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No. of Recommendations: 32
The price hasn't moved, net, in quite a while. Closing in on three years.
Boring, and eventually a little depressing.

But the stock value has been rising over time, meaning that each time we hit this price in general the stock is cheaper and cheaper.
I suspect this won't continue forever : )

   Date           Close       Known book        P/B      Current P/Peak B
2018-01-16 $315435 $187427 1.683 1.683
2018-03-12 317730 211750 1.500 1.500
2018-08-29 316905 217675 1.456 1.456
2018-11-21 316290 228794 1.382 1.382
2019-04-23 317415 212497 1.494 1.387
2019-06-27 318030 225575 1.410 1.390
2019-10-21 317235 234109 1.355 1.355
2019-11-21 324945 243927 1.332 1.332
2020-03-05 313440 261417 1.199 1.199
2020-08-07 314220 229358 1.370 1.202
2020-08-24 318915 245836 1.297 1.220
2020-10-22 317415 245836 1.291 1.214


Book per share isn't a perfect proxy for share value, but it's OK for rock and roll.
The valuation multiple is down by about a quarter in this flat stretch for prices, simply because value per share is up by about a third.

Jim
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No. of Recommendations: 1
" The price hasn't moved, net, in quite a while. Closing in on three years.
Boring, and eventually a little depressing."

Peak to book of 1.2x

is depressing
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No. of Recommendations: 6
For four years we had a president that cut tax, twittering about the market every other day, and a Fed refusing to raise rates.. The economy is full of idle cash. And people use that cash to chase the fastest rising stock. Not the best environment for Berkshire to find deals. Fortunately, Buffett and Munger managed to stay healthy and alive.
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No. of Recommendations: 9
We do control the capital allocation levers at HQ and people are tired of the WEB Brooklyn double talk.

Changing the goal post on measuring performance and giving hazy and inconsistent messages on buybacks is not fooling Wall Street.

Problem is in Omaha. Sorry
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No. of Recommendations: 24
We do control the capital allocation levers at HQ and people are tired of the WEB Brooklyn double talk.
Changing the goal post on measuring performance and giving hazy and inconsistent messages on buybacks is not fooling Wall Street.
Problem is in Omaha. Sorry


My advice: Watch the puck, forget the sports commentators. i.e., the market price.

Estimate how much value per share has grown in the last few years.
In the time stretch in the table, you'll presumably concluded it's double digits compounded no matter what metric you use.
If that's good enough for you, what's the problem?
Especially given the huge safety and predictability.

I don't see any conceivable case for overvaluation right now requiring a one-time permanent leg down in price.
So the price will rise as much as the value does, just irregularly.

If you want returns that are high, safe, and steady, you'll have to switch to an alternate universe.
In this one, you have to give up one of those three things. I pick steadiness.

Jim
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No. of Recommendations: 35
The interesting question is to ask why the market price has gone nowhere for such a long period of time starting from a point it was not overvalued and in a period where the business performance has been ok.

My theory is that the market is now discounting Berkshire's capital allocation capability based on the last 5 years of allocation performance.

The re-investment of earnings in the last 5 years has been generally mediocre and ultimately that is the key to compounding. Since end of 2014, Berkshire has earned $126b and cash equivalents have swollen by $87b.

PCP - Not a great use of $33b to acquire an earnings stream of $1.5b
OXY - So far a disaster. The entire market cap is currently less than the sum Berkshire invested
KHC - Ditto
Airlines - Ditto
Banks - Jury is out in a zero interest world

On the other side of the ledger, Apple was a home run.

There were signficant opportunities in the stock market in Q4 2018 and early 2020 when Berkshire did not deploy capital at all. I think these were big signals to the market.

Buybacks have been 3.2% of the shares outstanding so far in the 2 years the program has been active and during a time when the stock has been flat and cheap by historical standards.

The overall assessment is of a misfiring recent capital allocation function and the market valuing it on that basis since superior allocation has been the raison d'etre for the whole enterprise in the past.

With a different ownership structure this would typically attract activists who could force value to be unlocked but this is not possible. Till succession or some other catalyst like an unexpectedly aggressive action on buybacks, I don't see the multiple changing much. Growth from here on should really be expected to be in line with value growth rather than multiple expansion.
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No. of Recommendations: 3
Lots of points to WEB for deploying massive capital into Apple. He did take a big swing and connected.

WEB has failed and is continuing to fail the understand the economics of tech.

He is 90 years old. This is now dereliction of duty by the board.
He needs to be replaced now with dignity and respect.

BRK needs to reorganize under a new CEO.
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No. of Recommendations: 3
"Lots of points to WEB for deploying massive capital into Apple. He did take a big swing and connected.

WEB has failed and is continuing to fail the understand the economics of tech."


LOL!

jk
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No. of Recommendations: 11
"WEB has failed and is continuing to fail the understand the economics of tech. "

Apple is a grand slam. Give him credit. The above statement is silly since he clearly grasped the network effects, massive utility of the device, and addictive nature.

May you live to 90 with his capabilities.
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No. of Recommendations: 0
The massive cash pile, Gold, Oxy, BAC investments will not do well
His risk reward ratio is out of whack.

