What a lot of people don't realize is no one
cares what the stock prices do of companies Buffett has
no intention of selling.
First, the dividend
yield on these companies is well over 10% based on
original cost basis. This doesn't change a bit with their
flat EPS years or low stock prices. In fact, dividends
are raised ANYWAY!
Second, these stocks are
carried on the books with a corresponding 35% tax
reserve. Thus, the moves down are not 100% felt by BRK
because the majority of G and KO's current prices are
pure profit taxed at 35%.
Will BRK take a hit
based on G's performance tomorrow? Probably, but who
the hell here really cares anyway? Was anyone
planning on selling anytime soon? Unlike the nuts which
produce great short-term (and highly taxable) income, BRK
is an investment that we all know is appreciating at
a high rate whether the stock reflects it in the
near-term or not.
Outside of BRK, my only
insurance holdings are LUK (which basically sold out at the
top), and Tokio Marine and Fire -- Which is basically a
play on Japan (TKIOY).
Send me an email,
<What insurance journals are
out there? Why should I believe the claims that GEICO
may be the second largest auto insurer in a decade,
for example? Where do I get the numbers to compare
them to say Progressive?>
Go to a big
library and look at A.M.Best publications....There
insurance reports (wildely available), and aggregates and
averages (prob harder to find...hence big
Also, while at the library, get a stack of National
Underwriter's (PC edition).
Martha, you seem to be
knowledgeable here, but I'd be interested in anyone's
What insurance journals are out there? Why should I
believe the claims that GEICO may be the second largest
auto insurer in a decade, for example? Where do I get
the numbers to compare them to say
Similarly, who are General Re's major competitors?
there a good "introduction to the insurance industry"
Also (more off-topic); do you have
any info on the life/health industry as well? (I'm an
Not optimistic given CNA personal lines
acquistion -- in over their heads on independent agency
distribution. Auto margins currently headed in the wrong
direction. Added catastrophe exposure is also a problem.
Difficult to reflect the magnitude of the potential
downside of their cat exposure in the stock price.
Wouldn't be where I would choose to place a bet, but there
is always a price low enough I guess.
G really missed the numbers...
a PE of 50
with negative earnings growth
G should be glad it's not a small cap with that
kind of growth it would end up losing more then half
it's value in one day
but I'm sure G will only lose
5 to 10 points
the impact on BRKA...
will break below 70000 tomorrow