gfp
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Posts posted by gfp
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Here are the two KW filings for those that can't read the small print in netcash1's post. SJ, I thought 10% Pacificorp debt sounded pretty wild even with the wildfire liabilities but realized you meant PacWest LOL...
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Partial settlement of some Pacificorp wildfire liabilities (far from all of it)
https://finance.yahoo.com/news/berkshire-utility-reaches-299-million-223219342.html
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As I mentioned on another board previously - Haslam fully admits that he incentivized his top executives to game the 2022 EBIT to maximize the price Berkshire would pay for their early 2022 equity purchase. They called it "Special Distribution Growth Units" under their "Growth Partners Plan." A bunch of decisions resulting in maximized reported EBIT to feed into their formula and then payment of cash bonuses - "Special Distribution" awards based on the price Berkshire was forced to pay. These types of short term decisions at the expense of both Berkshire and PTC's long term profitability are why Berkshire was so annoyed to begin with and immediately fired the CEO and CFO and exited several newer lines of business.
QuoteHaslam said that, assuming Pilot exercised its Put Option in 2024, he would reward the assembled executives with large, one-time bonuses. Specifically, Haslam said that he would reward them in the same manner that they had been rewarded upon the 2023 Sale pursuant to PTC’s then-existing bonus program, known as the Growth Partners Plan (“GPP”). Under the GPP, as discussed in more detail below, executives received one-time “Special Distribution” awards upon the 2023 Sale calculated based on PTC’s 2022 EBIT. The Haslam family, which controls Pilot, funded those bonuses through a capital contribution to PTC, and the bonuses far exceeded the typical bonus compensation awarded to similarly situated executives in the market.
QuotePTC’s 2022 EBIT was the highest in its history, exceeding its earnings projections by approximately 50%. As a result, the Special Distribution awards also were record-setting. In total, they exceeded ---
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So my take on this is that the Haslams sued Berkshire when no harm had been done to them because they want to know the exact number they will receive if they exercise their put contract before they commit to exercising it. Berkshire's 10-Q shows the redeemable interest at approximately the correct amount the Haslam's want and they can just use that figure to decide when to Put the remaining 20% to BRK. The LLC agreement and the investor rights agreement and associated dispute resolution procedures govern any disagreements over the calculation of the payment Haslams would receive for their remaining 20%.
In bringing this un-needed lawsuit they have poked the bear and are now likely in trouble for what Berkshire has discovered.
The Haslams messed up here as previously Berkshire was just annoyed that they had been gamed by the incentives imbedded in their contract by counterparts less honorable than themselves. Berkshire is now "more than annoyed."
The Haslams were not going to be screwed over by BRK on their final payment. They just wanted PTC to keep two sets of books so they could know the exact figure the formula spit out before they made their decision.
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I'll put the original Haslam suit against Berkshire / Abel here as well (attached)
QuoteAfter Berkshire’s Chairman, Warren Buffett, informed the elder Haslam in an October 13, 2023 phone call that Berkshire would abide by the LLC Agreement, the elder Haslam sent Buffett a letter seeking confirmation that Berkshire would not apply pushdown accounting in calculating the value of Pilot’s Put Right. Buffett refused to provide a straight answer to Haslam’s simple question. Instead, Buffett repeated: “I said that Berkshire will comply with the terms of the contract. That’s exactly what will happen,” and that “when and if the Haslam family decides to exit, we will do exactly what the contract says.”
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Some might be interested in reading Berkshire's counter claim in its original form instead of relying on press accounts. Attached here as a pdf
QuoteBerkshire and the Individual Defendants admit that Greg Abel informed James Haslam III that Berkshire will address Pilot’s position on the calculation of the Put
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Right price in the context of the dispute resolution procedures provided for in the Investor Rights Agreement when Pilot exercises its Put Right
QuoteBerkshire and the Individual Defendants admit that the Investor Rights Agreement provides for the resolution procedure regarding disputes concerning the Put Right price, which procedure Plaintiff seems intent on avoiding.
