Semper Augustus

[John Hjorth]

28 minutes ago, SafetyinNumbers said:

Yes, he thinks the capital surplus can earn a higher return invested in equities which is a reasonable position but wouldn’t it make sense to consider buying the company growing capital surplus the fastest? 

 

Personally, I think this question - if else I understand it correctly [I'm not sure, at all, of that] - should be discussed in separate topic. I understand your question as related to what Mr. Buffett and Berkshire is doing with its own stock.

 

Is so, please go somewhere else than this topic, to discuss.

 

Now who is 'he' in your post above?

 

[Munger_Disciple]

I think Bloomstran is saying that FFH has a lot more insurance leverage (so higher risk, possibly higher return potential but more subject to negative surprises) and generally is not as a high quality insurer as BRK which is true. He is also saying that BRK has a lot more flexibility in investing insurance capital (so can have a much higher allocation to higher yielding assets like stocks and entire businesses) because it is so over capitalized. But what he is missing is that it is already more than priced in the relative valuations of the two companies. 

Edited September 8 by Munger_Disciple

[SafetyinNumbers]

42 minutes ago, John Hjorth said:

 

Personally, I think this question - if else I understand it correctly [I'm not sure, at all, of that] - should be discussed in separate topic. I understand your question as related to what Mr. Buffett and Berkshire is doing with its own stock.

 

Is so, please go somewhere else than this topic, to discuss.

 

Now who is 'he' in your post above?

 

Bloomstran. 

[John Hjorth]

2 minutes ago, SafetyinNumbers said:

Bloomstran. 

 

Thanks, [at least for my part], meaning Mr. Bloomstran does not trust Fairfax management anywhere near to his trust of Berkshire management by now.

 

Things appear on surface so complicated, while some times they are so simple.

 

Please place your bets.

[SafetyinNumbers]

2 minutes ago, John Hjorth said:

 

Thanks, [at least for my part], meaning Mr. Bloomstran does not trust Fairfax management anywhere near to his trust of Berkshire management by now.

 

Things appear on surface so complicated, while some times they are so simple.

 

Please place your bets.

I’m just going by what’s on the page. His argument is surplus capital can earn higher returns so he’s paying up for that optionality. If you know him personally, please ask, if he actually meant he doesn’t trust Fairfax management. 

[John Hjorth]

20 minutes ago, SafetyinNumbers said:

I’m just going by what’s on the page. His argument is surplus capital can earn higher returns so he’s paying up for that optionality. If you know him personally, please ask, if he actually meant he doesn’t trust Fairfax management. 

 

Mind you, you're on the Berkshire Hathaway turf of CoBF.

 

I don't know Mr. Bloomstran personally, nor am I a Semper Augustus client [, nor will I ever be], so I have not asked him any questions, - at all, at anytime.

 

Latest SAI Letter speaks for it self.  To me, at least, and at  all, pretty candid, actually really nobody protected.

 

What tf is it with you? - Don't you understand how lame your proposal is with regard to ever ask any - what so ever - a question - again - after asking this question?

 

Here, I'm guessing / speculating, as well as you are. Personally, I think the quoted text above can't really be misunderstood, but that may just be me.

 

Now,  enough of this. I have really had enough of this. Take the discussion up with Mr. Bloomstran yourself. I'm not his shrink, nor his client.

 

Next time, you ask a question like you did in this topic above, you may not only 'miss' reactions from me, perhaps also from others, whose opinion may be of your interest.

 

Meaning you are welcome to dump my comment about 'lack of trust' from Mr. Bloomstran towards mr. Mr. V. Prem Watsa, for your own part, however Mr. Watsa may very well be aware of that, already, as a fact.

 

Thank you.

 

[SafetyinNumbers]

3 minutes ago, John Hjorth said:

 

Mind you, you're on the Berkshire Hathaway turf of CoBF.

 

I don't know Mr. Bloomstran personally, nor am I a Semper Augustus client [, nor will I ever be], so I have not asked him any questions, - at all, at anytime.

