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General Category => Berkshire Hathaway => Topic started by: wescobrk on February 20, 2013, 10:09:25 AM

Title: Buffett letter?
Post by: wescobrk on February 20, 2013, 10:09:25 AM
I haven't seen a news release yet.
I'm assuming we'll see Buffett's letter this Sat morning, right?
Title: Re: Buffett letter?
Post by: xo 1 on February 20, 2013, 10:12:25 AM
We have to wait this year.  It will be released next Friday, after trading.

http://blogs.wsj.com/deals/2013/02/19/buffetts-annual-berkshire-letter-to-come-on-friday-march-1/
Title: Re: Buffett letter?
Post by: fareastwarriors on March 01, 2013, 07:52:37 AM
can't wait!
Title: Re: Buffett letter?
Post by: Liberty on March 01, 2013, 09:26:11 AM
can't wait!

+1  :D
Title: Re: Buffett letter?
Post by: Palantir on March 01, 2013, 09:42:06 AM
Do all shareholders get it in the mail or do you need to request a copy?
Title: Re: Buffett letter?
Post by: jeffmori7 on March 01, 2013, 09:44:26 AM
Do all shareholders get it in the mail or do you need to request a copy?

http://www.berkshirehathaway.com/
Title: Re: Buffett letter?
Post by: augustabound on March 01, 2013, 10:27:14 AM
No surprise in this graphic really.  Aside from Charlie I guess, WEB mentions Ajit the most.
Hover your mouse over the persons name to see the quotes.

http://graphics.wsj.com/from-the-mouth-of-warren-buffett/

I guess the Journal is trying to warm people up for the annual letter.  ;D
Title: Re: Buffett letter?
Post by: fareastwarriors on March 01, 2013, 11:27:34 AM
Investors Line Up for Buffett Clues


http://www.cnbc.com/id/100509850 (http://www.cnbc.com/id/100509850)
Title: Re: Buffett letter?
Post by: Liberty on March 01, 2013, 12:18:49 PM
Is the letter usually put up on Berkshire's site right after 4 PM, or later in the evening?
Title: Re: Buffett letter?
Post by: oddballstocks on March 01, 2013, 12:29:08 PM
In the mail, at least I've always received a hard copy of mine.
Title: Re: Buffett letter?
Post by: augustabound on March 01, 2013, 12:43:40 PM
Is the letter usually put up on Berkshire's site right after 4 PM, or later in the evening?

I don't remember them specifying a time.  Can you imagine the traffic to their web host at 4:01 if that was the case.  ;D
Title: Re: Buffett letter?
Post by: xo 1 on March 01, 2013, 12:47:12 PM
From the press release, it is approximately 4:00 p.m.

OMAHA, NE—Berkshire Hathaway Inc.’s 2012 Annual Report to the shareholders and its Form
10-K will be posted on the Internet on Friday March 1, 2013, at approximately 4:00 p.m. eastern
time where they can be accessed at www.berkshirehathaway.com. The Annual Report will
include Warren E. Buffett’s annual letter to shareholders and other information about Berkshire’s
financial position and results of operations. Concurrent with the posting of the Annual Report
and 10-K, Berkshire will also issue an earnings release.

We'll see how robust the server is.
Title: Re: Buffett letter?
Post by: fareastwarriors on March 01, 2013, 12:59:30 PM
waiting...
Title: Re: Buffett letter?
Post by: NormR on March 01, 2013, 01:01:39 PM
It's up  :)
Title: Re: Buffett letter?
Post by: fareastwarriors on March 01, 2013, 01:07:53 PM
yup, Thanks!
Title: Re: Buffett letter?
Post by: Palantir on March 01, 2013, 01:10:10 PM
YAY THE WAIT IS OVER
Title: Re: Buffett letter?
Post by: alexbossert on March 01, 2013, 01:12:29 PM
Here is the letter: http://www.berkshirehathaway.com/letters/2012ltr.pdf

Alex
Title: Re: Buffett letter?
Post by: Palantir on March 01, 2013, 01:13:51 PM
They left me in the dust as well. ;D
Title: Re: Buffett letter?
Post by: Yours Truly on March 01, 2013, 01:22:33 PM
Good to see Ted's purchase of DTV making the big board
Title: Re: Buffett letter?
Post by: Grahamisback on March 01, 2013, 01:54:33 PM
They left me in the dust as well. ;D

 ;D

It reminds me of a comment about Simpson in 2004 (But he's usually right.) ;)
Title: Re: Buffett letter?
Post by: beerbaron on March 01, 2013, 03:15:57 PM
What do you think he thinks about when he says:

If float is both costless and long-enduring, which I believe Berkshire’s will be, the true value of this liability is
dramatically less than the accounting liability


My logic tells me that an endless revolving load is worth 100%. What do you guys think?

BeerBaron
Title: Re: Buffett letter?
Post by: Tim Eriksen on March 01, 2013, 03:59:14 PM
What do you think he thinks about when he says:

If float is both costless and long-enduring, which I believe Berkshire’s will be, the true value of this liability is
dramatically less than the accounting liability


My logic tells me that an endless revolving load is worth 100%. What do you guys think?

BeerBaron

My logic disagrees a bit with with yours.  Would you rather have $100,000 or use the $100,000 to purchase a loan of $100,000 with no interest that is long enduring?  The answer for me is I would rather have the $100,000 and not have to ever worry about the $100,000 loan.  Thus it is worth less than 100%.  Having said that, I do think the value is closer to $100% than say 50%. 

You also want to make sure not to double count the insurance operations and the float.  If you value the float separately (whether or not at 100%) you then should only put a very conservative multiple on underwriting profits of the insurance operations since it may incur sizable catastrophe losses from time to time.
Title: Re: Buffett letter?
Post by: kiwing100 on March 01, 2013, 04:14:26 PM

Good clarity on dividend policy with a simple mathematical example - maximisation of intrinsic value to shareholders is still his focus.
Title: Re: Buffett letter?
Post by: ap1234 on March 01, 2013, 04:55:14 PM
The annual report was great! I have a question regaring one of Buffett's calculations (return on unlevered net tangible assets). On page 13 he says:

“Viewed as a single entity, therefore, the companies in this group are an excellent business. They employ $22.6 billion of net tangible assets and, on that base, earned 16.3% after-tax.”

Based upon the balance sheet for the Manufacturing, Service and Retailing Operations (pg. 12), how does Buffett calculate the $22.6 billion of net tangible assets??
Title: Re: Buffett letter?
Post by: kiwing100 on March 01, 2013, 05:23:20 PM
The annual report was great! I have a question regaring one of Buffett's calculations (return on unlevered net tangible assets). On page 13 he says:

“Viewed as a single entity, therefore, the companies in this group are an excellent business. They employ $22.6 billion of net tangible assets and, on that base, earned 16.3% after-tax.”

