gfp
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Posts posted by gfp
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5 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.
Well I would just like to say thanks for the post nwoodman! I had just woken up, let out the puppy, and saw your post and said "What the fuck is the market doing??" and ran upstairs to start dumping BRK shares pre-market. Sold from 430 all the way down to 424. No clue what that market reaction was but I was like, "did they read the same report as me???"
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13 hours ago, LC said:
Any prospects you're comfortable sharing? Buffett in his latest letter reiterated the approach: worry less about price, buy high ROIC with long runways. Obviously hard to divine, but that's the goal.
You didn't ask me, but here's a hint - just think of all those building code books around the world that require the purchase and use of hundreds of little pieces of bent metal - it's better than auto insurance!
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20 minutes ago, bargainman said:
I never really understood the rationale for the railroad purchase. The hailing of it as a high capital requirement business as if that was a huge positive. Now years later bemoaning that high capital requirement. I mean the higher that requirement, the higher the risk of a low ROE/ROIC no? I guess he did mention that he got it for a good price. Has anyone done an analysis of that part of the business since purchase? I wonder if he'd have made better by just buying back shares?
He has received his entire cost basis back in dividends and retains an extremely profitable, durable enterprise that has comparable valuations (UNP = $155 Billion, replacement cost ~$500 Billion ??) that are favorable and the "capital eating enterprise" continues to pay out several billions of cash every year in tax free dividends to the owner. I think it was a once in a lifetime opportunity to buy an irreplaceable productive asset that is almost impossible to buy out of the public markets. He was pretty psyched.
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24 minutes ago, Xerxes said:
Was wondering if you had any theory on why BNSF was dividend out of National Indemnity to BRK’ proper balance sheet.
Is it about the roll-up of liabilities that the insurance outfit might have, capping exposure to the railroad. Any thought ?
https://www.bnsf.com/about-bnsf/financial-information/pdf/8k-20231005.pdf
I think it would be a good question to ask at the annual meeting and I think Warren would answer it. If I had to guess I would guess that it was a combination of the railroad not counting for very much in terms of insurance regulatory capital (something like $40 billion) vs. various valuations in the real world between Berkshire's stated $85 Billion and UNP's $155 Billion market cap currently. You combine that with National Indemnity's absurd overcapitalization and it wasn't important to have BNSF in there, but also that is where the billions of dollars in annual dividends would end up (and have been landing). BNSF pays a lot of cash out to their owner every quarter - in stark contrast to Berkshire Hathaway Energy. (I don't know what all this talk about BNSF consuming capital at Berkshire is about - they have paid out the entire purchase price and more in cash dividends)
But since it wasn't important to National Indemnity's capital (Nat. Indemnity's capital barely changed after BNSF was removed because of stock market fluctuations and the fact BNSF was only counting for like $40B.), the decision probably was about bulkheads and fortifying the structure of the enterprise. Every time you can add bulkheads and non-recourse walls below the holding company level you increase the resilience / bulletproof-ness of the whole enterprise. There aren't any tax consequences so no real downside. National Indemnity is in no way capital constrained on the business they can write.
I think National Indemnity is where the original stock position in BNI was accumulated and National Indemnity is where there was plenty of money to come up with the cash portion of the merger consideration. So it's kind of an accident of history that BNSF was always a wholly owned subsidiary of National Indemnity. I don't think it was some master plan that the railroad should be in the insurance company.
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1 hour ago, anony208 said:
My speculation on BRK slimming down(or eventually exiting) only BHE was based on the various comments in the letter -- broken social contract, increasing regulatory burden, not throwing good money after bad, "costly mistake"
Very different situation with insurance compared to energy -- no mention of regulatory pressure, still gushing mucho $$ and BRK is a master at operating in this area.
Don't hold your breath on Berkshire exiting BHE. He specifically alluded to the bulkheads within Berkshire Hathaway Energy in the letter. It's just a message to regulators not to count on multi-decade capital projects in the tens of billions absent a predictable regulatory framework. PG&E might not have been in a good position to negotiate, but Berkshire isn't a helpless patsy here. These are decisions for the communities. Berkshire will be fine no matter what. I highly doubt it will ever happen, but if pacificorp were to disappear to creditors 10 years from now I don't think it will be a big deal for 2034 Berkshire Hathaway. But I would bet that someone figures out you can't treat the utility this way and expect what you got in the past.
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7 minutes ago, ValueMaven said:
Whats the best way outside of the Ks & Qs to look at Fairfax's equity portfolio?
