tag:blogger.com,1999:blog-5389144729834496735.post347455894963048658..comments2024-03-17T05:15:55.634-04:00Comments on The Brooklyn Investor: Is Buffett Really Bearish?! Unknownnoreply@blogger.comBlogger22125tag:blogger.com,1999:blog-5389144729834496735.post-79398449092903268322020-09-10T10:19:23.330-04:002020-09-10T10:19:23.330-04:00Hi, I have been more of a JPM person, but WFC is c...Hi, I have been more of a JPM person, but WFC is certainly interesting at this point. I don't own any at the moment, though... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-41939294094354758932020-09-05T11:40:07.057-04:002020-09-05T11:40:07.057-04:00Are you still holding Wells Fargo? I have a big ...Are you still holding Wells Fargo? I have a big slice and have been DRIP-ing the dividends but I. wonder if I'm being too patient and should sell? Thanks. Jeffrey Smith Unknownhttps://www.blogger.com/profile/17278921830804884423noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-16968034583374579652020-08-30T06:06:56.661-04:002020-08-30T06:06:56.661-04:00Very good points and well analyzed. I feel like th...Very good points and well analyzed. I feel like that thesis Buffett´s is just looking for capital intensive businesses to stay rich or however you want to phrase it is more mind reading. Again he says so little and its very cryptic so people read a lot into very few words. He made his largest stock buy ever in Apple which at the time many considered very risky; technology, competition etc. So to me it´s just lack of activity for whatever reason. He is always talking about buying things that go w the American growth machine. There are a bunch he seems to have passed up and don´t really know why. I would rather own a piece of something good to great vs all of something mediocre that some rich guy finally decides to sell.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-65432245953835256742020-08-24T11:54:21.683-04:002020-08-24T11:54:21.683-04:00Oops, I should have said, capital intensive might ...Oops, I should have said, capital intensive might actually be preferable now as long as return on that investment is reasonable. He wants to make BRK succession-proof... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-32404649284460986932020-08-24T11:49:54.568-04:002020-08-24T11:49:54.568-04:00Well, even if float doesn't have a lot of valu...Well, even if float doesn't have a lot of value now, it is valuable when interest rates are not zero. For example, when it was 6%, that was basically 'free' money (of course, nothing is ever really free).<br /><br />As for S&P 500, that's very interesting and makes a lot of sense. But I think for Buffett, it's just a hassle not worth it. He wants to bag an elephant, and he really wants a private deal (or 100% of listed company), and if he has a portfolio, he has to spend time liquidating, and that's a hassle too (even though he has some smart guys that can do that for him). <br /><br />Frankly, this friction between us shareholders and Buffett is probably simply the fact that we want him to make us rich, whereas he just wants to stay rich. Ever since the Gen Re aquisition, he has been sort of acting like he is trying to turn BRK into an endowment that is idiot-proof. That's why he would buy things like BNI, which would never have been a candidate in the old model (too capital intensive). In the endowment era of BRK, capital intensive is fine as long as capital can be reinvested at reasonable rates. In fact, he probably really likes that as it's less work for him, and less of a problem for the next generation; the more the businesses can use up and invest cash and the less comes to Omaha, the capital allocation becomes less of an issue (relatively; it will always be an big issue). <br /><br />Or something like that... <br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-90716637019057421002020-08-24T05:15:38.132-04:002020-08-24T05:15:38.132-04:00Honestly, I don´t know the answer. It is an intere...Honestly, I don´t know the answer. It is an interesting observation. But if the float is worthless or little value why would Buffett be looking at to increase it all the time? Adding more to worthless stuff doesn't seem to rational. Yes if you don´t do anything with the float then it is worthless. That is why it is frustrating he did so little during the sell off or at least buy something he knows like brk. Could have put 20bn into HD and LOW which seems like a safer bet to me than adding to old line real estate brokers who may be obsolete in 10 yrs.<br /><br />Was something so bizarre about the virtual annual meeting. Almost like he was trying to sound and look morose. Maybe they could buy some more lights next time and invest in a zoom account.<br /><br />I do feel like all this soothsaying on Buffett´s comments is kinda deliberate consciously or sub consciously. He talks in code and gives Yoda like responses to most questions. Even super deep and difficult topics he will come back with some 5 word quip. Its like the mystery method on a grand scale. If he told you exactly what he thought in great detail it would seem less interesting. But now everyone has just a taste and has to let their mind wander with fantastical ideas of what is going on in his brain. My guess, not much, just inertia and lack of people coming to him with deals not much else.<br /><br />I really think the should just focus on the s&p 500 and systematically decide which companies they like and add to them during major sell offs. It´s that simple. Find the best 25 best companies in the index they are comfortable with and buy them. They are getting so cute it´s starting to backfire. If Buffett didn´t like PCP enough to buy any shares why would he buy the whole company?