berkshire - cheap?

[gfp]

longinvestor,

 

So you mean rinse and repeat yearly for all those A-shares earmarked for the Gates Foundation to be converted to B, donated to Gates Foundation and then sold back to Berkshire for Berkshire cash?

 

So the Gates Foundation owns about 58 million B shares today.  Warren converts his A-shares to B-shares before he gives them away.  Over time there will be fewer and fewer A shares, as designed.

 

The Gates Foundation will continue to receive a shrinking number of shares, but very possibly not a shrinking dollar amount, annually, continuing a decade or so after Warren's death and they will at some point after his death receive the balance of his public bequest to them.

 

I don't think Berkshire and the Gates foundation will do a block transaction even though I can't personally find an ethical problem with it.  It is very possibly not what is best for the foundation, which has special permission to dispose of BRK.B shares much more slowly than they are technically required to by law.  So their special dispensation allows them to hold $11 Billion and growing of BRK.B shares, which is probably a pretty great asset for a foundation like theirs.

 

But never say never.  Anyone with a material sized block of stock should phone Omaha if they want to sell to the mothership on the cheap

[Guest longinvestor]

longinvestor,

 

So you mean rinse and repeat yearly for all those A-shares earmarked for the Gates Foundation to be converted to B, donated to Gates Foundation and then sold back to Berkshire for Berkshire cash?

Opposite: one time private transaction now whereby shares are retired and public sales down the road. Berkshire cash would come into play now but not later. I don’t know if such a thing is even possible/feasible. I can think of three stakeholders here.

 

1. Buffett foundation- do more good despite market prices

2. Gates foundation- do more good while not pressured to find worthy causes all at once.

3. Remaining shareholders- instantly and meaningfully benefit.

 

The board will have to decide and approve the transaction. Key question is how other possible investment opportunities right now compare with retiring shares.

[Cigarbutt]

I wonder if the price gets close whether the buyback threshold will get altered due to the tax law.

 

Would you please explain the implications of the new tax law in regards to buybacks?

 

This is an honest question & not an attempt to be inflammatory.

I really want to understand, as I am slowly building BRK into my largest position.

 

Wanting to learn is a sign of relative strength.

Will risk becoming a strawman and submit that your question is more subtle than it appears.

 

Mr. Buffett has explained that stock should be bought back 1- with excess funds and 2- when the stock is available at a discount to intrinsic value. The 1,2 rule is simply a tool to try to estimate the mismatch between book value and the discounted value that can trigger the buy back. Over time, for a firm, the ratio between intrinsic value and book value may increase.

 

Mr. Buffett has mentioned the emphasis on entire businesses recognized at book value as a potential reason for the growing mismatch.

 

For the tax part (the 2017 Augustus letter is helpful if you want to play with numbers, see below), when enacted, first, book value increases (which should not change the 1,2 multiplier if the market adjusts...) but, also, the future earning power is increased, under some assumptions (see below), so return on capital is increased and therefore the multiplier should increase.

https://seekingalpha.com/article/4151002-semper-augustus-investments-group-2017-letter-clients

 

Assumptions:

-corporate tax decrease is a good thing, OK

-corporate tax decrease will result in higher productivity, probably OK at Berkshire Hathaway

-a debt-financed corporate tax decrease is a good thing (don't want to get into politics but that leads to the next big assumption)

-the corporate tax decrease will be permanent, IMO uncertain

 

There have been reports circulating on the internet suggesting that the threshold for buy back should be mathematically adjusted to reflect the tax rate going from 35 to 21%, suggesting that the threshold should go to 1,4-1,5, but things are more complicated. First, the effective tax rate adjustment may not reflect the headline numbers. Second, and more importantly IMO, just like with the unrecognized book value aspect of consolidated subsidiary, the new tax rates will result in higher retained earnings (higher book value) going forward so, even if positive, the benefits of lower tax rates will be eventually be recognized in book value, with a lag, so one cannot simply use a rule of three.

