out that possibility.
This WSJ article was pretty good: https://www.wsj.com/finance/stocks/warren-buffett-berkshire-hathaway-returns-investors-2e0acca9?st=y8ssqh77y6a8wpt&reflink=desktopwebshare_permalink
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5 hours ago, Sweet said:
I really dislike that the Fed is what’s moving this market. All that seems to matter is read the inflation tea leaves, or rate cuts signals from powell, or market responding to a 9,871st fed speech of the week. And it will end up being a sell the first rate cut bs too.
Market movements seem to be based a lot more on vibes these days. People have become so short term focused, trading zero day options. There is a lot more volatility day to day. However, this gives those of us with a longer term perspective an opportunity to exploit the volatility they create.
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On 4/26/2024 at 8:47 PM, gfp said:
It depends on the subsidiary and how the bulkheads are constructed. I believe a subsidiary of BHE, like Pacificorp for instance, can be put into bankruptcy without the other assets of BHE being risked, much less the parent company holding company. But I'm sure there are exceptions for nefarious asset stripping or fraud. I mean, look at JNJ and the Talc stuff - you don't see all of JNJ at risk.
If Berkshire's legal structure is set up properly it can insulate the parent from risks at the subsidiary / operating level. Generally the maximum you can lose in a corporation is the capital that you have put into it, there is no default right to go after the assets of a parent corporation or shareholders. There are a few exceptions: 1) parent company guarantees of debts / contracts at the subsidiary level; 2) piercing the corporate veil - a judge can look through the corporate form if a corporation is not run as a distinct entity of the shareholder (I doubt this is a risk for BRK, more common with small corporations with one or two shareholders); 3) certain regulatory regimes like GDPR can give you a penalty equal to a percentage of the global revenue of a company which is terrifying but I think this penalty would be levelled at the subsidiary which violated the rules.
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On 4/16/2024 at 12:56 PM, juniorr said:
This was the big take away for me and made me add more stock
11.) Question: what has Prem learned from Charlie?
- Buying good businesses at fair prices.
- Strong track record
- Strong management
- “Looking for positions where we can compound for the long term.”
Given its large size today, are we seeing Hamblin Watsa shift their value investing framework to more of a ‘quality at a fair price’ and away from ‘deep value?’
Same. Like to see the evolution in their investing style happening.
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3 hours ago, ValueArb said:
And in Japanese pockets, in Chinese pockets, in UK pockets, in Luxembourg pockets, in Canadian pockets, etc. About a quarter of the US debt is held by foreign investors, including a lot in foreign governmental hands.
So we don't owe the debt just to ourselves, and even looking at it that way its still unbalanced. The 1% own most of the debt, while we all will have to pay higher taxes to service its costs. About a quarter of the debt is intragovernmental. Some of it IOUs for benefits "owed" to social security recipients that were never adequately funded during their working years. And some of it is for the massive quantitative easing the Fed ran from 2008 till 2022, essentially IOUs for inflating the money supply.
So what happens in a few decades when our children realize how much of their taxes are going to service the debt and retirement benefits that had been underfunded? Do they just accept paying half of federal revenues in interest on the federal debt, to foreigners, to the 1%, to maintain retirement benefits at unsupportable levels? Or does the next RFK/Trump/Sanders sweep into office on a promise to force those evil debt holders to accept less?
This path has been trod many times in South America and it never ends well.
Sure but your original post was that the interest payments will be a drag on economic activity in the future. Counter-intuitively there is an argument to be made that raising interest rates is actually stimulative. Still 75% of this income going to American citizens and institutions will be spent or re-invested. It may be a drag if the interest payments force the government to spend less thus reducing GDP. The key question is whether the borrowing is to make productive investments which will increase productivity / GDP in the future.
Also, if the US were to switch from running deficits to a surplus that would be deflationary / potentially lead to another crisis like 2008 which has been talked about by Wabuffo and others on this board.
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1 hour ago, ValueArb said:
I wouldn't compare over $1.5 trillion in annual interest payments like peeing in your pants to put out a fire. Gonna be a huge drag on the US economy for decades to come.
But this interest expense is interest income in people's pockets.
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My view is this rate environment is much healthier than zirp.
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Little nibble of BRK. Let's hope this market sell off goes a lot lower.
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11 hours ago, charlieruane said:
Fascinating! Mind if I ask where you heard this?
Can't remember where I heard this unfortunately but here is an article talking about Buffett inheriting stock positions: https://www.cnbc.com/id/41868643
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Ya apparently Lou Simpson begged Warren not sell their Nike position when he retired but Warren wasn't comfortable holding someone else's idea.
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12 hours ago, Jaygo said:
Thanks for posting. I always wondered what would happen in a major human cat event. Say if the Pickering nuclear plant went radioactive or something. In that instance the damage would be in the trillions and most likely end Canada as an entity. Who pays for that? And how.
Nuclear events are generally carved out of insurance so the Government would need to step in.
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3 hours ago, Saluki said:
This was exactly the issue in the Blue Chip Stamps litigation involving Berkshire many years ago. The issue was favoring one group of shareholders vs another and long term greedy vs short term greedy. I'm no expert on Canadian corporate law and how it differs from Delaware corporate law, but there is some value in not having sharp elbows when it comes to dealing with people.
