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No. of Recommendations: 9

I almost never disagree with you. And I'm probably wrong to do so this time.

But I believe Buffett has been mistaken in using BRK for stock in almost all acquisitions.

He has given up more than he received. Perhaps driven by enlarging the painting/museum rather than shrinking it? And reducing the forward burden on deploying BRK assets?

Consider GRN. How much would it have to be worth today to justify the BRK stock issued. Is it?

Ditto BNSF - considered the cash flow received after borrowing.

And, yes, I question how successful BRK will be in acquiring companies at prices superior to just repurchasing BRK except in times of distress. The exceptions might be as they broaden their scope - e.g. Apple. But that's open to a reduced ability to forecast the future. We'll see.

But do I believe Buffett and Munger believe otherwise? Yes. So I understand I'm departing from the faith. And I'm still betting a majority of my net worth that they'll do OK based on a risk adjusted basis. At my stage of life, preserving capital is more important than expanding it.

But, for discussion, compare BRK's prospects with, say, BAM in finding capex opportunities. I believe BAM's are superior. They operate worldwide. They have internal capabilities of buying distressed companies, making them more profitable, and then reselling them to recycle cash. Something BRK doesn't do. With BRK it is buying right and believing they're acquiring competent management. Who's prospects do you prefer? BAM does a lot of its purchases worldwide, both distressed and high quality. BRK hasn't been successful in doing so ex Iscar - a special case. Who has the better hunting ground?

BRK has lower cost capital - from negative float costs over time. But that's not worth much until they deploy it. That's their challenge.

We'll see how they do absent market crises.
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