QuoteIn a telephone call with Warren Buffett on October 13, 2023, James Haslam II sought Buffett’s agreement with the Haslam family’s position concerning pushdown accounting and its effect on the Put Right price. In
response, Warren Buffett said that he could not in any way discuss accounting, that 29
Berkshire complies with contracts, and, when and if the Haslam family decided to exit, Berkshire would do exactly what the contract says. Haslam II wrote Buffett on October 18, 2023 and misleadingly sought to “confirm” that Berkshire would not use pushdown accounting in connection with an exercise by the Haslams of the Put Right. Buffett wrote back the same day and set the record straight.
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For those interested in still following along with how SeaSpan / Atlas / Poseidon are developing, here is a press release on the order of their first car/truck carrier, a dual fuel LNG or ammonia/methane new build to be leased to Hyundai Glovis.
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6 hours ago, schin said:
Ron Olson of Munger Tolles Olson has several billions too.
3 hours ago, Parsad said:Ron Olson is only as rich as he is because of his stake in Berkshire Hathaway.
Why do you folks think Ron Olson has a several billion dollar net worth? That would certainly be news to me.
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Apologies if this was already posted, but here is what Li Lu wrote to honor Charlie:
QuoteRemembering my teacher Charlie MungerThursday, November 30, 2023I was on a business trip in Asia on Tuesday when I got the call from the Munger family informing me that Charlie was in his final hours. I hopped onto the next flight I could find to California, and before departure, was able to talk to Charlie through the help of his daughter. Charlie had largely lost consciousness, but still I could clearly hear him trying to make a sound to acknowledge he had heard me. Upon landing, I learned that Charlie had left us a few hours earlier.I arrived at his Santa Barbara home and had the opportunity to spend cherished time with family members, reminiscing about all things Charlie. Charlie was engaging, humorous and full of wit even at Thanksgiving dinner just a few days ago, family members told me. I visited his home library again. In that very room, exactly 20 years ago, also on a post-Thanksgiving weekend afternoon, following the introduction by our mutual friend Ron Olson, Charlie and I first struck up a deep conversation which ran for several hours. It began an investment partnership that has now endured two decades. Charlie became my mentor, partner, dear friend and above all, life-long role model.I was so deeply grateful that the Munger family made a special arrangement the next day for me to say a proper and private goodbye to Charlie.There, lying quietly with eyes closed, Charlie looked the same as ever, peaceful and sincere with a subtle smile on his face. There was a serenity about him. For a moment, I was reminded of the Living Buddhas I once saw in the Buddhist temples of Thailand. In the Buddhist tradition, the bodies of truly enlightened monks, through life-long self-cultivation, can remain incorrupt, without any traces of mummification after death. In that moment, it is what I saw in Charlie, an enlightened sage with an incorruptible body, surrounded by a glimmer of eternal light.Charlie was not a Buddhist. That vision can never be tested. But it is incontrovertible that his legacy and impact will live on for generations to come.In our capitalist society, where do virtue, moral responsibility, truth-seeking and public service fit in? Charlie Munger answered these questions through his long exemplary life. He insisted on making money in the most morally sound way, entering transactions only when, if positions were reversed, he would comfortably take the other side. He sought worldly wisdom through life-long learning. He guided life with rationality devoid of mental deficiencies such as envy, resentment and self-pity. He faced and persevered through countless adversities with stoicism and equanimity. As he gained in wealth and stature, he showed little appetite for the trappings of that success, and instead spent his wealth on worthy causes and tirelessly spread his worldly wisdom to those who would listen, often with humor. He remained deeply engaged with family, friends, partners and the broader world with loving assiduousness through his last days.In his later decades, Charlie Munger’s ideas began to spread across the world, particularly in the most populous countries of China and India. In China, the Mandarin language version of “Poor Charlie’s Almanack,” an anthology by and about Charlie Munger, sold over 1.2 million copies over the last 10 years. There, the educated class increasingly came to view Charlie as the embodiment of the modern-day Confucianism, maintaining a virtuous and enlightened life while embracing the market forces of capitalism. In time, that vision of modern Confucianism will be crucial for Chinese modernization and how China interacts with the rest of the world.Charlie’s teachings will continue to spread, inspire and impact the world even more profoundly. That will be his eternal legacy. -
The WSJ has some cool pictures of Charlie from September with his value line investment survey binders -
https://www.wsj.com/finance/investing/investor-charlie-munger-interview-2b636dc5?mod=hp_lead_pos8
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Who ever knows but my guess would be that the major indices are being pulled higher on short covering capitulation as the S&P500 threatens to make a new high for the year and Berkshire isn't really a stock that gets a lot of short sellers.
