zarley

No worries. I took a look at the 1997 letter (the earliest letter linked from the BRK website) and that same language is in there near the end. Makes me wonder when he started putting that in there and what motivated him to add that reminder/warning. http://www.wescofinancial.com/cm1997.pdf

Yeah, he's included something like that in every letter I've read. I don't take it for much beyond face value.

Buffett was on CNBC this morning. Here are links to the transcripts (with videos): Part 1: http://www.cnbc.com/id/29595047 Part 2: http://www.cnbc.com/id/29595412 Part 3: http://www.cnbc.com/id/29595537 Part 4: http://www.cnbc.com/id/29595993 Part 5: http://www.cnbc.com/id/29596414 Part 6: http://www.cnbc.com/id/29596605 Part 7: http://www.cnbc.com/id/29596955 Snailslug quoted a couple of interesting points. Obviously, there are many more. On Derivatives: Emphasis mine. I think this puts Buffett in the "regulated derivatives market" camp.

Conference Call transcript from Seeking Alpha: http://seekingalpha.com/article/121766-fairfax-financial-holdings-q4-2008-earnings-call-transcript?source=yahoo&page=1 I can understand why people are put-off by all the discussion of why underwriting was bad in 2008. A CR of 110 is just not very good, and saying that if all this bad stuff we insured against didn't happen and if exchange rates didn't fluctuate, our CR would have been in the mid 90s is a little weak. Yes, it was an unusual year, but at some point you need to stop talking about all the hows and whys and just continue to work on improving that part of the business. On the bright side, Odyssey's numbers look reasonably good (CR of 103.5 without adjusting for catastrophe losses). zarley

Interesting. Thanks for the link to the spreadsheet.

The intrinsivaluator: http://creativeacademics.com/finance/IV.html Conservative estimate = $117k per share. IMO, that's an excellent starting point for a simple assessment of BRK IV. Your collection of IV estimates might be better if they had source links, or something to back them up.

From the shareholder letter: and a little further down . . . This portion of the derivatives discussion made me wonder just how much money Buffett and Munger saved Berkshire by exiting General Re's derivatives business when they did. Buffett notes that the costs at the time were $400 million in losses, and that was in a functioning market for derivatives. How many billions in losses would have been incurred had they not taken the actions that they did, and instead had to deal with these contracts in the market of 2008? In addition to being a cautionary tale about the risks of derivatives, it's a reminder that the decisions they make today will be paying off for Berkshire many years down the road. At the time they were exiting the General Re derivatives business, booking $400 million in losses looked like a giant mistake on Buffett's part. From today's perspective that $400 million loss looks a lot better; it saved Berkshire billions. zarley

As I write this, Wesco (WSC) is trading at $233. Market cap is now around 1.66 billion and BV per share is probably north of $2 billion, or $280 per share. The last reported book value is $2.6 billion, but it's the Q3 number. I just lopped off $600 million to account for unrealized investment losses in Q4 and Q1 2009. I've never given a lot of thought to buying Wesco, but these prices are making me take a look. Thoughts? Edit: I just reread Wesco's earnings release and in it, Munger accounts for the decline in investments. BV is basically $2 billion given the declines in the equity markets. So, my guess was reasonably close, and WSC still looks pretty cheap. http://www.wescofinancial.com/1208ER.pdf zarley

Ah, I see. Thanks. That's referring to payments on CDS, not the market puts. Maybe a hairsplitting distinction, but I was simply thinking of the puts and was confused about the possibility of making current payouts on those. Paying small amounts on CDS makes more sense. I'm looking forward to WEB's discussion of the derivatives contracts in the annual letter. I'll be enjoying it with my coffee in the morning. ;)

Arbitragr, I haven't read anything about those loss payments you mention. Do you have a link to something describing them, or giving them context? As of the Nov. 7th quarterly report, BRK hadn't needed to post any collateral for the puts. zarley

Not sure if this was the only official discussion of it, but he mentioned it in the shareholder letter.

