Dan Braem

Dan Braem
Contributor since: 2008
Sinatra - probably a smart move. I started my position today...will wait to buy more at prices near where you suggested.
Well, I didn't buy a shirt today, but I bought some stock.
Apple is doing much bigger buybacks than Google. It would probably be "fair" to add that back. All in all, doesn't matter.
As is often the case, the buybacks were a gigantic waste.
Wasn't the MSFT offer higher than Yahoo's share price....today?
Sorry for typo above (worse/worst) - SA wouldn't let me go back and edit.
If one were to play the Eddie Lampert SHLD game we always read about (separate and spin the assets) - a way to look at yahoo is to separate the BABA stake, YHOO Japan stake, Cash/Real Estate, and Yahoo Core. Hard to believe this is all worth $30/share.
If I was Apple - I might buy this disaster - with the intent of spitting out the core. Then I would acquire more BABA w/ my giant offshore cash hoard.
Yahoo....is there a company in history with a worst collection of CEO's over a 10 year period?
Remember when the CEO rejected the MSFT takeover? Now this one stuck w/ a giant asset and no idea what to do.
Hard to believe.
Good point. More of a legend than several investors who get a lot more press. Truth be told, I still own 1 share b/c it is such a remarkable story and will buy back in if the price is right.
Curious on thesis of DJCO. It's not in a great business, and Munger can't last forever. Don't believe it is cheap on a NBV basis anymore.
Podcasts in general are excellent. Not much I would change.
For future ideas w/ episodes:
1) Guess speakers - other great investors, CEO's, writers, etc.
2) Best 10 bagger ideas
3) Your ideas on portfolio concentration
Netwall - agree 100%. I guess my comments were around Buffett - if he was Netwall or Dan Braem he would likely put his money elsewhere. But my guess is Berkshire will do fine over the long run with the $10B+ investment in IBM. Again, his measuring stick isn't a quarter or a year but potentially forever.
Buffett's time horizon for IBM within Berkshire is likely 10 - 20 years, maybe forever. I doubt he is concerned with one or two year results.
With no increase in IBM's dividend payouts, BRK shareholders will receive $420M in dividends from IBM indefinitely.
Revenues in 2010 were $138B.
Revenues in 2014 were $194B.
Growing revenue by $50B in 4 years or so - pretty impressive. Of course, its not organic growth by growth by acquisition.
I disagree that the investment opportunities are limited. They are still huge. As I wrote somewhere else, BRK is a private investment bank whose clients (subsidiaries) are in:
Transportation, Utilities, Insurance, Retail, Manufacturing, Chemicals, Food, Car dealerships, RE, etc.
Each one of these is a platform that can be added to. For example, seems like Buffett would like to add PSX into the fold. As ludicrous as it sounds, maybe someday they could fold in a Boeing.
Paying dividends or buying back stock reduces the capital needed for these future large bolt ons. I imagine all of these platforms as mini-conglomerates all under the BRK umbrella.
Maybe someday a new CEO will spin them all out but IMO the investment bank (capital/insurance companies) are the engine that make all these viable but we'll see.
Revenues (per my broker F/S) in 2010 were $138B.
Revenues in 2014 were $194B.
Growing revenue by $50B in 4 years or so - pretty impressive. Of course, its not organic growth by growth by acquisition.
I disagree that the investment opportunities are limited. They are still huge. As I wrote somewhere else, BRK is a private investment bank whose clients (subsidiaries) are in:
Transportation
Utilities
Insurance
Retail
Manufacturing
Chemicals
Food
Car dealerships
RE
Etc.
Each one of these is a platform that can be added to. For example, seems like Buffett would like to add PSX into the fold. As ludicrous as it sounds, maybe someday they could fold in a Boeing.
Paying dividends or buying back stock reduces the capital needed for these future large bolt ons. I imagine all of these platforms as mini-conglomerates all under the BRK umbrella. Maybe someday a new CEO will spin them all out but IMO the investment bank (capital/insurance companies) are the engine that make all these viable but we'll see.
BRK had $138B in sales in 2010
It had $194B in 2014.
In 2016, it may have $220B.
Its earnings growth rate with clearly not grow - but it is a company that will grow through acquisition. And the normalized earnings 10 years from now will likely be $40B per year or more.
It is a $170B market cap with $6B in FCF the most recent fiscal year. That doesn't scream to me.
Disney - tough to grow the FCF to a point where it is a good value in my opinion.
Berkshire is so big but it will get bigger. At near $300B market cap it is fairly cheap.
Berkshire is now a giant platform company.
Utilities - they can just add geography by buying other utilities.