 

Reasonable to expect the 1,2 number to go to 1,25 or 1,3.

 

Even if the excess fund argument should be independent from the discount to intrinsic value argument, at some point, the cash "cushion" may start to burn a hole in the pocket and the multiplier adjustment may be used to calm the crowd who keeps yelling: Swing, you bum!

 

[DooDiligence]

Thanks to all for the thoughtful responses.

 

It took me quite a few years of reading before I finally started buying BRK (began watching it around $80. & 1st purchase was around $190.)

 

I'm a full time student with no active income other than a Pell Grant & a tiny scholarship (hopefully, scholarship awards will grow.)

 

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

I can't see BRK's businesses being reproduced for 1.3 +/- book, and in the event of a large downturn, the strong shareholder base plus buybacks seem like good backstops for the equity. I understand that the non-wholly owned investments can fluctuate, and I may be wrong, but I look at these as lagniappe.

 

If the tax cut isn't permanent, the increase in economic goodwill should give this juggernaut a bit more momentum to sustain a possible future reversion to higher tax rates?

 

---

 

On another note, will the decrease in corporate tax rate increase competition by spurring a lot of new business start-ups?

Seems to me like it would, since the hurdle is so much lower.

[Guest longinvestor]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

 

Good luck to us.

 

 

[valueinvesting101]

Buffett talks about buying even at 1.25 or 1.27 of the book value.

 

https://buffett.cnbc.com/video/2018/02/26/buffetts-health-care-partnership-is-determined-to-contain-costs-full-interview.html?&start=1115

 

Original rational for buying above book value was that there are two liabilities viz. float and deferred tax liability were completely deducted as they were debt or accounts payable but economic nature of these liabilities are vastly different. With tax reforms deferred tax liability has actually gone down but multiple for buying at 1.2 times book remains. Assets are definitely more valuable with tax reforms as their after tax earning power goes up but part of misrepresentation of deferred tax liability is fixed so in a 1.2 times multiple has been extended.

 

Another argument made was with passage of time, underperforming assets are mark down but outperforming ones are never marked up. This causes difference between carrying value of the asset and their economic worth. Initial buyback was announced at 1.1 time in 2011 and increased to 1.2 in 2012. It has been almost 6 year since 2012 so just divergence between carrying value or economic value will justify buyback at 1.27-1.3 times book which is current price.

[gfp]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

Good luck to us.

 

Students come in all ages.  DooDiligence is in his mid 50's or something like that

[John Hjorth]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

Good luck to us.

 

Students come in all ages.  DooDiligence is in his mid 50's or something like that

 

Yes, that was actually funny!

 

The difference between young and more mature students:

 

Young students: Strugling very hard, and result-oriented to get IN to the hamster wheel chosen as preference.

More mature students: Working more balanced, but still result-oriented [still hell bent] to get OUT of the hamster wheel chosen ealier in life. If such a student has some guts, that person is actually designing and building the future job for him/her self!

 

-Right, Jeff?

[Guest longinvestor]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

Good luck to us.

 

Students come in all ages.  DooDiligence is in his mid 50's or something like that

 

hmmm.. goes to show assumptions don't work! More respect for the a-typical student ;)

 

Talking about assumptions, I can't let go of the chance to point out the topic of FANG versus BRK that consumed so many pages on this thread. Everyone here know to how to zero in on the exact BV and the multiple thereof for BRK literally to two or more decimal places; There are look thru earnings and cost of float and DTL projections and and.....in other words, few assumptions need to be made to value BRK.

 

How about the FANGs; any assumptions being made?  Naah, don't think so! Growth baby, growth. Just sit back and watch them win it all!

[DooDiligence]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

Good luck to us.

 

Students come in all ages.  DooDiligence is in his mid 50's or something like that

 

Yes, that was actually funny!

 

The difference between young and more mature students:

 

Young students: Strugling very hard, and result-oriented to get IN to the hamster wheel chosen as preference.

