Chris’s fund is 35 percent brk, so obviously he’s talking his book, but, he certainly isn’t lazy and he does a ton of due diligence. I’m almost done reading the entire letter.
He most definitely is not lazy!
Of the holdings on Semper’s 13-F, Berkshire represents a tad under 33%. But the 13-F doesn’t include some foreign holdings, so Berkshire must make up less than 33% of Semper’s entire stockholdings. I suppose it’s possible that some of its undisclosed foreign holdings are among its largest.
Is it worth reading ?
Several sections are well worth reading. A few years ago I emailed Chris and he was kind enough to exchange with me. An interesting factoid for me is, he addresses excess compensation in the letter. However, if Buffett and munger don’t take the usual 2 percent annually in total comp, shouldn’t brk outperform spy by at least two percent? Plus, the excess comp they don’t take remains in the company to compound for forty years. Also , think about the managers who have promoted brk over the years. Tilson got to about 175 million AUM, blew up, and now I think he sells used cars or something. Chris Davis lost about 25 percent of his AUM. Rolfe lost over 75 percent of his AUM, and he no longer owns brk, or very little. Bloomstran went from 150 million to 350 million but still, he should shoot dice like Cathie Woods and raise billions 
I think you would find this type discussion interesting, “ Chris writes, “” After about a third of profits are sent to index shareholders as dividends, more than 100% of the retained
balance is used repurchasing shares to merely offset the dilution that results from giving 2% of the
average company to insiders each year as options and restricted shares. Share reduction of the index
companies was a modest 0.7% per annum for the past decade. Said differently, companies spent roughly
60% of profits to purchase 2.7% of their market capitalization each year, yet only reduced the share count
by 0.7% annually. Bully. Retained earnings are NOT reinvested at the return on equity. All retained
earnings are spent repurchasing expensive shares. Repurchases made at high prices destroy capital. Shares
bought at 20x earnings yield 5%, and 30x earnings gets you 3.3%. If no profits are left after paying
dividends and repurchasing shares, what funds growth capital expenditures and growth research and
development? Exactly.“” In view of this fact, since BandM ran brk virtually free for 40 years, and never took one share from us, shouldn’t we expect brk to outperform spy by at least 2 percent a year long term? All that earned compensation that was never taken was allowed to remain within the company to compound for 40 plus years,no? Where did the expected over performance go? What am I missing? Thanks.
There’s no 2&20 drag on the S&P, that’s the drag you get for active management of a fund, not for running a conglomerate.
But anyways, 19.8% from 1965-2022, compared to 9.9% for the S&P, is not enough outperformance? HC may never be satisfied, because you won’t find that kind of outperformance very often. Even if there had been typical hedge fund fees, 7% annual improvement over the S&P, over 57 years, is not something I would complain about.
DTB
Good morning dt, in 1965 I was 14 years old living in govt subsidized housing , aka, the projects, with my parents. I’m a bit tired of ancient history, but if those stats are meaning to you, going forward, rock on. Id prefer more discussion on 10,15,20 year numbers. Off to pickleball , have a grand day.
I think you’re ignoring at least two very important points. 1. Most hedge funds operate in the form of a LTD Partnership or LLC which is a pass through for tax purposes. Holding large quantities of equities in a C corp like BRK is a huge disadvantage and you’d never set it up this way on purpose. 2. Size Limitations. BRK is hugely limited in what it can buy that actually moves the needle.
Finally, BRK is a conglomerate and there is almost always a conglomerate discount by Mr Market. Hence, the popularity of spin offs as a strategy to unlock value.
Btw, gold was 35$$ in 1965, I wish I had 35$$ dollars in 1965, just sayin.
Majority of the outperformance occurred when BRK was small and Buffett was young.
yes, gold would have been great, too, nothing special about berkshire, right?
gold up from $35 to $1846, so it’s up 53x
brk up from $19 to $461,705 …
Both are up a lot, so I guess it wouldn’t really matter which you bought, right?
I am officially not responding to any more of these dumb arguments.
dtb
I live in a 55 and older community. Guess what often happens to guys in their 90s? Simple question, if Buffett has a, bad week end, who manages the 100 billion? To me, a prospective investor in brkb should be thinking about 10,15, and 20 year returns, and how tandt have done over the ten year period. If you think 55 year numbers are that material, you are certainly entitled to your opinion. Were tandt mentioned in the letter? Thanks.
SP500 suffers from 2% to 5% management compensation drag, which Berkshire doesn’t. It is significant, especially over 40 year period.
It is fair to say we don’t know about T&T. However, why would Berkshire share their record?
This is addressed by Buffett, see here…
given their growing importance to the firm can you discuss this policy and whether we can expect to hear from the mmore in the coming years?
They’re both absolutely terrific and that’s one reason i don’t want people quizzing them on stocks they they are assets of berkshire and just uh there’s no reason for them to be out educating other people on how to compete with us uh and it wouldn’t it it always seems so silly that people expect they don’t expect you to they don’t expect murk or advisor or something to tell them exactly what their scientists are working on you know where they stand and where the failures have been so they can eliminate those yeah and and you know that the the if you’ve got talent that knows how to evaluate businesses and and those two fellows have been they’ve gone far beyond that uh they’ve terrific assets and they they love they love berkshire and they work extraordinary hours but but we don’t really want them going around with people asking them questions about why you like this industry better than that industry or anything of the sort
Thanks for sharing that kingran, but his response is embarrassing. If you think that’s acceptable disclosure, that’s ok by me, we can agree to disagree.
I think it is an acceptable response. Why you think any company, let alone Berkshire, share the performance of their individual managers? Do you know how many managers at various Banks manage money with higher risk that you never know about? Berkshire is disclosing the performance of their investments. So you make your own adjustments/ judgement out of it.
FWIW, I think this is a perfectly acceptable response to me.
I have never worked for an organization that allowed their top managers / directors to speak about their strategic direction, their intellectual property decision-making process / rationale.
That’s an organization’s moat to me - this is how I see T&T’s responsibility to BRK - and why WEB wants it that way.
'38Packard
Can you kindly show us where anyone ever requested that level of specificity ? Remarkable. Obviously , Buffett now wants their trades lumped in with his, I wonder why? It’s not to hard to read his mail.