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-17378048563678519702020-08-23T19:34:04.220-04:002020-08-23T19:34:04.220-04:00Yes, there are, but it has been suggested in the p...Yes, there are, but it has been suggested in the past that this is not why cash/FI = float. Given Buffett's comments (ready to deploy 'cash'), and this pattern of cash/bonds = float, and his insistence that this is coincidental and not deliberate, it doesn't add up... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-810665295376558692020-08-23T19:31:27.267-04:002020-08-23T19:31:27.267-04:00Yes, this is the point I made a few years ago when...Yes, this is the point I made a few years ago when I first realized this. People said float is equity, or float is better than equity, and people argued to add float to valuation. Made me wonder. Then did a table like this and realized, hey, wait a minute... So I realized float can't be valued as or like equity so it must be discounted (even assuming zero or better cost of float). <br /><br />And now with interest rates at zero, this float is getting pretty close to worthless from a valuation standpoint... kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-46298125392771702202020-08-23T18:11:39.428-04:002020-08-23T18:11:39.428-04:00Simalar to banking and brokerage regulations that ...Simalar to banking and brokerage regulations that limits how firms can invest client money (for ex, brokerages have to invest client money in US government backed securities if not cash), I wonder if there is an insurance regulation effectively forcing BRK to keep its float in cash?Babinhttps://www.blogger.com/profile/04039355877707713998noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-20843397885911176792020-08-23T16:23:56.439-04:002020-08-23T16:23:56.439-04:00This ratio is on the far right of the below table ...<b><i>This ratio is on the far right of the below table labelled, "Liquid / float". Since 1999 or so, it's been remarkably stable at around 1. Someone asked about this at a recent annual meeting and Buffett said there is no relationship. It is a head-scratcher because it seems to match perfectly over time.</i></b><br /><br />This has implications on BRK's valuation if the liquid/float assets equal to 100% of insurance float are really "non-working" capital permanently attached to the insurance business, no?<br /><br />If this is a case of "watch what Buffett actually does" rather than "listen to what Buffett says", then the perennial undervaluation of BRK may not be true. If one removes these non-working assets from the two-column valuation method, wouldn't the usual calculations of intrinsic value suffer as a result? <br /><br />It could be that Mr. Market doesn't undervalue BRK after all and instead, correctly values it - more or less.<br /><br />wabuffo100Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-41178762520433480272020-08-22T13:28:27.798-04:002020-08-22T13:28:27.798-04:00A lot of these general mkt valuation metric are no...A lot of these general mkt valuation metric are not so valid anymore. A lot of these American companies are global companies so measuring against just the us gdp doesn't make much sense. I find it interesting that there are so many theories out there but they never seem to adjust their theories for what the mkt is telling them. We have been hearing about hyperinflation etc for 30 yrs, hasn´t happened. But there is always some reason it will start to happen now. They never say maybe our theory or model is wrong.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-87078687640909400312020-08-22T03:17:02.763-04:002020-08-22T03:17:02.763-04:00The US government was essentially competing agains...The US government was essentially competing against Buffett.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-72586854972740044042020-08-21T17:13:29.912-04:002020-08-21T17:13:29.912-04:00Come on Roy.. Hate the game, dont hate the player,...Come on Roy.. Hate the game, dont hate the player, you want you money you sell your BRK shares but please do not judge Buffett on this minor stuff.<br />Be honest.<br />Anonymoushttps://www.blogger.com/profile/09328368281834111763noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-83027164878137933132020-08-21T16:21:53.439-04:002020-08-21T16:21:53.439-04:00Could be. My point is that his cash has been build...Could be. My point is that his cash has been building up for years. I even argued (a while back) that he doesn't even have all that much cash to put to work as it seems like all that cash backs up float. But that's a separate argument.<br /><br />I'm sure if there is a really great, gigantic 2 foot hurdle available, he would shoot, but that just hasn't been the case for years with all this private equity cash looking for deals. <br /><br />All these indicators show all sorts of stuff, and the markets will go up and down, but I still think if people focus on the names, they will be fine regardless. Value investors did fine after 1999-2000, and they will probably fine in the next correction / bear market.<br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-17569410650693264302020-08-21T16:15:26.188-04:002020-08-21T16:15:26.188-04:00It will be hard to outperform regardless of who ru...It will be hard to outperform regardless of who runs it, just based on size.kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-60492710087767576862020-08-21T15:54:33.289-04:002020-08-21T15:54:33.289-04:00Why in the world do you think the past is the futu...Why in the world do you think the past is the future? We invest in real-time. The past is 100% irrelevant.Alexhttps://www.blogger.com/profile/14492760651132838020noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-13507688506826028982020-08-21T15:07:51.576-04:002020-08-21T15:07:51.576-04:00People were saying the same thing at all the previ...People were saying the same thing at all the previous peaks where we saw overvaluation and Buffett was holding out and not buying things because