More mature students: Working more balanced, but still result-oriented [still hell bent] to get OUT of the hamster wheel chosen ealier in life. If such a student has some guts, that person is actually designing and building the future job for him/her self!

 

-Right, Jeff?

 

Absolutely!

 

I’m majoring in classical guitar & minoring in piano but plan on reversing that after the Fall semester.

 

The guitar has to be forced to play this stuff, whereas it simply flows from the keyboard.

 

As to employment prospects, I’m doing live & studio sound reinforcement for other students / performers & am slowly investing in equipment (picks & shovels instead of joining the gold rush.)

 

The puzzles presented by music theory instructors are just icing on the cake & every day in class is an absolute joy.

 

I try to help struggling / working students where I can, with the hope that a few of them will remember me after I’m gone (in another 25 or 30 years?!?)

 

Sorry for the thread derailment.

Thanks to all for helping me hang on to my grub stake!

 

——

 

Forgot to add, I’m 56.

[racemize]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

Good luck to us.

 

Students come in all ages.  DooDiligence is in his mid 50's or something like that

 

hmmm.. goes to show assumptions don't work! More respect for the a-typical student ;)

 

Talking about assumptions, I can't let go of the chance to point out the topic of FANG versus BRK that consumed so many pages on this thread. Everyone here know to how to zero in on the exact BV and the multiple thereof for BRK literally to two or more decimal places; There are look thru earnings and cost of float and DTL projections and and.....in other words, few assumptions need to be made to value BRK.

 

How about the FANGs; any assumptions being made?  Naah, don't think so! Growth baby, growth. Just sit back and watch them win it all!

 

I think you are underestimating the work going into most of FANG by value investors.  I’m assuming Munger is a hero of yours?  If so, you might consider trying to articulate the position of your opponents better than they can, and I don’t think “growth baby growth” counts.

 

Disclosure: I own Berkshire. Among FANG, I own one (less than Berkshire), think another is worth buying, and will likely be wrong to dismiss the value of a third. And I still might be wrong about the N.

[DooDiligence]

Maybe one day, it’ll be changed to BANG?

 

Disclaimer: Not to be taken seriously (or is it?)

[John Hjorth]

I think you are underestimating the work going into most of FANG by value investors. ...

 

... Disclosure: I own Berkshire. Among FANG, I own one (less than Berkshire), think another is worth buying, and will likely be wrong to dismiss the value of a third. And I still might be wrong about the N.

 

Here, I've edited the post by Joel quite heavily, not to mention all Joel's quotes, them all basically gone here [naturally they are all above]. Here, I'm doing it with sincere intentions, to focus on what's on my mind here.

 

- - - o 0 o - - -

 

Where are we headed? - And don't even think to ask me that question! [<- And it is totally neutral meant!] - Naturally, I don't know the answer.

 

It's about some pretty hard core [please don't confuse "hard core" here with "deep"] value investors catching interest in the FANGs and doing work on them, and at the same time growth investors showing interest in value cases here on CoBF.

 

I started noticing it in the beginning of this year, I think.

 

- - - o 0 o - - -

 

I think I'll try to branch it out in a separate topic here on CoBF later this Sunday. I think it could become an awesome discussion topic.

[Guest longinvestor]

 

 

It took me quite a few years of reading before I finally started buying BRK (began watching i

I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.

 

+1

I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.

 

You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.

Good luck to us.

 

Students come in all ages.  DooDiligence is in his mid 50's or something like that

 

hmmm.. goes to show assumptions don't work! More respect for the a-typical student ;)

 

Talking about assumptions, I can't let go of the chance to point out the topic of FANG versus BRK that consumed so many pages on this thread. Everyone here know to how to zero in on the exact BV and the multiple thereof for BRK literally to two or more decimal places; There are look thru earnings and cost of float and DTL projections and and.....in other words, few assumptions need to be made to value BRK.

 

How about the FANGs; any assumptions being made?  Naah, don't think so! Growth baby, growth. Just sit back and watch them win it all!

