villainx Posted June 25, 2021 Posted June 25, 2021 9 hours ago, IceCreamMan said: We have to account for the fact that he was probably maxing out his contributions each year, right? I wonder how much that changes the actual time-weighted return. Still probably extremely high. I'm curious what types of investments he made, i.e. typical market cap, typical holding period, type of situation/business, etc. I wonder if there is consideration for SEP type, if he was running his own biz, he could have super charged his contributions. Just another consideration.
LearningMachine Posted June 25, 2021 Posted June 25, 2021 12 hours ago, IceCreamMan said: I'm curious what types of investments he made, i.e. typical market cap, typical holding period, type of situation/business, etc. I'm curious here too. Because he did this in an IRA account, I wonder if he was willing to hold things for much shorter time periods as he didn't have to worry about capital gains? What do folks think? Also, has anyone figured out a way to distinguish between Ted's and Todd's investments on the Berkshire 13F? Do we know any of the investments in Berkshire portfolio that were definitely made by Ted? Also, wonder how was Todd's record before Buffett took him on? I wouldn't be surprised if he looked for a great record there as well.
ValueMaven Posted June 25, 2021 Posted June 25, 2021 His track-record as the GP of Peninsula Capital has been widely talked about. Massive outperformance in a concentrated way. Had a massive homerun in WR Grace - buying it below $1 in chapter 11, and riding it out until over $50+. This is all from memory - however, I know this topic was covered extensively here in the past
thepupil Posted June 25, 2021 Posted June 25, 2021 (edited) Todd Combs was a financials focused long/short manager. He made 34% net of fees 2005-2010 (~6%/year) during a very crazy time. Unsure if it was market neutral type of fund or what kind of net exposure. https://www.wsj.com/articles/BL-DLB-28105 The fund has also had strong relative performance during extremely challenging times in the financial services sector, outperforming its benchmark by roughly 80 percentage points since inception in November 2005 (positive 34% cumulative net return for Castle Point since launch vs. negative 46% for the XLF). Edited June 25, 2021 by thepupil
wabuffo Posted June 25, 2021 Posted June 25, 2021 (edited) Had a massive homerun in WR Grace - buying it below $1 in chapter 11, and riding it out until over $50+. This is all from memory - however, I know this topic was covered extensively here in the past That's correct - GRA was almost 50% of Peninsula Capital's (Weschler's fund) when he wound it up at the end of 2011. He probably was even more concentrated in it in his personal funds. GRA and USG both entered Chapter 11 in the early 2000s to settle their legacy asbestos liabilities. USG is more famous because Buffett invested in it before it entered bankruptcy. But W.R. Grace was probably an even better business. Both businesses hit their lows in Oct 2002. USG at $3 and change and GRA at sub-$1. USG exited in 2006 at over $100, did a rights offering, and purchased a business/expanded right into the teeth of the housing crash. The USG stock price collapsed after that. I owned USG back then (mainly because of Buffett) and if there is a way to break-even on an investment that went from $3 to $100 by buying and selling at all the wrong times - it me! The reason I remember GRA - is because much of the liability estimation for USG came from experts and benchmarks out of GRA's Chapter 11 case and I would review it in the PACER filings to try to estimate USG's final asbestos liability/capital structure. GRA exited and went to $50 - so a 50 bagger and a heavily-concentrated position for Weschler by the end of 2011. Of course, unlike USG, it kept right on going to $100 by 2015. I'm pretty much convinced that this one investment probably accounts for most of Weschler's outperformance. It did a 45%+ CAGR from 2002 to 2014-ish and he probably had over 50% of his IRA in it by the end due its monstrous CAGR. But he also made money on DVA, DTV and even Dillards coming out of the housing crash and I'm sure they were featured in his personal portfolio as well. wabuffo Edited June 25, 2021 by wabuffo
ValueMaven Posted June 25, 2021 Posted June 25, 2021 His Dillards call has been a massive homerun recently as well.
villainx Posted June 25, 2021 Posted June 25, 2021 Did old site use to number posts, so it could be referred back to? Anyway Wabuffo, that you for your post. I think I heard your USG story before, but I have so many similar type stories. Sure I still have tons of regret, but they've been invaluable in helping me stay humble, and sharper. Assuming Ted did his IRAs straight, it would really be interesting if there was more description on it. Then again, survivorship bias, and it'll be generally be unwise for most folks to emulate his approach.
