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In other news, QBE, the large Australian Insurance company, issued a press release that indicates that Berkshire could see a $900 million payout on a reinsurance contract that Ajit wrote for QBE. QBE exhausted the reinsurance coverage and then some, so BRK could be on the hook for the entire $900 million. Along with the AIG deal amortization and the GEICO numbers, this would almost certainly mean the first full year underwriting loss in quite a while.

Could be $8 Billion valuation for the whole thing. Not sure. Sales will be much higher than market cap for a company in that business. It probably makes at least $500 million net each year, but I don't have a source for accurate numbers.

It may be 5 or 6 Billion dollars for the entire company. 38% could be $2.25 Billion, the eventual 80% $5 Billion or so. With few other acquisitions this quarter and what I assume to be a quick closing with Byron as the investment banker and one of the sellers, we will probably find out what Berkshire paid in the annual report cash flow statement.

Here are some small pieces of the report, which I found on twitter. I do not have access to the report but I follow the company close enough that I don't think Ms. DeWitt has a ton to add. Always interesting to read anything on Berkshire but this is not groundbreaking stuff. Turns out Berkshire is a valuable enterprise designed to compound the per share net worth of the company... Oh- and Greg Abel might be the next CEO. Or it could be Ajit. But probably Greg. Or someone else...

Totally off topic, but for a short time Howie will be the Sheriff in his hometown. (he has been undersheriff for a while) https://www.bloomberg.com/news/articles/2017-09-15/there-s-a-new-sheriff-in-town-and-he-s-warren-buffett-s-son

Its not that he took equity out of his house and invested in Berkshire or any other stock, rather that he used a traditional mortgage at the time of purchase and so the 2nd home purchase took up less of his capital. Money is fungible, etc etc..

A fairly big acquisition for HomeServices - http://www.loudountimes.com/news/article/berkshire_hathaways_homeservices_acquires_chantilly-based_long_foster http://www.businesswire.com/news/home/20170907006469/en/HomeServices-America®-Acquires-Long-Foster-Companies update: recently acquired Long & Foster as made an acquisition of its own 5 days into HomeServices ownership - https://www.washingtonpost.com/news/where-we-live/wp/2017/09/13/long-foster-acquires-d-c-area-real-estate-brokerage-firm/?utm_term=.e4789c6d99f4

Insurance Insider has a brief note on Reinsurers with Florida exposure. If I had to bet, this storm is going to track east and make landfall up the east coast in South Carolina or thereabouts. Florida could still receive a direct hit but my bet it turns north sooner. From Ins. Insider: ------------ Nephila and Everest biggest Florida cat treaty writers Fiona Robertson Nephila, Everest Re and RenaissanceRe were among the leading reinsurers of some of the top Florida insurers last year, according to data collated by sister publication Trading Risk. Reinsurers of the biggest Floridian cedants will bear the brunt of the loss from Hurricane Irma, which looks increasingly likely to make landfall in the Sunshine State as a major storm. Nephila cut back its exposure compared to 2015, but the Bermudian asset manager still captured just over $200mn of premium ceded by 10 leading Florida insurers last year (see chart). This gave it a roughly 8 percent share of the $2.51bn of total premiums ceded by the peer group, including premiums written by Nephila's fronting partner Allianz Risk Transfer. Everest Re was close behind, assuming $196mn of premiums. The study covered 10 top standalone writers of personal and commercial residential insurance business within Florida last year, according to Florida Office of Insurance Regulation (FLOIR) data. These were: Universal Property & Casualty, Citizens Property Insurance, Heritage Property & Casualty, Federated National, Homeowners Choice Property & Casualty, Security First, United Property & Casualty, People's Trust, First Protective and American Integrity. The peer group did not include nationwide player USAA and State Farm, which is known to be a large writer in Florida but no longer discloses market share data to the FLOIR. RenaissanceRe-managed entities, including its DaVinci Re sidecar and Lloyd's syndicate, were a more distant fourth behind the leading reinsurers, on $65mn of assumed premium. This put it behind investors in the various Everglades Re cat bonds, although the insurance-linked securities instruments that were on risk last year have since expired. Clustering above $50mn of premiums were PartnerRe, Aeolus, Validus entities including its AlphaCat platform and fronting carrier Tokio Millennium. Other top-15 writers included Sompo International and its Blue Water platform, Markel, MS Amlin and Chubb Tempest Re. Both Swiss Re and Munich Re were underweight, with the former assuming $30.0mn of premiums from the top 10 cedants and the latter just $1.1mn. Hannover Re was also underweight compared to its broader market share in the cat market with $23.1mn of assumed premiums.