 

Latest SAI Letter speaks for it self.  To me, at least, and at  all, pretty candid, actually really nobody protected.

 

What tf is it with you? - Don't you understand how lame your proposal is with regard to ever ask any - what so ever - a question - again - after asking this question?

 

Here, I'm guessing / speculating, as well as you are. Personally, I think the quoted text above can't really be misunderstood, but that may just be me.

 

Now,  enough of this. I have really had enough of this. Take the discussion up with Mr. Bloomstran yourself. I'm not his shrink, nor his client.

 

Next time, you ask a question like you did in this topic above, you may not only 'miss' reactions from me, perhaps also from others, whose opinion may be of your interest.

 

Meaning you are welcome to dump my comment about 'lack of trust' from Mr. Bloomstran towards mr. Mr. V. Prem Watsa, for your own part, however Mr. Watsa may very well be aware of that, already, as a fact.

 

Thank you.

 

Apologies if I have offended anyone. I thought the thread was about Semper Augustus. 

[charlieruane]

19 hours ago, Luke said:

There are fund managers that are really smart and significantly outperform and do that by not investing in asset manager mega caps.

 

There are no bonus points in investing for difficulty. If I could hire a money manager who could meaningfully outperform in risk-adjusted terms with just megacaps, beyond what I think I can do, I'd pay him 1% per year. No need for him to dip into small caps for style points. 

 

Do you give Buffett less credit for the Apple investment because Apple was a big business? 

 

Most folks stand to nuke their nest eggs if they attempt to trade. It is not irrational to hire a money manager—even a megacap-only manager—if this fate is the alternative, assuming the manager is at least a plausible practitioner of fundamentals-based investing. And as another member mentioned, many of these high-touch managers provide additional services for the fees they charge. 

Edited September 9 by charlieruane

[Luke]

4 hours ago, charlieruane said:

There are no bonus points in investing for difficulty.

Yes there are, especially if you are hiring someone and paying them significant amounts of money to do what you can do too, because its easy.

4 hours ago, charlieruane said:

If I could hire a money manager who could meaningfully outperform in risk-adjusted terms with just megacaps, beyond what I think I can do, I'd pay him 1% per year. No need for him to dip into small caps for style points. 

But thats the point, holding Berkshire for 10 years is something anybody half reasonable can do. And they will perform the same excl. the costs. 

 

Investing in small caps is not style points. Its about outperformance and difficulty. I can invest in BRK myself. I might not be a genius that can invest in the software field small caps and do 25% a year but id be willing to pay someone who could do that. 

 

But then again, just owning Constellation Software for 10 years isnt of morally high character either, then just tell your investors to buy it and close the fund. 

4 hours ago, charlieruane said:

Do you give Buffett less credit for the Apple investment because Apple was a big business? 

I think investing in Apple needed more guts and DD then investing in Berkshire or other diversified asset managers. 

4 hours ago, charlieruane said:

Most folks stand to nuke their nest eggs if they attempt to trade. It is not irrational to hire a money manager—even a megacap-only manager—if this fate is the alternative, assuming the manager is at least a plausible practitioner of fundamentals-based investing. And as another member mentioned, many of these high-touch managers provide additional services for the fees they charge. 

If you are smart enough to go to a money manager and not invest in the SP 500 (we can debate that), then you SHOULD be smart enough to not go to a manager who invests the majority of stocks in buy and hold megacaps that are diversified asset managers. 

 

What additional service do they charge? Comforting me when markets are down? For ten thousands of dollars a year? While they themselves have no clue how long things will last or how the market will develop? 

 

Taking fees and buying a huge berkshire position is NOT an honest thing to do. 

Edited September 9 by Luke

[thepupil]

5 hours ago, Luke said:

Taking fees and buying a huge berkshire position is NOT an honest thing to do. 