Based upon the balance sheet for the Manufacturing, Service and Retailing Operations (pg. 12), how does Buffett calculate the $22.6 billion of net tangible assets??

Deduct goodwill from equity
Title: Re: Buffett letter?
Post by: mankap on March 01, 2013, 05:38:57 PM
I thoroughly enjoyed reading is as always.

I did not know that both Ted and Todd Combs are great runners.
Ted has done marathon in 3.01 hrs.That is a really good time.
Title: Re: Buffett letter?
Post by: OracleofCarolina on March 01, 2013, 05:41:01 PM
I thoroughly enjoyed reading is as always.

I did not know that both Ted and Todd Combs are great runners.
Ted has done marathon in 3.01 hrs.That is a really good time.

Not bad..almost as good as Paul Ryan..lol
Title: Re: Buffett letter?
Post by: Parsad on March 01, 2013, 05:45:35 PM
Incidentally, if you are booking for dinner at Gorat's or Piccolos during Berkshire weekend, Piccolos is taking reservations now, whereas Gorat's only starts taking them from April 1st.  I've got my table booked at Piccolos already!  Cheers!
Title: Re: Buffett letter?
Post by: redskin on March 01, 2013, 06:44:16 PM
What do you think he thinks about when he says:

If float is both costless and long-enduring, which I believe Berkshire’s will be, the true value of this liability is
dramatically less than the accounting liability


My logic tells me that an endless revolving load is worth 100%. What do you guys think?

BeerBaron



My logic disagrees a bit with with yours.  Would you rather have $100,000 or use the $100,000 to purchase a loan of $100,000 with no interest that is long enduring?  The answer for me is I would rather have the $100,000 and not have to ever worry about the $100,000 loan.  Thus it is worth less than 100%.  Having said that, I do think the value is closer to $100% than say 50%. 

You also want to make sure not to double count the insurance operations and the float.  If you value the float separately (whether or not at 100%) you then should only put a very conservative multiple on underwriting profits of the insurance operations since it may incur sizable catastrophe losses from time to time.

Buffett is conservative in his valuation by putting no value on the underwriting profits.
Title: Re: Buffett letter?
Post by: bablu on March 02, 2013, 04:50:59 AM
Incidentally, if you are booking for dinner at Gorat's or Piccolos during Berkshire weekend, Piccolos is taking reservations now, whereas Gorat's only starts taking them from April 1st.  I've got my table booked at Piccolos already!  Cheers!

Hey Sanjeev,
Is the reservation for Saturday or Sunday night ?
Title: Re: Buffett letter?
Post by: giofranchi on March 02, 2013, 07:19:27 AM
Quote
Charlie and I believe in operating with many redundant layers of liquidity, and we avoid any sort of obligation that could drain our cash in a material way. That reduces our returns in 99 years out of 100. But we will survive in the 100th while many others fail. And we will sleep well in all 100.
WEB


giofranchi

“As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes

Title: Re: Buffett letter?
Post by: Parsad on March 02, 2013, 10:08:27 AM
Incidentally, if you are booking for dinner at Gorat's or Piccolos during Berkshire weekend, Piccolos is taking reservations now, whereas Gorat's only starts taking them from April 1st.  I've got my table booked at Piccolos already!  Cheers!

Hey Sanjeev,
Is the reservation for Saturday or Sunday night ?

Sunday.  Buffett shows up at Piccolos on Sunday around 7:30-8:30pm.  He's usually at Gorat's on Sunday around 6-6:30pm, but Gorat's is broken up into three rooms, so you don't know where you will be seated.  Piccolos is really one big massive room for the most part, so it's likely you will get to see him.  Cheers!
Title: Re: Buffett letter?
Post by: argonaut on March 02, 2013, 08:01:02 PM
WEB is very discreet in listing the 1B positions...yes, he added DTV...with a disclaimer about some investments not shown because of pension funds....


So DVA which I believe is over the 1B mark (and others too?) are not shown..keeping them more out of the limelight...

There are quite a few pension funds that are used by web and Ted/Todd for the purchases...

I still ponder if we are seeing a slow run at DVA...thoughts?
Title: Re: Buffett letter?
Post by: LC on March 02, 2013, 08:48:15 PM
WEB is very discreet in listing the 1B positions...yes, he added DTV...with a disclaimer about some investments not shown because of pension funds....


So DVA which I believe is over the 1B mark (and others too?) are not shown..keeping them more out of the limelight...

There are quite a few pension funds that are used by web and Ted/Todd for the purchases...

I still ponder if we are seeing a slow run at DVA...thoughts?
i still think it's brilliant business to own the company that creates diabetes (KO) and the company that treats it (DVA)
Title: Re: Buffett letter?
Post by: Liberty on March 02, 2013, 09:12:34 PM
i still think it's brilliant business to own the company that creates diabetes (KO) and the company that treats it (DVA)

Ha! Thought by that reasoning if KO starts running into trouble, DVA could start doing worse too :)
Title: Re: Buffett letter?
Post by: Mephistopheles on March 02, 2013, 09:38:41 PM
WEB is very discreet in listing the 1B positions...yes, he added DTV...with a disclaimer about some investments not shown because of pension funds....


So DVA which I believe is over the 1B mark (and others too?) are not shown..keeping them more out of the limelight...

There are quite a few pension funds that are used by web and Ted/Todd for the purchases...

I still ponder if we are seeing a slow run at DVA...thoughts?
i still think it's brilliant business to own the company that creates diabetes (KO) and the company that treats it (DVA)

Sugar isn't a direct cause of diabetes. Binging on cola or other forms of sugar may cause obesity and/or insulin resistance which in turn may result in the development of diabetes, but in general sugar is not a cause.
Title: Re: Buffett letter?
Post by: Kiltacular on March 03, 2013, 01:57:00 AM
Quote
The annual report was great! I have a question regaring one of Buffett's calculations (return on unlevered net tangible assets). On page 13 he says:

“Viewed as a single entity, therefore, the companies in this group are an excellent business. They employ $22.6 billion of net tangible assets and, on that base, earned 16.3% after-tax.”

Based upon the balance sheet for the Manufacturing, Service and Retailing Operations (pg. 12), how does Buffett calculate the $22.6 billion of net tangible assets??

