Comments on: What’s Berkshire Hathaway’s expected life? http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Win Ryder http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8981 Fri, 20 Nov 2009 01:11:39 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8981 I am surprised so many people agrees with the post. Salmon has obviously not studied Berkshire in depth and therefore completely unaware of the synergy in Berkshire’s current structure which would be lost if the company is broken up.

Saying Berkshire will be just like any conglomorate after Buffett’s death and that ALL conglomorates trade at a discount is both untrue and exhibit faulty logic. He did not justify either of these statements. Could it be that he isn’t even aware that these statements bags major assumptions that may not be valid?

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By: Darryl Mollenhauer http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8940 Thu, 19 Nov 2009 16:55:15 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8940 I think Will’s close to the mark on this one.

Warren Buffett’s been exceptional at finding value by looking at long-term macro trend shifts.

Like it or not, as oil prices rise, as they invariably will, BNSF is in the position to maximize its yield on the transportation of coal since they would have no effective competition at any given source.

Should the rail network need to shrink, as it probably will, given the trend away from manufacturing, Berkshire is in an enviable position of selling off short line pieces to local operators, along with equipment and/or property that has become excess. Value of the sale could be maximized because local governments would kick in to reduce harm to businesses suddenly disadvantaged due to the loss of rail service.

The core lines of the BNSF would be attractive as oil prices rise and government initiatives are created to shift people and freight away from a highway system with a failing infrastructure and increasing environmental concerns.

Quite possibly there’s a hidden future value in the amount of industrial property and rights of way still owned by BNSF. I don’t doubt that this aspect of the company’s book value has been carefully scrutinized by Berkshire and they know far more about that underlying value than most analysts do.

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By: will http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8937 Thu, 19 Nov 2009 16:12:16 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8937 Long term investment horizon….

BNSF infrastructure has the right-of-ways that could connect the mid-west and plains population centers. If the roadbed and switching were improved to high speed rail, it could be a game changer. Could even seek some federal subsidy in terms of urban renewal land around terminals or other rural development economic programs.

Fast rail could move pax and UPS/FedEx sized cargo quickly independent of weather and airway and terminal congestion at hubs. With the right rolling stock configured for quick loading/unloading it would improve connectivity for rural and smaller midwestern cities with limited air service.

Improving the roadbed and switching would have to be done anyway. Doing so now would help add service flexibility if the nation experienced a shift from coal.

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By: Casper http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8883 Wed, 18 Nov 2009 15:16:56 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8883 How long is a coal train ?

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By: apj http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8877 Wed, 18 Nov 2009 10:52:56 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8877 What will happen? Probably the same thing that happened to Australia’s Packer Empire when King Kerry went 10-toes up – they’ll be taken advantage of lose a lot of money.

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By: Darlington http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8876 Wed, 18 Nov 2009 10:14:07 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8876 ultimately, as long as Warren’s motivation for investing in the railroads is sound, then there should be no problem with the investment horizon’s possible mismatch.
the question’s whether Warren’s investing because it makes business sense or he’s investing solely with a Berkshire outlook. who knows, that stake maybe worth alot at the “break-up” date.

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By: Robert Cunningham http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8871 Wed, 18 Nov 2009 05:46:27 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8871 If you’ve read his annual report for any number of years, or read any of the excellent biographies on him (by Roger Lowenstein or Alice Schroeder to name just two) you will know the steps that he has taken to keep “The Buffett philosophy” viable for many years to come.

As a long-time Berkshire Hathaway shareholder, I will truly regret the day when he passes on, not because of any anxiety over the price of the stock, or the future of the company, but because it will be a very long time, if ever, before we encounter another person endowed with his ethics and his generosity.

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By: Richard http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8866 Wed, 18 Nov 2009 04:07:19 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8866 Buffett and Munger have been at this for decades.

There really is a possibility that their values have become institutionalized. It’s also likely that their shareholders now expect the behavior that Warren preaches.

I’ve often wondered whether Berkshire-Hathaway might take a mighty plunge when Warren Buffett dies, and whether that might be the ultimate value purchase.

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By: najdorf http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8862 Wed, 18 Nov 2009 02:10:51 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8862 I’m a small BRK investor because I think the current book of investments/businesses is undervalued even assuming not many more years of Buffett/Munger-added value.

The other consideration about Berkshire is that a guy like Buffett can’t run that big an insurance business single-handedly. Given that their underwriting has been consistently profitable for years, I choose to believe what Buffett writes about the quality of people working in the insurance division. Certainly if I were an insurance expert with ethics and the desire/ability to excel I would want to work at a company like Berkshire rather than AIG (even before the downfall of AIG).

The problem after Buffett/Munger leave is that the company will lose its go-to status for deals like GS preferred. The insurance business will still be a good one but the options for deploying capital will decline. Also, Berkshire has gotten away with a large stock allocation for years and years because they’ve been smart/lucky enough never to get simultaneously hit by both large market declines and large catastrope losses. Buffett constantly warns about the disaster risk and acknowledges that they have had a string of luck there. Imagine a situation where the stock market of this past March coincided with disastrous insurance losses – the wrong confluence of events could lead to forced selling of something like WFC at 10.

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By: fred http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/comment-page-1/#comment-8860 Wed, 18 Nov 2009 01:12:11 +0000 http://blogs.reuters.com/felix-salmon/2009/11/17/whats-berkshire-hathaways-expected-life/#comment-8860 Craig: insurance companies (which is what BRK is, as I noted), like other financial institutions, are opaque by their very nature. No one way to know what sort of problems they might be hiding in their book of busiess unless you are an insider and even then it is easy to overlook some critical detail that could take down the whole business. All you can really evaluate is the corporate culture, and especially the incentive structure. That is where BRK shined compared to AIG, Lehman, etc. And it will continue to shine in that respect after Buffett leaves, at least until the Gates foundation no longer has a controlling interest, at which time BRK will be subject to the usual management-shareholder conflict.

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