LounginMKL Posted June 25, 2021 Posted June 25, 2021 https://www.cnbc.com/2021/06/24/a-jet-owned-by-candy-giant-hershey-made-an-unusual-trip-to-omaha-analyst-says.html A classic move from Bud Fox "ahhh, my boss is going to kill me. Do you know where that plane is going?"
TREVNI Posted June 27, 2021 Posted June 27, 2021 On 6/24/2021 at 4:55 PM, gfp said: Thanks for sharing the link. From the Pro Publica article, Ted had $264.4 million in his Roth IRA at the end of 2018. Safe to assume considerably more today. Amazing that Berkshire has found such rare talents to take the job. Which just goes to show how Berkshire has cracked the code in terms of motivating individuals to work. Weschler has won life many times over. He could be sitting on a beach having someone wait on him hand and foot for the rest of his life. Instead he chooses to read 12+ hours a day for the benefit of BRK shareholders. I count myself very lucky to have him working for us.
John Hjorth Posted June 27, 2021 Posted June 27, 2021 On 6/25/2021 at 7:07 PM, villainx said: Did old site use to number posts, so it could be referred back to? ... It did, villainx, Just use "targeted/focused quotes" [ref. above], and we'll do well. [Perhaps Sanjeev can do something about it also.]
John Hjorth Posted June 27, 2021 Posted June 27, 2021 (edited) 3 hours ago, TREVNI said: Which just goes to show how Berkshire has cracked the code in terms of motivating individuals to work. Weschler has won life many times over. He could be sitting on a beach having someone wait on him hand and foot for the rest of his life. Instead he chooses to read 12+ hours a day for the benefit of BRK shareholders. I count myself very lucky to have him working for us. @gfp & @TREVNI, I actually coulden't agree more. Here is Mr. Weschlers response to ProPublica. Edited June 27, 2021 by John Hjorth
ValueMaven Posted June 27, 2021 Posted June 27, 2021 I have not looked at Hersey's valuation in years. Might be worth reading the 10K tonight - but it seems like a stretch. CEO could simply be in town for an event. Or maybe a deal with Warren. I'd love to know the hit rate on these type of calls. I mean the OXY spotting was dead-on. Speaking of which - given the rally in oil - that is looking like an awesome deal.
wabuffo Posted June 27, 2021 Posted June 27, 2021 I mean the OXY spotting was dead-on. It was still hypocritical behavior on Buffett's part to finance this deal. Demonstrated some situational ethics, IMHO. wabuffo
ValueMaven Posted June 27, 2021 Posted June 27, 2021 How do you even figure that?? OXY gave him a sweetheart deal. Not many places (any!) that can give you $10B of capital in an hour.
wabuffo Posted June 27, 2021 Posted June 27, 2021 (edited) Q: Why was OXY anxious to get that preferred from Buffett? A: To shift the cash-vs-stock portion of the takeover offer such that the OXY CEO could get the amount of OXY common stock to be issued in the deal under the NYSE’s 20% rule. That rule forces a shareholder vote if the secondary issuance is greater than 20% of the shares outstanding. The OXY CEO knew her acquisition was unpopular and she would lose the vote so she denied her owners a vote with Buffett’s help. Q: Why is this hypocritical of Buffett? A: Because he went on CNBC and whined loudly when the Kraft CEO did the same thing to him. Buffett was a large holder of Kraft stock (this was before the Heinz 3G deal) and was going public with his displeasure at the dilution he was going to suffer in Kraft’s acquisition of Cadbury (the secondary was greater than the NYSE’s 20% rule). The Kraft CEO sensing she was going to lose the vote w/o Buffett’s support quickly sold the DiGornio pizza biz to Nestle for cash in a lousy deal vs that division’s true value and used that cash to increase cash/reduce stock in the Cadbury deal and avoid the 20% NYSE shareholder vote. Buffett howled like a stuck pig and sold all his Kraft stock soon after. I love the guy but his actions here were hypocritical and anti-OXY shareholder. One would think that with his Kraft experience he would not enable this kind of CEO behaviour towards her shareholders for whom she is a fiduciary and an employee. I remember someone asked a question along these lines at the 2020 AGM and he dodged the question by going off tangent about falling oil prices or some such… wabuffo Edited June 27, 2021 by wabuffo