 

I don't know man, picking a stock that has a) made a satisfactory absolute return b) beaten its sector c) beaten the market d) done so without any tax friction e) done so with arguably low risk seems to me like exactly what a professional manager should be doing. Bloomstran may be charging too much or may not be picking enough great stocks, but I don't think berkshire ownership should be disallowed. it's done great on almost any time horizon.

 

30 yr : 12.8%/yr vs 10.7% SPX....8.8%/yr for financials

25 yr: 10.4%/yr vs 8% SPX

20 yr: 11.1%/yr vs 10.6% SPX

10 yr: 13.3%/yr vs 13.2% SPX....11.4%/yr for financials

5 yr: 18.5%/yr vs 15.9% SPX

3 yr: 18.5%/yr vs 9.4% SPX......8%/yr for financials

1 yr: 32.1% vs 27% SPX

Edited September 9 by thepupil

[Xerxes]

1 hour ago, thepupil said:

 

I don't know man, picking a stock that has a) made a satisfactory absolute return b) beaten its sector c) beaten the market d) done so without any tax friction e) done so with arguably low risk seems to me like exactly what a professional manager should be doing. Bloomstran may be charging too much or may not be picking enough great stocks, but I don't think berkshire ownership should be disallowed. it's done great on almost any time horizon.

 

30 yr : 12.8%/yr vs 10.7% SPX....8.8%/yr for financials

25 yr: 10.4%/yr vs 8% SPX

20 yr: 11.1%/yr vs 10.6% SPX

10 yr: 13.3%/yr vs 13.2% SPX....11.4%/yr for financials

5 yr: 18.5%/yr vs 15.9% SPX

3 yr: 18.5%/yr vs 9.4% SPX......8%/yr for financials

1 yr: 32.1% vs 27% SPX

pupil 

 

in my case, anyways I don’t see any problem with fund managers buying Berkshire as a 3-5 year “trading opportunity”. 

But not as a multi-decade holding. 

 

I think that is the distinction. 
 

Even Bill Ackman did it in 2020, but he also sold it right away, making the statement that he is not going to outsource capital allocation decision. 

 

Another example is Mayers, who owns Brown and Brown, Old Dominion etc. as part of his fund. I don’t know if he has external clients. 
 

Mayers does own Berkshire (never sold a share I think) but he owns personally. And not through his fund. 

[Williams406]

Berkshire constitutes a large percentage of my portfolio but I did not commit capital equal to the current size of the position. The seed capital has grown since my late 90's first buys and there exists a daunting capital gain I'd rather not realize. I have just added periodically. I can imagine some portfolio managers are in the same position. Not sure why it would be dishonest for them to assess fees on that capital.

 

Plenty of intelligent people choose not to engage directly in investment decisions either because they have limited time or want to stay in their professional lane. The depth of knowledge members of this Board have regarding BH is very uncommon. A portfolio manager who has accumulated solid BH knowledge, bought, and exercised patience in holding over years is demonstrating some virtue that has value and they should be compensated. Some decisions--financial and otherwise--are wise, keep adding value, and distributing fees/dividends--financial or otherwise.

[Williams406]

Aren't all corporate managers capital allocators on some level? BH generates low cost float from insurance and invests it in railroads and Apple and utility projects. Some public, some private. Cool. JOE decides to invest capital in building some hotels? Also cool. Constellation decides to acquire yet another software company. What's the distinction?

 

So those managers who bought BH say, 20 years ago and have done very well for their clients overall should do what, exactly? Sell the position? Forgo fees on that part of the fund/account?

[boilermaker75]

29 minutes ago, Williams406 said:

Aren't all corporate managers capital allocators on some level? BH generates low cost float from insurance and invests it in railroads and Apple and utility projects. Some public, some private. Cool. JOE decides to invest capital in building some hotels? Also cool. Constellation decides to acquire yet another software company. What's the distinction?

 

So those managers who bought BH say, 20 years ago and have done very well for their clients overall should do what, exactly? Sell the position? Forgo fees on that part of the fund/account?