For the US holdings this is the shortcut I use for the 13F holdings.
https://www.dataroma.com/m/holdings.php?m=FFH
For the Canadian, International and OTC type holdings I use the company reports and Viking puts out some nice summaries.
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For those that didn't feel the letter was a little dour or whatever - consider the juxtaposition between prior years' "our managers are all star hall of famers" with this year's "we've had our share of disappointments."
Buffett's well-well worn, "tap dancing to work" with this year's "managing Berkshire is mostly fun and always interesting." Mostly fun??? I believe him but that is a change in his public tune. I had to throw some italics in my post to honor the hundreds of italics Buffett used in the annual letter this year. The man likes italicized words almost as much as Prem likes exclamation points!
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10 minutes ago, ValueMaven said:
WEB sounded almost depressed. I get BNSF and BHE weakness - but these are super valuable assets. In some ways I think he is really trying to talk down how special these are. Nothing on MSR which is seeing really solid results.
I dunno - I was left wanting more ...
Also - why does he not publish the top 10 equity positions anymore??
It's not every Berkshire annual letter that goes into graphic descriptions of suicide.
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An additional $2.376 Billion increase in the reported cost basis for equity holdings in the "Banks, insurance and finance" category since end of Q3 - for those handicapping what the confidential security (or securities) could be.
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Berkshire paid the Haslams $2.6 Billion for the final 20% of Pilot Flying J in January - that was the result of the settlement that we didn't know previously.
Maybe now that PTC is a wholly owned subsidiary they can see about refinancing or eliminating that $5.8 Billion in bank loans costing 7.2% currently. Sticks out like a sore thumb in Berkshire's schedules of borrowings (which are otherwise a thing of beauty, a masterclass really).
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26 minutes ago, scorpioncapital said:
Do we know the date it HAS to be disclosed?
I was guessing maybe AIG but we just don't know until its disclosed.
It has to be disclosed on the 13F date where they do not ask for and receive confidential treatment because they are no longer actively conducting a "buying program." (on the date of the 13F filing, not just the quarter end)
If they go above 5% voting control I believe they have to file a 13g regardless of the above.
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This is dollars worth at current valuation or shares?
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4 minutes ago, KCLarkin said:
https://www.wsj.com/articles/SB10001424052748703977004575393180048272028
I think it is pretty obvious that he'd be a good fit for the board. But why would he want the role?
Well if he plays his cards right there could be $3,000 to $7,000 in it for him - annually! Boom
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6 minutes ago, dartmonkey said:
Yes, this is what I expected, except I can't find a quote for FIH.U on TD Direct Investing or Yahoo or Seeking Alpha ; well actually, yes, on TD Direct Investing there is a stale quote of $903.32 (bid $1013, ask $1019) so I suppose there are occasional trades. I am familiar with the TSX having .U shares denominated in USD, like FIH.U, which actually trades that way, and for FFH.U, I suppose this just means that the TSX will purchase FFH shares using USD funds, but given the absence of an active market on the Toronto exchange, buying or selling them that way would not seem optimal.
Of course, once you have them, it makes no difference whether they are called FFH.to or FFH.U or FRFHF - a share is a share. But when people here refer to FIH.U, are they just referring to the USD value of FFH shares, usually obtained by looking at where they're trading over the counter in New York as FRFHF?
Sounds like you confused some tickers there unintentionally. FIH.U and FFXDF (OTC) are Fairfax India. The others mentioned above are Fairfax Financial.
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1 hour ago, SafetyinNumbers said:
The Digit IPO should allow for recognition of an additional gain in BV assuming its higher than the current mark which seems more likely than not.
It seems like approval for Fairfax to own a majority interest in Digit would result in their conversion of the preferred and they would then own 74% and Digit would become a consolidated subsidiary. Currently the 49% interest in Digit is held on the books for about $130 million and is equity accounted and the preferred that could convert to another 25% ownership interest has been marked to the Sequoia Capital valuation. Then presumably Fairfax would sell some Digit in the IPO?
I don't know what the accounting treatment is when a hybrid equity method / market to market ownership interest becomes consolidated but it may be a one-time adjustment to book value at the IPO event. I don't see it continually being marked to market at Digit's share price.
I guess the 49% will be written up once sort of like Gulf Insurance was just treated upon consolidation. One and done.
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1 hour ago, Jaygo said:
Does brk break down the revenue or are you getting the numbers from another source?
Berkshire discloses Marmon's revenues in the annual report and Marmon discloses a more up to date figure ($12 Billion) on their website. We'll get another update on Saturday. Marmon has done several acquisitions and is also the home for most of the operating companies Berkshire bought with Alleghany. Marmon management also ran Duracell when Berkshire acquired it, although it is not part of Marmon. I don't know if Duracell is now run by Marmon or not but I assume it is fully stand-alone reporting to Greg directly now.
