Halls of Shrewd'm / US Policy
No. of Recommendations: 12
No. of Recommendations: 0
Thank you for posting this, much appreciated!
Does anyone know what Chris Bloomstran's investing record is? Is he someone who is beating the index on a fairly regular basis? I was just curious. Thanks.
No. of Recommendations: 0
In his letter he claims 9.8 cagr over the 27 years in business, vs 8.5% for the SP500.
No. of Recommendations: 7
In his letter he claims 9.8 cagr over the 27 years in business, vs 8.5% for the SP500.
That's a meaningful advantage, especially if it's after fees and expenses. Good for him. As a money management business, it has been very hard to beat the S&P 500 in the last 15-or-so years.
Jim
No. of Recommendations: 3
Off the top of my head I wonder if a large portion of that edge has arisen in the last year due to his high weighting in the dollar stores. His return in 2025 was 41.4% net versus the S&P return of 17.9%. His other great period of outperformance was during the dotcom bust.
No. of Recommendations: 2
Why does Bloomstran publish his report a couple of days before Berkshire annual report comes out? It seems he is better off to incorporate the annual report info into his analysis of Berkshire by publishing a couple of week after the annual report. Seems a bit of gamesmanship to me.
No. of Recommendations: 24
Why does Bloomstran publish his report a couple of days before Berkshire annual report comes out? It seems he is better off to incorporate the annual report info into his analysis of Berkshire by publishing a couple of week after the annual report. Seems a bit of gamesmanship to me.
On page 92 of this year's letter, Bloomstran explains, "I was asked last year why I labor to estimate Berkshire’s year-end financial figures in such detail, albeit with remarkable accuracy, and why not just wait for the company to report results and then drop the actual numbers into my models and spreadsheets. The answer is that in laboring so beforehand, with Berkshire and all of our companies, the process makes me think. I want to think about the details about what’s going on with each moving part of the company. With the onslaught of AI, I fear fewer and fewer will understand the importance of doing so with the passage of time. Why read every Value Line page each week? Similarly, people ask me why I write such a voluminous annual letter (I sometimes ask myself that very question). The answer is that, again, the process makes me think, which leads to a better understanding of Berkshire and our other portfolio holdings."
No. of Recommendations: 3
Perhaps I am an outlier here but I don't think Bloomstran's 200 page analysis of Berkshire adds much to one's understanding of the company beyond what can be obtained by reading the quarterly & annual reports.
It's fine that he writes long-winded letters to his investors but for others it's not of much value. Just my 2c.
No. of Recommendations: 19
A few quotes from the letter with comments:
S&P500 is in a bubble. “The S&P 500 is dangerously elevated above levels seen at every secular peak in the last century. Most fundamental yardsticks of value are at records, even when adjusting for necessary factors.”
AI data center boom is like the fiber-optic boom of the late 1990’s [we don’t talk about “Level 3” in my house]. “As George W. Bush said, “This sucker could go down.” It’s not so much could, but when.”
On Berkshire:
“..the cash position beyond insurance needs is very large today, and we expect Berkshire’s new CEO, Greg Abel, to take big swings with it during the next deep recession or crisis, or when the rare elephant opportunistically crosses the path.”
“By Semper’s math, 2025 intrinsic value grew 9.3% from $1.126 trillion to $1.230 trillion, or in per-share terms to $855,396 per A share and $570 per B share.”
Note – this includes Bloomstran’s “Optionality Premium“, i.e. fictional earnings.
On Buffett: “The legacy of Warren Buffett is far beyond the investment record. While the world likely wouldn’t know Warren without the investment record and Berkshire Hathaway’s mammoth success over his more than six decades of stewardship, it’s the way the scorecard was created that is so important. His positive impact on so many people around the world is testament to who he is as a teacher, a mentor and a role model.”
On Abel: “I think Berkshire’s shareholders will find Greg fully up to the task of running Berkshire and allocating its capital.”
“A key question is how aggressive Greg will be in repurchasing shares when they are sufficiently cheap. My sense is he will be more aggressive than Warren was. Repurchasing undervalued shares is a terrific use of capital, and Greg is most certainly aware of the mountain of it lying around.”
On Berkshire valuation:
“The shares are less undervalued heading into 2026 than they have been in quite a while.”
“Against a S&P 500 trading at 26.0x earnings capitalized on a high 12.8% margin, we like Berkshire at 17.6x our measure of economic earnings. We liked it more at lower multiples.”
Optionality Premium p172-174: “We make a generally material upward adjustment to Berkshire’s reported profits that assumes much of Berkshire’s cash will be put to good use, and reasonably soon. Specifically, the adjustment assumes Berkshire will earn 7% pretax minus the current yield on U.S. Treasury bills on cash balances in excess of Berkshire’s stated $30 billion minimum cash floor plus the amount of cash expected to be paid in a year for claims paid in the insurance operation ($56.6 billion in 2025). Thus, we assume Berkshire’s permanent cash reserve is $86.6 billion.”
“The adjustment adds $7.3 billion to 2025 economic earnings, up from $6.2 billion in 2024.”
“Is it aggressive assuming a return that’s not being earned currently? We don’t think so.”
Hmmm. This adds about 10% to IV. Quite an adjustment. I believe it very unlikely that Berkshire will invest $280 billion anytime soon.
No. of Recommendations: 3
As I don't even read nearly 200 pages of my own legal docs, I'll pass. But I'm looking forward to the actual AR on Saturday, and will read it carefully as usual.
This isn't so much an exercise in evaluating their financials but to look for little clues (and not-so-little ones). I remember well in the 2006 AR, well before the fallout of all the CDO nonsense but when it was brewing, there were six separate things I read and flagged that made me think "hmm, this isn't looking good for housing".