Canadian corporate law is a bit different than Delaware - the fiduciary duty is to act in the best interest of the corporation but you have to consider the interests of all the stakeholders in your decisions. In practice, courts still give a lot of deference to boards of directors so as long as you can demonstrate you considered the stakeholders other than shareholders in the decision making process. It is not just straight maximization of shareholder value.
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10 hours ago, Gregmal said:
I’m just generally over it and have given up. The last 4 years(starting with COVID, not Biden) I’ve just come to terms with the fact that the system is unbeatable. It’s not changing. You can only change what you have control over yourself.
Even my great little Northern NJ town that I moved to over a decade ago now…started as probably 60/40 conservative, but the thing is, no one talked about politics. No one really cared or lived with it influencing anything they did. Then we get COVID, and all these shoebox dwelling assholes I guess apparently realized they value some space and not having the government tell them where they’re allowed to go for a walk or shop, and then come out here thinking they’re hardasses with their dumb hate has no home here bumper stickers on their $90k Suburbans and guess what? Now all the red hats come out, we have antivax rallies outside the town square, every board of Ed election is now about tampon dispensers in the boys rooms and what’s available in the libraries….and it’s the same shitshow it is everywhere else I detest. Fuck all these people.
So like a grumpy old man I’m packing my shit and moving to where the only topics are what’s your t-time and how’s the investments looking? Just done with it all.
Ya it definitely feels like Covid accelerated everything becoming so political, didn't help that it forced a lot more people to spend more time on their phones / internet rather than interacting with real people in person. Seems like we haven't addressed the root cause of people being driven further apart to the extremes - Facebook and other media driving outrage / division for profit.
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20 minutes ago, gfp said:
I wouldn't say this repurchase pace is "heavy." It will be interesting to see the split between A-shares and B-shares repurchased in the 10-Q. I think it is quite possible that Warren was offered a block of A-shares and he has shown a preference for retiring A-shares before he leaves the scene.
Fair enough but if you look at the total amount of Berkshire stock he repurchased in 2023, $9.2 billion, and then the approximately $2.2-$2.4 billion up to March 6th then the aggregate amount is pretty significant. It would exceed the value of Berkshire's Moody's holding as of the last 13-F and that is a top 8 public holding.
Just seems like his actions are somewhat inconsistent with the points raised in the annual letter. Maybe he is trying to talk down the share price so he can buy back more at a better price?
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14 hours ago, Blugolds11 said:
I'm sure everyone already has seen it, but just incase someone missed it over the weekend.
Yahoo: Berkshire Hathaway speeds up stock buybacks
In its proxy filing on Friday, Berkshire said it repurchased the equivalent of 3,808 Class A shares this year through March 6, spending approximately $2.2 billion to $2.4 billion depending on the dates of the buybacks.
Nearly three-quarters of the repurchases took place after Feb. 12.
Berkshire repurchased $2.2 billion of its own stock in last year's fourth quarter, and $9.2 billion in all of 2023.
Its peak year for buybacks was 2021, when they totaled $27 billion.
Through Friday, Berkshire's share price was up 14% this year, about twice the gain for the Standard & Poor's 500.
https://finance.yahoo.com/news/berkshire-hathaway-speeds-stock-buybacks-185257424.html
Thanks for sharing. I find it interesting that Buffett is buying back stock so heavily given his pessimistic statements about Berkshire's future prospects. Maybe one of the few companies capable of moving the needle is Berkshire itself.
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42 minutes ago, Gregmal said:
Can we create a news network that is not dishonest and actually labels its guests and fodder characters appropriately? Rather than “the guy who called XYZ crash”…wouldn’t “the guy who’s made 643 predictions with a 4% hit rate” be more appropriate? How about? “the guy who’s lost 30% over the past decade while underperforming the index by 300%”…instead of “famed short seller” can we get a more honest “guy who cries wolf a lot and if enough people are dumb enough to fall for it, buys the stuff he says he’s shorting”?
The CNBCs of this world are in it for the eyeballs. You might find this interesting, on page 5 of this JPM Eye on the Market they give an "armageddonist update". Obviously, once things have crashed, they all seem to predict further pain to come.
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7 hours ago, vinod1 said:
Ok
What is the flaw vinod1 (apologies if I missed it above)?
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1 hour ago, james22 said:
Why not Bitcoin?
No chance in hell.
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3 hours ago, nwoodman said:
For real? Results were good, but I thought the old boy did a good job of hosing future expectations. This market feels awefully bubbly.
Agree with you there. He didn't paint an optimistic long-term portrait of the company. Barring some financial calamity where they are able to be the buyer of last resort, they will struggle to move the needle given their huge size. Given the issues discussed with BHE, if they aren't able to re-deploy their capital in a way that meets Buffett's test for retained earnings, I can see them instituting a dividend which would be unfortunate for me. As a Canadian I'll get hit with withholding taxes.
The pendulum of market sentiment has changed from fear to greed, time to be cautious.
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2 minutes ago, sleepydragon said:
Her attractive daughters should be around 50-60 years old..
Maybe they have some attractive daughters too
. Something in the water in Omaha...
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Excellent letter this year. Was interesting to see him say that the five Japanese trading houses have more shareholder friendly policies than American companies like buying back shares as a discount and management not being so aggressive with their compensation. There were a few subtle and not so subtle digs at the direction the US is going such as the regulatory aspect mentioned above but also the casino mentality and Wall St.
Also that part at the end about going to Omaha to meet Bertie and her attractive daughters was hilarious!
Have We Hit The Top?
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