Author Topic: 30 Apr live streaming on web of Berkshire 2016 Annual Shareholder's Meeting  (Read 3029 times)


mrpercentage

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Thank you. I was just skimming his letter for Kinder Morgan. I will print it an read it in full later. I can only do so much heavy reading on the screen. You read his letters?

Reader

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not yet. is there a link to the letter? the news online seems to suggest that warren buffett was not the one who bought it - his investment manager did.

Heckler

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hang on a minute.  brk.a is $200k a share??  how is it reasonably possible for anyone to be a shareholder?

mrpercentage

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not yet. is there a link to the letter? the news online seems to suggest that warren buffett was not the one who bought it - his investment manager did.

I don't care if is manager bought it. Berkshire did. They all have good judgement. No one is perfect but Berkshire has pretty good judgement period

http://www.berkshirehathaway.com/letters/2015ltr.pdf

mrpercentage

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hang on a minute.  brk.a is $200k a share??  how is it reasonably possible for anyone to be a shareholder?

Most buy BRK.B

Also I think Warren likes to show exactly how much it has appreciated. Thats why its 200K a share. It didn't start that way


BTW, he has a 3 hour interview tomorrow on Squakbox CNBC
« Last Edit: February 28, 2016, 07:38:54 PM by mrpercentage »

Woody Viet

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Looking at the annual report it's really interesting to see that their equity, fixed incomes and cash holdings are worth approximately $160k per share. That means at today's price you're buying the rest of the business (a mix of utilities, small industrials and retailers, leasing firms), and it's earnings of $12.3k per share for only $32k per share.

If you believe that the companies they own will mirror the performance of the market as a whole (baring in mind they've done quite a bit better over the past decade), then that's a big discount on an index fund.

Using data from here (http://www.multpl.com/):

        S&P500, BRK, % discount
P/E:     21.49, 12.8, 40.5%
P/B:       2.62, 1.63, 37.8%

I adjusted Berkshire's book value down to take into account that they record the value of their financial holdings at market prices rather than the underlying companies measures of book value. This increases the P/B reported for them here but I think it more accurately reflects the value of the company. You could also remove their net liability of insurance float as it's been consistently profitable since it's inception
« Last Edit: February 29, 2016, 06:27:15 AM by Woody Viet »

Scandium

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If you believe that the companies they own will mirror the performance of the market as a whole (baring in mind they've done quite a bit better over the past decade), then that's a big discount on an index fund.

That's a bit of a stretch, as most of their purchases are traditional, value and/or low-growth firms. No tech stocks for one thing (except IBM which is struggling). This worked well in dot-com crash, but not so well since. I have no idea which is the better strategy in the future, but this makes the S&P a poor comparison. A better might perhaps be some sort of value index.

(ok, I do have an opinion; I think certain tech firms will be extremely important in the future, only I'm not sure which. So it'd rather buy the larger market, than the narrow slice of traditional industry that BRK dabble in)

Woody Viet

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If you believe that the companies they own will mirror the performance of the market as a whole (baring in mind they've done quite a bit better over the past decade), then that's a big discount on an index fund.

That's a bit of a stretch, as most of their purchases are traditional, value and/or low-growth firms. No tech stocks for one thing (except IBM which is struggling). This worked well in dot-com crash, but not so well since. I have no idea which is the better strategy in the future, but this makes the S&P a poor comparison. A better might perhaps be some sort of value index.

(ok, I do have an opinion; I think certain tech firms will be extremely important in the future, only I'm not sure which. So it'd rather buy the larger market, than the narrow slice of traditional industry that BRK dabble in)

Yes I'd say that's a fair critique. That is the idea that you can't tell which few companies will be extremely important in the future.

To me this poses another question: will those few successful firms make up for the multitudes that will fail or are you better off waiting until these companies become established and investing then? In the meantime you can own more traditional industries that have already been consolidated. I assume that the companies belonging to the traditional industries will do just as well, perhaps even better than winner-take-all super competitive industries. An assumption we differ on for sure.

I read a great study a while ago on how the longer a company has been listed for, the higher it's expected returns are but I can't seem to find it. Will post it later if it shows up.

mrpercentage

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Berk is currently being suppressed by a bunch of financial ETF's. The financials are killed so Berk is lower than it should be. The same people that say his portfolio is outdated will be jumping from ledges if we do go into a recession and their high multiples go dot com. I wish no one ill but am tired of the rhetoric. Coke is not going out of business. WellsFargo is not going out of business. His railroad is the only one profitable. IBM is not going out of business and they have the chance for explosive growth with projects like Watson.

Damn I like Warren. I like diet cherry cola by Big K too. I like hershey's, and I like trolling financial forums. Maybe we should all follow his advice and buy something we really like and hold it for 20 years. I do like Berkshire. Im sure it will do alright when he is gone. He had a mentor that was great before him. A few have been mentored by Warren for decades. Berk will do just fine, and long live the Oracle.

Woody Viet

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Berk is currently being suppressed by a bunch of financial ETF's. The financials are killed so Berk is lower than it should be. The same people that say his portfolio is outdated will be jumping from ledges if we do go into a recession and their high multiples go dot com. I wish no one ill but am tired of the rhetoric. Coke is not going out of business. WellsFargo is not going out of business. His railroad is the only one profitable. IBM is not going out of business and they have the chance for explosive growth with projects like Watson.

Damn I like Warren. I like diet cherry cola by Big K too. I like hershey's, and I like trolling financial forums. Maybe we should all follow his advice and buy something we really like and hold it for 20 years. I do like Berkshire. Im sure it will do alright when he is gone. He had a mentor that was great before him. A few have been mentored by Warren for decades. Berk will do just fine, and long live the Oracle.

People always forget that Berkshire are a lot more than value investors. The companies they've bought have as a group grown substantially over the years. They are high quality businesses pumping out tons of cash, and when you buy these high return to asset businesses each new dollar you ply back into them gets that return on assets. A dollar invested in a business with a marginal return on assets of 20% is worth twice that of a dollar invested in a business with a marginal return on assets of 10%. That goes for depreciation as well.

Just look at See's candy. They've owned it for something like 30 years and today it earns more every year than the price they purchased it for. In terms of growth it's earnings have increased in real terms by something like 4.5% (compared to the market at around 2%). Or GEICO, which has increased its market share from 3 to 11.4% over the past 20 years, that's 7%. Not bad results I think