 

I think you are underestimating the work going into most of FANG by value investors.  I’m assuming Munger is a hero of yours?  If so, you might consider trying to articulate the position of your opponents better than they can, and I don’t think “growth baby growth” counts.

 

Disclosure: I own Berkshire. Among FANG, I own one (less than Berkshire), think another is worth buying, and will likely be wrong to dismiss the value of a third. And I still might be wrong about the N.

 

Okay, I did, to the best of my ability in post #126 in this thread. Here is the link that post was centered around,

 

http://www.thedrum.com/opinion/2018/03/19/marketers-who-prioritise-digital-advertising-have-delusions-effectiveness

 

http://galbithink.org/ad-spending.htm is another link showing total advertising spend in the US 1919 until 2007.

 

Here's my Mungerism (trying to state the other side better), which I know to be better

 

Ad spending appears to have an upper bound at about 2% of GDP (See link#2)

Digital ads will not replace traditional ads completely. (see link #1)

Digital ads are not as effective as real world ads in building brands. (see link #1)

Consumers would prefer not to be advertised to; Think NFLX (free lunch thing practiced by FG allows them to abuse consumers)

Regulation is somewhat late to deal with surreptitious use of personal data by FG. It just got started with GDPR.

 

As stated in my prior post, for the purpose of this discussion, I am equating FG to FANG.

 

There it is. Make it better.

 

 

 

[racemize]

Just to be clear - stating the other side better than they can is stating the argument for their side not yours.  Your summary of the opposite side is "growth baby growth"--that is not a well articulated version of your opponent's stance.

[Guest longinvestor]

Just to be clear - stating the other side better than they can is stating the argument for their side not yours.  Your summary of the opposite side is "growth baby growth"--that is not a well articulated version of your opponent's stance.

 

I am leaving it at that.

[Spekulatius]

"Part of the reason why Buffett is holding onto these stocks is precisely this. He probably cannot find alternative mega cap stocks that fit his investing framework other than, e.g., Apple."

 

And it is not like he is out of cash to buy the FANG stocks or something else. So he is making a conscious decision that he does not want to own that stuff. At least at this price.

 

If you think that Buffett is purely passive then you should note that Washington Post became Graham Holdings and it is now gone, effectively sold his P&G stake which had bought Gillette, recently forced the hand of executives at USG to sell out.

 

Therefore I would think that you are quite mistaken to believe that he is not having a very critical look of the portfolio at all times and looking at potential alternatives.

 

Finally, when things go on for a long time, some assume that it will continue forever. Now we have some millenials who have started to invest in the last 5 or 6 years, never experienced a bear market, never experienced a recession, never seen a true panic and are now smarter than the greatest investor of all times... They probably should read the Intelligent Investors and get a feel for history.

 

Cardboard

 

 

Those are good points, backed by historical Berkshire facts, Cardboard,

 

I would add Munich Re to your list.

 

Very few people learn from their own mistakes. Even fewer people learn from the mistakes of others.

 

Going back to the thread, WEB tends to convert public holdings into fully owned ones, if he gets the chance. He uses tax free exchanges. He may be a sloth in terms of value realization, but he is not entirely inactive..

[John Hjorth]

Has anybody here on CoBF tried to estimate the BV/share for Berkshire end of period 2018H1?

 

[i have read the posts by Valuehalla in this topic, but I respectfully towards Valuehallas post of June 29[sup]th[/sup] 2018 submit, that the calculations - at least to me - are too cursory. [i hope you don't get me wrong here, Valuehalla ... - I have always enjoyed reading your posts here on CoBF about Berkshire in your capacity as long term Berkshire shareholder.]]

 

For my part, it's the tax expense in the 10-Q for 2018Q1 that is really teasing me.

 

Edit:

 

Dynamic,

 

Do you have an estimate for what will hit Berskshire P/L with regard to the listed investments for 2018Q2, based on your tool, & based on i.e. unchanged Berkshire portfolio composition, compared to end period 2018Q1?

