thefatbaboon

KJP, thanks for the links. I never participate in the politics section and have no interest to do so but obviously here this is about an investment I have, so I found the reaction of the other poster ridiculous. I mean if politics or religion or whatever impact an investment surely it's normal to want to understand? It's like forbidding discussion of tobacco regulation politics on the BAT and MO boards. Or net neutrality politics on the CMCSA and CHTR boards.

Excuse me? I'm a Braves shareholder, have been for many years, from the spin in fact. But I'm not American and have no idea so hence why i asked. Can't you explain it instead of insulting me?

I'm really confused. Everyone in the press says the law is horrific and disenfranchises minorities and blacks. But all i see when i read the bill summary is that there are some changes to the times when one can mail things and when ballots boxes are open and also that absentee voters have to have an ID. I couldn't find anything about blacks or latinos or any other minorities. Cancelling an All Star game seems kind of extreme, surely more obviously worse and discriminatory happenings occur than this in every state and in every year? But I'm no expert and obviously haven't read the whole bill, is there anyone who can explain it to me?

Great interview! thanks

Not sure what review you are linking to either adhital, seems to be an old indian version. Here is the actual app page on amazon, its nearly equal in 5* rating (78%) to Netflix (82%) and Disney (81%). And higher rated than every other video entertainment app on Amazon. https://www.amazon.com/Discovery-Communications-discovery-Stream-Shows/dp/B08F8XQLQZ/ref=pd_rhf_se_p_img_3?_encoding=UTF8&psc=1&refRID=Q2NGK34QP91EJZ5F1BE3

Personally I have been very happy with the app numbers so far. Much much better than i was expecting. To be the top entertainment app after 5 weeks from launch on Google play and the top entertainment app on Amazon, above Netflix, above Disney, above Tubi and HBO! And to still be top ten on iOS. Lets see how month two goes but it looks very promising so far!

I really want to understand the bullish spotify argument better. Please bear with me a bit... I asked what the giant DMPs would do in a world of doubling ARPU for Spotify and your answer is that the Labels push through increases for all DMPs. OK so in this environment where everyone's ARPU doubles isn't Spot still kicking 70% revenues to the labels? I mean if they aren't it kind of begs my original question, ie what do the other DMPs do if the labels accede margin to them. The issue I have is can Spotify's costs for music ever be meaningfully less than Apple, Amazon and Google and if these DMPs want to can't they always pass on music to their customers at cost? I also don't see the comparison to Netflix. Distribution: Netflix had and continues to have 100s of relatively small local distributors: all the worlds cable, copper and cellular companies. On the other hand every Spotify relationship is mediated by Apple and Google, who have competing music products that they can toggle and bundle more or less aggressively. Content: music is regulated, and truly exclusive music is nearly impossible in most major markets. So if a service wants to provide Beatles they can so long as they pay. Spotify just seems like an app joint venture between the labels and the phone duopoly. They get enough of a margin "to taste" but nothing more, step out of line and they'll just get squeezed back into line.

Thanks for the Coho writeup on Spotify it was an interesting read. In the concluding prognosis of a future where Spotify doubles ARPU and has 600m paying subscribers ...he doesn't say what Apple, Amazon and Google will be doing. Does he expect them to be charging 50% of what Spotify charges? If the tech giants who reach every internet connected human alive are happy taking tomorrow what they take today for unlimited music streaming and charging half what Spotify does how many of the projected 600m consumers are going to stick with Spotify? I had another question too but more from the label side of things...like if Spotify tries to change the labels' share from 80% to 50% or whatever we are imagining here...again what if the tech giants simply continue to pay the labels their share as they do currently? Why would the labels not withhold their content from Spotify and trust that all of Spotify users would be able to find one of: Apple, Google or Amazon? Also we never get any discussion of CRB and how the regulations and compulsory licenses work in the USA.