 

And what they are bringing might be the discipline and patience to hold BRK, which there clients might not be able to do if they held the stock individually.

[John Hjorth]

2 hours ago, thepupil said:

 

I don't know man, picking a stock that has a) made a satisfactory absolute return b) beaten its sector c) beaten the market d) done so without any tax friction e) done so with arguably low risk seems to me like exactly what a professional manager should be doing. Bloomstran may be charging too much or may not be picking enough great stocks, but I don't think berkshire ownership should be disallowed. it's done great on almost any time horizon.

 

30 yr : 12.8%/yr vs 10.7% SPX....8.8%/yr for financials

25 yr: 10.4%/yr vs 8% SPX

20 yr: 11.1%/yr vs 10.6% SPX

10 yr: 13.3%/yr vs 13.2% SPX....11.4%/yr for financials

5 yr: 18.5%/yr vs 15.9% SPX

3 yr: 18.5%/yr vs 9.4% SPX......8%/yr for financials

1 yr: 32.1% vs 27% SPX

 

1 hour ago, Xerxes said:

pupil 

 

in my case, anyways I don’t see any problem with fund managers buying Berkshire as a 3-5 year “trading opportunity”. 

But not as a multi-decade holding. 

 

I think that is the distinction. 
 

Even Bill Ackman did it in 2020, but he also sold it right away, making the statement that he is not going to outsource capital allocation decision. 

 

Another example is Mayers, who owns Brown and Brown, Old Dominion etc. as part of his fund. I don’t know if he has external clients. 
 

Mayers does own Berkshire (never sold a share I think) but he owns personally. And not through his fund. 

 

Somehow, we should take and accept at par what the man himself has to say about it - in writing to his clients :

 

Latest SAI Client Letter, p. 145 :

 

I don't know how you read it, but I read it as material matter of a conscious a priori decision now 25 years ago about achieving and sustaining staying power in this game, not to end up as day fly in a constantly changing investment universe.

 

Personally, I do not only understand that stance, I actually respect it. It is about defining 'the mission', so clients understand it, and can relate to it.

 

Satisfied clients are a prerequisite for wanting to go to work, otherwise you're ruining your own life. It is about creating an upwards spinning wheel, not a downwards.

 

- - - o 0 o - - -

 

I dare guess that Semper Augustus' investment vehicle[s <- ??]  is [ are <- ??] some kind of a non-permanent capital legal entity, by the way. I may be totally wrong about that.

Edited September 9 by John Hjorth

[Jaygo]

You guys banging on Chris seem a little jealous that's all. Who cares what he charges and for what services. As far as I can tell he's not out there preying on widows and orphans. His clients have made a decision and he runs his business in a way that he feels comfortable. 

 

All I see is a guy who has very generously given us his work. To this day I cant think of a better source of business accounting teachings than his letters. 

 

More granularly. Paying a guy to hold BRK or any other conglomerate business is fine. Have any of the guys bitching about his fees ran a business? Its hard, capital allocation is hard. Is he supposed to ignore BRK? the company he knows better than anyone not named Warren or Greg just because of the corporate structure.

 

Maybe his customers say to him "Chris just get me to the finish line with some money left" and that's all they need to sleep well at night. 

 

I also see his defensive style as a very good Ying Yang for someone holding the rest of their assets in QQQ or something. His portfolio has a bit of an all weather feel to it. 

 

 

 

 

[DooDiligence]

The previous 2 posts encapsulate everything Buffet / Bloomstran. Bloomstran has provided us all with some great perspectives. I could care less if its primary purpose was to market his services. There's a lot of self serving nimrods who give significantly less value. "We put the douche in fiduciary", does not apply to Bloomstran or Buffett.

 

Buffett simply is, and I love the cash pile.

Edited September 10 by DooDiligence

[Luke]

2 hours ago, Jaygo said:

You guys banging on Chris seem a little jealous that's all. Who cares what he charges and for what services.

