Post New

If I were to triage my goals going into the annual meeting, the high priorities are the usual: operating results, buybacks, analysis of current businesses (especially BNSF and the energy sectors, but also insurance and smaller operating companies).

But the highest priority was to carefully listen to Greg - what he says, how he says it, things he didn't say.

I went into this morning giving him a one out of three when it came to high-level discussions:
- unimpressed with his comments two year ago: way too much bureaucratic boilerspeak
- considerably more impressed with his comments last year as being more responsive.
- irritated at the annual letter for what I saw as some data massaging ( https://www.shrewdm.com/MB?pid=609258311 ) for which I was accused of a math error (accurate) and being "inappropriately harsh" (respectfully disagree)

So, thus far this morning: quite impressed. Objections withdrawn. Greg is assured, careful, cogent, thorough, data at front of mind, no obfuscation/conspicuous omissions as near as I can tell on first reflection.

I'm happier (or at least, less reserved) than I've recently been.

-- sutton
misses the See's candy on stage, though. (At least Ajit brought a Coke)

"So, thus far this morning: quite impressed. Objections withdrawn. Greg is assured, careful, cogent, thorough, data at front of mind, no obfuscation/conspicuous omissions as near as I can tell on first reflection."

It's clear he has a better overall grasp of the businesses than Warren did. He doesn't have the charisma and he hasn't cut his teeth on the big deals yet but I feel a lot more comfortable.

More Ajit! He funny and smart!

He clearly does not have the same kind of folksy gravitas that Warren does/did...but Warren never wanted to operate anything that would take away from his time in the pleasure palace ( Aside from Salomon which was a do or die kinda thing). He always had a fixer (frm Harry Bottle to Tracy Britt).

Full Disclosure: I am biased by my own experience spending 30 yrs starting and running businesses, before becoming a FT investor.

That being said, I can see more clearly now why Charlie said that in many ways Greg was more capable than Warren and will bring many things to the table as CEO

It's clear he has a better overall grasp of the businesses than Warren did. He doesn't have the charisma and he hasn't cut his teeth on the big deals yet but I feel a lot more comfortable.


I was quite impressed with Greg. He seems rational, objective and has significantly greater grasp of business operations. I particularly that he went out of the way to draw attention to areas of the business that were signficantly lagging comparable metrics in peer groups.

I saw everything realistically I expect from the new Berkshire CEO. The last years of the Munger and Buffett AGMs had become more of a self-satisfied religious gathering than a business meeting. The time had clearly come to transition and to his credit Buffett acted in time.

Lack of charisma etc is totally irrelevant to me as long as he is not prone to impulse driven transactions. There is no sign that is going to be the case.

Jain seems mentally sharp and the team looks good. Ajit is 74 after all and clearly has some phsyical issue but it doesn't seem to be hampering him in his ability to do his role.

Overall looks like a pretty solid new team at the helm.

First welcome back ppant. I've missed you, and I suspect many others have too. Appreciate your comments.

*********

Below are some comments I sent to friends just after the meeting:

"My most enjoyable BRK annual meetings have been those where I got to see you guys, and meet other BRK shareholders.

However, in terms of learning useful info about BRK, I think I got more from this single meeting than all those together from 1998 thru 2025. Warren deliberately, and with great skill, avoided disclosing any significant info about the businesses. Most of what I did learn came from occasional Charlie comments.

So I'm a huge fan of the new meeting format and CEO. I agree with E*** and others, I think Greg did a great job. He started off a little nervous at the beginning when he was trying to bridge the AM move forward while being sure Buffett was acknowledged. But his confidence and command of the facts were totally demonstrated thereafter. He's now in command. He understands where things now stand - good and "gaps" - and is willing to talk about them. And help fix and monitor them.

A company deeds a single leader, it's himself, and he knows his job. At his core, he will run BRK based on good capital allocation for shareholders. In this sense, "capital" includes expenses and thus business performance.

That's my take. I look forward to what others think."

Texirish,

I have "known" you since 2000 on TMF. (You don't know me). Your truck engine was running, but you hadn't yet engaged. Do you remember? I had already read all shareholder letters from inception to 1999/2000, twice. Phil Fisher - go big. Roger Lowenstein. Other writings. In hindsight? I feel like I/we got lucky.