[alwaysdrawing]

Inexact numbers, but these are the share price differences in the big positions (total of 80% of the portfolio)

 

Ticker Weight Change

AAPL 23.1% 10.16%

WFC 12.7% 2.98%

KHC 10.6% 4.00%

BAC 10.1% -3.11%

KO 9.0% 0.21%

AXP 7.6% 4.56%

PSX 2.7% 16.18%

USB 2.3% -1.29%

MCO 2.2% 6.04%

 

Overall that 80% of the portfolio was up $7 billion in value (about 4.6%), share price was down 5.8%.

 

The remainder of the portfolio you can calculate, but shouldn't be a huge impact.  We obviously also do not know what buys/sells happened in Q2

[Valuehalla]

The quarter in done

 

BRK is extremly cheap, just trading at 1,28 x BV

 

BRK.B price              $186.65                   -6.4% since end Q1

BV per B                 app  $145.20         1.29           app 3 % up since end Q1

KHC adj BVPS         app  $146.10         1.28    app 3 % up since end Q1

 

BRK a big big buy !

 

Hi John, my figures are not cursory. They are deeply calculated. I am just to laszy to publish the details. Soon we will see, how precise these figures were. Even today we are trading just app 1.28 x BV

[Dynamic]

Edit:

 

Dynamic,

 

Do you have an estimate for what will hit Berskshire P/L with regard to the listed investments for 2018Q2, based on your tool, & based on i.e. unchanged Berkshire portfolio composition, compared to end period 2018Q1?

 

Yes, it looks like about $5.9bn gain in market value for the quarter to 30 June 2018 aside from KHC which is treated more like a subsidiary. I estimated the tax on the realized gain on the Monsanto merger arbitrage already, but crudely assume 21% deferred tax liability increase is a little over  $1.2bn and net gain in portfolio is about $4.6bn-$4.7bn for the quarter. This does include the effect of known disposals but the economic effect will be the same.

 

Pretty sure the Apple position cannot have grown or they'd have filed a Form 4 on reaching 5% as @globalfinancepartners said on the Look Through thread. It's possible that other positions have been added to or initiated and likely that there is some small trimming required to keep banks like Wells Fargo below 10%, but I'd imagine they won't make a dramatic difference.

 

Running some rough numbers for fun on 29th June, just before the quarter closed I was within the ballpark of Valuehalla's estimated Book Value - perhaps 10-20 cents below a few hours before the portfolio market value got a late boost- I don't remember exactly - but I haven't tried to account for seasonality of each earnings line and I'm not sure of the tax effect accounting and have no particular insight into the insurance environment. I would personally ignore KHC's price action given how it's accounted for and aiming for a conservative number.

 

In the past, I've done pretty well estimating about 2-2.5% quarterly increase in BV from 2015Q3 to Q4 and even picking up some BRK.B at 1.234* Q3BV in Feb 2016 $~124.56, which turned out to be 1.19* Q4BV when it was announced later that month with the 10-K.

 

We're not so very cheaply priced now, the holiday season boost won't help Q2 gain so much as Q4, and the tax cut mixes things up, but I estimated BV just over $145 per B share and buyback threshold will provide a soft floor of a little over $174, much in line with Valuehalla. I don't have the figures to show my working except for the portfolio gain, I just recall the resulting figure for 2018Q2 BV and the estimated buyback threshold, which I've used recently to estimate my downside in BRK.B. I may have the sheet of paper somewhere but probably won't dig it out.

 

When the tax cut first came through I slightly overestimated BV at year end by a dollar or so, so take my estimate with a pinch of salt.

 

I'm certainly bullish on Berkshire Hathaway in the mid to high 180s and I expect the buyback threshold to catch up to my buy prices since Dec2017 by about this time next year. I'm in an odd position that my home currency GBP has weakened so although BRK.B is down from the mid 190s, it's more expensive in GBP than when I bought in December. I'd love the price to hit the mid 170s for a while, but I'd be surprised

[John Hjorth]

Hi John, my figures are not cursory. They are deeply calculated. I am just to laszy to publish the details. Soon we will see, how precise these figures were. Even today we are trading just app 1.28 x BV

 

Oh, I apologize for my comment then, Valuehalla. And I see that Dynamic comes up with the same numbers within a narrow margin, like yours, in his very elaborate post after yours.