I said it's easy money, and I am jealous of them to have that much AUM. I personally don't care what they charge, but it's worth discussing if what they charge, is objectively a fair transaction. 

2 hours ago, Jaygo said:

As far as I can tell he's not out there preying on widows and orphans. His clients have made a decision and he runs his business in a way that he feels comfortable. 

Preying on widows and orphans and charging high fees are not the same indeed. Still, one can question the moral character of such actions. 

2 hours ago, Jaygo said:

All I see is a guy who has very generously given us his work. To this day I cant think of a better source of business accounting teachings than his letters. 

If you decide to ONLY see his letter, then that's what you decide to see. 

2 hours ago, Jaygo said:

More granularly. Paying a guy to hold BRK or any other conglomerate business is fine. Have any of the guys bitching about his fees ran a business? Its hard, capital allocation is hard. Is he supposed to ignore BRK? the company he knows better than anyone not named Warren or Greg just because of the corporate structure.

Paying someone 2-3% a year for holding a +30% Berkshire position is not only not fine, it's also dumb. 

2 hours ago, Jaygo said:

Maybe his customers say to him "Chris just get me to the finish line with some money left" and that's all they need to sleep well at night. 

What does the finish line mean? If people have enough cash so they can pay him 2-3% of their returns per year they shall do it. To me, it's dumb. 

2 hours ago, Jaygo said:

I also see his defensive style as a very good Ying Yang for someone holding the rest of their assets in QQQ or something. His portfolio has a bit of an all weather feel to it. 

 

[Luke]

Anyways, to each their own. If you think twice, you don't want to pay someone 20-25% of your gains above 6%. If you are not smart enough to understand investing then i guess give him his money but then i question how you made it to that much money in the first place to even become an investor in this fund. Thats the weird thing. You are already very wealthy and must have brains but then decide to give someone much of your money who invests it in berkshire

[Luke]

In the perfect world, i would have 500m AUM and would invest all of it in Berkshire, Fairfax, LVMH and Prosus. Then i rent a nice office with huge windows in some capital hub, make youtube posts of how to be as smart an investors as me, read some books, browse the web and cobf and make big bucks for doing nothing

 

EDIT: AND will have YOU guys defending me for doing so!!!

 

Edited September 10 by Luke

[John Hjorth]

6 hours ago, Jaygo said:

You guys banging on Chris seem a little jealous that's all. Who cares what he charges and for what services. As far as I can tell he's not out there preying on widows and orphans. His clients have made a decision and he runs his business in a way that he feels comfortable. 

 

All I see is a guy who has very generously given us his work. To this day I cant think of a better source of business accounting teachings than his letters. 

 

More granularly. Paying a guy to hold BRK or any other conglomerate business is fine. Have any of the guys bitching about his fees ran a business? Its hard, capital allocation is hard. Is he supposed to ignore BRK? the company he knows better than anyone not named Warren or Greg just because of the corporate structure.

 

Maybe his customers say to him "Chris just get me to the finish line with some money left" and that's all they need to sleep well at night. 

 

I also see his defensive style as a very good Ying Yang for someone holding the rest of their assets in QQQ or something. His portfolio has a bit of an all weather feel to it. 

 

@Jaygo,

 

I think I likely was the one who started and / or initiated this by now ongoing discussion about SAI and SAIs product[s], based on how Mr. Bloomstran reacted on X related to a The Economist article recent published about if 'Mr. Buffett has lost his touch' with a lot track record talk, that is to me a horse already beaten to death, making the X post by Mr. Bloomstran a bit ridiculous to me, and also meaning I don't need his advice about personal subsciptions, I consider myself fully cabable of handling such task and decision thing personally myself without his advice.

 

In short, the man is publicly [on X] demonstrating a patronizing behavior, that offense me personally. He should feel him self above talking anything down / short, because it's not his game at all. If he focused hard on his primary task [the return on his clients capital], he would not have time to talk publicly about such matters. It demonstrates 'increasing confusion' between AUM and return to clients, if one ask me.