IMO, the annual meeting today was phenomenal. Like you, I thought Greg got off to a nervous start. But, OMG. The information that he provided in the first session was terrific. And, he made it a point to bring along those who weren't familiar with the "short initials" of the biz. I will be listening to that first session again.

I thought that there was 50 - 100 X s more information provided at the first session of this annual meeting than was provided at prior annual meetings.

And I loved the prior annual meetings!!! And Warren, and Charlie, and BRK.

But I think that Greg nailed it today. Kudos to Warren and Charlie for building BRK and then passing the baton. And kudos to Greg, Ajit, Katie, et al, for taking the torch.

This is going to be an interesting ride.

I loved the annual meeting today. It was superb.

Lethean

ps. I hope that Tode watched the annual meeting today, or that he will watch it shorty. I remember that Tode was VERY disappointed with Greg's first appearance at the BRK annual meeting a few years ago. Today was fantastic, and it was not a "performance". It was the real deal, IMO.

I have "known" you since 2000 on TMF. (You don't know me). Your truck engine was running, but you hadn't yet engaged. Do you remember?

I do remember 2000 when Buffett talked about possibly doing buybacks - the first time I recall this happening. I first bought in 1996 after Buffett talked about BRK being overpriced in 1995. I bought when it dropped from $35k to $30k. I also bought in 2000 at around $46k. I don't recall talking about this on the MF - but at 91 my memory is slipping.

I remember that Tode was VERY disappointed with Greg's first appearance at the BRK annual meeting a few years ago.

I do remember this first appearance on the stage by Greg and Ajit. Both were new at in their vice-chairman position, but Ajit had been in insurance all his career and Greg was just taking over all the non-insurance business. When asked questions Ajit was quick to respond in a direct and well informed manner. By comparison, Greg seemed to make generalities and came across poorly when compared to Ajit. I remember the criticism of him at the time.

I spent just under 40 years with XOM, so I have some experience with how corporate america functions. Greg was new in his position, hadn't really had time to meet and judge where all the non-insurance businesses stood or the people running them. He was in no position to either praise people or throw them under the bus. So he wisely avoided doing so. I recall trying to explain this to people in a post - but first impressions stick.

I think Greg's performance today demonstrated his ability to understand a wide range of businesses in depth and to effectively communicate with their managers. He didn't hesitate to point out "gaps" when compared with peer businesses. But his style is to point out issues when they exist, and then offer support and time to address them. Today he compared very well with Ajit - and better than Buffett in terms of managing those businesses. I think I was right in not negatively judging his first time on stage. Had the courage to keep his mouth shut when it wasn't time to talk about specifics.

This is not to fault Buffett. He rightly judged that his skills could add more to BRK in investing than in managing operating businesses more closely. And we shareholders have profited by this judgment. Also, as Buffett has said himself, he doesn't like conflict. That doesn't seem to be an issue with Greg if required.

I highly respect Tode - we've been friends for three decades. We come from different backgrounds - his reaction at the time was understandable. And shared by most people.

I learned a great deal from Tode and certain others on the old AOL board - back when access was by dial-up modems. I had recently retired from XOM and was trying to decide what to do with my lump sum pension. BRK had not issued the B shares at that time, and it was initially difficult to commit that much money to a single stock. I was very much a novice investor at the time. I've been eternally grateful to Tode and others for their teaching and friendship at the time. It led to a life changing investment in BRK - and a great band of new friends. We still try to keep in touch.

Much of the early reaction to Greg Abel’s first annual meeting actually shows something important: he succeeded in defining Berkshire Hathaway as it exists TODAY in 2026.

That’s a big deal for our company that remains widely misunderstood.

I’ll add this personally: after decades of following Berkshire, I agree with my friend TexIrish—I learned more from this meeting than any other!

Abel succeeded in truly defining the Berkshire of today versus the insurance company that generated cash to buy stocks which it was in the past.

He redefined what we are:
• a collection of large operating businesses
• plus a handful of concentrated equity holdings that should be thought of as equivalent to subsidiaries (Apple, Coca-Cola, American Express)

That’s how Warren and Greg are telling us to view the company.

