Valuebo

Another one from Greg but with Tom Gayner's method. http://www.gurufocus.com/news/138692/tom-gayners-approach-to-valuing-berkshire-hathaway-brkabrkb

Same could be said about today's rise, almost 3%. 8) Anyone got a clear projection/estimate of this quarter's results? I'm curious.

Im quite sure he would only buy it with a big enough MoS. ;D

Reminds me of the copy of The Intelligent Investor signed by Buffett that was sold at a ridiculous price. Wasn't very value-like! Will the same thing happen here? :P

http://gregspeicher.com/?p=2832#comment-888 Just for the sake of adding it to the pile...

Here in Belgium, after almost 400 days without a government, we might get a breakthrough with the latest news on the reforms. One idea from Wallonia (the poorer part of the country) is to implement capital gains taxes like most countries have. Mainly to prevent speculation because that is what caused the crisis (his words, not mine...). 50% tax on gains within the year, 25% for gains between 1 - 8 years. It is still unsure wether losses will be recoverable from this tax and wether they will look at your income or some exempt amount. Also, dividend taxes for all stocks will now be 25% and there will be a "temporary" tax of 0,5%/year if you have more than 1,250,000€. I won't bother you with other crazy proposals. Just yet another way to steal capital from Flanders (which ownes about 80% of it) and relocating it to Wallonia. And I am afraid most parties will agree because they don't really care about this subject. All new income but no savings it seems. Already living in one of world's most taxed (western) countries, I don't believe I have any reason to pursuit my dreams of becoming a reasonable good investor or/and entrepreneur in such environment where socialism is driven to new extremes and it hardly pays anymore to work hard. Why would one even bother to graduate and work hard if people can live of unemployment income forever (which almost equals minimum wage) sitting on their ass all day without any incentive to make a real living. Capital is being driven away rapidly. Sorry, just had to let of some steam. ;)

Ha the famous "tombgrt bias effect". I put an order in for $23.80 this weekend after completing my research and now it's +3%. ;D Of course now I am to stubborn to buy it at $25 even though I know it is only slightly less cheap. Buying something without completing your analysis is dumb, but not buying in the hope something cheap gets even cheaper is probably even dumber.

Does anyone know more about this company? What kind of buy was it? Asset play? According to Datorama, Prem made it a 16.38% position so I guess it will have a large influence on the performance of portfolio? http://www.dataroma.com/m/holdings.php?m=FFH Tom

- Likelihood of a more serious correction is high imo. The decline of the last weeks wasn't that impressive. People tend to forget that the market can overreact in both ways. I started buying again though. - Low confidence in my own stock picking skills because of my limited experience, especially in the current market. I don't believe I could sit out a serious correction if I would be fully invested. That said I don't believe I will ever be 100% invested for long, 90% tops. I am extremely risk averse and like the 'patience game', it's in my nature. I just like the mental cushion the cash provides and I am willing to sacrifice return for it.

60% :D I know, I'm mad. I have a small portfolio tho and just started a year ago.

Great topic! Thanks for your checklist, I'll be stealing from it. ;) I like the idea of quarterly updates and implementing an expected time frame. I definitely believe the recipe is worthless if the Chef just can't cook, but (especially if you are new) you still need it nonetheless to keep things simple and structured. I don't want to see this as something I just do besides work (I'm still a student tho), I need a well-organised plan and investment philosophy. I'll let you know what things I steal from you! ;) Thank you for the link. My search strategy stands alone from this checklist but has a lot in common with yours. Read his book some months ago. The second best I read (after TII) and will read it again in a couple of months. I will definitely implement EPV as one way to value my investments and a lot of what he says already has a place in my checklist and overall value approach. My copy is marked and has notes written down all over the place. :) Just like TII it is one of those books you need to know inside out to get all the value from it. I read There's Always Something to do a few weeks ago. I believe it has a lot of hidden value, great book. Can you recommend anything specific on Irving Kahn? Any good books, papers, .. ? :)

Hi all, My interest in investing started in September and since then I am trying to learn on a daily basis. To structure and simplify my investment process and increase the learning experience, I have made a fairly basic checklist which I will use for both selection and (written) analysis of companies. My checklist consists of three parts : 1. Filters. (stolen from Buffett) 2. Metrics valuation. (unfinished and will depend on industry, kind of investment, ...) 3. Additional questions. Only part 1 (not in full detail) and a quick overview of part 2 will be used for the first selection of companies. All three parts will be used in depth when making the write-up of an investment. For the record : This is not a 'list of things I have to do for each investment'. It only provides me with a clear view of what questions I want answered before I consider making an investment. My questions to the board : - Does my framework make sense? - Should I add other qualitative filters? Additional main questions needed in my final evaluation? - Do you have a written down checklist? Do you use a written analysis for each investment or is it all just in your head? If you don't write analyses down extensively, how do you manage to get a proper overview of each investment and how do review possible investment mistakes in the future? Tom

This is my first year and I am down 3% because of the weakening USD (60% of portfolio and I'm European.) and my biggest holding (BRK, averaging in). Funny thing is it feels like I am up for the year because of the deals I can find. I was up around 4% before but now my portfolio represents a lot more value. I have confidence in the future. :)

This. + You get the best owner management you can basically dream of, a business structure that enhances CF and +4$ in net cash. Cash which I trust will be better spent than the cash on CSCO's & MSFT's books. Why are a lot of people so busy examining companies like RIMM if you can get this kind of company with a PE net of cash almost under 6? Bigger moat, a brighter (and more diversified) future and far better management. @ Parsad : What do you think of INTC's moat as a company on the hardware side?

