30Yr Performance

[ValueMaven]

Which does better?

Cuz I have nothing better to think about on a Sunday afternoon

Edited August 28, 2022 by ValueMaven

[valuehawk91]

Why not both?

[Monsieur_dee]

What other companies would you be willing to hold for 30 years in hope of a adequate return. 

Would constellation software be on this list? Any others? 

[DooDiligence]

Edwards Lifesciences & Novo Nordisk

[scorpioncapital]

in 30 years, brk might buy mkl..

[nwoodman]

What no Fairfax option?

 

If both the companies and our good selves are there to see the winner then we will have all outperformed (speaking for me mostly). I voted MKL, but my portfolio argues differently, so a moment of cognitive dissonance.  

 

There will be some minor and major leadership changes for both companies over that period.  The test for both on the capital allocation side is going to be “invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will”.  So easier said than done.

 

I was always intrigued by the dual CEO structure of MKL.  Now that Gayner will be sole CEO shortly, it will be interesting to see any changes if any.

 

FWIW my numbers are discount IV/Compounding rates/ Fair Value:

 

BRK -7%/11% FV B Shares $300

MKL -23%/13.5%, FV $1550

FFH is the massive outlier at the moment I see it as an 11% return trading at a discount of 45% FV $USD 900.  

 

The certainty is in the order stated and varies from 20% to 40%.

 

 

 

 

[ValueMaven]

@nwoodman interesting that you have MKL undervalued by such a large discount??  Why do you think that is??  

[nwoodman]

1 hour ago, ValueMaven said:

@nwoodman interesting that you have MKL undervalued by such a large discount??  Why do you think that is??  

In terms of market discount I would not consider it huge within your usual margin of safety for a business like this.  Further no major insights other than:

 

1.  If you run a regression on results/share price/ book value you get an answer similar to 10-13%

 

2. Tom Gayner talking his book on a number of occasions alluded to this.  I find it distasteful after following Berkshire for so many years but that is nothing to Fairfax coming out and stating a number of 15%!

 

3. Interesting that Tod or Ted see a similar valuation i.e Berkshire

 

4. Over a 5 year period there performance has been OK but not great.  When I think I have found a true compounder and the share price has done nothing for X years, I get interested

 

So in a nutshell the number was thrown out there on the basis that is a true compounder.  Everyone’s mileage differs, I just need my investments going forwards to be of the kind that I can say to my wife “don’t flip that one” when I take my final bow . 

 

Edit: and for anyone playing at home for the first.  Fairfax has paid out a roughly 2%.  Important for side by side compariss.

Edited September 1, 2022 by nwoodman