When Buffett calls Apple Berkshire’s “best business,” he’s signaling this clearly. If you mentally move Apple, Coca-Cola, and American Express into the “subsidiary” bucket, something important happens:

You naturally put “stock picking” back into proper perspective.

The portfolio stops being the story—and starts being part of the operating structure.

What Abel did at this meeting was make that clear. By painting the full picture.

He highlighted our operating managers and emphasized EXECUTION.

And that connects directly to where I’ve argued our value creation comes from next.

Susan Decker pointed to what, imo, may be our most important lever inside Berkshire today: improving performance within the businesses we ALREADY OWN.

Her example was simple but powerful—bringing BNSF closer to Union Pacific’s efficiency could add roughly $250 million in annual earnings. No acquisitions. No new capital. Just better execution.

And that opportunity isn’t isolated.

Across Berkshire’s portfolio, incremental gains in margins, costs, and asset utilization—applied at scale—can meaningfully increase intrinsic value.

That’s the playbook now:
Not “what do we buy next?”
But “how do we run what we own better?”


Buffett built—and evolved—Berkshire into this structure.
Abel is ideally suited to optimize it. The Jobs to Cook transition is almost textbook.

What did Warren himself say in his one meeting comment yesterday? It was no accident: Jobs and Buffett CREATED.

Cook and Abel can take what’s largely built and drive productivity, efficiency and monetization. The IPhone, IPad, App Store, BNSF, GEICO, National Indemnity—all inherited by Cook and Abel. Who made them money machines? Who cultivated the ecosystems that made those components part of an unstoppable machine? Abel yesterday showcased the connection and synergies of what were perceived as random, idiosyncratic parts—and we said collectively “aha, THATS why we own that!”. With all due respect this communication previously fell short. If it happened at all..

Different phase. Different skill set.

Same compounding machine—now driven more by operational performance than new investments.

I gor ripped here claiming our best days are ahead. I get it. Let me revise: I’m far more excited for the next decade which I think will be more promising than the previous decade.

Curious how others are thinking about this shif

Focusing on operating companies is good, but Greg still has to figure out what to do with all the cash coming in.

So if we are no longer focusing on acquisitions as you say, what eats up all the excess cash?

<<So if we are no longer focusing on acquisitions as you say, what eats up all the excess cash?>>

We don’t know. And it’s not “not focusing on acquisitions”. It’s not forcing or overpaying for acquisitions.

As pointed out yesterday..5 times in 60 years it hits you in the head with a 2x4. Or one of the ideas Buffett and Abel said they have discussed for acquisition quotes a favorable price. Wait.

In the meantime, we learned the most important word in the Berkshire vocabulary is “no”. Repeat over and over per Ajit. Whether writing weak insurance policies or overpaying for acquisitions.

And if the fat pitch doesn’t happen soon, we just keep making $50 billion a year, compounding with inflation, plus the extra $Billions from running our businesses more efficiently. There are worse fates in life. Waiting is very very hard. Most can’t do it.

There is an opportunity cost for waiting a decade for the perfect pitch. And acquiring whole US companies of significant size at a good price has become harder. And last time the market crashed in 2020, Buffett didn’t swing at all.

Cash is earning 3.8%. BRK ROIC is 7% and ROE 10% (figures from Guru Focus and not verified.) Buying back stock with say $100 billion of cash would be a better use of cash.

I was disappointed they pretty much stopped buying stock after the March announcement, even though stock traded below their average repurchase price virtually the entire time since then.

I am encouraged though by their investments in Japan and hopefully they will find more. Asia has been hit hard by the Iran war, there might be bargains there. Maybe they can give Li Lu some funds to manage.

It’s true that the more our cash piles up, the fewer companies of significant size are available to soak up the capital. But our entire cash pile only buys 10% of Apple’s or Google’s market cap.

I can think of a few world events that would worry investors enough to bring these two behemoths to reasonable prices for Berkshire.

There is an opportunity cost for waiting a decade for the perfect pitch. And acquiring whole US companies of significant size at a good price has become harder. And last time the market crashed in 2020, Buffett didn’t swing at all.

