CanadianMunger

A true original. Thanks for sharing your wisdom all these years Charlie. Rest in peace.

As usual, the best take around.

gfp - Your explanation looks spot on, great post. I can't recall Berkshire initiating a management change of an acquisition this quickly before(?) so yeah it looks like they weren't happy being gamed. edit: imo, gfp your commentary on Berkshire has the most signal to noise ratio and that includes the greats such as mungo and rationalwalk among others. I always look forward to reading your posts - thanks sir!

Royal Bank of Canada injects cash into US subsiduary: https://finance.yahoo.com/news/2-rbc-pumps-capital-californian-154026168.html

@John Hjorth Was that you?!?

I'm pretty sure Buffett wants to keep on buying Oxy, so it's no surprise he didn't give a straight answer on it. Also, I'm pretty sure he intentionally telegraphed that Berkshire will not be purchasing Oxy outright to front run the arb's that would come in as the stake goes up. We'll see what happens.

I have a feeling the letter is getting shorter due to: 1) Nothing new to say as mentioned above by someone 2) Decreasing the expectations for Greg to write a long letter after Buffett leaves the scene

$1B was definitely disappointing, considering the increase to the cash pile. Munger has commented before that the buybacks have been too restrained, and I agree!

Second anniversary of this post. November 1, 2020 to November 1, 2022: Berkshire: $202.33 --> $294.13 45% Brookfield: $39.59CAD --> $54.55CAD 38% Fairfax: $350.24CAD --> $670CAD 91% The BAM and FFH numbers don't include dividends and not sure if BAM had any spinoffs during this time. Would be lovely if someone can post a total return graph including S&P500, or direct me to a site where I can obtain and post. Thanks. Fairfax clearly in the lead two years into the hypothetical ten year holding period. Will be interesting to see how this plays out in the coming years.

Check out the two interviews Tim Ferriss did with Edward Thorp this year. Thorp is 90, yet looks 60 and has reinvented himself multiple times. Lots of topics are covered, including aging, investing and as an added bonus a few Buffett anecdotes. I prefer transcripts, so here are the links: https://tim.blog/2022/05/28/ed-thorp-transcript/ https://tim.blog/2022/06/30/edward-o-thorp-2-transcript/

It's odd because Warren seemed sharp in the Charlie Rose interview. Perhaps it was edited and condensed? Took a quick reminisce tour through the CNBC annual meeting archive starting in 1994, and skipped every 5 years. Warren still seemed pretty sharp even last year. TBH it gives me pause as BRK is my largest holding. He has noted that the board will know when to take the keys away - but lets be honest - these people have adored and loved him for decades. They say an experience is not only valued on the whole but particularly based on how it ends. I hope my last impressions of the GREATEST OF ALL TIME are not what we saw today. I thought I would never say this, but perhaps it is time Warren retired. -CM

Clicking the blue dot located to the left of a topic should take you to the first unread post.

Berkshire, Constellation Software & Alphabet

Disagree with all of this. Nothing further to add. -CM

“The plan to create a publicly listed operating group made up of Topicus and TSS was a key part of our discussions with the Topicus founders. They didn’t want their legacy disappearing into the craw of an omnivorous conglomerate. While they knew that Topicus would have autonomy within Constellation, they also wanted identity. The public listing is expected to afford our Netherlands-based businesses a platform from which to celebrate their culture and achievements.” Why shouldn't Berkshire follow Constellation Software's lead by partially spinning off stakes in their major businesses? I re-read the 2019 annual this week (nearly all of it) in preparation for the release this weekend of the 2020 report. Nearly all of their non-insurance businesses with the exception of BHE have been pretty stagnant for a long time. What is their motivation to improve? A pat on the back from Buffett and Abel? What happens post WEB? At least when you have a public quotation their is some real feedback on how you are performing (or perceived to be performing), rather than being buried in some huge conglomerate. Look at PCC, their last major acquisition - it was a poor performer pre-covid and looks to be a train wreck. If it was publicly quoted, there would be some real time feedback on how they are performing. Conversely if a portion of GEICO was public over the past few decades it would have reinforced how well they have done. Humans respond to information (market quotes). Berkshire could still own a majority stake and of course consolidate results. I'm surprised that with all their expertise on incentives and psychology that WEB & CM have not tried this. I suppose on one level it would be an admission that the conglomerate structure is not always optimal. Mark Leonard has spoken on identity being lost the more an organization grows. "I'm an old dog, but I'm certain that they have new tricks to teach me" - Mark Leonard Will Berkshire eventually learn some new tricks? -CM

Baskin wealth had some intelligent thoughts on the subject: https://baskinwealth.com/blog/fun-with-numbers-should-you-realize-capital-gains-and-pay-taxes-early/

Looks like the washed up old dog still has a few tricks up his sleeve ;)

The following is from Buffett's 2015 special letter "Berkshire - Past, Present & Future": "Purchases of Berkshire that investors make at a price modestly above the level at which the company would repurchase its shares, however, should produce gains within a reasonable period of time. Berkshire’s directors will only authorize repurchases at a price they believe to be well below intrinsic value. (In our view, that is an essential criterion for repurchases that is often ignored by other managements.) For those investors who plan to sell within a year or two after their purchase, I can offer no assurances, whatever the entry price. Movements of the general stock market during such abbreviated periods will likely be far more important in determining your results than the concomitant change in the intrinsic value of your Berkshire shares. As Ben Graham said many decades ago: “In the short-term the market is a voting machine; in the long-run it acts as a weighing machine.” Occasionally, the voting decisions of investors – amateurs and professionals alike – border on lunacy." Given Buffett's modesty, are we to infer that purchases made around these levels (~1.2 book) will outperform the S&P?

All three look pretty cheap, as discussed in the various threads. Currently Berkshire.B trades at $202.33US, Brookfield $39.59CAD, and Fairfax at $350.24CAD. Who performs the best over the next decade?

Thanks for posting. fyi this took place on January 29, 2020.

gfp, I thought the same. I'm speculating that this speaks to WEB's discipline in not accepting a return below whatever his hurdle rate is, even with 100B in his wallet ;) -CM

Thank you for taking the time to share. Your writing style is superb and the content is very interesting! -CM

This deal is peanuts for Berkshire. He's just getting Berkshire's name out there for when one of the big 5 banks need capital. Savvy, even in his old age :) -CM

"This cheery prediction comes, however, with an important caution: If an investor’s entry point into Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares have occasionally reached – it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this truth." The above is an excerpt from Buffett's essay "Berkshire - Past, Present and Future" in the 2014 AR. Most of the valuation approaches I have seen peg Berkshire's current IV at 1.65-1.75 book. So yes, buying at double book value would be a premium to intrinsic value currently. However, with Berkshire's shift to purchasing operating businesses, the gap between book value has grown over the last decade and is virtually certain to increase over the next few decades (ie. the value of operating co's are never written up). So why would Buffett make the above comment in the future section of his essay? Its definitely true now, but is it not plausible that a few decades hence, Berkshire's intrinsic value will be double book value? -CM

I wish I had something intelligent to add, but I don't. I'll defer to one of the foremost experts on (real world) risk: Original quote by journo: @daveweigel: The GOP rush toward a "stop letting in refugees" position reminds me of the "travel ban NOW or we all die of Ebola" fad of last year. Response from NNT: @nntaleb Illustration of how journalists are incompetent in grasping risk, precaution,probability & multiplicative effects. -CM