wabuffo Posted June 27, 2021 Posted June 27, 2021 (edited) https://buffett.cnbc.com/video/2020/05/04/berkshire-hathaway-annual-meeting-qa---may-02-2020.html BECKY QUICK: All right, this next question comes from Jason (Plawner) in New Jersey. “As both a Berkshire and Occidental shareholder I was encouraged to see your investment in the company, but with passing weeks, it became evident that your investment facilitated Occidental management’s ability to avoid a shareholder vote on the Anadarko acquisition, a very shareholder unfriendly outcome. “This deal proved to be irresponsible and expensive from an OXY perspective, and ultimately, very value destructive for OXY shareholders. In my view, it also permanently hurt Berkshire’s reputation in the marketplace. “Please comment on this unfortunate outcome and tell me why OXY shareholders and other market observers shouldn’t feel this way.” WARREN BUFFETT: Yeah. And these are not — it’s not like they’re super-high return thing. But they’re decent returns over time. And we’re almost uniquely situated to deploy the capital, as opposed — I mean, you could have government entities do it too —but in terms of a private enterprise — and they take a long time. They earn decent returns. I’ve always said about the energy business, it’s not a way to get real rich, but it’s a way to stay real rich, and — We will deploy a lot — a lot of money at decent returns — not super returns, you shouldn’t earn super returns on that sort of thing, I mean — it does — you are getting rights to do certain things that governmental authorities are authorizing. And they should protect consumers and — but they also should protect people that put up the capital. And — You know, it’s worked now for 20 years, and it’s got a long runway ahead. ------------------------------------------------- I think it's very telling that Buffett avoids the crux of the actual question asked (probably because he has no defense after complaining about the Kraft-Cadbury situation…. ) Tsk, tsk Warren... wabuffo Edited June 28, 2021 by wabuffo
IceCreamMan Posted June 28, 2021 Posted June 28, 2021 5 hours ago, wabuffo said: https://buffett.cnbc.com/video/2020/05/04/berkshire-hathaway-annual-meeting-qa---may-02-2020.html 5 hours ago, wabuffo said: I think it's very telling that Buffett avoids the crux of the actual question asked (probably because he has no defense after complaining about the Kraft-Cadbury situation…. ) Tsk, tsk Warren... It looks like he explains some of his reasoning in the middle here: BECKY QUICK: All right, this next question comes from Jason (Plawner) in New Jersey. “As both a Berkshire and Occidental shareholder I was encouraged to see your investment in the company, but with passing weeks, it became evident that your investment facilitated Occidental management’s ability to avoid a shareholder vote on the Anadarko acquisition, a very shareholder unfriendly outcome. “This deal proved to be irresponsible and expensive from an OXY perspective, and ultimately, very value destructive for OXY shareholders. In my view, it also permanently hurt Berkshire’s reputation in the marketplace. “Please comment on this unfortunate outcome and tell me why OXY shareholders and other market observers shouldn’t feel this way.” WARREN BUFFETT: Well, yeah. We said right from the beginning — although we didn’t certainly expect the degree of what’s happened — we said, essentially, when you buy into an oil — a huge oil production company — you know, how it works out is going to depend on the price of oil to a great extent. It’s not going to be your geological home runs or super mistakes or anything like that. It is a — it is a investment that depends on the price of oil. And, you know, I — when oil goes to minus $37 — (laughs) — it happened the other day for, I guess, it was the May contract. You know, that’s off the chart, and — If you own oil, you should only own oil, if you expect these prices to go up significantly. I don’t know whether they’ll go up significantly or not. We’re in the transaction. Our commitment was made on a Sunday when the management of Anadarko favored Chevron. And Chevron had a breakup fee of a billion dollars and the Occidental people had been working on it for several years. And it was attractive at oil prices that then prevailed. And it doesn’t work, obviously — it doesn’t work at $20 a barrel — it certainly doesn’t work at minus $37 a barrel — but it doesn’t work at $20 a barrel. And everything the oil companies have been doing, whether it’s Exxon or Occidental or anybody else, it doesn’t work at these oil prices. That’s why oil production is going to go down a lot in the next few years, because it does not pay to drill now. That’s happened at other times in the past. But the situation is, you know, you don’t know where you’re going to store the incremental barrel of oil, and oil demand is down dramatically, and for a while the Russians and the Saudis were trying to outdo each other in how much oil they could produce. And when you’ve got too much in storage, it doesn’t work its way off that very fast. Now, you will have production of oil go down in the United States significantly. It does not pay to drill in all kinds of formations that paid before, and it doesn’t pay — it doesn’t pay to have paid the price that oil was trading at in the ground a year or two ago. And to that extent, if you’re an OXY shareholder, you know you’ve — or any shareholder in any oil producing company — you’ll join me in having made a mistake, so far, in terms of where oil prices went. And who knows where they go in the future.
