Charlie

Very good quarter. :) P/B is back to 1,35. Still more upside. After Swiss Re reported strong reinsurance numbers I sold my IBM shares and bought back my Berkshire shares. Again 100% of my portfolio in Berkshire. ;) If at the annual meeting a question is asked about austerity it could be from me. I asked if austerity in Europe makes sense. Great to see Buffett and Munger talking. They are still the smartest. :) I would love to be at the annual meeting. ;)

Following a good Buffett interview: :) Warren Buffett on Economy, Berkshire Succession Plan By Gabrielle Karol Published May 02, 2013 | FOXBusiness Despite the economy’s slow pace, Warren Buffett maintains the U.S. is functioning “pretty darn well now.” In an interview ahead of the annual Berkshire Hathaway (NYSE:BRK.A) shareholder meeting, Buffett shared with FBN’s Liz Claman his opinions on everything from the state of the economy to Twitter, and from gold to women in the workplace. “I don’t think the U.S. is terribly vulnerable,” said the Oracle of Omaha, though he admitted the recovery is a lot slower than most would like. “But it is a recovery, and it’s a constant recovery – and you can say Europe has got plenty of problems,” said Buffett, drawing a line between the U.S. and the euro zone. Unrest abroad hasn’t shaken Buffett’s commitment to his investments, though. He reaffirmed his belief in investing for the long-term, and advised investors not to get scared off by headlines in the news. “I think that investors should own businesses they want to own for 5 or 10 years, and they shouldn’t worry about Cyprus or Europe or anything else, as long as they’re happy with the businesses they own,” Buffett said. And personally, he said current events did not stand to affect his own decisions: “I’m not going to sell the farm I own or the apartment house I own because of some news that may happen next week or next month.” Buffett Praises Both Bush and Obama’s Leadership Talking about the economy, Buffett credited both George W. Bush and Barack Obama, as well as Ben Bernanke, Hank Paulson and Tim Geithner, for their leadership throughout the recession. “Anybody can look back and second-guess,” said Buffett. Though he has a positive outlook on the future, Buffett is quick to underscore the severity of the recent financial crisis. “What we went through in 2008 was something like I’d never seen, and a lot of things that were a whole lot worse than what happened could have happened if we had handled things wrong,” Buffett said. ‘Not a Buyer of Gold or Silver’ Buffett shared a number of his positions with FBN's Liz Claman – including his hard and fast take on gold. “It just sits there, and you hope someone pays you more for it,” Buffett said. "If gold went to $1,000, I wouldn’t be a buyer, and if it went to $800 I wouldn’t be a buyer.” He then pointed out that in 1965, a share of Berkshire Hathaway was worth only $15, and gold was at $35. “You could have bought two shares of Berkshire for an ounce of gold – little more than two shares – and so far two shares of Berkshire has been better,” he said. And the same goes for silver. While Buffett admitted that silver has “more utility” than gold, he said definitively, “I’m not a buyer of gold or silver.” Buffett’s Succession Plan – and the Role of Women Earlier Thursday, Buffett made a web-viral splash by joining Twitter – a move he said was primarily to lead eyes to an article he wrote for Fortune magazine on the importance of women in the workplace. “I wanted to get out two messages. Women have been held back in a very major way both by exterior factors – primarily by exterior factors in the first century of this country – but also by interior factors,” he said. In the article, Buffett mentioned that he had a leg up on his two sisters just by the sheer fact that he had been born male – and not because of any superior intelligence or skills. He encouraged women to stop looking at themselves in “funhouse mirrors” and doubting their own abilities, citing Washington Post Publisher Katharine (Kay) Graham as an example of a woman who needed to conquer self-doubt in order to succeed. But when it came to his successor at Berkshire Hathaway, Buffett refused to share any details – but indicated that if something were to take him from the wheel in the short term, the next CEO will be a man. “If I pick up 13 spades and my heart goes out, the board tomorrow morning will have somebody, and I’ve used the pronoun ‘he,’ and it’s a ‘he,’” said Buffett. “And he will be very good.” But in 10 or 15 years’ time, Buffett said the CEO could very well be a woman, adding, “I hope it is.” Read more: http://www.foxbusiness.com/business-leaders/2013/05/02/warren-buffett-on-economy-berkshire-succession-plan/#ixzz2SERk97h9

Good results from Swiss Re: http://www.reuters.com/article/2013/05/02/swissre-idUSL6N0DJ0A320130502?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43 Cheers!

Berkshire Hathaway to Acquire Balance of IMC International Metalworking Companies http://finance.yahoo.com/news/berkshire-hathaway-acquire-balance-imc-120500596.html Cheers!

"Spain is in a full-on Depression, not unlike the 1930's in the U.S..." "Hotels are still a little pricey though (Idon't think the depression in US had hotels at such lofty prices). I checked Madrid about a week ago and it is comparable to other major European cities" House prices in Spain are still very expensive. No depression prices. "Hunger is growing in Greece as well. People are hungry and we know what that means." Next week I will make holiday in Greece. I don´t think they hunger. They eat very healthy and live with no stress, so they live very long. Check the greek food at the Berkshire annual meeting. It´s very good. Also no depression holiday prices in Greek. ;)

sorry, alreaedy posted here ;) http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/ko-coca-cola/msg113850/?topicseen#msg113850

Buffett at the Coca-Cola annual meeting: http://www.bloomberg.com/news/2013-04-24/buffett-tells-coke-ceo-to-study-failure-to-avoid-complacency.html Cheers!