Hmm and then they claim choas is reigning in Greece. ??? They haven't seen anything yet!

I just bought some. Thank you Mr Market. :)

If you say that, then you also have to say there are no diseconomies of scale in any industry or sector in the universe. You also must say that their are no sub $500 million niches or markets out there that a small company can dominate like a large company dominates a large market. While diseconomies of scale and smaller narrow specialization might be harder to see than say Cotsco or Google's obvious moat, it doesn't mean their not there. Exactly. They are hard to find but they exist. davidwoo, if you want a very clear example of this I suggest you read chapter 6 "A wonderful little franchise : The earnings power of WD-40" of the book "Value Investing From Graham to Buffett and Beyond" by Bruce C.N. Greenwald & others.

WDFC (WD-40) 666M LRE (Lancashire Group) 1B I think it is a better exercise if you try to find the moats yourself imo. Especially for LRE it should be easy to spot. If you can't find it, there is a big thread about it here, use the search function. ;) Btw, was I the only one who thought this was a second "HarryLong with an idea"-thread?

Only 4 times the $500m market cap yes. ;D Interesting company tho, high & apparently sustainable operating margins, specialised business with high costumer dependency, CF, earnings, dividends increase year after year, ... At 20x earnings but one to keep an eye on it seems.

The 70% of float + BV = IV rule of thumb may reflect the idea that there are some restrictions on the use of float having to do with liquidity to meet obligations to pay claims. Otherwise, Warren's observation that growth in interest free "permanent" float is better than an equal increase in pretax earnings is accurate. Berkowitz' method of valuing a growing stream of float from good underwriting as an interest free loan is perhaps better than that rule of thumb, given the strength of BRK's culture. :) Thanks for the explanation twacowfca, makes a lot of sense. :) ;) Around 2-3x normalized earnings without counting underwriting results (8 straight years of profit now and a hardening market could be on its way...) and investment income (duh) yes. That is for earnings that are growing at 20% annually on average... I checked and doubled checked valuations based on investments + share, float + BV, BV, history, ... and can't find any reason for a valuation under $150k. $155-165k seems a conservative guess of IV. Tilson is explaining his bull thesis for BRK since a couple of months now in his presentations (http://www.tilsonfunds.com/BRK.pdf). Funny thing is the same undervaluation happened in 2000 when Tilson told the same thing : http://www.fool.com/boringport/2000/boringport000214.htm Buffett announcing a possible share buyback or plainly stating that he feels BRK is undervalued could once again be a major catalyst for the stock price if the stock stays depressed a little longer. I bought more yesterday under $75.

Any chance they would send one to Belgium? :-[ I am willing to pay the shipping costs of course.. I'm going to try my luck!

Haha, I must agree. I bought this one last week and I'm at chapter 14. It reads fluently and has some good stories and value principle reminders. It gives great insight in Cundill's mind, which I can appreciate as a young investor with lots of questions, doubts and fears. :) Oh, and there is also a short chapter (19) about Prem and Fairfax! Finished it a couple of days ago, good book but not a classic. The chapter on FFH wasn't really worth mentioning btw, very small and nothing interesting to note for us shareholders.

He won't ever buy back a share. All he has to do is announce that he will buy back shares and the price will adjust, overnight. That's what happened last time he announced intentions. It quickly became more fairly valued. mission accomplished. I agree. Chances are history will repeat itself and if not IV will keep compounding while we wait. :)

*repetitive mode* In ran into this reading the annual letters : This would imply that in 2000 Buffett & Munger thought BRK at $45'000 was at least 25% under IV. Adding in 11 years the BV growth at this starting point of $45'000 gives a price of around $113'500. Then Add 33,33% to make up for the 25% discount to come to conservative IV which would be almost $151'000. Seems like a fair MOS. This is when we would say that at $45000 Buffett believed BRK to be undervalued by just 25% and not more. The stock was up more than 70% from its low at $41'300 in 9 months or almost 60% from $45000. The same result in 2-3 years would already make me thrilled (versus the risk involved), adding in time as the friend of a wonderful business!

twacowfca, have you (or someone else! ;)) ever heard of the metric "70% of float + BV = IV" (where 70% is supposed to be véry conservative) for BRK? Also, do you have any insight in the growth potential of premiums when we get into a hard market? I have been talking to acquaintances both on- and offline and almost everyone gives BRK & Buffett zero credit. "Stock performance is terrible the last decade." "Buffett is getting to old." "It is trading at a premium to book value and therefore it is expensive." "Buffett overpaid for Burlington and BRK is becoming to big to handle." "BRK's PE is 17, that is very expensive!" etc. My 3th order is about to be exercised, down to $100'000 we go! In a strange way here it feels very comfortable to average down. I like it!