If you look at the balance sheet for MSR that Buffett posts there on p. 12, you will see "Berkshire equity" of $48,657 on the right hand side.  On the left hand side, you will see "Goodwill and other intangibles" of $26,017.  If you subtract the "Goodwill and other" from the "Berk equity", you'll see that you get $22.64. 

Close enough for this game.

By the way, Buffett's long discussion about the amortization of goodwill and other intangibles was awesome.  There is little discussion of this issue anywhere.

Frankly, I mentioned this the other day in the Leucadia thread w/r/t the amortization of intangibles at National Beef.  National Beef is throwing of enormous cash to Leucadia and the business had a "bad" year according to the 10k.

Also, Buffett mentioned (as he has previously) that Wells Fargo is taking HUGE completely non-cash and meaningless charges to amortize the intangibles it bought in the Wachovia acquistion -- $1.6 billion in 2012.  Wells Fargo's earnings are WAY higher than they appear based on this number.

I love how Buffett mentions that "no analyst report he's seen mentions this". 

Interesting in that (1) he takes a shot at the "analysts and (2) he read EVERYTHING, including their reports.

Disclosure: Long WFC warrants
Title: Re: Buffett letter?
Post by: Kiltacular on March 03, 2013, 02:13:37 AM
Quote
My logic disagrees a bit with with yours.  Would you rather have $100,000 or use the $100,000 to purchase a loan of $100,000 with no interest that is long enduring?  The answer for me is I would rather have the $100,000 and not have to ever worry about the $100,000 loan.  Thus it is worth less than 100%.  Having said that, I do think the value is closer to $100% than say 50%. 

You also want to make sure not to double count the insurance operations and the float.  If you value the float separately (whether or not at 100%) you then should only put a very conservative multiple on underwriting profits of the insurance operations since it may incur sizable catastrophe losses from time to time.


Here is (part) of what Buffett notes in the letter (my emphasis added):

"Looking ahead, I believe we will continue to underwrite profitably in most years. If we do, our float will be better than free money."

So, there you have it.  If Berkshire can perform with cumulative underwriting profits, Buffett right there says, he'd rather have Berkshire's float liability than an equivalent amount of equity.

I have spent about 5 or 10 years bringing this issue up with people in all kinds of forums and I have NEVER gotten anywhere with getting people to agree that this is what Buffett thinks. 

First, it seems they can't even get past the issue of Buffett's important caveats.  You have to have long-term undewriting profits for float to be better than "free" money.  You have to be certain that the float won't shrink quickly.  You have to agree that you want to have the money called "float" invested in something for a long time (and NOT otherwise immediately spent).

But, IF those conditions can be met, insurance 'float liability' that delivers underwriting profits IS BETTER than having the same amount of money in equity.

That Buffett believes this is not particularly useful to us analysts because, as Buffett takes pains to highlight, these conditions ARE NOT MET by the insurance industry as a whole.  And, when they're not met, the dream scenario he describes simply doesn't apply.

It isn't true for AIG.  It isn't true for Fairfax.  Etc.

That doesn't make their float useless.

Still, what Buffett says here -- well, I haven't found (m)any people that can accept what he is saying is true EVEN IF they agree Berkshire (or some other insurance company) can produce sustained underwriting profits on a float pool that doesn't shrink or doesn't shrink quickly.

So, if you can understand what Buffett is saying here, you might be able to write an interesting book or produce a document that ends up getting forwarded around the value investor community.

Be prepared, though, people will say you're an idiot and mock you.  Later, they'll pretend you never said it -- when Buffett finally confirms you were correct about what he is saying in plain English.

 ;D

--
edited for clarity, if that's even possible on this subject
Title: Re: Buffett letter?
Post by: bennycx on March 03, 2013, 03:28:18 AM
Quite weird that he says that it is better than free money. Wouldn't it be the same as free money given consistently then? It's like saying a profitable business (like coke) is better than free money......
Title: Re: Buffett letter?
Post by: maxthetrade on March 03, 2013, 04:27:41 AM
Here is (part) of what Buffett notes in the letter (my emphasis added):

"Looking ahead, I believe we will continue to underwrite profitably in most years. If we do, our float will be better than free money."

So, there you have it.  If Berkshire can perform with cumulative underwriting profits, Buffett right there says, he'd rather have Berkshire's float liability than an equivalent amount of equity.

I have spent about 5 or 10 years bringing this issue up with people in all kinds of forums and I have NEVER gotten anywhere with getting people to agree that this is what Buffett thinks. 

I understand all this and in general I agree with the reasoning but float comes with two major restrictions that do not apply to equity: you always have to hold some cash for cat payouts ($20bn in Berkshire's case) and regulators won't let you invest float as you want, i.e. you have to invest in fixed income securities.
So yes float is like free money (or even better) in Berkshire's case but that free money must be invested in cash and fixed income securities. Would you really put the same value on equity and on money that comes with these restrictions?


Title: Re: Buffett letter?
Post by: link01 on March 03, 2013, 04:45:09 AM
<<But, IF those conditions can be met, insurance 'float liability' that delivers underwriting profits IS BETTER than having the same amount of money in equity.>>

I agree with most of what you’re saying but I wouldn’t go that far. Lets remember that an insurance co’s equity that affects its claims paying ability, after all. Float is still ultimately a liability, although its one that comes with benefits, like deposits do for a bank. It’s a prime source of earnings, along with equity via investments, & underwriting. If you think about it, it’s a lucky thing for consumers of insurance too. If it were ever mandated by regulatory govt agencies for instance that insurance co’s could only invest the float portion of their investments portfolio in 30 day treasuries then premiums would have to be jacked up pretty substantially in order for insurance co’s to just earn their cost of capital.
Title: Re: Buffett letter?
Post by: bablu on March 03, 2013, 06:28:44 AM
Incidentally, if you are booking for dinner at Gorat's or Piccolos during Berkshire weekend, Piccolos is taking reservations now, whereas Gorat's only starts taking them from April 1st.  I've got my table booked at Piccolos already!  Cheers!

Hey Sanjeev,
Is the reservation for Saturday or Sunday night ?

I guess i am out of luck.. My flight is for sunday noon..


Sunday.  Buffett shows up at Piccolos on Sunday around 7:30-8:30pm.  He's usually at Gorat's on Sunday around 6-6:30pm, but Gorat's is broken up into three rooms, so you don't know where you will be seated.  Piccolos is really one big massive room for the most part, so it's likely you will get to see him.  Cheers!
Title: Re: Buffett letter?
Post by: bablu on March 03, 2013, 06:29:38 AM
Incidentally, if you are booking for dinner at Gorat's or Piccolos during Berkshire weekend, Piccolos is taking reservations now, whereas Gorat's only starts taking them from April 1st.  I've got my table booked at Piccolos already!  Cheers!

