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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: maxthetrade   😊 😞
Number: of 21940 
Subject: Re: BAC
Date: 07/01/23 4:10 PM
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Sure, the company must have something good going for it or Mr Buffett wouldn't be such a big fan.
But I just continue not to see enough of them to interest me.


Obviously I can only guess what Buffett saw back in 2018. I think it was a wager on more normalized interest rates and higher NIM's. He probably didn't anticipate that they'd buy huge amounts of long duration bonds at generational low interest rates. As I said, it was a huge mistake and a dumb one. BTW, many insurers made the same mistake, that's one reason why I bought/hold FFH and WRB.
But the damage is done and in my view it's more than priced in. The bonds will mature and the proceeds will be reinvested at much higher rates. I think their interest income will increase nicely over the next few years.

Better run firms do better on this metric, a flavour of ROIIC.
As a random example discussed here lately, DG has retained about $5.5bn total in that same stretch.
On-trend real pre-tax total earnings are up about $1.15bn/year, which is 21% of the total retained capital. Each year.
And again, even more on a per-share basis because of buybacks, with a comparable percentage drop in share count, -18% at DG versus -22% at BofA.
Consequently DG's real pre-tax EPS rose at about inflation + 12.8%/year on trend in this stretch instead of BofA at around inflation + 0.7%/year on trend.


I understand where you're coming from and I agree that DG is a better business and much easier to understand, I own way more DG than BAC. If I were certain my analysis is 100% correct I wouldn't own BAC but I'm not Bueffett or Munger so I like to diversify a little bit even if I could put everything in my best three ideas. Usually I don't like to put more than 10% in one idea unless I'm convinced that I can't loose much if I'm wrong.
BTW, I own a basket of BAC, USB and WFC about the same size as my DG position.

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This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
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