When reading posts, there are yellow stars against the names of the most respected Shrewds. The number of points in the star, starting at 3, represents the Shrewd'm-Star rating. This number is the average recommendation that the author received over the last 12 months.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 1
Berkshire shares tumble as Warren Buffett prepares to step down
https://www.ft.com/content/86ee04f0-d400-45fa-b034...Nothing new (to me) in this FT piece yesterday, except this quote:
Buffett, who oversees the company’s share repurchase programme, stopped buying back Berkshire shares in May 2024. He repurchases stock when he “believes that the repurchase price is below Berkshire’s intrinsic value”, according to company filings.
“The stock was overvalued,” said Christopher Bloomstran, the president of Berkshire shareholder Semper Augustus Investments. Bloomstran added that he believed the recent pullback might entice Buffett to start buying again soon.I had Bloomstran pegged as a perma-bull. Anyone remember his last IV estimate?
No. of Recommendations: 1
According to Perplexity it was $522...so Berkshire was overvalued by 4%??
No. of Recommendations: 8
I had Bloomstran pegged as a perma-bull. Anyone remember his last IV estimate?
The most recent publicly-available Semper Augustus client letter is from February 21, 2025. (It is extremely strange that he publishes a detailed assessment of Berkshire literally the day before the annual report is published - it becomes immediately outdated. But who am I to judge.)
Some relevant quotes from that report:
"Berkshire grew per-share intrinsic value by 10.5% in 2024 and 11.3% in 2023. The stock returned 25.5% and 15.8% over the two years, respectively. The stock advanced faster than intrinsic value over both years in part because the shares gained only 4% in 2022, trailing intrinsic growth. The stock also rose to 87% of value from 77% at year-end 2023 and 76% the prior year."
"The shares are less undervalued heading into 2025 than they have been in quite a while."
He presents intrinsic value estimates based on 4 different methods (again this is immediately prior to the most recent Berkshire annual report]:
Sum of the Parts Basis: $780,463 (A shares)/$520 (B shares)
GAAP-Adjusted Financials: $757,508/$505
Simple Price to GAAP Book Value: $785,965/$524
Two-Pronged Approach: $807,869/$539 [He labels this one "Ours" to indicate preferred method. This aligns with the comment that the stock traded at roughly 87% of value as of this date]
Simple Average: $782,951/$522
If he kept exactly those estimates, then Berkshire reached full fair value ($539 per B share) already this year and exceeded a "Simple Average" fair value of $522 by a small amount.
But I think it's also reasonable to believe that Bloomstran lowered his estimate of fair value after the annual report and annual meeting (and before this most recent interview), such that he did view it as materially overvalued in real time. (I have certainly soured on Berkshire's outlook over the last 14 months or so and have more or less exited a position that I've held for more than 25 years. I have some remaining shares offset by January 2027 calls at 530. I probably would be a buyer again at 420 or so.)
Any way you look at it, I think it's clear that he viewed Berkshire as substantially less attractive at the beginning of this year than he historically had, and that view almost certainly got more bearish during April and May when Berkshire's price jumped.
No. of Recommendations: 4
Bloomstran said the following regarding Berkshire's valuation on 8/2/2025:
"The stock actually traded above my appraisal of intrinsic value earlier in the quarter for the first time since our owning the stock in February 2000. The shares peaked the Friday before this year’s annual meeting at its highest fundamental valuation since 1998. Ongoing growth in intrinsic value and a ~12% price decline from the peak has the share now at about 85% of my appraisal and back down to valuation levels where Berkshire last bought back shares."
https://x.com/ChrisBloomstran/status/1951792051621...
No. of Recommendations: 1
"Bloomstran said the following regarding Berkshire's valuation on 8/2/2025:"
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I have always enjoyed reading the Semper Augustus LLP reports & Chris's view of Berkshire Hathaway.
As of Q1, the LLP portfolio total was over $600M and over 30% allocated to Berkshire.
https://www.dataroma.com/m/holdings.php?m=saAs mentioned earlier he has been a holder & huge fan of Warren Buffett & Berkshire for over 25 yrs.
His published LLP performance however is a bit puzzling with under performance for all 1,3,5,10,15,&20 yr comparisons to the S&P.
Over 20 yrs ending 12/31/24, he has underperformed by 3.1%/yr or an account value 46% below an equivalent investment in SPY, ($1.85:$1)!
(See p.167.
https://static.fmgsuite.com/media/documents/05891b...)
This then begs the question,
"Am I just entertained by his writing or is the LLP like so many others & just damn hard to compete with the overall market in the long term?"
ciao
No. of Recommendations: 1
The most recent publicly-available Semper Augustus client letter is from February 21, 2025. (It is extremely strange that he publishes a detailed assessment of Berkshire literally the day before the annual report is published - it becomes immediately outdated. But who am I to judge.)
I figure he wants the publicity right before the AM, only he didn't get it out in time this year, IIRC, yet still used old data. <shrug>
But I think it's also reasonable to believe that Bloomstran lowered his estimate of fair value after the annual report and annual meeting (and before this most recent interview), such that he did view it as materially overvalued in real time.
Must be. I wouldn't think he'd describe it as "overvalued" if it was only 4% over his IV estimate.
No. of Recommendations: 19
"Am I just entertained by his writing or is the LLP like so many others & just damn hard to compete with the overall market in the long term?"
It may not be just entertainment. A money manager can say extremely insightful and (to you) useful things, yet be not a very good manager of a fund.
"Good" has two definitions: one is that the manager is making a good living, and the other is that the fund is getting higher returns after fees for its investors than equally safe alternatives.
Running a fund for a living requires vast marketing skill, huge box-ticking and regulatory time, a fair bit of organizational/management skill, and barely a pinch of investing acumen (entirely optional, in fact). Successful investing, successful investing analysis and writing, and successful fund management are three entirely different skills. The last one barely overlaps with the others.
Jim
(possibly with none of the above skills, though I am a fairly quick typist)
No. of Recommendations: 1
"Running a fund for a living requires vast marketing skill, huge box-ticking and regulatory time,......"
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I recall many many moons ago "Ringing You Up" via the early internet & inquiring as to you managing an account.
My recollection of your reply to the inquiry was that the business "perfomance sucking energy" required to deal with all the Natl,Fed,State filing requirements left to little time for actual investment analysis. I believe you had been down that path once before and then decided to take the path less traveled simplifying life managing your own account.
Cheers, ciao
No. of Recommendations: 1
i must add so does actually running a business, which is why warren sensibly conceded.
great investors are rarely the case of 'it takes one to know one'.
No. of Recommendations: 1
('one' being the crossover from investor to operator)
No. of Recommendations: 2
"'one' being the crossover from investor to operator"
And yet, that is what seems to be happening with BRK; shifting focus from finding new places to invest excess cash (WEB) to generating more cash from existing businesses (Greg). Ajit and the insurance operations are the ballast that carries BRK through all storms. I have no idea what they are going to do with all that cash, but it is a good problem to have.
abromber
No. of Recommendations: 0
is it certain that greg will have final say over use of cash and liquid assets?
maybe ted+todd contractually\effectively have it?
No. of Recommendations: 0
Yes, I recall Warren said at the meeting Greg will oversee all capital allocation but certainly will lean on other folks in BRK leadership, but I think ultimate control is with Greg, as it has been with WEB, with Board oversight.