Hey Sanjeev,
Is the reservation for Saturday or Sunday night ?

I guess i am out of luck.. My flight is for sunday noon..


Sunday.  Buffett shows up at Piccolos on Sunday around 7:30-8:30pm.  He's usually at Gorat's on Sunday around 6-6:30pm, but Gorat's is broken up into three rooms, so you don't know where you will be seated.  Piccolos is really one big massive room for the most part, so it's likely you will get to see him.  Cheers!

I guess i am out of luck.. My flight is for sunday noon..
Title: Re: Buffett letter?
Post by: redskin on March 03, 2013, 08:57:47 AM
What are thoughts on MidAmerican?  Buffett seems upbeat about the business and he boasts about the huge amount of capex invested, but I don't see the results.  After huge amounts of capital invested, net earnings attributable to Berkshire has increased from approximately $1.1 billion in 2007 to $1.3 in 2012.  I would like to hear Buffett expand on this at the annual meeting in May. 
Title: Re: Buffett letter?
Post by: twacowfca on March 03, 2013, 12:34:15 PM
<<But, IF those conditions can be met, insurance 'float liability' that delivers underwriting profits IS BETTER than having the same amount of money in equity.>>

I agree with most of what you’re saying but I wouldn’t go that far. Lets remember that an insurance co’s equity that affects its claims paying ability, after all. Float is still ultimately a liability, although its one that comes with benefits, like deposits do for a bank. It’s a prime source of earnings, along with equity via investments, & underwriting. If you think about it, it’s a lucky thing for consumers of insurance too. If it were ever mandated by regulatory govt agencies for instance that insurance co’s could only invest the float portion of their investments portfolio in 30 day treasuries then premiums would have to be jacked up pretty substantially in order for insurance co’s to just earn their cost of capital.


BRK's float under the conditions Warren listed is better than free money if it grows over the years as it should.  The growth of invested free money is reduced by income taxes or deferred tax liability.  The growth of float doesn't have this drag.

Imagine that you had a perpetual source of funds that is a liability that increased in principal amount by 10% each year. You also are able to invest those funds in stocks that increase in value by about the same amount each year.  Then, you'll never have to pay taxes on those capital gains because the increasing liability for the increasing float matches the increasing value of your portfolio.  Therefore your portfolio will grow at a much higher rate than if you had to pay taxes on its growth in value. 

The growth in that value over decades will be many times more than the value of the free money if you earned 10% per annum on it and had to pay taxes on the capital gains.  :)
Title: Re: Buffett letter?
Post by: val740 on March 03, 2013, 01:01:24 PM
In the Investments section, Buffett shows 22,999,600 shares of DTV. He also states that pension fund holdings are not included. The 13-F shows an additional 11,037,900 shares for a total of 34,037,500 shares. That would be a total of $1.7 billion, or 17% of Weschler's and Comb's combined portfolios.

Is the difference because of the difference in pension fund disclosures or something else? Can someone shed light on this? Thanks.
Title: Re: Buffett letter?
Post by: jay21 on March 03, 2013, 01:47:54 PM
I don't think its that hard to come up with the value of float.  The way I look at it is you have the ability to borrow at below market rates, which is an asset.  For example,  let's say BRK can borrow 100m at 7% for 10 years.  Instead, BRK underwrites a 100m liability with a 0% cost.  If we assume the float is bond-like, the NPV at the market rate of 7% is around 50m.  If the liability is stated as 100m on the balance sheet, there is an offsetting asset of 50m on the balance sheet.  That's a very simplistic way of looking at it and you may want to play with a lot of the assumptions, the biggest being that the borrowings can fund nearly anything whereas the float can only fund certain things.
Title: Re: Buffett letter?
Post by: philassor on March 03, 2013, 05:49:58 PM
Web on float:

So how does our attractive float affect the calculations of intrinsic value? When Berkshire’s book value is calculated, the full amount of our float is deducted as a liability, just as if we had to pay it out tomorrow and were unable to replenish it. But that’s an incorrect way to look at float, which should instead be viewed as a revolving fund. If float is both costless and long-enduring, which I believe Berkshire’s will be, the true value of this liability is dramatically less than the accounting liability.

A partial offset to this overstated liability is $15.5 billion of “goodwill” that is attributable to our insurance companies and included in book value as an asset. In effect, this goodwill represents the price we paid for the float- generating capabilities of our insurance operations. The cost of the goodwill, however, has no bearing on its true value. For example, if an insurance business sustains large and prolonged underwriting losses, any goodwill asset carried on the books should be deemed valueless, whatever its original cost.

Fortunately, that’s not the case at Berkshire. Charlie and I believe the true economic value of our insurance goodwill – what we would happily pay to purchase an insurance operation producing float of similar quality – to be far in excess of its historic carrying value. The value of our float is one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value.


So if you believe like I do that overtime that Berkshire's float is costless (or better) over time due to their proven obsessive underwriting discipline, one can be bold and look at valuation statically and modify the book value as follows.

Book value on 12/31/2012:   187.6  B
Float                                 :      73.1
Insurance Goodwill            :  -   15.5
                                         --------------
Net adjusted BV                      245.2         (1.3 x stated book value)


Then of course you have to add X amount for the understated goodwill (think Sees Candy) of the wholly owned companies. and you obtain perhaps 1.5 to 1.6 times stated book which incidentally was how the market was  traditionally valuing Berkshire ;

No wonder Buffett buys back at 1.2 of book.

Title: Re: Buffett letter?
Post by: Kiltacular on March 03, 2013, 08:30:05 PM
philassor,

Good points.  And, the funny part is that, for example, he tells you to subtract the goodwill for the insurance business -- as you have. 

But then, you can find something -- like the 2010 report -- where he says that GEICO is on the books for only $1.4 billion of "goodwill" but really you could easily say that it should be on the books for more than $14 billion over carrying value...if you marked it up to what he thinks it's worth. (And, that was two years ago.)

Or, this year, he says Marmon is worth more than $4 billion more than it's on the books for. 

God knows what he thinks BNSF's value is over Berkshire's carrying value.  Whatever it currently is, the spread widens by the day if Buffett is to be believed. 

Anyway, good comments.
Title: Re: Buffett letter?
Post by: racemize on March 04, 2013, 08:54:41 AM
Incidentally, if you are booking for dinner at Gorat's or Piccolos during Berkshire weekend, Piccolos is taking reservations now, whereas Gorat's only starts taking them from April 1st.  I've got my table booked at Piccolos already!  Cheers!