Interesting article from George Soros: http://www.georgesoros.com/interviews-speeches/entry/how_to_save_the_european_union_from_the_euro_crisis/ Cheers!

giofranchi, do you know the Ferrero business in Italy? It is probably the best company in Italy I know of. It is a confectionery company, which sells Ferrero Rocher, Kinder Schokolade, Hanuta, Nutella, Tic Tac etc. It´s like See´s Candy, but much, much bigger. And you get addicted to this stuff. ;) The Ferrero family is on the Forbes list with $20,4 billion. It would be a wonderful purchase for Berkshire Hathaway. What do you think?

"On the other hand, I am completely unconvinced that the southern european countries are able to actually have that adult conversation and actually take the bad tasting medicine. I hear ridiculous denial from people when I travel to France. In Spain, I wander around in disbelief about how things are run...or are not run. The Greeks that I have spoken to point the finger at the Germans for their problems. All of this is unbelievable." +1 Germany pay probably most of the bills and get in exchange most of the insults. That´s ridiculous. There is a lot of self-denial and unability to look at one´s own faults in southern europe. Sorry to everybody I have insulted. ;) giofranchi, do you think the Euro is overvalued?

another good excerpt from the video :) People tend to "focus too much on what the government's done, and to give them either credit or blame," Warren Buffett, CEO of Berkshire Hathaway-BRKB, said in a recent interview conducted by the chief executive officer of Business Wire, the Berkshire subsidiary that distributes press releases. "The real credit belongs to our system." The U.S. economy "is coming back because of the natural juices of capitalism and not because of government," Buffett said. "We have a wonderful system that eventually is self-cleansing and always moves forward." "We went from a wooded land to an incredible, absolute abundance of riches" because the U.S. has had a system that can "unleash human potential," he said. "Never bet against what humans can accomplish if they're operating in the right soil. And we have the right soil."

The beauty is that Berkshire is not expensive: At a P/B of now 1,36 and tomorrow with earnings out perhaps P/B of 1,3 it´s still only 10% over buyback level, so with businesses booming and the P/B quite low, the stock has some way to go... :)

I think most of Berkshire´s businesses are booming as optimistic as Buffett is in some interviews. :) Here you can Buffett ask questions (3 hours with Becky this coming Monday): http://www.cnbc.com/id/100502034?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

Swiss Re with good results. http://www.bloomberg.com/news/2013-02-21/swiss-re-plans-2-8-billion-payout-on-lower-disaster-loss.html?cmpid=yhoo Cheers!

"BRK was selling for a deal of our lifetimes over the past few years. I have never seen Buffett nudging his shareholders to buy more than he has over the past 2-3 years. I re-read the AR again and his comments at the recent buyback." +1

Happy Anniversary and many thanks to Parsad for this wonderful board!!! :)

Palantir, it seems so that Munger didn´t talk about your questions. The portfolio will probably not change much.

