August 2010

Berkshire Valuation

Mon, 08/30/2010 - 16:50

We've been discussing how information moves selectively in and out of the Berkshire financials/shareholder letter. Here is an example that concerns the critical question of how to value Berkshire. You can draw your own conclusions.

2005

Railroad & Utility Segment

Mon, 08/30/2010 - 07:56

In an earlier post, one smart person responded that they're ok with MidAmerican and BNSF being combined because these companies file separate financials and they get the data on their own. I understand why you say this because as a diligent investor you are better off. But here's why I disagree with the principle.

Transparency at Berkshire

Sun, 08/29/2010 - 23:15

This continues a discussion with Ravi. His salient point: "One of the things that I have found frustrating over the years is that Berkshire often rolls subsidiaries that used to provide granular data into broader groups as the company grows over time.... It is a gradual trend from year to year but when you go back a decade or more, the reduction of granularity really hits you....I go back and forth [but] think we come back to needing a basic level of trust to invest in Berkshire...

Buffett Analysis of Financials

Sun, 08/29/2010 - 11:04

People on this page are asking for more information about how Warren analyzes financial statements in response to a comment I made there. So yes, I am writing the investing book. A biography can't contain the detailed examples that people want, and someone (by default, me) needs to put together a coherent framework of how Warren actually invests. Why write something that you already "know"? It goes without saying that there has been a clamor for this book. There is a lot to be learned from looking at the details.

Price of Wesco and Berkshire's Future

Sat, 08/28/2010 - 09:18

Berkshire is not going to raise the offer. (Amend that, maybe a tiny symbolic gesture but nothing meaningful.) I don't see any compelling reason why it has to do so (fairness typically is not a reason that makes Warren pay people more money). Berkshire will tender now, and take in whatever shares are surrendered. Berkshire will tender again later whenever the stock is cheap enough. Eventually it will get 10% of the stock and squeeze out the rest. This is what it did with Cologne Re.

Happy 80th

Fri, 08/27/2010 - 16:54

Warren, I'd like to wish you a very sincere happy birthday. 

> You were born just a few months before my Dad, and I picture the two of you celebrating many more birthdays to come.

> I've been squelching the rumor that you keep a countdown clock on your desk that ticks away your life expectancy. Yes, this rumor actually is circulating, and as we both know, it's not true.

Why NetJets Matters

Fri, 08/27/2010 - 08:49

There has been a lot of back-and-forth on this blog over NetJets but rarely have I been able to pull the big picture together. It's worth taking a step back and asking, why does what is happening at NetJets matter?

Berkshire to Buy Out Wesco

Thu, 08/26/2010 - 17:01

From LA Times.

Start your calculators. What do you think of the price? I would throw out Cort goodwill as valueless but give credit for deferred tax assets = BV of $348/share excluding "float." Berkshire's paying a slight premium to this -- it's not surprising that the stock has traded up to $363. As I read the rules Berkshire does not own enough WSC stock to force a squeeze-out.

Sokol Threatens to Shut Down NetJets

Thu, 08/26/2010 - 09:14

Folks, I realize many of you are tired of the back-and-forth on NetJets, but this is a big, huge deal. David Sokol sent an email out last night to employees threatening to shut down the company if people don't stop criticizing him (in effect). Here's how I read the meta-message of the thing and its import. The email follows.

UPDATE

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The Line Forms

Mon, 08/23/2010 - 08:28

Headline of Associated Press story: "Membership Plummets at Nation's Country Clubs"

Saying of Charlie Munger's: (paraphrasing): You aren't in a really bad economy until there's a waiting list to get out of the country club."