Hey Sanjeev,
Is the reservation for Saturday or Sunday night ?

Sunday.  Buffett shows up at Piccolos on Sunday around 7:30-8:30pm.  He's usually at Gorat's on Sunday around 6-6:30pm, but Gorat's is broken up into three rooms, so you don't know where you will be seated.  Piccolos is really one big massive room for the most part, so it's likely you will get to see him.  Cheers!

Wait, he goes to both of them on Sunday?--does he do anything on Saturday night?
Title: Re: Buffett letter?
Post by: longinvestor on March 06, 2013, 07:24:06 AM
Embedded in many of the annual letters lies a central investing theme BRK has followed: Be the lowest cost/unit producer in whatever business you are in. This is the key ingredient to the moat like quality all of his investments. From Walmart/Costco to BNI to the Utilities to Geico and even the BRK HQ! The moat gets deeper as BRK ploughs more and more capital into the business to entrench the cost/unit advantage in ways that no one else can duplicate. Going by Munger/Buffett's recent statements about Wind/Solar energy likely getting "10X" what they invested in 2011-12, at $ 50B to 100B of capital to be invested over the coming years, this has got to be the one with the most attractive cost/unit differentiator for BRK. It would surely be an interesting question for them to answer at the meeting.
Title: Re: Buffett letter?
Post by: bargainman on March 06, 2013, 07:33:33 AM
There's also the built in advantage of their AAA/AA credit rating.  A friend worked for Clayton homes, and he said they could basically access credit at insanely low rates since they were part of BRK.  Their competitors had no such advantage.
Title: Re: Buffett letter?
Post by: jay21 on March 06, 2013, 07:38:44 AM
There's also the built in advantage of their AAA/AA credit rating.  A friend worked for Clayton homes, and he said they could basically access credit at insanely low rates since they were part of BRK.  Their competitors had no such advantage.

From what I remember, BRK issues the debt to get the low rate.  They then add 100 basis points for Clayton to use the funds.
Title: Re: Buffett letter?
Post by: ourkid8 on March 06, 2013, 07:43:30 AM
You are correct and this is a great system to provide businesses with the compeititive advantage.  I just hope Fairfax strives to achive the AAA credit rating to help all their current and future subs have this wonderful competitive advantage.

S

There's also the built in advantage of their AAA/AA credit rating.  A friend worked for Clayton homes, and he said they could basically access credit at insanely low rates since they were part of BRK.  Their competitors had no such advantage.

From what I remember, BRK issues the debt to get the low rate.  They then add 100 basis points for Clayton to use the funds.
Title: Re: Buffett letter?
Post by: longinvestor on March 06, 2013, 08:00:34 AM
You are correct and this is a great system to provide businesses with the compeititive advantage.  I just hope Fairfax strives to achive the AAA credit rating to help all their current and future subs have this wonderful competitive advantage.

[/quote]

I keep reading on this board how Fairfax has better risk/reward than BRK. FFH is very early in owning operating businesses. BRK has a 15-20 year headstart. BRK is already there, FFH hopes to get there. There is another thing, businesses come seeking to become part of the BRK family, this is only in the dreams of others with capital. Even post-Buffett, if the ownership culture is retained, this will likely continue. The powerful combination of permanent capital access & "Leave management alone" are the anti-thesis of today. Just go and ask any business owner who sold to PE on how they feel seeing what happened to their business post-sale!

Title: Re: Buffett letter?
Post by: SouthernYankee on March 06, 2013, 09:19:49 AM
Quote from: bargainman on Today at 07:33:33 AM
There's also the built in advantage of their AAA/AA credit rating.  A friend worked for Clayton homes, and he said they could basically access credit at insanely low rates since they were part of BRK.  Their competitors had no such advantage.

From what I remember, BRK issues the debt to get the low rate.  They then add 100 basis points for Clayton to use the funds.


-I believe BRK was able to buy Clayton Homes at a reasonable price (much lower than their shareholders wanted) because of the situation where Clayton could not get financing on its own. They were just like any other company in that industry, weak. With Berkshire behind them, though, their positive attributes showed more clearly.
Title: Re: Buffett letter?
Post by: valueinvesting101 on March 06, 2013, 02:12:42 PM
Embedded in many of the annual letters lies a central investing theme BRK has followed: Be the lowest cost/unit producer in whatever business you are in. This is the key ingredient to the moat like quality all of his investments. From Walmart/Costco to BNI to the Utilities to Geico and even the BRK HQ! The moat gets deeper as BRK ploughs more and more capital into the business to entrench the cost/unit advantage in ways that no one else can duplicate. Going by Munger/Buffett's recent statements about Wind/Solar energy likely getting "10X" what they invested in 2011-12, at $ 50B to 100B of capital to be invested over the coming years, this has got to be the one with the most attractive cost/unit differentiator for BRK. It would surely be an interesting question for them to answer at the meeting.

Where did they make that statement?
Title: Re: Buffett letter?
Post by: redskin on March 06, 2013, 02:26:33 PM
Embedded in many of the annual letters lies a central investing theme BRK has followed: Be the lowest cost/unit producer in whatever business you are in. This is the key ingredient to the moat like quality all of his investments. From Walmart/Costco to BNI to the Utilities to Geico and even the BRK HQ! The moat gets deeper as BRK ploughs more and more capital into the business to entrench the cost/unit advantage in ways that no one else can duplicate. Going by Munger/Buffett's recent statements about Wind/Solar energy likely getting "10X" what they invested in 2011-12, at $ 50B to 100B of capital to be invested over the coming years, this has got to be the one with the most attractive cost/unit differentiator for BRK. It would surely be an interesting question for them to answer at the meeting.

Where did they make that statement?

During the annual meeting last year, Buffett said he could see Berkshire allocating $100 billion to the utility over the next decade.  I don't think it was specifically wind/solar.
Title: Re: Buffett letter?
Post by: jay21 on March 07, 2013, 07:38:00 AM
Quote from: bargainman on Today at 07:33:33 AM
There's also the built in advantage of their AAA/AA credit rating.  A friend worked for Clayton homes, and he said they could basically access credit at insanely low rates since they were part of BRK.  Their competitors had no such advantage.

From what I remember, BRK issues the debt to get the low rate.  They then add 100 basis points for Clayton to use the funds.


-I believe BRK was able to buy Clayton Homes at a reasonable price (much lower than their shareholders wanted) because of the situation where Clayton could not get financing on its own. They were just like any other company in that industry, weak. With Berkshire behind them, though, their positive attributes showed more clearly.