I couldn't agree more. There is a limit to the extent to which cash can pile up without impacting long term compounding characteristics of the business. FInding places to deploy the accumulated cash is THE key capital allocation problem for Greg. Keeping on kicking the can down the road just makes it harder..

5 years ago Berkshire had $138b net cash. So over half a decade it has effectively ended up assumulating $232b more of cash reserves looking for a use. I would be much more comfortable with a steady regular buyback than hope for Greg Abel to suddenly reinvent himself as a market timer extraordinaire sitting around waiting to pounce in the next crash ( which Buffett himself did not do at any time in the last 10 years despite a number of clear market dislocations).
So as a shareholder I would want to see Greg making a steady series of intelligent decisions rather than comfortable hoarding capital waiting for some spectacular meltdown in the markets. Berkshire has long since crossed the size of reserves where the reserves it already has are more than sufficient for any large transaction the capital markets can throw at it. I don't really want another 5 years to go by and berkshite sitting on $600-700b idle cash and pretending that is evidence of intelligent capital allocation. If that happened, I think the market should rationally award a lower than usual valuation multiple to the business.

Apologies for the typos by the way ! Typing on the move and no edits allowed !

This is exactly where I am. As much as I don't like it, I'd rather see an Apple-like systematic buyback program rather than having Greg have to deploy huge amounts of capital.

Plus, maybe we could hire a group of smart young folks who work for Ted, and help him search the public and private markets daily looking for good deals? Then Ted could bring the ideas to Greg and Ajit for discussion?

This is a wonderful problem to have, BTW. We make more than can be sensibly deployed. The stock is so popular that it doesn't make sense to buy more of it. But the shareholders don't want dividends. Think about that for a second. No wonder WEB can't stop smiling. He won the race! And they've retired his number to make it official. A couple of Ben Graham quotes to remind us of how he did it:

“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”

“The essence of investment management is the management of risks, not the management of returns.”

and finally: “The intelligent investor is likely to need considerable will-power to keep from following the crowd.”

Personally, I want Greg to follow that advice and stay in his circle of competence, even if it is old-fashioned. I am happy to have him take his time deciding where BRK should go next, and what to do about the cash. I assume the stock price will drop further as people lose patience. Since Greg is a net long-term buyer, that works to his advantage lol. But I doubt he cares either way. He's a hockey player, and he'll focus on scoring goals. That's how you win championships.

abromber

< I don't really want another 5 years to go by and berkshite sitting on $600-700b idle cash and pretending that is evidence of intelligent capital allocation.

Berkshite? POS indeed : )

Jim

5 years ago Berkshire had $138b net cash. So over half a decade it has effectively ended up assumulating $232b more of cash reserves looking for a use. I would be much more comfortable with a steady regular buyback than hope for Greg Abel to suddenly reinvent himself as a market timer extraordinaire sitting around waiting to pounce in the next crash ( which Buffett himself did not do at any time in the last 10 years despite a number of clear market dislocations).
So as a shareholder I would want to see Greg making a steady series of intelligent decisions rather than comfortable hoarding capital waiting for some spectacular meltdown in the markets. Berkshire has long since crossed the size of reserves where the reserves it already has are more than sufficient for any large transaction the capital markets can throw at it. I don't really want another 5 years to go by and berkshite sitting on $600-700b idle cash and pretending that is evidence of intelligent capital allocation. If that happened, I think the market should rationally award a lower than usual valuation multiple to the business.

I feel that this is so “obvious” and yet, the situation has been maintained now for a very, very long time. I cannot understand what is happening at Berkshire on this matter. I fear that Sue Decker let the cat out of the bag. Buffett’s own letters highlight that if Berkshire cannot beat the S&P 500, it shouldn’t exist. He moved the goalposts with his various tests and now, I think, we don’t know whether Berkshire should exist based on any test. What is the test, exactly, for measuring performance against the S&P 500. The stock performance over time? From what date?

It is just so weird. Now, not only is Buffett not in charge (right?), we discover that Abel is not only the business picker, but also the stock picker? That’s not the deal I thought I signed up for when Weschler and Combs were hired.