Lubrizol - chemical company
Car Dealerships
Real Estate
Insurance
Transportation/Railroads
Manufacturing
Retail
Food
Investments (partially under Insurance)
They can/have/will take excess earnings (soon to be $20B, probably in 5 years $30B) and buy other businesses. They can bolt on a business to any of the above and more. It is truly amazing. The scale will be gigantic.
What happens when they generate $40B per year like Apple. They could buy a Boeing someday, a MMM, something ridiculous. May take 20 years, but they will add and add and add and grow and grow and grow.
Thanks. Again, I am not as informed on Sears but I will suggest that if the best case plays out over time, my guess is that you can still pick up Sears lower from here. Again, I'm not well informed here, but guessing the next earnings report will send the stock yet lower.
But appreciate your comments.
Gfinocchietti-it seems you are bullish. I am ignorant to all the facts (left Sears a while ago). Can you explain your overview on Sears. If there is value left, how will shareholders bemefit? How will shareholders get value for the remaining real estate? Another spin? JV's.
My past fear was that this is a dying business and Sears will never be cash flow positive. Would be interested in your bull case if I am not misinterpreting your position.
Agreed. Great article. Sad story.
The IRS is more clever than that. Apple would pay tax at 35% (less foreign tax credits) on the money spent buying shares w/ offshore funds.
Under most tax authorities of various governments, they would tax the FMV of the intellectual property used in those products if created in such country.
Unless Congress allows tax-free (or little tax) repatriation, repatriation of all cash is nearly impossible. The company certifies that foreign earnings are permanently reinvested I'm guessing. So not worth the discussion.
Why buyback so many shares? The war chest is such an incredible asset - why destroy?
Apple could use the foreign cash to buy content - NFL streaming rights - movie rights - music rights. It could buy a 10% stake in Berkshire Hathaway. I could buy 10% of Pfizer. It could buy Sony - keep the content - spin out the junk (i.e. hardware business). Through the history of time - how many tech companies sustain on their original technology? A share buyback, to me, is a bet that your company's business can sustain itself forever. A rare event. Investing in other businesses is a much better path to sustainability and is much preferable to long term owners.
I don't disagree (quite frankly ignorant on the facts). Just wanted to see the bull case of the $20B laid out as it seems unlikely.
I am interested in the learning more about the $20B bankruptcy protected legal entity. It would great to see a simple summary (e.g. if the parent goes bankrupt, the Bermuda sub could be distributed to shareholders separately, etc.). I haven't researched this at all but I'm unclear as to how the parent could enter bankruptcy yet shareholders get access to the insurance company. I also find it hard to believe that the book value of this entity is $20B+. In my opinion, Sears will no doubt go bankrupt. So the insurance company or the intangible company will be the make or break asset for shareholders. Again, its clear I am not up-to-date on this anymore so any narrative appreciated.
I think it impossible for EL to convert Sears to an investment vehicle at this point. Sears will eventually die and there is no cash flow.
Opportunity is lost - could have happened several years ago but they spent a ton on buybacks. Big mistake.
This is a little tricky. As an investor, I think it makes little sense to worry about Iwatch being a dud or worrying about the sales for this Christmas. It is much more important as to how this will evolve over the long term (i.e. are wearables the future and if so, will Apple be a big player).
No one is ever smart enough to know the future ten years out w/ technology, so it is an educated guess IMO. I just think that the answer to the questions I posed is yes and yes.
The $200B in cash is amazing. The Apple TV is nothing right now in terms of EPS but it will be interesting to see what that product/service brings in the next 10 years. Same with the watch.
Music, Apps, Pay Services, as well as the old PC business - a lot to be excited about.
I'm still not a fan of the buybacks - not at all. I'd prefer, and just my opinion, they make bigger acquisitions. GoPro is really cheap (2 weeks of Apple cash flow?), Netflix would be interesting, and Twitter is dirt cheap. I guess the giant challenge is how big a company can one team manage?
2 great companies. MKL does have the advantage of growing from a much smaller base.
Clearly, it is more difficult for BRK to grow as fast as MKL because of natural smaller investment opportunities to move the needle.
So, yes - I think MKL as a company will grow much faster.
That being said, every asset has a value. BRK seems cheaper to me based on the current stock prices.
But I own both.
Some good and bad comments IMO. Here's what I like:
Ipad Pro is another tool. Various users will pick from laptops, Ipads, watches, Imacs, phones, ITV's, computers, etc. - to meet their needs.
In general, for the non-geek - does anyone feel that the operating system developed by Microsoft is better than Apple's? Email, Web, Browsing content, etc.... to me its not even close. I still believe Microsoft is only alive b/c of Excel, Word and Powerpoint.