I can't recall if that is true or not, but I think that subprime lenders do a lot better when backed by a capital allocator entity like BRK.  Another example is LUK and Fairfax backing ACF.  When companies are locked out of a debt market, that's when you want to be making loans. Can't wait to see what LUK and JEF do.
Title: Re: Buffett letter?
Post by: longinvestor on March 07, 2013, 10:18:42 AM
Embedded in many of the annual letters lies a central investing theme BRK has followed: Be the lowest cost/unit producer in whatever business you are in. This is the key ingredient to the moat like quality all of his investments. From Walmart/Costco to BNI to the Utilities to Geico and even the BRK HQ! The moat gets deeper as BRK ploughs more and more capital into the business to entrench the cost/unit advantage in ways that no one else can duplicate. Going by Munger/Buffett's recent statements about Wind/Solar energy likely getting "10X" what they invested in 2011-12, at $ 50B to 100B of capital to be invested over the coming years, this has got to be the one with the most attractive cost/unit differentiator for BRK. It would surely be an interesting question for them to answer at the meeting.

Where did they make that statement?

Trying to find the link, actually I remember it was Munger who said they like renewable energy a lot. He said the costs are high now but certain to keep going down over time, so it will be a good investment. He compared renewables to Ethanol which he called "dumb" because it takes more energy to get less out.

I distinctly remember the 10x quote but cannot put my hands on it. I will keep looking.

Title: Re: Buffett letter?
Post by: Liberty on March 07, 2013, 11:20:31 AM
Trying to find the link, actually I remember it was Munger who said they like renewable energy a lot. He said the costs are high now but certain to keep going down over time, so it will be a good investment. He compared renewables to Ethanol which he called "dumb" because it takes more energy to get less out.

I distinctly remember the 10x quote but cannot put my hands on it. I will keep looking.

MidAmerican has made huge investments in solar and wind power.
Title: Re: Buffett letter?
Post by: longinvestor on March 07, 2013, 12:26:09 PM
Trying to find the link, actually I remember it was Munger who said they like renewable energy a lot. He said the costs are high now but certain to keep going down over time, so it will be a good investment. He compared renewables to Ethanol which he called "dumb" because it takes more energy to get less out.

I distinctly remember the 10x quote but cannot put my hands on it. I will keep looking.

MidAmerican has made huge investments in solar and wind power.
Yes, about $8B thus far. The discussion is over the related statement of them investing 10x that amount over the next decade.
Title: Re: Buffett letter?
Post by: longinvestor on March 10, 2013, 08:09:42 AM
Reading the letter again, something else that stands out is how quickly Combs/Weschler's kitty is growing. In the letter, Warren talks about increasing their money to $5B each and since the letter was published, that number now stands at $6B each (announced in the CNBC interview). At this rate they will have all of it pretty soon! It must be quite an experience for these two coming from their prior careers!
It must be amusing for Todd/Ted to hear their boss come up to them saying "Good job, and oh, here is another Billion" ;D. Berkshire is the only place in the world where this can possibly happen! Warren seems to have settled with these two (no more 3rd and 4th investment lead). Wonder who else was considered for this job?

One thing I rather like is that Ted/Todd have not appeared in the press at all. I hope this is no accident and they never talk publicly. The CEO can do the talking. Surely there are lots of people who would like to get into their heads right now. That will be a huge distraction.
Title: Re: Buffett letter?
Post by: LC on March 10, 2013, 09:12:12 AM
One thing I rather like is that Ted/Todd have not appeared in the press at all. I hope this is no accident and they never talk publicly. The CEO can do the talking. Surely there are lots of people who would like to get into their heads right now. That will be a huge distraction.
All the while, of course, Mr. Buffett has been ALL OVER the press!

It reminds me of what White Sox coach Ozzie Guillen would do for his team. Ozzie was such a controversial public figure that all the attention was on his antics and outbusts rather than scrutinizing the performance of his team!
Title: Re: Buffett letter?
Post by: ericd1 on March 13, 2013, 07:13:34 PM
Is there a way to determine what Ted/Todd picks are? 

Compare previous 13-Fs?

Title: Re: Buffett letter?
Post by: ragu on March 18, 2013, 12:23:17 AM
Wonder who else was considered for this job?

My understanding is that none of the 4 mentioned in the 2007 letter (http://www.berkshirehathaway.com/letters/2007ltr.pdf) is currently in the running.

As for who it was, there is plenty of evidence to suggest that Li Lu of Himalaya Capital (http://www.himalayacapital.com/) was one of the 4. Don't know who the other candidates might have been.

Best,
Ragu
Title: Re: Buffett letter?
Post by: ragu on March 18, 2013, 01:22:27 AM
Good points.  And, the funny part is that, for example, he tells you to subtract the goodwill for the insurance business -- as you have. 

But then, you can find something -- like the 2010 report -- where he says that GEICO is on the books for only $1.4 billion of "goodwill" but really you could easily say that it should be on the books for more than $14 billion over carrying value...if you marked it up to what he thinks it's worth. (And, that was two years ago.)

Kiltacular,

The subtraction of goodwill is not inconsistent with Buffett's idea that the insurance businesses are worth more than they are carried for on Berkshire's books.

Goodwill (for the insurance businesses) = Price Berkshire was willing to pay for those businesses' float-generation capabilities

If you adjust book to reflect the economic value of float, then you must necessarily subtract goodwill so that you don't end up double-counting the value of the float.

Best,
Ragu
Title: Re: Buffett letter?
Post by: Palantir on March 18, 2013, 01:55:56 PM
Is there a way to determine what Ted/Todd picks are? 

Compare previous 13-Fs?

It seems the smaller buys tend to be Ted or Todd's. I believe Todd tends to flip positions more quickly than Ted.
Title: Re: Buffett letter?
Post by: Yours Truly on March 18, 2013, 02:35:29 PM
Is there a way to determine what Ted/Todd picks are? 

Compare previous 13-Fs?

It seems the smaller buys tend to be Ted or Todd's. I believe Todd tends to flip positions more quickly than Ted.

Ted takes concentrated positions (DVA, DTV, LMCA)... and I believe Todd specializes moreso on financial companies
Title: Re: Buffett letter?
Post by: compoundinglife on March 18, 2013, 03:29:37 PM
Is there a way to determine what Ted/Todd picks are? 

Compare previous 13-Fs?

The easiest way (for me at least) is to watch/read the WEB interviews. People ask him why he bought Intel or GM and he will mention that they were not his purchases. This used to happen all the time with Lou's portfolio, BAC was a Lou position that people always asked Buffett about.