There is no scenario I can conjure where I’d be comfortable with Abel putting $300 billion to work in any reasonable amount of time. I doubt I’m alone. I say there is next to zero chance that happens. I expected at least $5 billion of buybacks this quarter alone. There should be a dividend. The notion - sold to us - that a dividend can be “created” by selling the stock (as Buffett eloquently described when he set up the Gates donation) is not the point. The point is capital allocation.

If Berkshire does not comfortably beat the S&P 500, one should own the index instead. That was his advice to his wife. It is my advice to my heirs (assuming a basis step up still exists).

I simply cannot understand what their plan is. Their biggest capital allocation “front” was utilities. Is that now “dead”? Buffett bought in the West but now everyone is moving South. He’s at the mercy of some crazy state legislatures out there.

How many years will we keep hearing that BNSF needs to improve? From its leaders no less.

Buffett is the GOAT. And, perhaps it is too soon. But, when can we move on? No one wants to do a post Covid evaluation, and it’s been 6 years. A decade after Buffett, will we be hearing “markets can do anything”?

I am at a total loss to explain how the shareholder base is going for this. Buffett mentioned to Quick that Berkshire (he?) would be willing to do a $100 billion deal tomorrow. We need three of those - now - and then one every two years thereafter (and more frequently as the cash flow presumably rises from the deals). I hate to say, but I cannot fathom how Buffett believes that is going to happen. It isn’t.

We got a boost when interest rates on cash went from zero to reasonable. The market bid the stock up. I’m not measuring from the high. I’m looking solely at the capital allocation.

I’m looking solely at the capital allocation.

Me too - with the difference that I trust Warren & Greg to know what they are doing (or rather not do).

Mhmm, one sentence might have been a bit too short. As I tried to say with that one sentence I think it comes down to trust. More in detail:

- You think they should ..... pay a dividend.
- You think they should ..... do BIG buybacks at current price
- You think they should ..... [this or that]

Whom do you trust more? Their judgement or yours? For me the answer is clear, which is why though reduced I still have around 50% of net assets in Berkshire.

Did they (Warren) make mistakes? Sure he did. Especially his famous "Errors of Omission". Not using the GFC. Not participating in the Mag 7. Missing out on A LOT, no doubt.

But that fits perfectly my far weaker mentality than theirs. I am far more willing to give my money to somebody who is mentally strong enough to ALWAYS give Rule #1 (Don´t lose money) absolute priority. Such a mindset unavoidably leads to errors of omission --- which is perfectly fine with me, as for myself capital preservation has priority and all else is icing on the cake. And I wouldn't know anybody I´d trust more with that priority.

So it comes down not simply to trust (that was too simple, sorry). It's about your priorities, your investment goals, your preferred risk-reward balance, one has to look into all of that to decide whether Berkshire is the right investment or one should rather look elsewhere.

I’m looking solely at the capital allocation.

That is the core issue and your points are well made. There still seems to be a level of comfort in the shareholder group that ballooning cash reserves is a not a problem that needs to be solved and one must have "faith" and not ask the question.

Well if we have a business which is merely hoarding cash, you should equally be completely prepared to accept lower multiples. Over the last 10 years cash reserves have gone from $53b to $370b which is despite a chunk of cash being used for buybacks a few years ago. If it was any other business there would be serious questions asked about the management.

I understand the people who value not losing money over all else and are comforted by large cash holdings but I also want to see a well managed business. The money thrown off by the business is the shareholders' capital and if management does not have anything intelligent to do with it, they should give it back as Buffett himself has said repeatedly in the past.
Operationally it was good to see that Abel will likely be an upgrade in that matter. There is no evidence that that will be true for the main job which is capital allocation. In fact I have concerns that there might be a passive acceptance that this is part of the "culture" and it is perfectly OK for management to hoard excess capital and that there can be no limits applied to the size of passive capital that keeps on accumulating. I expect new management to find a way to solve the problem not to pretend that this isn't an issue that needs addressing.

Well if we have a business which is merely hoarding cash, you should equally be completely prepared to accept lower multiples

Yes, that of course you have to eventually accept.

There still seems to be a level of comfort in the shareholder group that ballooning cash reserves is a not a problem that needs to be solved and one must have "faith" and not ask the question.

