Buffett/Berkshire - general news

[73 Reds]

1 minute ago, gfp said:

 

I don't know but we just had to turn down a prospective tenant who applied but couldn't afford the apartment and I was sort of worried he would come back with some discrimination stuff.  Dude put his Mother down as his only reference LOL...  My first thought was to forward him this article and explain how irresponsible it is for a landlord to trap a tenant in a contract that can't afford but luckily that is my wife's department and I fix the toilets where my strengths lie.

LOL, the irony is when a landlord leases to tenants who can't afford the rent, the landlord is only creating problems for himself.  But to the very issue involving Clayton Homes, there is no telling what the buyer might have represented in its financing application or even verbally (i.e., "I'm getting a big raise starting next week").  Home owners who default on their mortgages have many more legal options than defaulting tenants, who can often be summarily removed even if they have a valid defense to an eviction but no money to cover the rent.   

[gfp]

Not sure where to post this but I found it entertaining and it is a well told narrative of an early 80's Berkshire Hathaway arbitrage investment.  Didn't want to put it in 'Buffett's early investments' since that is somebody else's book.  This is a free article but the substack offers a subscription.  Not a recommendation to pay up for a sub.

 

https://dirtcheapstocks.substack.com/p/how-warren-buffett-earned-a-39-irr?utm_source=post-email-title&publication_id=2329765&post_id=154492215&utm_campaign=email-post-title&isFreemail=true&r=oqhe5&triedRedirect=true&utm_medium=email

[WFF]

With the fire in LA, what can we expect the hit to the insurance business?  Aside from GEICO, is the exposure pretty limited?  

Berkshire has exited the home insurance market in California, so we should be fine there. There is probably a hit with small business insurance as well.  But how about reinsurance?   Has anyone looked into this?

[ValueMaven]

Mercury General is getting crushed right now .. down -25%.  They are a very large auto insurance, with very sizable CA exposure  and the CEO is well over 100 years old at this point (he owns 45% of O/S).  Seems like it would be a great acquisition for GEICO, given the near-term distress.  Anyone have thoughts on this?

Edited January 10, 2025 by ValueMaven

[WFF]

https://thehill.com/homenews/state-watch/5079152-california-wildfires-insurance/

 

So does this mean that the ones the insurer has cancel recently are now stuck with the policy and have to payout?  

 

[WFF]

7 hours ago, WFF said:

https://thehill.com/homenews/state-watch/5079152-california-wildfires-insurance/

 

So does this mean that the ones the insurer has cancel recently are now stuck with the policy and have to payout?  

 

The good news as I check,  Berkshire has limited exposure it seems.  With perhaps Three, and GEICO affected, not sure about policy exposures given not everyone will have comprehensive car insurance.   

[fareastwarriors]

WSJ: Warren Buffett Prepares His Middle Child for the Job of a Lifetime

[LC]

1 hour ago, fareastwarriors said:

WSJ: Warren Buffett Prepares His Middle Child for the Job of a Lifetime

 

Oh boy. From playing dress-up sheriff to dress-up chairman? Warren is a great investor but his succession planning never struck me as outstanding.

[sleepydragon]

1 minute ago, LC said:

 

Oh boy. From playing dress-up sheriff to dress-up chairman? Warren is a great investor but his succession planning never struck me as outstanding.

that’s not what I concluded from reading this story. Howie is a “do-er”. Takes initiatives and get things done.  Who else you know traveled to a war zone a dozen times. He’s compassionate and full of passion, and is responsible.

 

[Munger_Disciple]

This was a surprise for me: Howie says: Berkshire should continue holding annual meetings at which the leadership takes questions at length from shareholders. "One hundred percent, absolutely. I just hope I can do it and Greg can do it for eight hours like he does.”

 

So Howie will be on the podium with Greg & Ajit post-Warren taking questions from shareholders. Before this, I thought it would just be Greg & Ajit. 

Edited January 11, 2025 by Munger_Disciple

[rohitc99]

1 hour ago, LC said:

 

Oh boy. From playing dress-up sheriff to dress-up chairman? Warren is a great investor but his succession planning never struck me as outstanding.

I think warren mentioned he will be the guardian of the culture and maybe his legacy ? not an operating manager per se. So not a true successor in that sense and with the buffett family stock going to charities, the family will not exert control in that manner. 