AFAIK these are the current holdings that WEB's picks. Anyone see any errors:

WFC
KO
IBM
PG
WMT
PSX
MCO
WPO
COST
MDLZ(kraft spin off)
KRFT
GCI
GE
USB
PSX(cop spin off)
COP
JNJ

Title: Re: Buffett letter?
Post by: jeffmori7 on March 18, 2013, 03:43:18 PM
Is there a way to determine what Ted/Todd picks are? 

Compare previous 13-Fs?

The easiest way (for me at least) is to watch/read the WEB interviews. People ask him why he bought Intel or GM and he will mention that they were not his purchases. This used to happen all the time with Lou's portfolio, BAC was a Lou position that people always asked Buffett about.

AFAIK these are the current holdings that WEB's picks. Anyone see any errors:

WFC
KO
IBM
PG
WMT
PSX
MCO
WPO
COST
MDLZ(kraft spin off)
KRFT
GCI
GE
USB
PSX(cop spin off)
COP
JNJ

You just omited American Express, his fourth holding :)
Title: Re: Buffett letter?
Post by: compoundinglife on March 18, 2013, 03:45:32 PM
Is there a way to determine what Ted/Todd picks are? 

Compare previous 13-Fs?

The easiest way (for me at least) is to watch/read the WEB interviews. People ask him why he bought Intel or GM and he will mention that they were not his purchases. This used to happen all the time with Lou's portfolio, BAC was a Lou position that people always asked Buffett about.

AFAIK these are the current holdings that WEB's picks. Anyone see any errors:

WFC
KO
IBM
PG
WMT
PSX
MCO
WPO
COST
MDLZ(kraft spin off)
KRFT
GCI
GE
USB
PSX(cop spin off)
COP
JNJ

You just omited American Express, his fourth holding :)

Duh! Cut and paste error :)
Title: Re: Buffett letter?
Post by: jeffmori7 on March 18, 2013, 03:49:50 PM
I would think that both pharma Glaxo and Sanofi are Buffett holdings too, but maybe I am wrong on those ones.
Title: Re: Buffett letter?
Post by: finetrader on March 18, 2013, 03:51:58 PM
As an idea stealer from other respected investors, I feel like Ted, Todd, BB, and maybe Pabrai are the only one I can steal idea from with a good level of confidence simply because they run concentrated portfolio. Watsa would fit in but then we all know in what type of (controversial  to say the least) company he gets into...

Ex: I could take an idea from Tepper but then he would have only 2-3% invest in.
Title: Re: Buffett letter?
Post by: compoundinglife on March 18, 2013, 03:52:54 PM
I would think that both pharma Glaxo and Sanofi are Buffett holdings too, but maybe I am wrong on those ones.

Yeah looks like it. GSK goes back to 2007:

http://www.dataroma.com/m/hist/hist.php?f=brk&s=GSK

and SNY going back to 2006:

http://www.dataroma.com/m/hist/hist.php?f=brk&s=SNY
Title: Re: Buffett letter?
Post by: jay21 on March 18, 2013, 06:09:15 PM

The easiest way (for me at least) is to watch/read the WEB interviews. People ask him why he bought Intel or GM and he will mention that they were not his purchases. This used to happen all the time with Lou's portfolio, BAC was a Lou position that people always asked Buffett about.

AFAIK these are the current holdings that WEB's picks. Anyone see any errors:

WFC
KO
IBM
PG
WMT
PSX
MCO
WPO
COST
MDLZ(kraft spin off)
KRFT
GCI
GE
USB
PSX(cop spin off)
COP
JNJ

Going off memory: MTB, USG, LEE, Media General, Verisk Analytics

Phillips 66 was dumped by Buffet I believe, and then Tedd and Tod both picked it up.
Title: Re: Buffett letter?
Post by: Kiltacular on March 18, 2013, 07:23:32 PM
Quote
Kiltacular,

The subtraction of goodwill is not inconsistent with Buffett's idea that the insurance businesses are worth more than they are carried for on Berkshire's books.

Goodwill (for the insurance businesses) = Price Berkshire was willing to pay for those businesses' float-generation capabilities

If you adjust book to reflect the economic value of float, then you must necessarily subtract goodwill so that you don't end up double-counting the value of the float.

Best,
Ragu

Hi Ragu,

Sometimes these types of conversations are difficult online.  With that said, I DO NOT think it is inconsistent with Buffett's commentary / explanation to subtract goodwill for the insurance businesses.

I was pointing out that it is VERY conservative if you believe Buffett when he explains that there is a lot of "economic goodwill" for the insurance companies -- at least w/r/t GEICO -- that IS NOT on Berkshire's consolidated balance sheet.

The goodwill that is on Berkshire's balance sheet related to the insurance companies is -- from memory -- mostly related to the purchase of General Re.  The goodwill represents the portion of the purchase price in excess of what can be allocated to the purchased assets once those assets that are indentifiable are written up to fair value.

What Buffett explained about GEICO in the letter I referenced was that there is a huge amount of "goodwill" that is not on Berkshire's balance sheet but would be if Berkshire "rebought" GEICO now (well, in 2010).

Subtracting the goodwill related to the insurance companies that is on Berkshire's balance sheet is very, very conservative if you believe Buffett about GEICO. And, GEICO's "economic goodwill" (what would be balance sheet goodwill if Berkshire rebought GEICO today on the same basis that it bought it when it did) is likely more related to GEICO's ability to produce enormous underwriting profits on premium volume than it is related to GEICO's ability to produce float.  Though, that is likely not true for the Gen Re purchase -- which was for the float (very long-tailed) -- and less for the underwriting profits.

Again, this is wordy and likely worthless.  The point is simply that subtracting the goodwill that is on the balance is very, very conservative IF you believe Buffett about GEICO.

My 2 cents.
Title: Re: Buffett letter?
Post by: ragu on March 18, 2013, 08:37:10 PM
The point is simply that subtracting the goodwill that is on the balance is very, very conservative IF you believe Buffett about GEICO.

Kiltacular,

IMO, this has very little to do with conservatism and all to do with assigning a value to Berkshire's float. If you assign a value to Berkshire's float and adjust Berkshire's BV upwards accordingly, then you must subtract goodwill.

Why? Because they represent the same thing i.e. the value of the float, only at different points of time (goodwill: at the time of acquisition, estimate of the value of float on the books: current).

It's the estimation of the value of the float that will take care of the discrepancy between goodwill on the books and current economic value. If the estimate is reasonable, then that number will be larger, likely significantly larger, than the goodwill on the books. 

