Todd Combs on How Failure Is Useful (Preferrably Early in Life)

A good quote from Todd Combs in the FSU Alumni Association Magazine:

« you really just have to find your passion in life. Warren says to find the the job you would do if you didn’t need a job. The earlier you find that, the better – because it won’t seem like a chore to follow your dream, and you’ll outwork everyone in the process. Don’t be afraid to fail. In fact, you kind of want to fail early and often because it doesn’t cost you much when you’re young – and you learn a lot more from failure than success. »

I found it reading this good BBG article on how Combs was a key in setting up the partnership between Berkshire Hathaway, Amazon and JPMorgan.

What Options for Buffett Who Has $90 Billion To Invest?

Short answer:  Not Many.

Facts: Cash & cash equivalents at Berkshire Hathaway (BRK) reached $116 billion at the end of 2017, compared with $86.4 billion at the start of the year. Per Morningstar’s Gregg Warren estimates, Buffett finds himself with « around $90 billion in dry powder that could be committed to investments, acquisitions, share repurchases and dividends. » Continuer la lecture de « What Options for Buffett Who Has $90 Billion To Invest? »

Berkshire Hathaway : Lollapalooza Earnings & The Bet

Numbers are staggering. Berkshire Hathaway, the holding chaired by Warren Buffett and Charlie Munger, earned $44.94 billion last year vs $24.07 billion in 2016, in large part thanks to tax cuts decided by the Trump administration. Operating earnings actually declined to $14.46 billion from 17.58 billion a year ago, mainly because the insurance business lost money. Tax cut contributed $29.11 billion to results, which « derives from a reduction of net deferred income tax liabilities that arose as a result of the reduction in the U.S. corporate income tax rate from 35% to 21%. »

A more meaningful number for understanding the valuation of BRK is the evolution of the net asset per share or book value per share. Last year, the number grew 23% to $211,750, outperforming S&P 500 by 1.2%. CAGR return for book value per share over 1965-2017 is 19.1% vs 9.9% for S&P 500. Patience, discipline, opportunistic approach, great deal of focus on price and knowing his circle of competence explain such an amazing performance.

The most important part of BRK release of its annual report is Buffett’s letter to shareholder. This year, Buffett covers the following topics :

Continuer la lecture de « Berkshire Hathaway : Lollapalooza Earnings & The Bet »

Review the Basics: Thoughts on Valuation (1997) – Mauboussin

Michael Mauboussin is a highly respected investor, teacher, speaker and book writer. I came across a number of his notes in the past (including this one which I liked a lot). Thanks to the Internet and the many people who share good thinking, most of his notes are there to grasp and read.

While re-populating my blog, I came into his 1997 reflections on valuation. As Graham/Buffett nicely put it: price is what you paid, value is what you get. So to earn decent return when investing, you need to know the value so you can pay a price that gives you a good margin of safety.

The full note is available to read here. I just wrote down a couple of remarks that make sense to me and hopefully give you a quick overview of why it might be useful and what you will find inside.

Key purpose of the note is to defend the value-based approach of investing,  to keep in mind what really matters in valuation and not to fall into « market myths ».

Continuer la lecture de « Review the Basics: Thoughts on Valuation (1997) – Mauboussin »