Tech is low risk / high reward but he is not able to see it.
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No. of Recommendations: 4
Tech is low risk / high reward but he is not able to see it.

LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

jk
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No. of Recommendations: 21
Tech is low risk / high reward but he is not able to see it.

Mr Buffett is able to see that most "tech" firms are not predictable businesses over long time frames--the range of outcomes is generally very wide.
Technologies change, especially cutting edge technologies.
He also understands that really good investment results come from skipping things that give unpleasant surprises: Rule #1 and all that.

So...does he understand investing in tech better, or worse, than other prominent investors?

Consider:
People who do skydiving understand the intricacies of things like PLFs and rear riser stalls and parachute folding far better than I do.
But they are also far more likely to die in a skydiving accident than I am.
So...which of us has a better handling of the risk?

One view:
If something risky is not worth doing, it's not worth doing well.

Jim
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No. of Recommendations: 3
Speaking of change and predictability...

With low current interest rates and a strong case for rates remaining low for a long time a case can be made for high equity prices.

At Berkshire’s current price the market view is a mixture of:

1. These guys can’t be trusted to allocate future capital flowing in to HQ. Too conservative. Missed tech disruption both on benefiting from it and suffering from the damage to existing businesses and investments. Have made some poor capital allocation decisions. Firm is too big. Capital allocators too old. Etc.

2. The current businesses and investments don’t have sustainable competitive advantages.

3. The current businesses don’t have room to grow much.

4. The firm is too messy to understand and value. Owner earnings adjustments, underwriting volatility adjustments, unrealised investment gain/loss adjustments etc is too confusing.

5. The businesses and investments are boring. The world is changing rapidly and there are so many other stocks operating in exciting industries that are growing rapidly and have wondered economics.

I presume the above is why the market values Berkshire at about 10 times earnings.

A buyer or holder of Berkshire today does not really buy into these views. There is the question of paying 100x for some other great business with excellent growth prospects for on thing.

My question to you is this. Tell me about Berkshire’s top 5 or 10 businesses or investments by size and about their sustainable competitive advantages, their sustainability and their growth potential. The current climate may have forced people to question Berkshire and Buffett. Surely the future is a lot brighter for Berkshire that some might think. Much has been written and said about this great place Berkshire Hathaway it can’t all have been hot air?

Have a great weekend and thanks for any comments on Berkshire. Good or bad.
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No. of Recommendations: 2
Tech is low risk / high reward

My partner was a leading developer at Wellfleet Communications (later becoming Bay Networks), developing with her team the first multiprotocol router, connecting the different networks and topologies of Sun, IBM etc. Asked whether I get a McLaren for my birthday (then around $1 million) she told me "If you had met me earlier I would have bought you a fleet of McLaren") - she meant before the year 2000 when her reward (stock options) became annihilated.
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No. of Recommendations: 8
Mr Buffett is able to see that most "tech" firms are not predictable businesses over long time frames--the range of outcomes is generally very wide.

This is the central problem and reason for BRKs underperformance over last 15 years.
WEB cannot unlearn and followers have no capacity to assess independently.
WEB has trained himself and his followers in wrong things and neither are able to see the reality.

GOOG,TSLA,FB,SQ,SHOP,AMZN are examples of businesses that are solving global problems and compounding rapidly both in value and price.
TSLA was $40B a year ago. It is now $400B and now marching to $2T by 2030. Yes, read this again.

Contrast that with dud investments like KHC,OXY,Gold,Cash,BAC,DAL. These are high risk investments NOT low risk.

The evidence is right in front of you but it does require to think objectively and more importantly independently.
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No. of Recommendations: 3
My partner was a leading developer at Wellfleet Communications (later becoming Bay Networks), developing with her team the first multiprotocol router, connecting the different networks and topologies of Sun, IBM etc. Asked whether I get a McLaren for my birthday (then around $1 million) she told me "If you had met me earlier I would have bought you a fleet of McLaren") - she meant before the year 2000 when her reward (stock options) became annihilated.

Well I once owned 50k shares of Au Bon Pain which I sold too early. It later became Panera Bread and was finally bought by JAB. I stopped calculating my missed gains when it became a hundred bagger... Selling those shares to buy more BRK was by far my worst investment decision. But you know the old German saying: 'Hätte hätte Fahradkette' Still it would have been nice to fly Netjets and race a couple of McLaren on weekends ;-)
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No. of Recommendations: 0
Of course you are right with "Hätte", but I told the story because it was mentioned
........Tech is low risk / high reward
and I am not sure whether my partner would agree.
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No. of Recommendations: 5
I own all the stocks except Tesla div20 says are solving world problems and such. The one thing that has been consistent in my long-long investment years is that investing in the secular change stuff is hit and miss, big relative profits to go huge profits or to complete stalls and falls.

And I am never able to figure it out. I own small amounts of all the Chinese tech, or sort of tech, names. From past history and actions I just invest once and watch, and basically never does it turn out the way I expected.