There are a few private options but I'm not sure how the pricing compares to NFIP/FEMA. Brokers offer flood policies through Lloyds of London syndicates as well as AIG. http://www.privatemarketflood.com http://www.lexingtoninsurance.com/insights-innovations/current-product-releases/private-market-flood-insurance The National Flood Insurance Program will only cover a residence for a maximum of $250k building and $100k contents. It is important to note that most the insurance policies that most businesses purchase do usually cover flood, in addition to business interruption and other claims. So auto and commercial insurance generally pay out on flood events. Buffett talks about it a bit here: . Basically the people who want the insurance are likely to be flooded so it doesn't really work as a financial product. At some point I guess you're just just paying the same amount of the house. If you had a $500k house I'd insure it for $500k, but that doesn't help you much.

Well, I'm sure they won't do as well appreciation-wise as Warren did with his modest purchases of seaside real estate in California before a generation of repricing that made virtually every owner of oceanfront property in California a multi millionaire on paper. I know some old hippy college professors that got just as "lucky." Of course, to spend it they have to move away from the beach, which is sad. Should high profile entertainers buy trophy properties in L.A.? Who knows, I would say if it helps them unload the disaster of Tidal then it will probably pay for itself. It's worth noting that the asking price was something above $120 million and they paid in the $80's so there is that. But of course you can ask whatever the hell you want for a property. As far as the mortgage goes - they both earn their incomes predominantly in very high-tax ways (like a professional athlete). Beyonce made over $100 million last year with Lemonade, Formation tour and an endorsement operation that has a lot of room to expand if she chooses. As long as that Goldman Sachs mortgage interest remains fully tax deductible, the cost to them is a lot less than the 4% headline rate. It's probably the most reasonable leverage available to them when you factor in the tax subsidy. Should they instead have invested in 10% cap rate income producing real estate using the same access to leverage for lifetime income for several generations? It's a personal decision. His Champagne company does seem to be doing well, and the Live Nation JV, sports management startup, etc - all seem to be very successful. I'm a fan of both and still listen to DJ Danger Mouse's remixes of Jay's Black Album with the Beatles White Album - the "grey album" as well as another DJ's remix of the Black Album with Radiohead called "Jaydiohead." Great stuff those two. "I check cheddar like a food inspector" ... And Lemonade was pretty phenomenal, even without the New Orleans connections. Almost all the tracks on that album are really great. (I don't care for the 'I ain't sorry' track but all the rest are A++)

He also did a fox business interview with Liz Claman from the same restaurant - http://www.foxbusiness.com/markets/2017/08/30/warren-buffett-id-do-it-for-president-trump.html Maybe I missed it - did anyone ask him about Oncor? Pretty surprising that he flat out said Mondelez isn't going to get an offer from KHC. Not so much that they aren't interested at these prices, just that he was so open and matter of fact about it being a "no."

Happy 87th birthday to W.E.B!

as expected, BRK exchanges preferred and warrants for common in BAC. Wonder if it will have to pass through the income statement for the quarter (no tax due of course) http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2297215#fbid=XOIEhKq6Vrz

Interesting investor, but I believe his fund is too small to be followed by this method. As far as I know he is not required to file quarterly reports of his holdings, so he is only forced to disclose 5%+ positions. I believe he has raised less than $30 million, although AUM is probably quite a bit higher given the impressive performance record.

