Spekulatius

If the flow from emigrants from China dries up, good authentic Chinese food will be harder and harder to find. There is just no way 2nd or 3rd generation emigrants from China are going to work their but off to run a Chinese restaurant.

I don’t think that LAACZ is comparable to UHAL. LAACZ is simple self storage and real estate play that generate good cash distributions and some organic growth with little leverage. It’s straightforward and low risk Limited partnership. UHAL is owner Operator like LAACZ and is much higher levered, because most of the self storage buildout is financed by debt. Contrary to LAACZ, they aren’t minority shareholder friendly, don’t pay a meaningful dividend and no buybacks, but I do give them them are not actively trying to screw minors shareholdrs either. I have difficulty putting a value on their self storage operation and how much value is created here and as I mentioned before, it’s like a snake that is still munching a big meal and it will take about 2-3 years if pot. Worse looking financials before the cash flow hopefully comes out. That’s a long time to wait even for patient shareholders. I have added and subtracted to my shareholding opportunistically (last sale was ~$380) and I think there is decent, but not great value here. My conviction in LAACZ (to which I added recently) is much higher than in UHAL and my weighing reflects that. UHAL may be interesting in 2 years or so, when the self storage either works out or not. By that time, the cash flow should be visible and hopefully the debt load will be manageable. I think they will another $2.0-2.5B investment in Self storage to build out the properties they have acquired.

I like Gabelli’s involvement since he is smart like a fox and has a tremendous eye for value. I almost always find a value angle in his holdings, even if it isn’t apparently on first sight. With the low liquidity of this stock, how did he manage to acquire such a large position? FWIW, I have a few hundred shares only, but I am super stingy and bought only when it hit ~$34 recently. I also owned some during the Q4 meltdown but sold for a quick gain. Quite frankly, I was hoping for some deeper selloff into the $30 range ::).

Why to buy this vs DFS or COF? Both are cheap, but gave lower ROA, but also less risk. I do think the market is pricing in lower ROI ( from increased competition) and higher loan losses from a weakening economy.

I am going though Markopolos short report - there were a few things I noticed: 1) The last actuary test for the insurance co was done last November, before Fuld became CEO. It is likely that.p GE in the insurance teach in in March 2019 then claimed the adjustment was close zero as higher losses were compensated for with higher interest rates. Without higher discount rates resulting from higher interest rates, the adjustment would have been $1.9B. The way interest rates likely are going, I think this discount rate will get dialed down again. 2) I am curious about this difference between statutory and GAAP reserved. If the books indeed get aligned around the statutory assumptions, the GE indeed will take a significant hit against equity. 3) I don’t see what he sees with respect to BHGE accounting treatment. Looks to me that GE May indeed be short on cash. It all depends on aircraft engines becoming more cash flow positive. If not, I see some sort of a deal with Berkshire and we know how they work :-).

I agree they the manufacturing they went to China won’t come back. Vietnam is a joke, because their economy is running hot already and it’s basically a Chinese colony economically. I do think that Mexico could be a major beneficiary, since it is a friendly state. The biggest thing about China is theft of IP, by means of forced Jv’s which are basically forced IP transfer. Just concentrating on the IP issue, getting Europe, Canada and Japan behind it would have been a way smarter way to conduct, with much less risk, imo. Interesting side note - Trump talks about “fair trade” now, not “free trade”. He is a neo mercantilist.

Time to revisit, as the price has come down again. I rebought some just today and last week when it dropped to $340. My quick numbers - they own 38.2M sqft of self storage now Growth as follows +5.3M sqft (2019) +3.7M sqft (2018) +3.4M sqft (2017) +3.6M sqft (2016) +2.1M sqft (2015) $390M storage revenue (2019) They have purchased land and are building 10.9M more sqft of self storage at the present time and mentioned that they slowed down acquisitions of new properties and then have permits for ~3M sqft more. last year, they spent $1.09B in Capex on Self storage alone and it looks like based on the pipeline, that there are going to be at least 2 more Capex heavy years. It’s kind of crazy. I. Read some CC transcripts and it is clear they are talking down their own business and couldn’t care less about the share price. Make of it what you will. They added almost $2B in equity and $2B in debt since 2015. Shares are flat since. Either it was overpriced than it is underpriced now.

