Author Topic: Buffett letter?  (Read 27507 times)

beerbaron

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Re: Buffett letter?
« Reply #20 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


Tim Eriksen

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Re: Buffett letter?
« Reply #21 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.

kiwing100

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Re: Buffett letter?
« Reply #22 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.

ap1234

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Re: Buffett letter?
« Reply #23 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??

kiwing100

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Re: Buffett letter?
« Reply #24 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

mankap

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Re: Buffett letter?
« Reply #25 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.

OracleofCarolina

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Re: Buffett letter?
« Reply #26 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

Parsad

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Re: Buffett letter?
« Reply #27 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!
No man is a failure who has friends!

redskin

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Re: Buffett letter?
« Reply #28 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.

bablu

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Re: Buffett letter?
« Reply #29 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 ?