gfp

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.

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.

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.

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.

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!

It's not every Berkshire annual letter that goes into graphic descriptions of suicide.

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.

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).

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.

This is dollars worth at current valuation or shares?

Well if he plays his cards right there could be $3,000 to $7,000 in it for him - annually! Boom

Sounds like you confused some tickers there unintentionally. FIH.U and FFXDF (OTC) are Fairfax India. The others mentioned above are Fairfax Financial.

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.

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.

I mentioned it back when it was announced but there was a lot other stuff going on that morning.

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.

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.

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."

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?

Now there's someone who will survive a little inflation!

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.

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.

I usually prefer to own the actual underlying over a non-marginable OTC ticker. I am fine with FFH in Canadian dollars (30% margin requirement for the most part, sometimes 50% since MW report). But in US tax deferred accounts I buy FRFHF because I don't want to buy the CAD before each trade and can't borrow it.

Hmmm. Why is it a good idea to sell a crown jewel just because you can? https://www.bloomberg.com/news/articles/2024-02-19/truist-nears-sale-of-stake-in-insurance-arm-to-stone-point-cd-r " Truist Agrees to Sell Rest of Insurance Arm to Stone Point, CD&R Deal ‘will further strengthen our balance sheet,’ CEO says Truist Insurance Holdings valued at about $15 billion in deal"

Thanks for the clarification. I primarily use Interactive Brokers in the USA and I can never seem to find FFH.U (the US dollar traded Toronto shares) - does anybody else with IB have access to FFH.U ? Fairfax India shows up no problem.