shalab

The one thing I've always espoused when investing is never fall in love with the CEO. You can fall in love with their actions...even their words...but they have to always back it up. Well said Sanjeev!

Mr Biglari may get many people to invest in him - many inadvertently through various index funds/ETFs. However, his reputation is harmed for good which will make it harder for him to become a billionaire or take a controlling stake in another company. In retrospect - the guy is not prudent with money, has taste for lavish cars/mansion - wants ot make money off the shareholders not with them - used the buffett emulation as a marketing tool - attract talented managers to wok for him since he is the only beneficiary of the new pay package - not have a sycophantic BOD around him He can still do well monetarily by milking SNS and investing money in undervalued companies. He seems pretty good in spotting such opportunities. Anyway, I made money off of SNS and was thinking of being a longer term holder for tax reasons if Biglari is able to compound even at reasonable rates. I wouldnt want to buy BH at these prices.

Sanjeev has maintained the highest level of integrity throughout the time I have known him. It is not only the Sardar incident but there have been other cases too. In hindsight, Sardar had many issues. His taste for expensive car(s) is quite unlike Munger/Buffett. He used the highly admired WEB as a sales tool and I would say used it skillfully. He then had Cooley who looked like an older, wiser person to supervise the young Turk. Cooley and the BOD has been asleep on the wheel throughout this entire episode. Biglari's method of high payments to himself and nothing for everyone else is going to fail sooner or later. It is only a matter of time. Kudos to Sanjeev for setting a very high bar for integrity. I look forward to having Sanjeev as the head of a publicly traded company setting the right example like Watsa and Buffett/Munger. cheers!

Seriously, I think it eliminates all people who have a serious name recognition from the group. People who are independently wealthy and running their own concerns with name recognition probably would see little value in running Berkshire portfolio after Buffett.

I didnt attend the meetign but have been following online - heard this was one of the best meetings. Any good insights from people attending?

Extremely well thought out and thorough analysis - thank you for sharing.

Fido lets you trade in Canada, Germany, UK, Hongkong and possibly Japan. One can't trade options though in international markets.

Niether. I would buy out BRK, FFH and BH. ;D If I were to remain a passive investor, I will go with apple, these guys will overtake MSFT in market valuation, it is only a matter of time. If I am like Biglari, I would go for Microsoft for its free cash flow.

50mil for the first quarter 2010. Not bad - if they keep this up, it will turn out to be pretty decent. http://www.dispatch.com/live/content/business/stories/2010/04/22/netjets-returns-to-profit-in-first-quarter.html

Thank you for sharing. Although the author has put together a bunch of data together, I think the author goes wrong in trying to come up with a model to predict berkshire's earnings. He misses the boat in many areas which is fine. I think Alice Schroeders valuation was much better though it is much dated.

On the P/B ratios, BRK has significant non insurance businesses on the balance sheet as does LUK. So, it is not entirely an apples to apples comparison.

US permanent residents and citizens world wide income is taxable - dont know the rules in other countries. I am not entirely opposed to inheritance tax - I think we had a thread on this sometime back, it allows for more innovation than would be the case otherwise. In Asia, there are tons of family owned enterprises that stifle creativity and innovation by managing the government. cheers!

Regarding BRK, if one looks at the CEG deal, they would have bought the whole thing at 26.5. Unfortunately, that deal didnt close and see where CEG is at today. Markets like last years is Warren Buffett time - we havent seen return from those moves yet. Also, all of Berkshires businesses are distressed giving it a boost as the economy recovers.

I will offer an opinion on LUK, BRK and FFH and would like to see other opinions LUK is a buy around $22, though I would like $20 a bit more. This is looking at historical prices. LUK typically buys disheveled businesses and I think they have good opportunity to do well in the next several years. BRKA is not super cheap but is not expensive either. I think this still has the potential to go up 10-15% this year. I think BNI will do better than last year ( looking at railroad traffics ) and the equity portfolio has been trending north. I expect it to beat SP500 over the next two years. I would buy it around 100K though. FFH - Again the equity portfolio has been trending north, looking at historical prices, FFH is not cheap now but then the business has been getting stronger. I dont think it is cheap either - I would buy it at $340 (US) or lower.

good idea but generally I dont like shorting - would rather buy PUTs. Can't do that with these instruments.