My god. The only thing worse than that little gem is the comments that follow it. It's days like this I feel like I'm living in an alternate universe. Who are these people who feel compelled to comment on that, but clearly have no clue about BRK or Buffett? My alternate universe also has major media outlets that wouldn't publish that little piece of tripe or employ someone who is so willing to post that kind of nonsense. :P

Link to Q4 conference call transcript at seeking alpha: http://seekingalpha.com/article/121766-fairfax-financial-holdings-q4-2008-earnings-call-transcript

So, BRK.b is down close to 10% today and around 25% just this month. I bought a little bit yesterday at $2,400 and am considering buying more if things go much lower. But, I'm trying to figure out what is happening and why are people dumping? Any theories? * Fear that Wells Fargo and GE may get nationalized or otherwise go to zero. * Indiscriminate dumping of financials and insurers One observation from the TMF board is that the A/B conversion ratio is well outside of normal and that an 'A' holder could sell, buy back 30 'B' and pocket close to $6,000 in cash. Obviously it looks like the selling is forced/panicky and that the conversion spread is unsustainable. Who's selling? Why? Can it really keep going down, given the already huge discount to value? Other thoughts?

Link to Marketwire announcement: http://biz.yahoo.com/iw/090219/0475920.html

Agreed. Great letter. I'm not done reading it, but it is insightful and entertaining -- a great combo. This quote from Lincoln I've never heard before: An excellent thought on being deliberate and prepared. Thanks for sharing.

Thanks Grenville, that's the one I was thinking of.

I've been watching the prices today . . . wondering what's up. $2,500 for the B's seems pretty crazy. I agree about the low $70k range on the A's being close to a buyback price. Recall Munger's actions in Nov when it got this low. I believe he sold some A's to his family members around these prices, in a sort of pre-emptive distribution of his BRK holdings.

Long term -- FFH. But over a shorter period the ORH preferreds may do a bit better. If called at the end of 2010 ORH-A will return over 60% from current prices. FFH would need to get over $500 to provide that kind of return. That seems a little unlikely in the next two years, although it's certainly possible. Given a 5-10 year time frame though and the earning potential of FFH is much more attractive. I own both, but my position in FFH is 2x my position in ORH-A. FWIW zarley

Apparently a couple guys put on a ukulele concert and donated the proceeds to WEB (cash in a brown paper bag). They also got an interesting interview with him, discussing many topics, but focusing mainly on his favorite stringed instrument. http://www.boingboing.net/2009/02/10/interview-with-warre.html

Several attempts to access the ORH-A thread in the Fairfax forum have given me this error: Actually, it's all the threads in that forum. Anyone else having this problem? Zarley

I thought the portrayal in the book really humanized him. I think a lot of people tend to think of Warren the investment god and stop there. The personal parts of the book really show that he is an imperfect human being just like the rest of us. I think Schroeder could have really done a hatchet job if she wanted to, but instead, portrayed his personal flaws in a mostly non-judgemental way.

Not sure the original link is working. Here's a different link: http://www.swissre.com/pws/media%20centre/news/news_releases_2009/preliminary_and_unaudited_2008_results.html This little tidbit was tucked in there as well: Someone at the TMF BRK board suggested that BRK received a 2billion premium for this meaning BRK basically reinvested that premium plus 1 billion of it's own at 12%. Anyone here have some insight about that? Seems like a pretty good deal. Link to presentation slides: http://www.swissre.com/resources/170346804cebd7cd962ab798e2cf17c9-FY2008_preliminary_results_FINAL.pdf

I agree with StubbleJumper, and voted to keep the current format. It will take a little time to know how and where the discussions go, but what you have is a great start. If we find certain sections are unused, you can always fold them into another relevant section, or put everything into the general discussion heading. I think in time the activity of the board will reveal if we need more or less subforums, but the current structure seems right to me for now. FWIW zarley

Currently offering close to 12% in dividend yield and has the potential to be called by Odyssey for $25 after October 2010. Best case scenario, you get ~$4 in dividends and a ~$7 capital gain by the end of 2010 if they call it asap (64% gain in ~two years). Worst case scenario, you get a 12% dividend indefinitely from a well run and well capitalized company, which is majority owned by Fairfax. It won't be a homerun, but I see it as a very safe bet that offers a good to very good return. Here's a link to the issue prospectus: http://www.sec.gov/Archives/edgar/data/1137048/000090956705001607/t18226e424b5.htm