Christopher Davis: Davis Selected Advisors: 0001036325 Davis NY Venture Fund: : 0000071701 Clipper: 0000736978 Mairs & Power: 0001070134 Abrams Capital management: 0001358706 Nelson Peltz / Trian Fund Management: 0001345471 Bill Nasgovitz / Heartland Select Value: 0000809586 David Katz / Matrix: 0000720498 Tom Russo / Gardner Russo & Gardner: 0000860643

I always wondered how one is supposed to merge into the interstate if self driving platoons of road trains are following closer than would be safe if humans were driving. As for BRK, by the time this materially impacts BNSF, BNSF will be a much smaller percentage of BRK. It's just the nature of the compounding machine. And we really don't know what these road trains will be asked to pay for their use of the public infrastructure, vs BNSF's privately maintained infrastructure. What if 20 years from now autonomous lorries are a thing and $1.5 trillion market value Berkshire Hathaway (or a per-share equivalent gain in shareholder wealth through repurchases) is only reporting $400 million a quarter in profit from BNSF, instead of a billion. Is that a disaster?

Yeah, I'm not saying that everything with 'manager code 4' in a 13f is warren's personal account. Just that when a form 4 says these securities are owned directly by Warren E Buffett and the CFO confirms as such then we have the answer. Even on Wells the 'code 4' line doesn't match his personal share count.

Not sure what happened to Jurgis's post, but this is from Marc Hamburg: "The shares referenced in your e-mail below are Warren’s are personal holdings and are not held by Berkshire."

It's pretty clear in the link: "1. These securities are owned directly by Warren E. Buffett, who is a reporting person hereunder."

Barron's is reporting that since BRK's deal for EFH was never officially approved (I guess by the BK judge), BRK will not receive the $270m break fee. Not sure if that is accurate, but that's what they are reporting. Oh well. Let's see what the regulators say. http://www.barrons.com/articles/berkshire-hathaway-even-when-it-loses-it-wins-1503410341

It's easy enough to see his direct ownership of WFC. It is 2,009,000 shares https://www.sec.gov/Archives/edgar/data/72971/000120919117026722/xslF345X03/doc4.xml Why do you think he owns WFC in his personal account? I've seen that stated many times. It would probably take some work for me to find any sources as everything I am recalling was some time ago, (5-15 years?).

I do think it is amusing to Warren and Charlie that Berkshire isn't able to attain the AAA rating anymore. I remember it being something like, "they hold their cash in treasuries and the USA isn't AAA anymore, so we can't count on the cash being good at the AAA level anymore." Interesting that it looks like Microsoft, JnJ and Exxon Mobil are still triple A? Is that out of date or are those the only non financial AAA issuers these days? I feel like Berkshire's diversification of income streams makes them less likely to default on their debt than the three above. Maybe no corporates should be rated AAA.

Constellation was even better than that - "Even without completing the deal for Constellation, MidAmerican still comes out well. Constellation will have to pay MidAmerican $593 million in cash — including a $175 million termination fee — and issue MidAmerican 20 million shares, or 9.9% of its stock. The preferred stock that MidAmerican bought with its $1 billion infusion will be converted into a loan with a 14% interest rate that will have to be repaid in a year." Yea but somehow they seem to get a win either way. On the Connie deal they got $593 million. Not bad for just showing up.

If they get it, the $270m is better than float. It's equity capital after it gets taxed as income. And BHE of course had considerable professional fees in preparing the bid and lobbying stakeholders. And then there was that loss on the EFH/TCEH bonds. On the bright side, its been 6 months since the Unilever bid and that one might have better economics. Still probably a no-go but it was a nice try

Sempra's deal isn't a sure thing so we'll just have to wait and see. It's also not a sure thing that either Berkshire or NextEra will receive their deal break fees. Certainly will be contested but both may be paid. Sempra's deal structure is financially weaker than Berkshire's and brings in 3rd party equity resulting in Sempra owning 60% of the equity of the parent company after the deal. Plus additional debt. They will probably not buy the other 20%. Sempra has agreed to certain of the ring fencing conditions. Regulators have already seen Berk's proposed structure, including taking out all parent company debt above Oncor and BHE's significantly lower cost of capital benefitting stakeholders. And Berk was all about the multi-billion dollar capital spending with funding not an issue... Sometimes when you've seen what's possible everything else just seems "less good" for Texas. Time will tell...