I am reading too much about how firms (and I guess by extension their employees) should be “punished” for share repurchases or dividends. I believe this entirely misses the point and reflects a dangerous misunderstanding of what is going on. 1. This virus while bad is not worth entering a Great Depression for. Indeed it would be better to let it run, implement harsh triage rules for the use of ICUs and kill many of our elderly and infirm and not shut everything if the result is an economic cataclysm. 2. We are a wealthy society with the resources to take a long “holiday” however so that we can deal with this health issue more humanely. 3. As such we should treat it as a health holiday and place everything on hold. No firing, no defaults etc. With the governments paying everyone to not work and stay quietly at home for a number of weeks/months. 4. We absolutely do not want to destroy many important industries and companies and jobs for no good reason. 5. Furthermore we do not want to have the economic survivors emerge from this and spend the next x years delevering and investment freezing because they believe they must prep for zero revenue scenarios. So, let’s not waste time overcomplicating things with who should be supported, who should be punished, diluted, preferred stakes, equity stakes.... All that is nonsense. 6. In conclusion, put an end to recriminations, stop this firing, let’s simply go on a health retreat for the next month or so, everything paid for or guaranteed by government borrowing and come back in a little while when we can easily pay it back when our economic engine is firing on all cylinders.

It's worth noting that Japan has one of if not the oldest population yet have seen pretty good numbers without extreme measures. I'd say the odds are high it's somewhat correlated to smoking. Doesn't the Middle East have really high smoking rates as well? Smoking rate is high in Japan, especially men, between 25% and 30% of the male population.