I doubt the Haslam stuff or a potential OXY financing deal has much to do with it.
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https://www.newsday.com/business/Warren-Buffett-Haslam-Pilot-bribery-Berkshire-Hathaway-h85840
"Haslam family refutes allegation..."
"Judge will rule by tomorrow on concurrent trial.."
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On 11/7/2023 at 2:58 PM, gfp said:
Don't fret, we have been managing "demand destruction" with supply destruction for a while now - we will shrink our way to a bull market, call the Saudis!
Phew!
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On 10/11/2023 at 9:14 AM, gfp said:
I think there is a lot of demand across the curve for treasury securities with a 5 handle. This year's bond market (and maybe the stock market as well) is shaping up to rhyme with 2018.
On 10/26/2023 at 1:11 PM, gfp said:It will be interesting to see if anything on the UST curve from 2's out to 30's can close today with a 5 handle... As I posted above, the seasonal pattern is playing out just like 2018. Big September-effect yield fake out. There is a lot of demand for US government securities at 5%.
So now that the September-effect seasonal fake out in bond yields has ended, with absolutely no change to the outlook for issuance / supply, can we all admit that it is the long term outlook for the economic growth and inflation that matters for long term interest rates and not issuance? The long term damage from the COVID-era fiscal deluge might even have decreased long-term economic growth potential - in a way, that wasteful inflationary period may end up contributing to lower long term rates over time if it contributes to another step down in long term economic growth.
Lower interest rates = worse economy
Higher interest rates = better economy
Stock market bulls should be hoping for higher interest rates, not the other way around.
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We just returned home from a long trip to Florida with a lot of driving and ate dinner next to the roadside hotel one night at a "Longhorn Steakhouse" - I think it is a Darden brand. If you really want to know where the dregs of the Caymus central valley grape supply end up, it is in a LongHorn Steakhouse "exclusive" product called "BONANZA by caymus." 36 a bottle at the restaurant. Blech!
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RIP Charlie.
Also, the plot thickens in Brk vs Haslam/pilot flying J
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If there is no liquidity and the stock rarely trades, how is the company going to continue repurchasing a meaningful amount of stock? Private deals with insider's shares?
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17 minutes ago, Hamburg Investor said:
... 2000...?
The year 2000 wasn't a black swan event for Fairfax or Markel, but they both had just completed acquisitions (Crum & Forster & TIG at Fairfax and what became Markel International - Terra Nova, at Markel). These acquisitions took longer to turn around and Markel had some newly acquired lines of business that they decided to discontinue. So in both companies, I think the poor consolidated combined ratios you observed for 2000 were largely acquisition related.
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Sure - It is no surprise that utilities are permitted to pass the costs of mitigation to the customers. What we don't know (and I doubt) is that utilities would be able to pass liability judgements on to the customers ultimately. Mitigation is normal course of business. Multi-billion dollar liability judgements are another matter altogether.
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That's interesting - I feel like some of Fairfax's trading / changes to holdings are not reflected in the 13-F that Dataroma uses. As an example, inside Odyssey Re (q3 NAIC filing) we see some Orla Mining purchases but also this purchase of Kennedy Wilson, where the 13-F shows no change in KW holdings during the quarter. (this chart is security, purchase date, source, number of shares, dollar cost paid)
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Not sure if there is any interest here but for the curious, here is Odyssey Re's Q3 NAIC filing - tables on investments are towards the end.
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14 minutes ago, rkbabang said:
I fully believe that I will outlive the USD and my Bitcoin will be worth far more than it is now. I think there is a 60% chance that you won't be able to buy Bitcoin with dollars someday. So BTC/USD price will be meaningless.
Fascinating stuff!
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SD, I've heard you call so many different things "cash equivalents" it is starting to lose meaning LOL
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To quote Charlie Munger at the 2012 AGM:
"And I don’t think you need to worry about Warren’s side investments. His investments in Berkshire are so huge and those are so small, relevantly, that if that’s your main problem in life, you have a very favored life."
Fairfax 2023
in Fairfax Financial
Posted
Read my post above yours. I linked to both Kennedy Wilson 8-Ks