he didn't see any deals. When market comes down, he will go on a spending spree, just like in prior times. <br /><br />Key with Apple is he bought a strong moat with incredible cash flow at a significant discount, which you definitely can't say with what people are buying now (i.e., Tesla, Amazon). Buffett has outperformed everyone for decades. Incredible how many people are shortsighted, which seems to be fueling what looks just like previous bubbles. Brown Bear Investorhttp://www.brownbearinvestor.comnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-19227664769854167632020-08-21T15:01:58.900-04:002020-08-21T15:01:58.900-04:00Not sure why your analysis on Berkshire's cash...Not sure why your analysis on Berkshire's cash levels as % of investments are so different than Bloomberg's [https://www.bloomberg.com/opinion/articles/2019-08-26/warren-buffett-s-quiet-but-his-philosophy-still-speaks-volumes]? <br /><br />Also, one key metric Berkshire keeps an eye on is US Stock Market Cap to GDP, which is now higher than dot com levels from 1999 (also see Bloomberg chart). <br /><br />He could be strengthening his fortress ahead of the coming storm. Brown Bear Investorhttp://www.brownbearinvestor.comnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-48679826903303023382020-08-21T06:20:23.811-04:002020-08-21T06:20:23.811-04:00Forgot to add that I think Buffett should have a s...Forgot to add that I think Buffett should have a serious conversation with whoever bought the gold miner. Truly horrible business. Look at the 20 year chart of GOLD, price has gone from 250 to 2k and the stock is essentially flat. That is all you need to know about the gold business. I really concerns me that this idea even entered their watch list much less putting $500mm into it. I could give you a list of great 25 s&p 500 companies would have put 500mm into easily during the sell off. My bet its Weshler. He made his career on 2 names; wr grace(where he worked for many yrs and was an asbestos litigation play) and DVA which is essentially a reimbursement scam.<br /><br />The whole T&T experiment is a waste of time and resources. These positions have almost no impact on brk. Put surplus cash in the s&p and have them work on portfolio companies and look for companies to buy. Really does not make sense to me. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-38326319431587862192020-08-21T06:01:51.554-04:002020-08-21T06:01:51.554-04:00Thank you for the thoughtful analysis on BRK. I al...Thank you for the thoughtful analysis on BRK. I always look fwd to your candid and quality research on Brk.<br />I would not go so far as to say Buffett is bearish as he has inertia and lack of action. He bought back stock fairly aggressively near the end of Q2 but bought none at the brk bottom in Q1. I am not saying to blow everything but say putting $5bn to work when brk was crashing and hit 159 would not have risked the franchise and also would have been a good way to put cash to work. <br /><br />He said his phone didn't ring which makes sense given the govt action money in private equity now. I don´t think this will change much in the future. So what is the plan? Is he gonna keep saying the phone isnt ringing. Maybe you don´t want that call, why are they calling you when they can get it cheaper somewhere else(see oxy, pcp, khc). Concerned that there may be a negative selection bias in companies that decide to work w brk. So we are left with subpar deals. I would rather buy good shares of companies at discounts during mkt sell offs than buy bad companies because they decide to sell the whole thing. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-18931534117235282332020-08-21T01:57:47.686-04:002020-08-21T01:57:47.686-04:00My conclusion with Buffett's ever increasing c...<br />My conclusion with Buffett's ever increasing cash pile is that Berkshire is too big so it should return some of this cash to investors.<br /><br />If the recent crash and current economic environment is not enough to for him to spend, then what would it be?<br /><br />His misjudged both WFC and IBM. IBM could be excused, but WFC? People were pointed out the obvious long, long time ago so NOW he sells it?<br /><br />Additionally, is BRK actually safer than S&P500? Its recent failures show otherwise. People point out the Apple investment. That's actually high risk. Significant part of Apple's revenue and growth come from a certain market that can be turned off with a flick of a switch. Every passing day increases the chance that this would happen.<br /><br />As long as Buffett is at the helm and BRK does not return money to its investors, it's not going to outperform the S&P500.<br /><br /><br /><br />Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-49839934526818484242020-08-21T01:52:34.869-04:002020-08-21T01:52:34.869-04:00My conclusion with Buffett's ever increasing c...<br />My conclusion with Buffett's ever increasing cash pile is that Berkshire is too big so it should return some of this cash to investors.<br /><br />If the recent crash and current economic environment is not enough to for him to spend, then what would it be?<br /><br />His misjudged both WFC and IBM. IBM could be excused, but WFC? People were pointed out the obvious long, long time ago so NOW he sells it?<br /><br />Additionally, is BRK actually safer than S&P500? Its recent failures show otherwise. People point out the Apple investment. That's actually high risk. Significant part of Apple's revenue and growth come from a certain market that can be turned off with a flick of a switch. Every passing day increases the chance that this would happen.<br /><br />As long as Buffett is at the helm and BRK does not return money to its investors, it's not going to outperform the S&P500.<br /><br /><br /><br />Royhttps://www.blogger.com/profile/09325498485905547125noreply@blogger.com