Awesome post. It gives us a great idea what BHE is worth right now. 9-10% return forever is a great deal and I think the longevity is what WEB is after in this case. A lot of business die over time or need to reinvent themselves, which sometimes works and something it does not. BHE probably doesn’t need to reinvent itself for the next 50 years.

I hope everyone had a great summer. Time for a meetup again ?

Yeah, interesting that the Triffen dilemma is brought up. I heard about it, it never looked up what it means., until now. The US$ can’t be reserve currency with the US running a trade surplus at the same time. The US needs to export US$, or cease to bet the reserve currency of choice , presumable this can be achieved via debasing it. I knew that a reserve currency tends to be overvalued (the GBP in the 19 century had this issue) which is really the same thing. https://en.m.wikipedia.org/wiki/Triffin_dilemma

The secondary market for US debt exists, it’s the Eurodollar market. The US Fed has no control over it. Like it or not, the US is the main reserve currency. That pretty much guarantees a negative trade deficit in my opinion.

Some people like their thuna with a bit dolphin meat mixed in. Jerky chicken is great. I had some persistent coldcaller a while ago who wanted to drum up some funding for animal rights. Nothing really wrong with this, but I hate persistent cold calls. She asked me if I liked animals or not. I told her, it depend on how they taste like. That was the last cold call I got from her.

Even if you spin off the subs , the discount will persist, because they are limited partners and don’t control their destiny (the GP BAM does). To eliminate the discount you would also have to eliminate the cash stream to the GP. In this case, the GP would ask for compensation in more LP units, just like IDR were eliminated in certain midstream LP’s (MPLX, PSPX). The GP/LP structure is worse for the LP from a governance structure compare to a c-Corp or self managed REIT and deserves to trade at a discount.

I don’t think that a good idea right now though. Financial leverage is cheap and plentiful right now (it may change, but if the debt laddered well, it’s shouldn’t become a problem), but operational leverage probably will stay - considering that we are probably about to encounter slower growth or even a recession, the former might do much better than the latter financial model.

The valuation is OK, but it doesn’t exactly take an advanced valuation method to determine that BRKB is undervalued. Even just looking at the chart gives you an idea. Traditionally, BRKB stock prices hasn’t always moved its the intrinsic value as ai see it, there wer periods, when the stock price stalled, while the IV increased. Typically, those periods lasted about 2 years. As I see it, they were from 2010-2012 ($70/share), 2014-2016 ($130) and 2018-???? ($200). simply put, since 2018 BRK has been building up “stored energy” in terms of earnings power, float, and cash (which will eventually be deployed) which at some point will lead to a rising stock price. On a side note, Wilson has a funny typo in his slide - “Fort Know”

Living near Earth will make you shoot blanks. Tin foil hats doesn’t work, those in the know wear u-metal body suits.

Sauna is great, regardless of electricity effects or not. FWIW, the magnetic field half a meter away of a wire with 100Amps of current is roughly equivalent to the magnetic field of the earth.

BRKB, MSG, WMB, FOX ( adds) and a starter in UNVR.

Got to admit that it is fun to watch a “presidential meltdown”. Will pop a beer tonight and turn on Fox News.

Thanks for four work cigarbutt. It takes 10x more work to refute BS than to produce it. (Brandolini‘s law). That’s how BS survives.

^ Texas needs another one or two elections cycles to turn blue. We would be better off, if Trump just goes golfing for the remainder of his presidency.

LOL. Sounds like Trump overdoses his Adderrall ( or whatever he is taking) today. Saw a sign today at a neighbors lawn: “Any functioning grown up 2020”. It’s a tall order though.

Powell hasn’t mastered the art of Greenspan doublespeak to say nothing , but phrase it in a way that everyone can take away whatever they like. However given what we know, why would we even care what he says?

So what does screwing up mean in your opinion? I guess it’s the choice between no cut and a 0.25% cut. My odds would be 50/50. I honestly think it doesn’t matter.

^ Counterargument is that cable / internet isn’t really cheaper in NA population centers. It’s the regulatory framework that makes the difference. Korea has KT, which is heavily regulated.