zarley

onyx1, where did you find the info on the preferred. The few links I've read don't mention it or have any detail.

Looks like 3G Capital -- http://www.3g-capital.com/ is not the small value oriented hedge fund 3G Capital -- http://www.3gcapital.com/. Linking up with a Swiss billionaire makes more sense than a couple young value managers.

Hehe. I actually lightened up a little bit on WDC yesterday. Still my second biggest position, but now more in line with what I see as a "normal" size. The volatility is crazy on this stock, so I wouldn't be surprised to get another opportunity to buy in the mid to low 30's. Between BRK and WDC, it's been a pretty good couple months.

I was thinking something along these lines as well. What is the benefit of formally starting a fund vs. becoming a RIA and managing accounts? I've read that the Interactive Brokers platform for RIAs makes it very easy to run a collection of accunts in a unified way that really simplifies things. I think Ben Hacker may have linked to some of that info here in the past.

I think you have your logic backwards here. Seth Klarman, one of this generations best investors, and his team of managers/analysts is able to find 20-30 stocks to invest in . . . I think a retail investor working part time would be nuts to think they could match that. I might know 20 decent companies well enough to own them, but I don't own them because the right price hasn't presented its self. I own 5 stocks in my brokerage account because I can't follow 100 stocks closely and I feel comfortable with the safety and future prospects of each. If I'm wrong my returns will be volatile, but I can accept that. If you buy the stocks in any of Graham screens (net-nets, Enterprising investor, Conservative Investor) you WILL beat the market, guaranteed. The problem is that most of them are companies with <50M capitalization. A retail investor can buy them, but not somebody like Klarman. I see your point. I personally tend not to use screens of that sort; I'm uncomfortable buying baskets of stocks in that way. That sort of mechanical screening can work, but I'm not sure it's fair to compare that to what Klarman does.

I think you have your logic backwards here. Seth Klarman, one of this generations best investors, and his team of managers/analysts is able to find 20-30 stocks to invest in . . . I think a retail investor working part time would be nuts to think they could match that. I might know 20 decent companies well enough to own them, but I don't own them because the right price hasn't presented its self. I own 5 stocks in my brokerage account because I can't follow 100 stocks closely and I feel comfortable with the safety and future prospects of each. If I'm wrong my returns will be volatile, but I can accept that.

There has been a little bit of this debate (how much adjusting from reported BV is warranted for purposes of determining a more precise estimate of the current buyback price) on the TMF BRK board. Since I'm lazy, I don't view the buyback price as a floor, and roughly right is good enough for me, I land in the 'just use reported BV' camp. Your adjustments would be reductions to overall BV and the buyback price, so they're a bit more conservative and arguably more correct. But, I'd guess the net effect is pretty close to negligible (although I haven't done the math).

Although, you seem to mix two separate issues. 1) is it appropriate to include non-controlling interest in the shareholder BV calculation? and 2) how should one adjust the reported Q3 equity to approach a current BV estimate? My $89.40 BRK.b buyback price reflects a no on #1 and does no adjustment to the reported Q3 numbers. It may be appropriate to make adjustments as you noted to get to a more accurate "current" BV. But, I haven't done that. straight from the Q3 10Q: shareholder equity = $184,602 million shares outstanding = 1.652 million (A equivalents) BV/A Share = $111,745 Buyback = 1.2 x BV = $134,093 1,500 B shares per A share ==> $89.40

I use the BRK shareholder equity of 184.602B that omits the non-controlling interest line and wind up with a buy-back price of $89.40.

+1 for keepass in combination with dropbox. Although, I'd add a suggestion to use multilevel authentication with both a master password and a keyfile. Of course you should never have your key file in any public cloud type service. Plus, be very careful about your email accounts (e.g., use the gmail authenticator). A hacker won't need to guess or crack your passwords if they get control of your email account and can use it to request password changes to your other accounts. A unique password change account in gmail that you don't use for anything but password change requests is something worth considering (although I haven't gone that far yet).

Ravi (aka Rationalwalk) on the TMF BRK board linked to this little post about BH: http://www.inelegantinvestor.com/2012/12/14/jockey-biglari-and-his-recalcitrant-horse-a-late-scratch-special-meeting-postponed-again-at-last-minute/ In a nutshell: No matter how smart the guy is, or how good an investor he is, or how rich he'll very likely make himself with BH, I'm pretty sure I wouldn't want to be his 'partner' in much of anything.

Amen. I didn't get much past the first paragraph. He's trying way too hard to sound smart. That almost never works.

The wishful thinking and willful denial of reality in this election and to a certain extent this thread is baffling to me. A little reading of Nate Silver (538) and Sam Wang (Princeton) was about all you needed to know where the race was. Back to investing discussion then?

Both good points. All in all, I'm just being cautious in my expectations. If BRK sees $1-2+ billion in losses from Sandy and doesn't see much impact to BV, so much the better. Quite a testament to the BRK model that a storm like Sandy might have little noticeable impact on BRK's balance sheet.

I'm not sure how WEB came up with 110% of BV as the buyback marker. I guess I'd characterize it as a figure that WEB sees as currently (and most likely in the future) well below a reasonable estimate of IV. It sets a clear signal to current owners, and perhaps future managers, as to what WEB sees as a safe and sensible place for BRK to retire shares (instead of finding other things to buy). Your second point about the potential growth in the divergence of BV and IV is true, if the acquired operating companies are purchased at prices below IV. If WEB or someone else goes on a binge buying businesses at prices above IV, then the difference between IV and BV will likely shrink, not grow. Although, I guess you could take a bunch of impairment charges, reducing BV. In that case, even if the IV:BV ratio doesn't change, they both go down together.

I suppose it's not a given that BV must be lower. But, given the magnitude of the sandy related damages, I'd be surprised if BV didn't drop in Q4. Honestly, it's just a mental asterisk I've put on the BV and buyback numbers.

Ah, thanks for the reminder dcollon; I managed to forget BRK was reporting today. At first glance, it looks like a nice quarter -- buyback price is now close to $123,000 / A and $82 / B. I'm sure Q4 will bring those back down a bit, due to Sandy, but Q3 was good.

Thanks for sharing. I own a bit of GOODX in a retirement account. It's a good proxy for my own approach/positions.

Wow, that looks fantastic. Won't be able to get to reading it in full for a little bit, but thanks for sharing.

I tend not to think of BRK in terms of what is an appropriate BV multiple. Using a modified version of the two column approach, my current IV estimate for BRK is around $165,000 per A share. As a multiple of BV that is somewhere near 1.5x.

Is Jon Bon Jovi a billionaire? :o That seems to be implied, but that can't be right. Can it? Seriously. Bon Jovi billionaire?

I agree. But that does raise the question of how/why did they build a significant position and then change course. I haven't looked at the timing, but perhaps related to the IBM purchase? It's not a red flag for me at this point, but there has been more turnover in the portfolio this past year than we're used to. It may settle down once Combs and Wechler have been around for a while. Or, it may be the new normal given the new guys are recent hedge fund managers and less inclined to hold indefinitely.

Does Lifetime Member mean I can never leave? :D

The interview is from last year, so whatever he said about hedges is likely out of date. A good interview, of course, so it's worth taking a look at if you missed it the first time.

Valuation aside, the parade of share lock-up expirations through the end of the year will probably keep FB down for a while. I may start looking at it if it's in the mid-low teens in late December (near the tail-end of the lock-up schedule). Although, with the imbalanced share structure and a management team that seems to resent going/being public and has repeatedly expressed the interest in user experience over profitability, it may not be worth owning at any price.