 

Its worked out for some of the other companies such as walmart. maybe it will in berkshire too

[ValueMaven]

The guy has been on some of the largest public company boards for decades (KO, ADM, etc) ... Is the son of the most successful investor of all-time, and is being hand-picked as a non-executive chairman.  I dont see why people are getting so upset.  When I hear Howie speak - I personally have no issues at all.  

[LC]

4 hours ago, sleepydragon said:

that’s not what I concluded from reading this story. Howie is a “do-er”. Takes initiatives and get things done.  Who else you know traveled to a war zone a dozen times. He’s compassionate and full of passion, and is responsible.

 

When he was dress-up sheriff for a year, he paid a 10k “gift” to avoid doing the mandatory training hours. Dude wants to walk around carrying a gun, arresting people, with the law at his back…and won’t spend the time to prep for it?

Was he a do-er as Archer-Daniels board member when they were colluding to fix prices? 
 

I’m cherry picking my criticism, but at best he is willfully ignorant (the benefit of being a billionaires son I guess). Not someone I want as “cultural successor”.  
 

Btw- What kind of job is “cultural successor”, anyways? Sounds like a BS position anyways. If it was some DEI hire this board would be up in arms. 
 

Just my two cents!

[Gamecock-YT]

from shirtsleeves to shirtsleeves in 3 generations

[rohitc99]

does the investment thesis change on berkshire post Warren Buffett with Howie as the chairman v/ someone else ?

[ValueMaven]

@rohitc99 yes and no.  I do see the start of a dividend over the next 5yrs as highly likely, and large outpeformance has low probability.  Frankly, I'd love to learn more about how Ted/Todd/Greg/Ajit work together.  Between those 4 I feel very confident in BRK going forward.  

Edited January 12, 2025 by ValueMaven

[73 Reds]

8 minutes ago, ValueMaven said:

@rohitc99 yes and no.  I do see the start of a dividend over the next 5yrs as highly likely, and large outpeformance has low probability.  Frankly, I'd love to learn more about how Ted/Todd/Greg/Ajit work together.  Between those 4 I feel very confident in BRK going forward.  

Mostly agree but I think BRK has a better chance at outperformance because Ted and Todd will be in the forefront and looking for and needing a reason to shine.  Buffett's "circle of competence" may no longer be a constraint on a large portion of Berkshire's investible capital.  With much larger sums to invest, T&T may look to areas and/or regions for investment that don't necessarily make as much sense with smaller amounts to allocate.  My hunch is even while Buffett is still in charge they are doing a lot of prep work anticipating the day when they assume control of that much more investment capital.   

[Blugolds]

I still come back to this push for “going green” with the last administration, obviously that is probably put on the back burner for now, but the other aspects of needing tremendous amounts of energy are still there. Elon has the ear of POTUS and he is gonna push for more tech in the country (my opinion) and especially if the crypto grifters have anything to do with it, we need tons of energy and the only logical way to produce that cost effective is Nuclear. I dont think I have ever heard nuclear nuclear nuclear being touted as much as I have in the past several months and I think that a good thing for BHE as they have already been in talks about it and were set up and ready to go with plans to produce mini reactors etc in partnership with Gates. BHE is an industry leader, Greg is one of if not the best in the energy space and they have a fat a juicy bankroll for assurances and the ability to move quickly if they get the green light. I still think further down the road 5-10-15 yrs BHE will be the golden goose of BRK that is where I see the most potential, solid stable returns on large amounts of invested capital. Takes a lot of pressure off finding creative ways to invest the money, just run the energy business intelligently, make sure ROIC is decent etc. At least that is a future I can imagine, I struggle imagining a future that looks much like we’ve seen over the past several decades, the culture will remain intact as that is WB primary concern, for shareholders/partners..but finding elephants and getting the call because its WB I dont think continues in the same fashion. 

[73 Reds]

25 minutes ago, Blugolds said:

I still come back to this push for “going green” with the last administration, obviously that is probably put on the back burner for now, but the other aspects of needing tremendous amounts of energy are still there. Elon has the ear of POTUS and he is gonna push for more tech in the country (my opinion) and especially if the crypto grifters have anything to do with it, we need tons of energy and the only logical way to produce that cost effective is Nuclear. I dont think I have ever heard nuclear nuclear nuclear being touted as much as I have in the past several months and I think that a good thing for BHE as they have already been in talks about it and were set up and ready to go with plans to produce mini reactors etc in partnership with Gates. BHE is an industry leader, Greg is one of if not the best in the energy space and they have a fat a juicy bankroll for assurances and the ability to move quickly if they get the green light. I still think further down the road 5-10-15 yrs BHE will be the golden goose of BRK that is where I see the most potential, solid stable returns on large amounts of invested capital. Takes a lot of pressure off finding creative ways to invest the money, just run the energy business intelligently, make sure ROIC is decent etc. At least that is a future I can imagine, I struggle imagining a future that looks much like we’ve seen over the past several decades, the culture will remain intact as that is WB primary concern, for shareholders/partners..but finding elephants and getting the call because its WB I dont think continues in the same fashion. 