Best,
Ragu
 
Title: Re: Buffett letter?
Post by: Kiltacular on March 18, 2013, 09:27:29 PM
Quote
IMO, this has very little to do with conservatism and all to do with assigning a value to Berkshire's float. If you assign a value to Berkshire's float and adjust Berkshire's BV upwards accordingly, then you must subtract goodwill.

Why? Because they represent the same thing i.e. the value of the float, only at different points of time (goodwill: at the time of acquisition, estimate of the value of float on the books: current).

It's the estimation of the value of the float that will take care of the discrepancy between goodwill on the books and current economic value. If the estimate is reasonable, then that number will be larger, likely significantly larger, than the goodwill on the books.

Hi Ragu,

I see how you're looking at it -- well explained.  But, what you say is true if Berkshire simply always writes a combined ratio of 100.  No underwriting losses but also, no underwriting profits.

But, I would add, again, that in the case of GEICO, the discrepancy you describe is not just attributable to GEICO's float. 

So, while I would agree with you that if we're just talking about valuing Berkshire's float, you are correct, I was adding the idea in my original comment that, even if you subtract the goodwill on the books associated with the insurance companies, it isn't insane to think that this is conservative (and I'll amend that with) if you consider that the value of GEICO [if not the other insurance operations] is not just its existing float and its future float but also its ability to create massive underwriting profits.

So, if you assume that GEICO will produce large and growing underwriting profits for a long time and that the rest of Berkshire's insurance operations will write at breakeven, I would still argue that you are not double-counting if you write up Berkshire's books for the unrecorded value of GEICO's goodwill even if you subtract the rest of the goodwill associated with the insurance operations that are recorded on Berkshire's books (as Buffett suggests should be done in this year's letter).

Does this make any sense?  I may still be double counting it but I don't think I am if the conditions I describe are met.

Title: Re: Buffett letter?
Post by: ragu on March 19, 2013, 05:45:48 AM
Kiltacular,

Firstly, thank you for the kind words.


[...]even if you subtract the goodwill on the books associated with the insurance companies, it isn't insane to think that this is conservative (and I'll amend that with) if you consider that the value of GEICO [if not the other insurance operations] is not just its existing float and its future float but also its ability to create massive underwriting profits.

Setting aside the question of whether it is appropriate (or even useful) to add a separate measure of value for GEICO's u/w profits,  I'd suggest that any measure of said value is completely independent of the goodwill paid in acquiring GEICO, because these two measures aren't like for like.

Quote from: Kiltacular
Does this make any sense?

My understanding is that you believe that adding back an estimate for the value of float still causes the insurance operations to be undervalued because u/w profits are essentially being ignored. Buffett disagrees with the notion that u/w profits ought to be capitalized, although he seems to ignore both float and deferred taxes entirely when coming up with a value for the insurance operations.

From the 2008 letter (http://www.berkshirehathaway.com/letters/2008ltr.pdf) (in the section titled 'Yardsticks'):

Quote
Berkshire has two major areas of value. The first is our investments: stocks, bonds and cash equivalents. At yearend those totaled $122 billion (not counting the investments held by our finance and utility operations, which we assign to our second bucket of value). About $58.5 billion of that total is funded by our insurance float.

Berkshire’s second component of value is earnings that come from sources other than investments and insurance. These earnings are delivered by our 67 non-insurance companies, itemized on page 96. We exclude our insurance earnings from this calculation because the value of our insurance operation comes from the investable funds it generates, and we have already included this factor in our first bucket.
(emphasis supplied)

Quote from: Kiltacular
I may still be double counting it but I don't think I am if the conditions I describe are met.

I believe you are. If you'd really like to value u/w profits, then you'd need an estimate of what normalized u/w profits over an entire cycle might be and then capitalize them appropriately.

Best,
Ragu
Title: Re: Buffett letter?
Post by: Yours Truly on March 19, 2013, 08:59:03 AM
As an idea stealer from other respected investors, I feel like Ted, Todd, BB, and maybe Pabrai are the only one I can steal idea from with a good level of confidence simply because they run concentrated portfolio. Watsa would fit in but then we all know in what type of (controversial  to say the least) company he gets into...

Ex: I could take an idea from Tepper but then he would have only 2-3% invest in.

Tepper relies a lot on credit/bonds, and his stocks are a fraction of his overall portfolio, similar to how Klarman runs his.. so I wouldn't put too much weight into it

On the notion of stealing, its best to steal from managers that exhibit high concentration and low turnover such as Sequoia Fund, ESL, BB, Lou Simpson, Chuck Akre, Wedgewood Partners, Weitz value and of course Pabrai/Weschler
Title: Re: Buffett letter?
Post by: finetrader on March 19, 2013, 09:08:51 AM
Quote
On the notion of stealing, its best to steal from managers that exhibit high concentration and low turnover such as Sequoia Fund, ESL, BB, Lou Simpson, Chuck Akre, Wedgewood Partners, Weitz value and of course Pabrai/Weschler

Agree.
thanks for mentioning other managers.
Title: Re: Buffett letter?
Post by: compoundinglife on March 19, 2013, 09:38:53 AM
Quote
On the notion of stealing, its best to steal from managers that exhibit high concentration and low turnover such as Sequoia Fund, ESL, BB, Lou Simpson, Chuck Akre, Wedgewood Partners, Weitz value and of course Pabrai/Weschler

Agree.
thanks for mentioning other managers.

One other thing to think about is that (at least in my opinion) someone like Tepper could have hedges or paired trades that might not be obvious, so following him into a long position might not mirror what he is actually doing, where as some of the others mentioned are usually just long their best ideas. I generally try to keep apprised of what my favorite managers are doing, try to figure out their thesis and then wait to see if the price goes below their cost basis.
Title: Re: Buffett letter?
Post by: Kiltacular on March 19, 2013, 09:48:28 AM
EDIT:

I erased my response because after thinking about it for a few minutes, what Ragu is saying is much more correct that what I was saying.

I was double counting.  My example: Using GEICO's book value excludes all of GEICO's float.  If we include all of GEICO's float, then there is not too much "economic goodwill" not included on Berkshire's balance sheet.

Ragu...thanks for your patience.
Title: Re: Buffett letter?
Post by: ragu on March 19, 2013, 07:32:25 PM
If we include all of GEICO's float, then there is not too much "economic goodwill" not included on Berkshire's balance sheet.

Zigackly.

Quote from: Kiltacular
Ragu...thanks for your patience.

Not at all. Buffett is so rational that is always worthwhile thinking about what he says. Even more so, when it seems odd at first glance.

Best,
Ragu