Good questions, been on my mind too regarding the insurance and reinsurance...while I know no special info I did go back to his 2001 Annual Letter and reread the following: The Economics of Property/Casualty Insurance Our main business ó though we have others of great importance ó is insurance. To understand Berkshire, therefore, it is necessary that you understand how to evaluate an insurance company. The key determinants are: (1) the amount of float that the business generates; (2) its cost; and (3) most critical of all, the long-term outlook for both of these factors. To begin with, float is money we hold but don't own. In an insurance operation, float arises because premiums are received before losses are paid, an interval that sometimes extends over many years. During that time, the insurer invests the money. This pleasant activity typically carries with it a downside: The premiums that an insurer takes in usually do not cover the losses and expenses it eventually must pay. That leaves it running an "underwriting loss," which is the cost of float. An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money. 6 Historically, Berkshire has obtained its float at a very low cost. Indeed, our cost has been less than zero in about half of the years in which weíve operated; that is, weíve actually been paid for holding other peopleís money. Over the last few years, however, our cost has been too high, and in 2001 it was terrible. The table that follows shows (at intervals) the float generated by the various segments of Berkshireís insurance operations since we entered the business 35 years ago upon acquiring National Indemnity Company (whose traditional lines are included in the segment ìOther Primaryî). For the table we have calculated our float ó which we generate in large amounts relative to our premium volume ó by adding net loss reserves, loss adjustment reserves, funds held under reinsurance assumed and unearned premium reserves, and then subtracting insurance- related receivables, prepaid acquisition costs, prepaid taxes and deferred charges applicable to assumed reinsurance. (Got that?) Year GEICO 1967 1977 1987 1997 2,917 1998 3,125 1999 3,444 2000 3,943 2001 4,251 General Re Other Reinsurance Other Primary Total 20 20 131 171 807 1,508 455 7,386 415 22,754 403 25,298 598 27,871 685 35,508 Yearend Float (in $ millions) 40 701 4,014 14,909 4,305 15,166 6,285 15,525 7,805 19,310 11,262 Last year I told you that, barring a mega-catastrophe, our cost of float would probably drop from its 2000 level of 6%. I had in mind natural catastrophes when I said that, but instead we were hit by a man-made catastrophe th on September 11 ñ an event that delivered the insurance industry its largest loss in history. Our float cost therefore came in at a staggering 12.8%. It was our worst year in float cost since 1984, and a result that to a significant degree, as I will explain in the next section, we brought upon ourselves. If no mega-catastrophe occurs, I ñ once again ñ expect the cost of our float to be low in the coming year. We will indeed need a low cost, as will all insurers. Some years back, float costing, say, 4% was tolerable because government bonds yielded twice as much, and stocks prospectively offered still loftier returns. Today, fat returns are nowhere to be found (at least we canít find them) and short-term funds earn less than 2%. Under these conditions, each of our insurance operations, save one, must deliver an underwriting profit if it is to be judged a good business. The exception is our retroactive reinsurance operation (a business we explained in last yearís annual report), which has desirable economics even though it currently hits us with an annual underwriting loss of about $425 million. Principles of Insurance Underwriting When property/casualty companies are judged by their cost of float, very few stack up as satisfactory businesses. And interestingly ñ unlike the situation prevailing in many other industries ñ neither size nor brand name determines an insurerís profitability. Indeed, many of the biggest and best-known companies regularly deliver mediocre results. What counts in this business is underwriting discipline. The winners are those that unfailingly stick to three key principles: 1. They accept only those risks that they are able to properly evaluate (staying within their circle of competence) and that, after they have evaluated all relevant factors including remote loss scenarios, carry the expectancy of profit. These insurers ignore market-share considerations and are sanguine about losing business to competitors that are offering foolish prices or policy conditions. 2. They limit the business they accept in a manner that guarantees they will suffer no aggregation of losses from a single event or from related events that will threaten their solvency. They ceaselessly search for possible correlation among seemingly-unrelated risks. 7 3. They avoid business involving moral risk: No matter what the rate, trying to write good contracts with bad people doesn’t work. While most policyholders and clients are honorable and ethical, doing business with the few exceptions is usually expensive, sometimes extraordinarily so. The events of September 11th made it clear that our implementation of rules 1 and 2 at General Re had been dangerously weak. In setting prices and also in evaluating aggregation risk, we had either overlooked or dismissed the possibility of large-scale terrorism losses. That was a relevant underwriting factor, and we ignored it. In pricing property coverages, for example, we had looked to the past and taken into account only costs we might expect to incur from windstorm, fire, explosion and earthquake. But what will be the largest insured property loss in history (after adding related business-interruption claims) originated from none of these forces. In short, all of us in the industry made a fundamental underwriting mistake by focusing on experience, rather than exposure, thereby assuming a huge terrorism risk for which we received no premium. Experience, of course, is a highly useful starting point in underwriting most coverages. For example, itís important for insurers writing California earthquake policies to know how many quakes in the state during the past century have registered 6.0 or greater on the Richter scale. This information will not tell you the exact probability of a big quake next year, or where in the state it might happen. But the statistic has utility, particularly if you are writing a huge statewide policy, as National Indemnity has done in recent years. At certain times, however, using experience as a guide to pricing is not only useless, but actually dangerous. Late in a bull market, for example, large losses from directors and officers liability insurance (ìD&Oî) are likely to be relatively rare. When stocks are rising, there are a scarcity of targets to sue, and both questionable accounting and management chicanery often go undetected. At that juncture, experience on high-limit D&O may look great. But thatís just when exposure is likely to be exploding, by way of ridiculous public offerings, earnings manipulation, chain-letter-like stock promotions and a potpourri of other unsavory activities. When stocks fall, these sins surface, hammering investors with losses that can run into the hundreds of billions. Juries deciding whether those losses should be borne by small investors or big insurance companies can be expected to hit insurers with verdicts that bear little relation to those delivered in bull-market days. Even one jumbo judgment, moreover, can cause settlement costs in later cases to mushroom. Consequently, the correct rate for D&O ìexcessî (meaning the insurer or reinsurer will pay losses above a high threshold) might well, if based on exposure, be five or more times the premium dictated by experience. Insurers have always found it costly to ignore new exposures. Doing that in the case of terrorism, however, could literally bankrupt the industry. No one knows the probability of a nuclear detonation in a major metropolis this year (or even multiple detonations, given that a terrorist organization able to construct one bomb might not stop there). Nor can anyone, with assurance, assess the probability in this year, or another, of deadly biological or chemical agents being introduced simultaneously (say, through ventilation systems) into multiple office buildings and manufacturing plants. An attack like that would produce astronomical workersí compensation claims. Hereís what we do know: (a) The probability of such mind-boggling disasters, though likely very low at present, is not zero. (b) The probabilities are increasing, in an irregular and immeasurable manner, as knowledge and materials become available to those who wish us ill. Fear may recede with time, but the danger wonít ñ the war against terrorism can never be won. The best the nation can achieve is a long succession of stalemates. There can be no checkmate against hydra-headed foes. © Until now, insurers and reinsurers have blithely assumed the financial consequences from the incalculable risks I have described. (d) Under a ìclose-to-worst-caseî scenario, which could conceivably involve $1 trillion of damage, the insurance industry would be destroyed unless it manages in some manner to dramatically limit its assumption of terrorism risks. Only the U.S. Government has the resources to absorb such a blow. If it is unwilling to do so on a prospective basis, the general citizenry must bear its own risks and count on the Government to come to its rescue after a disaster occurs. 8 Why, you might ask, didnít I recognize the above facts before September 11th? The answer, sadly, is that I did ñ but I didnít convert thought into action. I violated the Noah rule: Predicting rain doesnít count; building arks does. I consequently let Berkshire operate with a dangerous level of risk ñ at General Re in particular. Iím sorry to say that much risk for which we havenít been compensated remains on our books, but it is running off by the day. At Berkshire, it should be noted, we have for some years been willing to assume more risk than any other insurer has knowingly taken on. Thatís still the case. We are perfectly willing to lose $2 billion to $21⁄2 billion in a single event (as we did on September 11th) if we have been paid properly for assuming the risk that caused the loss (which on that occasion we werenít). Indeed, we have a major competitive advantage because of our tolerance for huge losses. Berkshire has massive liquid resources, substantial non-insurance earnings, a favorable tax position and a knowledgeable shareholder constituency willing to accept volatility in earnings. This unique combination enables us to assume risks that far exceed the appetite of even our largest competitors. Over time, insuring these jumbo risks should be profitable, though periodically they will bring on a terrible year. The bottom-line today is that we will write some coverage for terrorist-related losses, including a few non- correlated policies with very large limits. But we will not knowingly expose Berkshire to losses beyond what we can comfortably handle. We will control our total exposure, no matter what the competition does. Also, in his recent interviews with CNBC and Yahoo he has sounded quite calm about the pandemic and I'm pretty sure he said that this kind of thing has been on his and Bill Gates' minds for years.