Yeah, when is the last time Buffett "got the call"?  Those days are largely long over.  Hopefully T&T are a little more aggressive when it comes to finding suitable acquisition candidates.  The culture need not be degraded by pursuing more and waiting less.  There is nothing wrong with competing with and bidding against others for acquisitions; each of Berkshire's operating companies competes for business against competitors every day.

[Gregmal]

18 minutes ago, 73 Reds said:

Yeah, when is the last time Buffett "got the call"?  Those days are largely long over.  Hopefully T&T are a little more aggressive when it comes to finding suitable acquisition candidates.  The culture need not be degraded by pursuing more and waiting less.  There is nothing wrong with competing with and bidding against others for acquisitions; each of Berkshire's operating companies competes for business against competitors every day.

This and the post you quoted are one of the best summarizations of the new age of investing. Buffett has largely gotten by unscathed because he’s made some great investments. But the above sort of textbook ideology has ruined the careers and returns of many an investor. Waiting for “the call” so to speak. A redux of past crises that ain’t coming. God like yesterday the impending housing crash of 2022 called by all the experts lol. And it turns out not only did we not crash, but the exact opposite of what they predicted occurred. Same with the general “market is expensive” crap. 
 

Hopefully within Berkshire post Buffett there is a little more effort to be proactive. What they don’t seem to realize, is that there’s a huge built in advantage in “being Berkshire”. And only waiting for “the call” to capitalize on it, is wasting that card.

[Castanza]

I’m in my low 30’s and have owned a position in BRK pretty much since I started investing. But I never sized it up significantly because I never expected outperformance. I expected consistency and preservation of capital from a top notch management team that let me sleep easy at night.  
 

When WB if gone I expected consistency and BRK to maintain their culture, their identity and their durability. However I expect T&T to bring a little agility to their approach. I’m more excited about Berkshire now than I have been the last 10 years. I bet it outperforms over the next 20.  I hope it continues to stay no dividend though.  

[Spekulatius]

On 1/10/2025 at 10:54 AM, ValueMaven said:

Mercury General is getting crushed right now .. down -25%.  They are a very large auto insurance, with very sizable CA exposure  and the CEO is well over 100 years old at this point (he owns 45% of O/S).  Seems like it would be a great acquisition for GEICO, given the near-term distress.  Anyone have thoughts on this?

Mercury also writes a lot of homeowners insurance. I had my home and car insured with them for years when living in CA. They used to have the lowest rates. They probably get hammered for their home insurance losses due the fire. Why would Berkshire be interested in them? I don’t  think they had ever good underwriting and management and Berkshire exited CA for good reasons.

[LC]

Here's a question: if Ted outperforms and Todd doesn't, what happens? What about over a 5, 10 year horizon? What if they both collectively underperform over similar timeframes? Who holds the accountability here to shareholders? 

[Munger_Disciple]

You guys are all talking about Todd & Ted but Buffett said at the 2024 AM that Greg will be managing marketable securities once he becomes CEO just as Buffett is doing now. This means that their current roles are unlikely to change once Greg takes over. They will still be managing relatively small % of BRK's equity portfolio as they are now. 

Edited January 13, 2025 by Munger_Disciple

[gfp]

1 hour ago, Munger_Disciple said:

You guys are all talking about Todd & Ted but Buffett said at the 2024 AM that Greg will be managing marketable securities once he becomes CEO just as Buffett is doing now. This means that their current roles are unlikely to change once Greg takes over. They will still be managing relatively small % of BRK's equity portfolio as they are now. 

 

That's not exactly what he said.  But, yes - Greg will have final say on capital allocation and that includes everything.  Warren does firmly believe that there needs to be one person in charge, not a committee.  The board of directors can fire that one person, but unless they do the buck stops with Greg.