That group is shrinking --- as you can see perfectly here. The voices "Do something with it!" become more and louder. As longer it takes to put the cash hoard to full use as less people will accept it. At the moment many are only willing to still accept this inactivity because they see their Berkshire investment as insurance against a very highly valued market. But how much longer will that reason be enough for them to stay with Berkshire?

The trust*** in management is clearly dwindling, with markets getting higher and higher and each month at Berkshire going by without "finally" something big happening. From yesterday´s not exactly enthusiastic reaction of the market to the AM it seems that this dwindling trust in management did not change with Greg, so I wouldn´t be surprised if Berkshire falls out of favour - which in itself would provide opportunities.


***I would replace "faith" with "trust". Google´s AI: "Faith is conviction in the unseen or intangible. Trust is a verb, a choice, and an action often based on experience or evidence."

The voices "Do something with it!" become more and louder.

Doing something with it is his core job. There is new management in charge and there is an issue that needs to be addressed. In the longer term, capital markets are unforgiving and untrusting.

Flip the perspective. If Buffett been in charge of a business which was letting cash pile up in treasuries and had a new guy at the helm with no convincing plan for the capital what would he have done ?

Let's be real, yesterday was based on what's happening in the Middle East more than the 1st quarter results.

There still seems to be a level of comfort in the shareholder group that ballooning cash reserves is a not a problem that needs to be solved and one must have "faith" and not ask the question.
...
That group is shrinking --- as you can see perfectly here. The voices "Do something with it!" become more and louder...

On the "swing ya bum" line of thought, which arises from time to time:

One thing to bear in mind is that this is not a case of management being remiss, just sitting on their butts "letting" the cash pile up, foregoing reasonable opportunities because of out-of-date investment thinking or whatever. Rather, this has been a very purposeful move, a conscious restructuring of the portfolio over the last 5-6 quarters.

The cash pile is bigger than it has been, but so is the company. So it makes sense to assess it in relation to the size of the firm.

Consider: as recently as end 2024, cash as a percent of total assets was actually below the median level of that same metric over the prior 12 year ends. The subsequent rise beyond that "normal" level is very big, but it's all recent, and in effect all due to stock sales. We might all be in the dark on our guesses of the exact reason(s) for that move--general dislike of valuations, falling fondness for some existing positions, sidestepping taxes on unrealized gains, being ever more prepared for disaster, positioning for a possible buyout of some crazy whale--but it was an active and purposeful move. Management didn't "let" it happen, they did it.

Jim

The voices "Do something with it!" become more and louder.

Yes, yes, almost like a bell ringing...

The "Warren Buffett Indicator" currently sits around 230%, the most expensive valuation in history, surpassing the Dot-Com Bubble and the Global Financial Crisis.

"The current Buffett Indicator reading is 67.7% above its trend-line (2.05 standard deviations)."

Prolly different this time? Maybe a new permanently high plateau?

https://www.advisorperspectives.com/dshort/updates...

Consider: as recently as end 2024, cash as a percent of total assets was actually below the median level of that same metric over the prior 12 year ends. The subsequent rise beyond that "normal" level is very big, but it's all recent, and in effect all due to stock sales. We might all be in the dark on our guesses of the exact reason(s) for that move--general dislike of valuations, falling fondness for some existing positions, sidestepping taxes on unrealized gains, being ever more prepared for disaster, positioning for a possible buyout of some crazy whale--but it was an active and purposeful move. Management didn't "let" it happen, they did it.


This! ^ Thanks Jim.


It's a feature, not a bug.

It's a feature, not a bug.

Good way to put it.

Admittedly we don't yet know whether it's a GOOD feature, but it doesn't seem to be an accidental one.

Jim

Typing on the move and no edits allowed !

It's super easy to edit before posting, with the Preview and Edit buttons. I love them. 😀

Tilsons take on Berkshire ,


“This combination leads me to believe that Berkshire's stock is highly likely to beat the S&P 500 over the next five years, perhaps by a margin of two to three percentage points. So if the S&P 500 compounds at 5%, I would expect Berkshire to do roughly 7% to 8% – with a bias toward the upside.”

https://stansberryresearch.com/whitney-tilsons-dai...

ciao

Admittedly we don't yet know whether it's a GOOD feature, but it doesn't seem to be an accidental one.


