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browndlee

browndlee
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  • Berkshire Hathaway: The Last Bargain [View article]
    What you are saying, in short, is that all the float can be claimed as book value because it will never be paid out. Don't buy it and I doubt Warren would either. If you note the authors calculations above he counts ALL the investments as value to the shareholders and only subtracts holding company debt against it. Not a dime of liabilities for any future claims. Even if that's true, the value of this float will only be realized over decades as the possible liabilities are resolved. To assume today, in 2014, that the full value can be claimed in book value for shareholders is a hell of a stretch.
    Aug 3 06:20 PM | Likes Like |Link to Comment
  • Berkshire Hathaway: The Last Bargain [View article]
    Very well done. The only item I would have attempted to include in some fashion is the reserves necessary for the insurance companies. Only a portion of the investments can be considered available for shareholders. I know some will say that with a combined ratio under 100 that's not needed for BRK. However, there are future liabilities there.
    Jul 31 09:23 AM | 1 Like Like |Link to Comment
  • Retirement Strategy: Sorry Warren, But You're A Cheapskate [View article]
    I don't know, you seem to be making a buck or two off of BH articles on Seeking Alpha.
    May 15 09:50 AM | 6 Likes Like |Link to Comment
  • Buffett Or Icahn: Invest In Berkshire Hathaway Or Icahn Enterprises [View article]
    Comparing the two is comparing apples and oranges. At this stage, given it's size, most of BRBK's value comes from it's existing portfolio of companies. Given that Buffett rarely sells large positions (or whole companies) the value he can add yearly through capital allocation is falling. Ichan, and his LP is all about the transactions. When Ichan is gone, his partnership is worth it's liquidation value unless you believe his son can do what he's done. Lot's of potential downside in IEP when Ichan is gone. Possibly more upside in the short term.
    Mar 20 10:43 AM | 1 Like Like |Link to Comment
  • Berkshire Hathaway's Pieces Are Worth More Than The Whole [View article]
    I hate to wander into the quicksand of financial accounting but I need to point out a problem with your analysis. BRK's stocks are held inside their insurance company balance sheets and are carried at the lower of cost or market with any mark to market gains flowing through on the balance sheet as accumulated other comprehensive income. In other words the relatively high book value for insurance companies includes market gains on their stocks. The very fact BRK's stocks have done well tends to lead to high price to book ratios on those stocks. However, since the insurance companies must include market values for the stocks, all of the gains flow through to increase the book value. If a real estate company had to include all the unrealized appreciation on property owned into it's book value that higher figure would tend to increase book and decrease price to book. But they don't. You are comparing apples to oranges by pulling the market values of stocks out of the insurance companies. I agree comparing to the S&P 500's actual performance to book value gains is a poor method to use. However, for Buffet it maintains almost 50 years of using the same bench mark. I suspect he won't be changing it now.
    Mar 11 04:59 PM | Likes Like |Link to Comment
  • Warren Buffett's Portfolios Don't Reward Investors For The Added Risks [View article]
    The line about 2000-2003 being when Buffet made his reputation jumped out at me as well. Buffet made his reputation from 1955 to 1995. By then the size of Berkshire had made it very difficult to significantly outperform. I first heard his name as a 15 year old when I read Goodman's book Supermoney. He was know on Wall Street at that time as the perhaps the best investor of all time. Unfortunately the general public didn't become aware of him until much later when it had become much more difficult for him to outperform. I still hold BRBK and have for 15 years. But don't expect more than modest outperformance going forward with underperformance in big up years and outperformance in down years.
    Mar 6 09:14 AM | 7 Likes Like |Link to Comment
  • Warren Buffett Should Bet A Billion On Berkshire Hathaway [View article]
    I'll probably toss a bracket in for fun. If a person really wanted to win the billion the best way would be to bribe the starters on all 67 teams. Let's see, 67 times 5= 335 @ a million a piece still leaves a $665 million profit.
    Feb 6 04:38 PM | Likes Like |Link to Comment
  • Warren Buffett Is Wrong About Dividends [View article]
    Buffet has purchased companies that have a high return on capital employed, not a return on equity. And he likes companies that don't require large cap ex to maintain that ROCE. The difference is a company with 90% debt can appear to have a stong return on equity until they have a bad year and go bankrupt. A company with a strong return on capital employed is a company where profitability is high regardless of the capital structure. Then if you can reinvest those high returns at the same high ROCE you have a real growth company. This takes good management and usually strong barriers to entry. MO has a high ROCE but no growth prospects. Companies with a high ROCE that don't require high cap ex but still will allow you to reinvest at that same high ROCE are few and far between but great when you can find them.
    Feb 6 04:30 PM | Likes Like |Link to Comment
  • Warren Buffett Gets Paid To Keep The Lights On At GE [View article]
    This was the worst of the crisis era investments from a financial standpoint for Berkshire. As I recall (might be slightly off) the warrants associated with GE were struck around 22.25 a share. Fairly small gain over 5 years for the risk in September 2008. Of course the preferred dividend was nice at 10%. Fortunately the rest of the crisis era investments paid better.
    Oct 18 09:55 AM | Likes Like |Link to Comment
  • Life After Warren: Will Berkshire Still Get Sweet Deals? [View article]
    Interesting topic for Berkshire holders like me. If Berkshire doesn't begin to pay a dividend then somebody will have to take on Warren's role. If he passed away today that individual would likely have to decide how to reinvest over $250 billion in cash over the next decade. Their decision making will have a more significant impact at Berkshire than at most large US companies that pay out 30-50% of earnings as dividends.
    May 29 02:53 PM | 1 Like Like |Link to Comment
  • Berkshire Hathaway Is Not A Sell [View article]
    One thing not mentioned in this or other articles this weekend is Buffett's measurement method. He compares his book value increase to the S&P 500's total return. He does this to keep the focus on the improvement in the business over time, not the short term stock price. However, if we look at what Berkshire's stock price did last year (it rose to 89.70 from 76.30) it outperformed the S&P 500 again. (17.5% to 16%)
    Mar 4 10:00 AM | 2 Likes Like |Link to Comment
  • Berkshire: What Did Sokol Really Do? [View article]
    As Berkshire becomes larger it's obvious to me that the company should be broken up following Buffetts resignation or death. Only he and Munger really understand all the pieces and few people would have the ability to command the same loyalty. What he has accomplished is amazing, but who has the same skills he has to reinvest the earnings across the world and still create value? I hope his ego doesn't get in the way here by trying to retain a corporate structure certain to fail after his passing at the helm.
    Apr 4 12:48 PM | 2 Likes Like |Link to Comment
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