Marmon bought another business from the Pritzkers, Colson Medical, in 2019, reuniting the companies after Colson was carved out many years ago.
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On 2/8/2024 at 10:16 AM, gfp said:
Might be lost in the news of the morning, but Prem resigned from the Blackberry board of directors today (as of 2/15)
"in connection with the Company's repayment at maturity of its $150 million principal amount convertible debentures held by Fairfax"
1 hour ago, ValueMaven said:No one mentioned that FFH just received (2/15) $150M from Blackberry for the convert note they issued. Prem also resigned from the board.
I mentioned it back when it was announced but there was a lot other stuff going on that morning.
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23 minutes ago, SafetyinNumbers said:
I’m determined not to let that happen again but I assume it will become more difficult once we are in the IV range especially for shares held in registered accounts where there are no tax consequences.
Currently, it’s easy to own or buy FFH given the set up. My current strategy is to wait until my forward ROE estimate is less than 10% to sell any.
The best selling decisions are usually when a new opportunity comes into your life that is so good you start scouring the couch cushions for more capital to buy more. That's when your mature investments trading around intrinsic value get trimmed. It doesn't have to be all or nothing of course. Until that happens or something changes with the firm just let it ride and enjoy the tax deferral.
A great lesson from Buffett's partnership days when he actually had more ideas than capital - he was willing to sell out of undervalued positions quickly if another idea came along that was juicer.
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2 minutes ago, Munger_Disciple said:
@gfp What % of your portfolio is BRK? I agree with your views. I think tax considerations make it very hard to sell BRK even if it is at intrinsiv value which it appears to be at currently because the alternative needs to outperform BRK after paying taxes on BRK sale if one diversifies.
My personal capital it isn't a huge percentage anymore. But for some of the separate accounts I mange for others it is very large. One is like 92% although she has maybe 130% long equity exposure so 100% isn't the total. Many of these accounts are in Berkshire with a cost basis averaging around the post - 9/11 market rep-opening price. It was like 2000 on the B-shares at the time, I guess that's like $40 on today's B-shares? That was a major buying period for me and I have sold most of the higher basis shares by now. Most of what I manage is taxable money. I was buying Berkshire before 9/11 in a normal way but that reopening dip was when I bought everything I could. Tax considerations can save you from a lot of foolishness in this game if you aren't naturally wired right for the long holds.
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27 minutes ago, treasurehunt said:
Me too. I have sold about 15% of my BRK.B position in the last few months.
It's a tough call. Berkshire was valued at something like $888 Billion at the highs today. In this market environment I don't see any reason they shouldn't be a 20x owner earnings company. So it's not a crazy valuation. I think for a long time we had great results using price to book as a quick shortcut to valuing Berkshire and maybe that usefulness is waning. There won't be high rates of growth, but some of us have large tax considerations and it really is a tough decision to reduce on valuation alone. Maybe Charlie (munger not dealraker but not much difference in this context) said it best to his heirs, "just hold the goddamn stock."
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24 minutes ago, Thrifty3000 said:
When FFH reports mind-blowing results and the stock price drops...
Weren't those the approximate results that we all expected? Which may have been a major factor in the bull run preceding the earnings announcement?
Did you expect a worse Q4 than what was reported?
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Now there's someone who will survive a little inflation!
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13 minutes ago, jks327 said:
Research started in April 2023, not much interested in keeping cash in an investment account!
Seem like your track record will be influenced to a great degree by whether or not January 2024 was a good time to go from zero to fully invested in US stocks. Sounds like this isn't a fund? Good luck, I do hope it works out well for you and I like to see the meaningful position sizes.
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13 minutes ago, jks327 said:
As of this morning:
STLA 11.83%
MLI 10.36%
WIRE 10.28%
STM 9.87%
TOL 9.86%
DHI 9.45%
VSH 9.38%
TEX 9.15%
CCRN 4.28%
BRK/B 4%
GS 3.78%
OSK 2.99%
FLEX 1.17%
EGRX 1.08%
RELL .9%
SCSC .83%
WY .65%
NKLA .01%
Read about it here:
So is this a new fund you started and fully invested all of it in January 2024? Didn't waste much time getting fully invested.
Buffett/Berkshire - general news
in Berkshire Hathaway
Posted
For those that like to read BHE's own 10-K it is here:
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/71180/000108131624000003/bhe-20231231.htm