True. Cash has more than doubled just in the last 2 years. As you say it is unlikely to be accidental. Unfortunately they didn't really share the thinking behind this in the annual meeting.

What is also true is that the problem of what to do with the enormous amount of cash is now Greg Abel's to tackle. The concern that some of us feel is his lack of credentials in successfully investing anything approaching this amount. Although he was impressive in the AGM as an operator, this issue was not really tackled head on.

Muted buybacks and Abel sitting on $400 billion waiting for a meltdown to deploy is not really a prospect that leaves me feeling particularly optimistic about superior returns long term. We will have to wait and see how things pan out.

Consider: as recently as end 2024, cash as a percent of total assets was actually below the median level of that same metric over the prior 12 year ends. The subsequent rise beyond that "normal" level is very big, but it's all recent, and in effect all due to stock sales. We might all be in the dark on our guesses of the exact reason(s) for that move--general dislike of valuations, falling fondness for some existing positions, sidestepping taxes on unrealized gains, being ever more prepared for disaster, positioning for a possible buyout of some crazy whale--but it was an active and purposeful move. Management didn't "let" it happen, they did it.

It's good to be reminded of this. I notice that cash + fixed is 31% of total assets. It generally runs between 15 to 18%. In 2000 it was 28%...

I saved a Mr. Buffett quote from 2020:
2/24/2020 WEB Squawk Box: "So, we’re about 80% in-- roughly in equities and about 20% in cash"

By "equities" Mr. Buffett included wholly owned companies.

On that same basis we are now about 65% in equities and about 35% in cash. In 2000 it was 60/40.

Tilsons take on Berkshire ,

“This combination leads me to believe that Berkshire's stock is highly likely to beat the S&P 500 over the next five years, perhaps by a margin of two to three percentage points. So if the S&P 500 compounds at 5%, I would expect Berkshire to do roughly 7% to 8% – with a bias toward the upside.”


In the piece Tilson writes:
Today, assuming the funds are in a tax-free retirement account, I would trim the two S&P 500 funds by 10% and add a 20% Berkshire stock position. This would result in a 30/30/20/20 allocation.

30% SPY
30% RSP
20% BRK
20% "International Fund"

He believes Berkshire's stock is highly likely to beat the S&P 500, yet has *a lot* more allocated to the S&P500.

" On that same basis we are now about 65% in equities and about 35% in cash. In 2000 it was 60/40."


Good morning partner, at what point do you concede market timing and stock picking is hard? Thank you.

He believes Berkshire's stock is highly likely to beat the S&P 500, yet has *a lot* more allocated to the S&P500.

Which is a lot less risky for an investment manager than to act in accordance with his conviction, as he won´t look worse than his competition if the S&P goes nowhere.

And that in a time when the S&P is so richly valued might give the individual investor, free of such constraints, the upper hand.


(Btw: Contrary to a previous post I am not "around 40% of net assets" in Berkshire. "Only" 40% BRK, remainder nearly all cash. Apparently beginning of 2025 I sold far more BRK than I thought. Not that this info is of any relevance for anybody, just wanted to correct a mistake.)

Gemini tells me total trading volume for A and B shares combined over the last 3 years was:

Year Class A (BRK.A) Class B (BRK.B) Combined Total
2025 $88.20 B $466.20 B $554.40 B
2024 $80.64 B $403.20 B $483.84 B
2023 $71.82 B $340.20 B $412.02 B

5-10% of 2025 total trading volume is $27.7B - $55.4 which seems reasonable if it gets cheap enough.


So far, the cash hasn't hurt BRK ability to trade at a decent P/BV. And if it trades at a significant discount to IV they'll probably buy back up to 10% of volume. I think they bought back $9B in Q3 and Q4 of 2020.

Throw in the occasional OxyChem $10B, Apple $38B, Allegheny $10B, Japanese companies $15B and they'll stem the tide a bit.

BRK owns or has owned, Apple, Google and Amazon which are big companies. Warren said he put 10% of Berkshire's resources into Apple. With current resources, they could put another $10B in Apple, $65B in Google and $70B in Amazon, at the right price.