Dynamic Posted June 30, 2021 Posted June 30, 2021 https://www.cnbc.com/2021/06/29/buffett-reflects-on-his-first-meeting-with-munger-im-not-going-to-find-another-guy-like-this.html KEY POINTS Warren Buffett and Charlie Munger first met over dinner in 1959, Buffett recalled in CNBC's special, "Buffett & Munger: A Wealth of Wisdom." The now-iconic business partners were introduced to each other through the family of a well-known doctor in Omaha. "I just knew instantly Charlie was the kind of guy that I was going to like, and I was going to learn from," Buffett said.
gfp Posted July 1, 2021 Posted July 1, 2021 (edited) HomeServices made an acquisition of a group of franchisees - https://rismedia.com/2021/07/01/americana-holdings-acquisition-homeservices-reach-grows/ https://www.businesswire.com/news/home/20210630006040/en/ Edited July 1, 2021 by gfp
Mephistopheles Posted July 3, 2021 Posted July 3, 2021 I don't think Buffett was a hypocrite at all. His fidicuary duty is to BRK shareholders, not OXY shareholders. He complained about the Kraft deal because he felt it was value destructive to Kraft of which he was a shareholder.
UK Posted July 9, 2021 Posted July 9, 2021 https://www.wsj.com/articles/biden-to-target-railroads-ocean-shipping-in-executive-order-11625736601?mod=hp_lead_pos12 In the case of the seven Class 1 freight railroads, consolidation has given railroads monopoly power over sections of the country where theirs are the only freight tracks, the person said. The executive order will encourage the STB to take up a longstanding proposed rule on so-called reciprocal or competitive switching, the practice whereby shippers served by a single railroad can request bids from a nearby competing railroad if service is available. The competitor railroad would pay access fees to the monopoly railroad, but could win the shipper’s business by offering a lower price, using the rival railroad’s tracks and property. The STB proposed a competitive switching rule in 2016 but hasn’t yet acted on it. “The consolidation brought about much-needed rationalization in the system 25 years ago, but the net result is a lot of shippers who are subject to a market-dominant railroad,” said a government official briefed on the White House’s proposal for the STB. But a move to mandate switching would guarantee a battle with the freights and the railroad trade association, the Association of American Railroads, which has long opposed the policy. “Competition remains fierce across freight providers, and any proposal mandating forced switching would put railroads—an environmentally friendly option that invests $25 billion annually in infrastructure—at an untold disadvantage,” Ian Jefferies, chief executive of the railroad association, said Thursday. “Such a rule would roll back the foundational market-driven principle that keeps the industry viable, reduce network fluidity, and ultimately undermine railroads’ ability to serve customers at a time when freight demands have dramatically increased.” In the rail industry, a wave of combinations in the 1990s left the U.S. with just seven Class 1 freight railroads. STB merger rules in place since the administration of President George W. Bush have effectively prevented further consolidation. Still, the White House argues that the current state of the industry leaves railroads with effective duopolies in much of the country, and monopolies at the local level, meaning customers have little leverage to negotiate prices. The White House will also encourage the STB to consider proposals that would compel railroads to offer rates that would better enable shippers to cobble together routes across competing rail networks to lower their costs, and to more readily bring cases to the STB to challenge railroads’ rates, this person said.
bizaro86 Posted July 9, 2021 Posted July 9, 2021 Canada has this, and we have arguably the most profitable class I railroads. Actually, iirc BNSF uses it to compete for business in Canada.
ValueMaven Posted July 9, 2021 Posted July 9, 2021 AAPL hit an ATH a day or two ago. Getting very little press. This is has turned into a massive homerun for Berkshire. Warren knows the consumer extremely well.
gfp Posted July 12, 2021 Posted July 12, 2021 https://news.dominionenergy.com/2021-07-12-Dominion-Energy-and-Berkshire-Hathaway-Energy-Agree-to-Terminate-Sale-of-Questar-Pipelines-Dominion-Energy-Commencing-Competitive-Sale-Process Berkshire - Dominion deal for Questar Pipelines has been called off. Uncertainty around FTC antitrust approval given as reason.
ValueMaven Posted July 12, 2021 Posted July 12, 2021 yea; but only 20% of the total value. slightly disappointing - but at least they closed on the majority of the assets
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