Anyone here like Wesco? It looks outrageously expensive to me Outrageously expensive compared to what? I sold mine recently for a good gain but I didnt sell because it was outrageously expensive.

Time for rating agencies to wake up ;D http://www.bloomberg.com/apps/news?pid=20601010&sid=aYUeBnitz7nU

Dont think insurance is as cheap as it was four months ago. Many have gone up, some significantly. FFH is an exception in that it has fallen a bit.

I am looking at COMS as an arbitrage - about 2% return in about a month and half. Are people looking at specific arb positions right now?

Thank you Sanjeev.

I've told my family that if I get hit by a bus tomorrow, keep the Fairfax and Steak'n Shake shares, and put the rest with Francis and Tim...don't worry if there are years when their funds are down by alot...just hold on to it and keep adding if you can. I'm sure there are managers that may have protected the downside a bit better, or may have better absolute results, but I know my family will always be treated ethically by them. That they will never have to worry about the honesty or integrity of their investment manager. In today's world, trust is something more valuable to my family's welfare than pure performance. Sanjeev just curious why you dont have BRK in the mix? Is it because of Buffett's age?

The mini-me comment may not be that off the mark - the BRK/FFH portfolios have a lot of stuff in common. For the four majors that Watsa mentioned ~1.7 billion on FFH accounts, BRK has 16 billion of the same.

Interesting comments below: Last year gave us an outstanding opportunity to add to our investment holdings of excellent companies with fine long term track records. All things being equal, we expect to hold these common stocks for the very long term. Shares owned (millions) Cost per share Amount invested Market value As of December 31, 2009 Wells Fargo 20.0 $19.36 388 540 Johnson & Johnson 7.6 61.00 463 488 US Bancorp 15.9 16.27 258 356 Kraft Foods 10.7 26.55 285 291 Wells Fargo, as you know, is a wonderful bank in the U.S. with an outstanding long term track record. In the financial crisis of 2008/2009, it seized the opportunity to double its size (without much overlap) through the purchase of Wachovia Corporation, while increasing its shares outstanding by only about a quarter. Today it has more than 70 million customers in the U.S. with a net interest margin of 4.3%, the highest among the major U.S. banks. With 80+ separate businesses, cross selling at least six products per customer and a funding base of $800 billion in deposits at a cost of 40 basis points – all embedded in a risk averse culture under John Stumpf’s leadership –Wells Fargo is well positioned for strong growth over the next decade and we expect to be a major beneficiary. US Bancorp is, similar toWells Fargo, an outstanding bank with a great track record. LikeWells Fargo, it has benefited from the financial crisis by making many tuck-in acquisitions (FDIC assisted). It also has a very profitable payments processing division with worldwide expansion prospects. Under Richard Davis’ leadership and with its risk averse culture, we expect to be a major beneficiary in the next decade. We continue to like Johnson & Johnson and we believe that Kraft Foods will, over time, benefit greatly from its purchase of Cadbury’s (one example – Cadbury’s has a distribution network of over 1 million stores in India!). All these are very high quality companies selling at modest multiples compared to their past and relative to the S&P500! We expect to hold these investments for a long period and if we are right, unrealized gains will become a significant portion of our equity base (at year-end 2009 it was already significant at $747 million after tax). A side benefit will be a smaller tax bill (until we sell), since gains generally compound tax free while we hold the investments

I am thinking BRK should be doing better in the next couple of years as the 20+ billion dollars put into work bears fruit. The GS, Mars, GE, Swiss Re, CEG investments returned 40%+ including dividends - a pretty good return rate for such large sum of money. If you look at FFH portfolio BRK owns a larger chunk of the same businesses - JNJ, WFC, USB and KFT. Also, the BNI earnings should get better this year compared to last. Given all the subsidiaries are depressed, it should only get better.

I think Sanjeev was right on the BNI deal - BRK is looking to invest large amounts of money for reasonable returns not outrageous returns. I think the utility segment generally is like that. It was interesting for Buffett to note that BRK got slightly more than what it gave away. I think BRK will do fine. BRK book value compounded at 8.8% (arithmetic mean) clip for the past decade which isn't bad. The business value has grown faster than that according to Buffett & Gates - we may be looking at around 10-12% gain/year (arithmetic mean). Buying of pacificorp, fixing gen re, tuck in acquisitions and the increase in competitive strength of BRK businesses through the recession should have helped. cheers! Shalab