Does anyone know where i can find data for hospitalization by age cohort? And within hospitalization the split between oxygen and intubation also by age cohort. Thanks

It is worth paying attention over the coming days to the budget in the UK. Boris Johnson has just won a resounding election. The UK does not have the same level of constitutional offsets as USA (president/senate/house) or political confusion and sausage-making as EU. And gilts recently headed into negative territory, oil is weak and sterling has been strong. It is a perfect situation for Boris Johnson to borrow big and spend.

I think gary has a valid question here. Simplistically: Shares outstanding: 21.2m Share price: CAD1373 , USD1028 Market Cap: USD 21.8bn FCF 2019: USD 590m Trailing FCF yield: 2.7% 2019 Maintenance Organic Public g: 2% 2019 Maintenance Organic Private g: 1% 2019 Wgtd Avg Org Growth: 1.6% Assume that that is fair, that it is reasonable to expect a valuation at 2.7%. Assume also an improved organic growth of 2%. And that all FCF is used for acquisitions. How much return does a shareholder want from this business? I would say minimum is 10%, no? So that means the market cap has to add $2.18bn in value this year. and more each year going forward. Existing business: $21.8bn is worth 2% more next year through organic growth: this adds +$430m of market cap value. Still have to find $1.75bn of market cap...and the only way to do that is acquisition. Last year they acquired $688m of new businesses (including deferred payments). Is it reasonable to expect that what they buy is immediately and predictably worth 2.5 times their cost, year after year? I would hate to bet against this business and feel horrible closing a successful and enjoyable long but I think the valuation here requires a real leap of faith. A combination of the following three possibilities would help: 1.) Organic growth (of the key maintenance lines) picks back up to msd. 2.) The acquisition funnel that produced $688m of acquisitions ( about 10% more than in 2018). Ramps up faster without a diminution in quality. 3.) They find a large, one-off value enhancing acquisition.

Thing is though how much of running bond issues or acting as stock transfer agent or partnering on rail car deals ends up as actual revenue on WFC books? WFC had approx $80bn revenue last year so the relevant levels are $8bn, $4bn and $1.6bn. Also, what happens if it is a one-off? Say most years its just fee income and commissions for some deal flow, debt issuance and general banking services and these (guessing) are less than $1.6bn of actual Wells revenue. But every so often Berkshire buys something where Wells is principal owner in something like the Homeservices lending jv mentioned which say Wells is principal owner and therefore all sale amount counts and revenue goes over the $1.6 level. Do you have to modulate down for one year and then can buy back the next year??