 

Thank you gents.

[Dynamic]

Elaborate post maybe - probably not very elaborate figures (except for the Look-Through part, which is elaborate!).

 

It was a few rough numbers for after tax segment earnings or losses based around the 10-K and 10-Q on a sheet of paper plus the reasonably accurate Look-Through portfolio change (excluding KHC).

 

But the good thing is we're estimating the difference from Q1 BV to Q2 BV - about $4.00 added to BV per BRK.B share for the quarter so roughly right give or take $0.20 to $0.30 either way may be a +/- 5-8% window around the real increase, but is still pretty good for estimating the buyback threshold we'll have from early August within a dollar or so, and I'm happy enough with that.

 

It's a lot easier to be roughly right than it was when we were estimating the unknown impacts of the new Tax Cuts back in December. I was a bit over-optimistic at that time. For Q1 I was a lot closer but still a little optimistic.

[nickenumbers]

Valuehalla and Dynamic,

 

I appreciate the effort and the courage to put your numbers out there.  That is part of the reason why I joined this group was to see what a group of SMART, Value Focused, investors have to say.  We don't have to agree, but we should endeavor to be respectful.  We can all Monday morning quarterback the numbers, but I think you guys are on track AND...  I was too lazy to perform the arithmetic that you offered. I love LOVE the fact that you have taken a stab at the math for me.  Thank you for the contribution and the opinion.

 

I understand Charlie and Warren saying that they can not continue to grow the company at rates that they have in the past.  I get that and I get the upper limit on the economy growing.  But when you listen to them in the 1990s, and the 2000 they were saying the same thing.  Don't you think they are tamping down expectations so that they have an opportunity to exceed the expectations.  They have never been happy to grow their wealth at 4%, why would they accept that now?  I also get the fact that the cash and size of their company is a drag on their performance, but don't buy the opossum routine that Warren puts out there on slower growth.  Slow growth might happen here and there, but that is not what they are aiming for.  Finally when you have collected a menagerie of superior companies with high rates of returns as BRK has, why do we think that the S&P can outperform it? 

 

PS- I am long Brk.b and I have Brk.B LEAPs going out over the next 6-18 months.

[DooDiligence]

Valuehalla and Dynamic,

 

I appreciate the effort and the courage to put your numbers out there.  That is part of the reason why I joined this group was to see what a group of SMART, Value Focused, investors have to say.  We don't have to agree, but we should endeavor to be respectful.  We can all Monday morning quarterback the numbers, but I think you guys are on track AND...  I was too lazy to perform the arithmetic that you offered. I love LOVE the fact that you have taken a stab at the math for me.  Thank you for the contribution and the opinion.

 

I understand Charlie and Warren saying that they can not continue to grow the company at rates that they have in the past.  I get that and I get the upper limit on the economy growing.  But when you listen to them in the 1990s, and the 2000 they were saying the same thing.  Don't you think they are tamping down expectations so that they have an opportunity to exceed the expectations.  They have never been happy to grow their wealth at 4%, why would they accept that now?  I also get the fact that the cash and size of their company is a drag on their performance, but don't buy the opossum routine that Warren puts out there on slower growth.  Slow growth might happen here and there, but that is not what they are aiming for.  Finally when you have collected a menagerie of superior companies with high rates of returns as BRK has, why do we think that the S&P can outperform it? 

 

PS- I am long Brk.b and I have Brk.B LEAPs going out over the next 6-18 months.

 

WEB's says in nearly every letter to shareholders that we can expect combined ratios to deteriorate, and yet, insurance operations continue to perform.

 

He's one of my favorite pessimistic optimists.

 

Make Berkshire Great Again!