In the AM, Greg said there are probably 10-15 companies that are big enough and of high quality that he follows closely that could move the needle, at the right price. Will we ever see the right price? Should he put your money into them if a good price never materializes?

There are 12 with market caps over $1T. There are about 100 companies over $200B market cap.

Berkshire has $10+B in 8 companies currently. 5 are greater than $200B market cap, Oxy is only 58B, Moody's $79B and Chubb 125B total market cap.

There are ~350-400 companies in the US with market caps greater than $58B so there are still some places to stash away $10B or so.

It's simple but not easy. It has rarely been easy. When did Charlie and Warren first say there are no called strikes and you have to wait for a fat pitch? 1974 maybe?

Tilson has always done this lazy analysis. A stock market genius as his grifter ads proclaim

Which is a lot less risky for an investment manager than to act in accordance with his conviction, as he won´t look worse than his competition if the S&P goes nowhere.

And that in a time when the S&P is so richly valued might give the individual investor, free of such constraints, the upper hand.

He does say it's in his personal portfolio, but it's for public consumption so there could be an element of what you say in it.

Larger quote from Tilson:
In my August 19 e-mail, I discussed why, for the indexed part of my personal portfolio, I reduced the allocation in a traditional S&P 500 fund from 100% to 40%. I then put 40% in an equal-weight S&P 500 fund and 20% in an international fund.

Today, assuming the funds are in a tax-free retirement account, I would trim the two S&P 500 funds by 10% and add a 20% Berkshire stock position. This would result in a 30/30/20/20 allocation.

> True. Cash has more than doubled just in the last 2 years. As you say it is unlikely to be accidental. Unfortunately they didn't really share the thinking behind this in the annual meeting.

> What is also true is that the problem of what to do with the enormous amount of cash is now Greg Abel's to tackle. The concern that some of us feel is his lack of credentials in successfully investing anything approaching this amount. Although he was impressive in the AGM as an operator, this issue was not really tackled head on.

> Muted buybacks and Abel sitting on $400 billion waiting for a meltdown to deploy is not really a prospect that leaves me feeling particularly optimistic about superior returns long term. We will have to wait and see how things pan out.


I didn't get any responses to my last post, but that is really my issue.

At this point we are net long USD, exposed to inflation, running an collection of operating companies mostly concentrated in the US, and net long US equities and I don't particularly agree with this.

There has to be a target cash position and goal to collecting the cash. I've increased my own BRK holdings this week, but at the same time I want BRK and Abel to do better in articulating the goal behind the cash hoard. Being a source of systemic strength in the US economy and financial system is great. Do we need more cash to do that effectively? It feels like if that is the goal, there is nowhere near enough. If the goal is to opportunistically pursue acquisitions, that's also great. If the magic list of targets exceeds current levels and we expect a downturn, we also need more cash. They should suspend buybacks and borrow money.

I'd probably state it more sharply than my last post. I *do not* extend the current BRK leadership the same level of trust I did previously. I want clearer plans. Obviously my anonymous demands on a small but mighty internet forum are not going to move mountains, but I'm sure BRK leadership will have to deal with this sooner than later.

Good morning partner, at what point do you concede market timing and stock picking is hard? Thank you.

Market timing and stock picking are indeed hard.

But checking the current prices of securities isn't hard, so it usually isn't hard to decide not to buy something. When you decide not to buy something, that doesn't mean you have or need any opinion about which way prices are going next.

Jim

“ But checking the current prices of securities isn't hard, so it usually isn't hard to decide not to buy something. When you decide not to buy something, that doesn't mean you have or need any opinion about which way prices are going next.

Jim“. Good morning old bud, it brings much joy to read you rationalize away the facts. Hopefully we can agree that those who have been very overweight cash the past 15 years, have been very, early. :::)))

Plus, maybe we could hire a group of smart young folks who work for Ted, and help him search the public and private markets daily looking for good deals? Then Ted could bring the ideas to Greg and Ajit for discussion?

The markets seem to have changed, or maybe psychology has changed, or maybe the generation has changed, and this might not work anymore. What I mean is that "invest by committee" might not work anymore because the current crop of investors "buy the dip" so rapidly that no committee could ever react quickly enough.

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