I'm wondering more and more with the ever-increasing cash position - obviously in raw dollars but possibly also as a bigger slice of the pie in overall assets if their equities sort of slog along - if we're seeing dry powder being kept for another lender of last resort scenario, but at an even bigger scale. Many of you will recall how Berkshire made some substantial loans at around 8-12% to Harley Davidson, Goldman, etc, maybe 15-20 years ago. They got some nice warrants out of that also. I would be pretty cool with seeing ~$250b of those written, in some sort of calamitous times.
No. of Recommendations: 6
Perhaps I am an outlier here but I don't think Bloomstran's 200 page analysis of Berkshire adds much to one's understanding of the company beyond what can be obtained by reading the quarterly & annual reports.
You are an outlier from my perspective, but I'm only one guy here! 😀
But I'm not sure you've read his letter if you think it's entirely about Berkshire. Reminds me of Joe Morgan poo-pooing Moneyball without having read it, apologies if I misunderstood you. There's a lot more in it than Berkshire, and all enlightening (including much of the Berkshire portion).
No. of Recommendations: 2
You are an outlier from my perspective, but I'm only one guy here! 😀
But I'm not sure you've read his letter if you think it's entirely about Berkshire. Reminds me of Joe Morgan poo-pooing Moneyball without having read it, apologies if I misunderstood you. There's a lot more in it than Berkshire, and all enlightening (including much of the Berkshire portion).
I skimmed through the letter. Yes it isn't just about Berkshire, but it is the only company he talks about other than macro level topics. And Berkshire gets a ton of ink.
As they say "to each his own". I have no problem if you find it useful, it's just not my cup of tea.
No. of Recommendations: 8
His reports are easy to skim. I just look at the syllabus and go to the part that interests me. By far the best part was his analysis on AI and what is going on with the hyperscalers. This is such a complicated topic and I really enjoyed his easy to digest thoughts on the situation. I also happen to think he's spot on comparing it to the Telecom bust and putting that in it's proper context by not referring to it as the dot com bust. There is an overbuild and it will be a problem but it will eventually be digested with a shake out of winners and losers. And while he aptly pointed out that the economics (and profitability) of it don't add up, I think he could've added that it seems the only economic advantage would be eliminating jobs, which is a whole separate topic.
At some point something's got to give and it feels like we might be in the early stages of that.
No. of Recommendations: 1
" A few quotes from the letter with comments:
S&P500 is in a bubble. “The S&P 500 is dangerously elevated above levels seen at every secular peak in the last century. Most fundamental yardsticks of value are at records, even when adjusting for necessary factors.”
AdrianC, good morning partner, I knew I could count on you to provide the Cliff Note version. On what page does Chris make suggestions with respect to how brkbs current leadership can make brkb a more compelling value relative to highly concentrated, overvalued, too much tech exposure,1 % yielding SPY?
On what page does Chris discuss the fact that since brk does not use stock-based comp, every share brk buys back is more precious and dear than any other public company buybacks?
On what page does Chris explain why he thinks nvda, googl, meta, etc initiated small annual dividends in 2024?
On what page does Chris discuss the significance of Buffett and Munger working for partners virtually FREE for 60 years?
Does Chris discuss the significance of Buffett's plan to sell approximately 15 billion market value of his control block of shares into the public market annually the next ten years?
I have a hunch the letter is jammed backed with, ancient history, and I'm very happy you enjoy that content. In 1965 I was 15 years old living in Brooklyn New York, in govt subsidized housing, aka, the projects, I doubt my parents had 1000$$ in savings. I'm into current events.
Thank you for expediting the process for us lazy old people. :)
No. of Recommendations: 11
AdrianC, good morning partner, I knew I could count on you to provide the Cliff Note version. On what page does Chris make suggestions with respect to how brkbs current leadership can make brkb a more compelling value relative to highly concentrated, overvalued, too much tech exposure,1 % yielding SPY?
You're welcome. More compelling value? I think Bloomstran has the same thinking as many of us here - if Berkshire businesses do well and management allocates capital well the value of Berkshire will go up and that will be reflected in the stock price. Interestingly, he doesn't think the shares are very cheap right now: “The shares are less undervalued heading into 2026 than they have been in quite a while.”
He thinks Greg will be more aggressive with share repurchases: “A key question is how aggressive Greg will be in repurchasing shares when they are sufficiently cheap. My sense is he will be more aggressive than Warren was. Repurchasing undervalued shares is a terrific use of capital, and Greg is most certainly aware of the mountain of it lying around.”
There was a mention of Berkshire paying a dividend:
"One tool Berkshire does not employ is payment of a dividend. It paid one $0.10 quarterly dividend and
realized it was better retaining all profits and reinvesting like it knew how. Berkshire had precisely one
116 million shares outstanding in 1967 (only 43% higher today, the increase from acquisitions using mostly
expensive Berkshire shares as currency and the issuance of the “B” shares in 1996). The dime dividend
therefore cost Berkshire $100,000 in 1967. Shareholders’ equity would be higher today by $2.7 billion
had they not paid it. Berkshire would be worth a fraction of what it’s worth today had they adopted a
conventional strategy of distributing some percentage of profits as dividends every year. "
I'd guess Bloomstran isn't a fan of Berkshire paying a dividend :-)
No. of Recommendations: 2
What he does write about Berkshire flies in the face of Buffett’s “conservatively calculated” approach. Arguably there’s an unmet need amongst shareholders to hear this vain. Makes them feel smug about owning Berkshire. They weren’t going to get it from Warren.
Surely it helps a money manager that there’re a lot of old money wealthy around Omaha. And Buffett providing full disclosure like no other Chairman does.
Like to read his 100 page writings about his second best idea. He’s been in the business for 25 years.