 

Some posters above have presented to us some countering, balancing views here about how to think about SAI and SAIs product[s], which is great and what CoBF is always about, as a basis for honing or adjustning own opinions and stances on a certain matter at hand.

 

Like you and so many others, @Jaygo , I sincerely appreciate what Berkshire related Mr. Bloomstran has been sharing with us. He is really good at it.

 

- - - o 0 o - - -

 

Also and thus, thank you to those of you providing above those arguments based on reason above, so far.

[Xerxes]

7 hours ago, Jaygo said:

You guys banging on Chris seem a little jealous that's all. Who cares what he charges and for what services. As far as I can tell he's not out there preying on widows and orphans. His clients have made a decision and he runs his business in a way that he feels comfortable. 

 

All I see is a guy who has very generously given us his work. To this day I cant think of a better source of business accounting teachings than his letters. 

 

More granularly. Paying a guy to hold BRK or any other conglomerate business is fine. Have any of the guys bitching about his fees ran a business? Its hard, capital allocation is hard. Is he supposed to ignore BRK? the company he knows better than anyone not named Warren or Greg just because of the corporate structure.

 

Maybe his customers say to him "Chris just get me to the finish line with some money left" and that's all they need to sleep well at night. 

 

I also see his defensive style as a very good Ying Yang for someone holding the rest of their assets in QQQ or something. His portfolio has a bit of an all weather feel to it. 

 

 

 

 

No one is jealous here. 

 

This is just reacting to what I call “twitter cult behaviour” of posters. Probably yearnings to count how many “reposts” and “like” there is by the X acolytes. The so called influencer economy ….

When you exhibit cult like behaviour, than you leave yourself open. And it is not just The Economist. He flames Microstrategy when Bitcoin is in the gutters, but fails to follow up when his narrative doesn’t unfold. Maybe do a follow up tweet …. 

 

I have been reading The Economist for almost 15 years now. Week after week. And it probably made me less stupid than otherwise. So I am bias. Yes. But regardless, of my bias, I found it utterly silly to see someone blow a fuse on an article …. If anything his post is a “Bloomstran clickbait” … calling it “formerly great magazine” in the same tweet several times, is no different than Trump’ name-calling.  
 

like I said, typical “twitter cult” behaviour ….

[Jaygo]

@Xerxes @John Hjorth

 

You both have a point. Dont dish it out if you cant take it. He does seem to get mired in the BS instead of taking the highroad and ignoring it. I think he did the same with Cathy wood and others at one time. We all have flaws. 

 

I do think his fees and the way he has structured his business is a different matter and short of predatory tactics he and his clients should be left to themselves to evaluate.

 

I guess i just wanted to defend him where he could not defend himself. I am totally in gratitude to his letters. Much like our @Viking amongst others and their efforts on FFH. When someone teaches you to fish you tend to think very highly of them.

[TwoCitiesCapital]

On 9/8/2024 at 12:51 PM, SafetyinNumbers said:

I’m just going by what’s on the page. His argument is surplus capital can earn higher returns so he’s paying up for that optionality. If you know him personally, please ask, if he actually meant he doesn’t trust Fairfax management. 

 

Late to the convo

 

I knew the analyst that used to work for Semper - or one of them (not sure how many are employed). I pitched both Fairfax and Fairfax India to him. His response makes me think that they don't trust the management. 

 

Perhaps that was from a surface level review in response to the equity/deflation hedges that ended poorly? But they were uninterested in discing further and already had some familiarity with the company. 

 

Can't recall exactly when the conversation was had - but was at some point between 2019 - 2021

Edited yesterday at 01:38 AM by TwoCitiesCapital

[dealraker]

Don't worry about Chris as he's been buying the dollar stores for some time now in large amounts....beginning at prices double today's quotes.