Some other good notes from RoughlyRight. My favourite: "Not surprised that stocks are going up with interest rates low. That’s why we own stocks." Enjoy :) Author: RoughlyRight Subject: DJCO 2013 Meeting Revisited I just typed up my notes from the meeting. I like to just jot down things. Daily Journal Meeting, February 6, 2013 In WWII, one member of Congress voted against going to war with Japan—shows how difficult unanimity is. Foreclosure boom. Boom for us (DJCO). Biggest in the history of the world. Made an unholy amount of money. Something about being reminded of the sword of Damocles hanging over one’s head. The 50-year future of newspapers is not good. Local newspaper used to be the 4th estate. The 4th part of government. Civic minded. Honest. We’re losing something. DJCO didn’t take a position ever on politics. Half the readers would agree; half would not. Several monopoly newspapers borrowed money, bought others, went bankrupt. DJCO bought up small papers. The paper came with a free option related to the public notice business. Made 1000’s of percent in foreclosure boom. Like a funeral parlor owner in a plague. Best to live by reacting right to what comes; difficulties, etc. Not by seeing well in the distance. No master plan. React to opportunities and hazards. Enlightened opportunism. Fix problems as quick as you can when they come up. Want DJCO shareholders to do well. Owner operation. Would feel terrible if we had done what GM did to its shareholders. DJCO’s doubling down on software. Like the people. Could be a bonanza. In a lawsuit that DJCO lost. We lost unfairly, but that happens. Ratings agencies. Admitted to serious mistakes in judgment. Charlie doesn’t think they were consciously lying. They were stupid. Sure there may be some embarrassing emails. Sol Price. Success in business came from what he would be better off without. Leave money that is tainted. Do without that. Warren at Solomon. Wanted a list of things that were turned down that were just legal. Don’t think he ever got that. Criminal law should not be the standard. Don’t behave in relationships that way. The miscreants have no shame. Soft white hands. Doing well at poker or in the securities markets. 2008. Circumstances different. Something changes. Act differently. Behave sensibly; reacted to opportunities. GM’s point of view: someone else’s fault. Their prosperity made them weak. Why do BRK acquisitions work? Buy in many fields, not one. Don’t pour endless treasure into losing hands. With World Book, just got out of the business. Some business owners will only sell to BRK. Charlie about attendees at the meeting. We’re addicts. Meeting was being held in the original part of L.A. BRK has two reasonable options at all times: buy companies; buy stocks. CEO for 5 years. Can’t change a company in 5 years. Thinks CEOs should have a long run. Government. There have been crazy kings. Ben Franklin: When you can vote yourself money instead of working, … Consultants (pension funds). Monthly returns. Hard to change. People profiting from it, like it. Worse than problems in government. Way too short term. Do we want everything taken over by Carl Icahn? Would that be good for the country? I think don’t think so. Not surprised that stocks are going up with interest rates low. That’s why we own stocks. Money management. Hire smart guys, study industries, etc. Problem is that it doesn’t work. Munger approach is to just find a few great ideas. Munger had zero transactions in his accounts last year. Owns BRK, COST, and Asian securities through “a guy like him, but much younger” (Li Lu). Charlie’s way is right; others are wrong. Only a few decent ideas. Keep your head down when all others are losing theirs. They teach diversification, rotation. Blow up whole profession. When Charlie had a good idea, he went in heavily Diversified Retailing. Big mistake, got out. Took the $6 million and bought stocks that were cheap. Rub your nose in failure. Not going to get many really good investment ideas. Don’t blow it. Go with courage. Borrow. Intelligence and gumption. Charlie likes the word gumption. BYD. Unusually talented group of people. For 15 years, grew 75% per year. Started with little capital. Have had problems over the last three years. Li Lu thinks they have been solved. CEO Wang Chuanfu is a very talented human being. Kipling: Treat those two imposters the same: success and failure. Tragedy in life is if you don’t play so hard that you don’t have some reverses. Newspapers: Decent investments, but not going to make tons of money (I think he was referring to newspapers recently bought by BRK) DJCO investments: probably WFC and BYD CA politics. Driving out elderly rich is bad policy. They aren’t going to schools. Their healthcare is paid for. Many are self-centered. They take actions like moving to another state. Charlie: I’m not going anywhere; won’t move across the street to save his kids $50 million. He said for most in the room today, the biggest problem with their children will be making their lives too easy, not too hard. Book recommendations. Charlie is reading an astrophysics book, “A Universe from Nothing: Why There Is Something Rather than Nothing.” Author: Lawrence Krauss Printing money instead of taxing. Will be a big backlash. Just don’t know when. Retailing. Tougher and tougher. COST a winner. Peter Kaufman book suggestion of Buffett’s: The Outsiders. Author : William Thorndike. Charlie. It took some gumption to buy See’s Candies. Got free pricing power as an option. This is a model that Charlie was into today. Something might be fine at present, but there also may be a free option buried into the investment. Because of See’s, got into Coca-Cola earlier as a result. Reminded us attendees again that we were groupies. The meeting lasted for slightly over 2 hours. Charlie recognizes that some have come a long way for the meeting. Charlie is 89 now, but seemed similar to how I remember him when I first started going to BRK and Wesco meetings when he was about 72. Charlie seemed to enjoy the meeting and we all look forward to more such meetings. One attendee stated that there is a difference between knowledge and wisdom, and we come to such meetings for wisdom. The person went on to say that it was like recognizing that a tomato is a fruit, but you know to not put tomatoes into a fruit salad. Frankly, I think Charlie laughed harder at this joke than anything I’ve seen him laugh at before. RoughlyRight

Since value investors tend to buy to early and sell to early here is my advice: Don´t sell to early. :)

Good results from Munich Re: http://www.bloomberg.com/news/2013-02-05/munich-re-raises-dividend-as-profit-exceeds-expectations.html?cmpid=yhoo Cheers!

"Ha, I always thought Trader Joes would also be a great fit. I would love to own that store." It´s owned by Aldi. The most successful company in Germany. ;)

Here Buffett said he would love to own In & Out Burger. :) http://www.rbcpa.com/companies/brk_notes.html

Thanky ERICOPOLY for the Soros interview. Always a good read. :) I am 0% cash, 100% Berkshire. I agree with Mohnish Pabrai: Do you feel better about 2013 than you did 2012? His basic answer was yes. "People will be surprised at how robustly the U.S. economy comes back," he said. :)

"Interestingly, a large part of the "small cap effect" is actually some of these larger companies rebounding after they have been beaten down. :)" Do you have any concret evidence about this? :) One evidence is perhaps the O´Higgins strategy: You take the 5 stocks of the "Dogs of the Dow" with the lowest share price and rebalance yearly. I think the annual outperformance to the Dow Jones/DAX is around 5%. This strategy worked for a very long time in the Dow Jones and DAX index.

http://www.fool.com/investing/general/2013/01/10/mohnish-pabrai-what-ive-learned-from-warren-and-ch.aspx Cheers! :)