For instance, the two investments I have made in the Chinese that I thought were BY FAR the best entrenched and best value, Fanhua and Baidu, have done the worst. I can't predict anything, but I can participate and wait...I'm good at the patience thing.

I learned long ago that Buffett/Munger's concentrate thingy was not for me whatsoever. Another example of how far out-of-it I can be in CSX and Norfolk, stocks I've got 100 baggers owning since 1975. Since I've decided that they were bizarre overvalued (at half what they sell for today)? Oh my, they don't have sales increases, that's long ago stalled, but per-share profits...(fueled by buy-backs...)? Up, up and up.
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No. of Recommendations: 5
The evidence is right in front of you but it does require to think objectively and more importantly independently.

....and to have 20/20 hindsight. ;-)

For every tech investment that is a big winner, there are lots of losers.

Cheers!
Murph
BL and PRE Home Fool
(who has invested in quite a bit of "tech" via Blast Off 2019 and 2020...but still maintains his core non-tech stocks....which might not be for everyone, but meets his risk tolerances and financial goals and circumstances)
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No. of Recommendations: 3
For every tech investment that is a big winner, there are lots of losers.

Another thing you need to unlearn.

Winners and losers are in every sector including those Warren has invested in (DAL)airlines and (OXY)energy , WFC(Finance), Gold, Cash etc.
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No. of Recommendations: 18
For every tech investment that is a big winner, there are lots of losers.
...
Another thing you need to unlearn.
Winners and losers are in every sector including those ...


Well, yes.
It's just that long holds work less often in tech-centred firms.
They are subject to far more change in their business economics...for better sometimes, for worse more often.
For every ten bagger, there are several wipe outs. Telling one from the other in advance is not easy.

In the end, all investing comes down either to making money from earnings, or from somebody else's hopes.
Berkshire does the first one, almost never the second one.
Both approaches can make you money, but the variation of outcomes in category two is very much larger. For both better and worse.

Admittedly investing in cutting edge technology-focused firms has many advantages.
It's full of good stories to tell at cocktail parties...there's always a good story stock.
Those are the good stories that allow people not to notice the survivorship bias.
Which in turn creates a pool of people from whose hopes (see above) one can make money.

Jim
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No. of Recommendations: 1
Admittedly investing in cutting edge technology-focused firms has many advantages.
It's full of good stories to tell at cocktail parties...there's always a good story stock.
Those are the good stories that allow people not to notice the survivorship bias.
Which in turn creates a pool of people from whose hopes (see above) one can make money.


Another mistake equating tech to "cutting edge".

Tech does not need to be "cutting edge" or you should not feel the need to talk in cocktail parties.

Tech companies like GOOG, AMZN and FB have durable entrenched advantages. These were apparent 15,10,5 years ago and even today and are increasing in value and price.

I am surprised no one has brought up CSCO from 20 years ago yet.
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No. of Recommendations: 1
"I am surprised no one has brought up CSCO from 20 years ago yet."

how 'bout JDSU or the Munder net net fund?

Or maybe LVLT - a cult favorite of many on the prior board for Berkshire discussions.
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No. of Recommendations: 1
http://schrts.co/rMQFXCQW

You could know nothing and buy QQQ. You'd still be better off than buying nothing. And far better than buying IBM and airlines, deliberate mistakes of commission that had to be reversed.

In the end, all investing comes down either to making money from earnings, or from somebody else's hopes.

I don't think that matches reality.
Investing is about future earnings, mostly far in the future. That is a mix of fairly reliable short-term earnings projection, and your own hope of being right in your long term projection.
Otherwise, why would Buffett sell WFC? He can surely recoup his money via earnings in 7-10 years.
Go back and check the P/E, forward earnings etc of GOOG AMZN FB from 5-10 years ago. Who predicted the earnings would go up so fast? Maybe some smart investors foresaw them, or maybe hoped for them and were right, or maybe just went along for the ride. You don't know their thought process. All of them made money that Berkshire shareholders missed out on.
Buffett can't predict anything even remotely correctly anymore. He is too old and should retire.
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No. of Recommendations: 0
"I am surprised no one has brought up CSCO from 20 years ago yet."

Well, way back when, it seemed to me that they had the technology to replace the entire AT&T Long-Lines with their stuff. Even do packet switching for voice as just a simple case of message switching. I even held shares for a while (not lots), but I assumed they did not have the capital to pull it off. I do not even know if they ever intended to do that.
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No. of Recommendations: 0
Didn't do Cisco, but did buy EMC. Bought somewhere in the early 90's at a split adjusted $1 per share and watched it go to $105 per share!

It dropped to $7 a share and I held. Went back to $30's per share and I was out! LOL. Small initial investment though so it wasn't going to break the bank.

Ha! I do own Dunkin Donuts...and today was hilarious.
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No. of Recommendations: 0
My inherited stocks dominate my porfolio with the exception of AJ Gallagher. I'm amazed at how little is know and published about the insurance brokers such as Gallagher, a spectacular investment for me.

Another is Erie Indemnity, a holding of mine now for 20 years or so. Simply incredible business, they just gave us (and I was involved) $125,000 to build hiking and biking trails in our area. Erie has been an incredible investment.
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