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There isn't any problem with Berkshire's method of accounting, which Berkshire uses on their other acquisitions and understates profitability in a way that is consistent with Berkshire's conservative accounting style and rejection of earnings "optics." There is no reason Pilot can't keep two sets of books, or simply adjust the Berkshire-kept figures for the excess depreciation and amortization and include derivative hedging gain/loss. Companies do this all the time. Hell, a lot of companies keep three sets of parallel books. That's why I think they will just negotiate an adjustment to the computation of earnings before taxes and settle the matter. Since it impacts Berkshire's reputation as an acquirer that "does right by their seller partners," I feel like there is more to the story when you consider the other changes Pilot and Berkshire made. Pilot brought in a commodity trader CEO and started trading a lot more around energy commodities (a business Berkshire exited), Berkshire fired that CEO and the CFO immediately after assuming control, Berkshire exited the more trading-related businesses and focused back on the plain vanilla lines of business Pilot was in at the time of the original deal.

Thanks John. It really doesn't sound like the Haslams are way out of line here, so I wonder what the real story from Berkshire's side is. I assume this will just get negotiated between the parties before too long and we won't hear much more about it. It is interesting that 10x pre-tax earnings seems to be a Buffett sweet spot for buying private companies. No wonder they haven't made very many deals lately

You can wait around for a company this high quality and strong to trade at 12x their real, actual cash earnings (vs. the accounting earnings at most other firms), but you might be waiting for a really long time. Then when it happens, few will actually buy the shares because of whatever the reason is that it got so cheap in the first place. This isn't some microcap shitco, it shouldn't trade at 12x clean cash earnings unless something horrible is going on.

It really comes down to the earning power of the Insurance operation in this environment. The biggest factor in this quarter's earnings were insurance underwriting and investment income (dividends and interest).

I agree with you guys except for this bit, “no other company can come close to offer an alternative. Insane. And nonsensical. ” obviously there is a strong competitor in Android phones

BV was 242.28 / B-share at quarter end

You can really appreciate the diversity in income streams in a quarter like this, where reported profits from the electric utility business basically vanish (wildfire loss reserves wiping out accounting profits) but the absence of a consequential hurricane in Florida more than offsets with a windfall (more to come in q4 it seems). GEICO has shrunk, halved ad spending and raised prices - returning to respectable profits for now. Berkshire continues to de-leverage, repurchase some stock, and "t-bill and chill."

I think you guys have it right on the A-share preference. It is likely a combination of factors - 1. He prefers to have fewer A-shares outstanding after his death 2. The A-shares are so illiquid and hard to buy in size that he is in the market more steadily buying some, instead of turning it on and off 3. The phone number for larger holders to call Mark Millard with blocks of shares to offer probably has some OG families offering A-share blocks.

" PacifiCorp increased its liability for estimated pre-tax probable Wildfire losses, before expected related insurance recoveries, by $1.4 billion in the third quarter and by $1.9 billion in the first nine months of 2023. Expected probable Wildfire losses, net of expected insurance recoveries, were approximately $1.3 billion in the third quarter and $1.7 billion in the first nine months of 2023. Such amounts were included in energy operating expenses in the accompanying Consolidated Statements of Earnings. PacifiCorp’s cumulative charges to date for estimated probable Wildfire losses were $2.4 billion through September 30, 2023."

Looks like they sold around 12.8 million CVX shares (~$2 Billion worth) in the quarter. Not hugely surprising given recent trends in their CVX trading.

The Berkshire Bond Portfolio! $22.4 Billion on a Trillion dollar asset base, with 78% of the "Bonds" maturing in a year or less (yes, Berkshire also has a $24 Billion mortgage business but I believe that is largely a spread business funded by BH Finance borrowings)

It's Saturday morning nerds! https://berkshirehathaway.com/news/nov0423.pdf https://berkshirehathaway.com/qtrly/3rdqtr23.pdf " Approximately $1.1 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $7.0 billion. On September 30, 2023 there were 1,445,546 Class A equivalent shares outstanding. At September 30, 2023, insurance float (the net liabilities we assume under insurance contracts) was approximately $167 billion, an increase of $3 billion since yearend 2022." At 10/24 the share count was 1.444 million A-share equivalents (2.166 Billion B-share eq.)

Here is one more soundbite from the WSJ interview with Charlie, Re: Apple Charlie Munger isn't too worried about Apple's valuation. During a recent conversation with the Berkshire Hathaway vice chairman, I asked if he thought the tech giant's shares have gotten expensive to continue being a major Berkshire holding. Apple is trading at about 26.7 times its projected earnings over the next 12 months, compared with a 10-year average of 18.5, according to FactSet. “I don’t think we’ve got any rules about what we do at Berkshire. If it makes sense at the time in a rough kind of way, we do it. And that’s our system,” Munger responded. “I would argue that Berkshire would have less advantageous future prospects if we didn’t have our Apple.”

What do they make on the TRS on a day like today? Like $125 million bucks?

FFH Q3 cc.pdf

Are you asking what the definition of October is?

Cathie! She expects deflation and Bitcoin wins no matter what "Bitcoin is a hedge against both inflation and deflation because there’s no counterparty risk, and institutions are barely involved.” It’s “digital gold,” she said." https://www.bloomberg.com/news/articles/2023-11-03/cathie-wood-says-bitcoin-btc-is-digital-gold-as-deflation-hedge?srnd=premium

You know they aren't a widely followed hot stock when there are barely any questions asked on the call!

The seasonal fake-out has concluded! Long live the September effect

So end of Q3 the duration was still 2.3 years. The best part of the extended duration to 3.1 years (current situation) is that it occurred in October! An excellent time to grab those 3 and 5 year notes.

Tilson works for Porter

To be clear, this footnote only applies to Brit, not Fairfax as a whole

Because they are keeping the capital in the insurance subs. There isn't much excess capital at the holding company level