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I dislike long tweets but can& #39;t how to make this shorter. I posted a version of this back in Aug19, so has nothing to do with the Munger interview. I& #39;m long $BRKA $BRKB and feel that WEB is anchored to his idea/passion of turning a $ into more than a $, without actually doing so.
He says market is very undervalued if rates are sub-2% but buys little (public/private/repurchase). They& #39;re likely using a 9-10% threshold which, of course, will not be met in a sub-1% world. Waiting for a deal amounts to betting on rates or cycles (which they say they don& #39;t do).
Central banks are driving DOWN rates. So may be another 5 years before a deal. If that deal (in 2025) is anything less than $200 billion, ROE from now on will be disappointing. WEB is right to think BRKB is not worth much more than where it trades...
... because they will always have a cash drag and not enough opportunities. He loves the buybacks @ AAPL, loved them @ IBM, but the same logic doesn& #39;t seem to apply to BRKB. We have to adjust our prospective ROEs down accordingly. It& #39;s not totally rational for WEB to act this way
He just doesn& #39;t believe in shrinking the base when it comes to $BRKB. This view has been held since at least 1995 (when they said they wouldn& #39;t buy it back even at a 25% discount). His passion/desire to invest is getting in the way of "per share" results.
In many of these situations, he has always said in hindsight that they should& #39;ve acted differently (e.g. when they didn& #39;t buy back after 1999, when they raised the threshold from 1.1x to 1.2x, etc.)
$OXY seems like something they got into where they liked the terms but not the business because they cannot find anything else (like Salomon and US Air back in the day). Kraft deal did not go as well as anticipated. Many of the GFC investments (except BNSF) were just okay.
Ted/Todd/WEB have not beaten the indices. PCP was just okay. Airlines?! There have just been too many mistakes and misses ($GOOG $V $MA, etc.) that I frankly cannot give $BRK the benefit of the doubt on cash. Yes, $AAPL was good but barely covers the opportunity cost on $IBM
