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- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 12
I believe there could possibly be the potential for very significant upside to operating earning under Abel.
Warren bought all our businesses from old men with the promise that they would be left alone to run the businesses as they wish.
Warren also believed in buying businesses so good that an idiot could run them...businesses so good that they made money in spot of themselves.
Fast forward 40 years and most if not all of those old guys are gone.
Warren won't be here forever either.
His promises were kept but I believe they expire when he steps down.
I look for Abel to go through each business Wirth a fine tooth comb wringing out wastes and inefficiencies.
I believe he has been mandated to do this.
See what is happening now at GEICO now that Tony Nicely retired after 30 years.
The railroad is next to be fixed.
I think you could see some of the unimportant retail and services business sold.
I look for a leaner, and for certain, meaner BRK to display latent earnings potential in the years ahead.
Charlie and Warren were not operators, but Abel is.
No. of Recommendations: 20
There may be merit in much of what you say.
I might not expect this one though:
I think you could see some of the unimportant retail and services business sold.
It does make sense to sell or close those that are losing money and are without a solid prospect of making money soon without additional capital infusions.
But merely low returns can probably be supported indefinitely.
My reasoning is that the units involved are generally so small that the benefit from the financial resources freed up would not be worth as much as the "good will" of keeping them, since that good will is a help when negotiating private acquisitions.
Nobody cares if Berkshire has a small amount of very-low-return capital tied up in something like (say) Pampered Chef, other than the next person who might sell such a business to Berkshire. (I have no idea if Pampered Chef is doing well or not, it's just a for-instance)
Jim
No. of Recommendations: 1
<<<It does make sense to sell or close those that are losing money and are without a solid prospect of making money soon without additional capital infusions.
But merely low returns can probably be supported indefinitely.
My reasoning is that the units involved are generally so small that the benefit from the financial resources freed up would not be worth as much as the "good will" of keeping them, since that good will is a help when negotiating private acquisitions.
Nobody cares if Berkshire has a small amount of very-low-return capital tied up in something like (say) Pampered Chef, other than the next person who might sell such a business to Berkshire. (I have no idea if Pampered Chef is doing well or not, it's just a for-instance)>>>>
Spot on! This hass the approach of "current management" lol! And likely get the incoming CEO shown the door if the good will promise is tampered with too much.
No need to think any harder than current management holding even the dismal Berkshire Hathaway for 20 years, while subjecting it to a capital diet plan (ok, starvation).
All that said, future management is unlikely to hold for 20 years and that is indeed a good thing for shareholders. 20 years may have been okay in 1965, but unlikely to be in 2035.
It'd be an interesting exercise for early shareholders on this forum to estimate the incremental value accretion left on the table of inaction, had Warren shut down the spinning and weaving stuff in 1970 or 75? No need to boggle the mind more than the 21% compounding but it would be a fun exercise.
No. of Recommendations: 2
<<<<The railroad is next to be fixed.
......
I look for a leaner, and for certain, meaner BRK to display latent earnings potential in the years ahead.
Charlie and Warren were not operators, but Abel is.>>>>>
Indeed the positive side of the upcoming change, even acknowledged by Warren. We know his distaste for taking bad news, especially big bad news downwards.
In fact, at the annual meeting, my ears perked up wide and caught something Abel said when answering a question about the railroad's cost problem.
"What BNSF needs is a culture of continuous cost reduction, not based on coal or oil of lumber loadings in the current period." aka Lean culture.
Prior answers on this subject in previous meetings were of the variety "We are adjusting the costs to the current demand" - or such bromide. Wall Street driven companies pander to the rallying cries for organ replacement, amputations and such.
This was music to my ears.
No. of Recommendations: 0
And likely get the incoming CEO shown the door if the good will promise is tampered with too much.
Pampered Chef > Tampered Chef
No. of Recommendations: 0
And likely get the incoming CEO shown the door if the good will promise is tampered with too much.
Pampered Chef is better than Tampered Chef
