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The Berkshire Hathaway of the Internet (2017)

awilkinson.medium.com

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Re: The Berkshire Hathaway of the Internet (2017)

#31

Post by lotsofpulp »

sumedh wrote: post #30
lotsofpulp wrote: post #27

Earlier quoted context omitted.

> The reason why BH has not been outperforming SP500 in the last 10 years is that cash is cheap for everyone (this is the longest boom in history) Once the water level drops again and we see who swims naked, BH will outperform again. At the start of the tech companies’ boom, Buffett famously said he does not invest in tech companies because he does not invest in what he does not understand. Then he bought a ton of Ap…

> Then he bought a ton of Apple a few years later, Did he buy it or was it one of the two fund managers who work for BH?

Sorry, I should have said Berkshire bought it. I do not know the specifics, but I assumed such a large investment would have had Buffett’s approval.

Re: The Berkshire Hathaway of the Internet (2017)

#32

Post by aczerepinski »

sumedh wrote: post #30
lotsofpulp wrote: post #27

Earlier quoted context omitted.

> The reason why BH has not been outperforming SP500 in the last 10 years is that cash is cheap for everyone (this is the longest boom in history) Once the water level drops again and we see who swims naked, BH will outperform again. At the start of the tech companies’ boom, Buffett famously said he does not invest in tech companies because he does not invest in what he does not understand. Then he bought a ton of Ap…

> Then he bought a ton of Apple a few years later, Did he buy it or was it one of the two fund managers who work for BH?

It was primarily Buffett (he said he bought it) but I suspect one of the other two bought some and later sold it as well.

Re: The Berkshire Hathaway of the Internet (2017)

#33

Post by gtirloni »

salmonlogs wrote: post #20

If the genius business model relies on trusting people because "we have tons of mutual friends" then its just friends of friends investing in each other. That is not even slightly comparable to Berkshire Hathway and shows a stunning level of naivety. The typical process requires due diligence because there is no trust - there are a huge amount of dodgy businesses, sketchy owners and smooth talkers trying to extract c…

And you know this because?

Re: The Berkshire Hathaway of the Internet (2017)

#34

Post by ethbr0 »

texasbigdata wrote: post #22
salmonlogs wrote: post #20

If the genius business model relies on trusting people because "we have tons of mutual friends" then its just friends of friends investing in each other. That is not even slightly comparable to Berkshire Hathway and shows a stunning level of naivety. The typical process requires due diligence because there is no trust - there are a huge amount of dodgy businesses, sketchy owners and smooth talkers trying to extract c…

If it is naive the LPs signed off and agree with the strategy. If it’s not, it differentiates them from competitors. Until you’ve received a 35 page word document from a big public company with bullet point questions (their “standard” catch all set) it’s hard to describe the sheer pain of certain diligence; it can take a team of 6-8 people up to 2-3 weeks to turn something (depending how much you prepared by predicti…

The investing thesis can probably be boiled down to: most companies are run as they say they are (honestly), a few companies are unknowingly run poorly (inaptitude), and a very few are run fraudulently (wilfull deception).

The due diligence process is designed to ensure the last one is ferreted out.

If you believe you can find other signals to identify and avoid those companies, then why still conduct it (aka the most painful part of the process)?

Honest companies are not an issue, and inept companies can be recognized through a less disruptive audit.

Re: The Berkshire Hathaway of the Internet (2017)

#35

Post by moneywoes »

sfobiab wrote: post #29

Andrew Wilkinson recently took a company public in Canada through a reverse takeover https://www.google.com/search?q=CVE:+WE Very early in the life of the company they have undertaken some pretty dishonest accounting of their revenues, net retention and other key metrics. The CFO resigned after the first reporting quarter. I have a strong feeling there is more to this character than just the recycling of virtue fille…

Guy is a great writer though

Re: The Berkshire Hathaway of the Internet (2017)

#36

Post by nojito »

nabla9 wrote: post #24
smg wrote: post #9

There is more to BH than how they acquire companies. They also have a track recored of out performing S&P for decades. I doubt if BH alpha is because of their streamlined acquisition process. Does Tiny have a similar record?

The whole idea that BH is a success due to good deals is wrong. BH has made good deals and bad deals, but that's not the main reason for their long term track record. BH has a good record because they have structured their business to have a permanent edge: Their insurance&reinsurance business (half of the business) generates cash and float constantly. The side of the company seeks ways to invest all that cash. Often…

>BH has made good deals and bad deals

Yup...famously Buffett's worst acquistion was of Berkshire Hathaway itself!

It probably cost him ~$200B.

Re: The Berkshire Hathaway of the Internet (2017)

#37

Post by nojito »

elchief wrote: post #4

It's not because he makes it easy. He buys them when they're strapped for cash Fruit of the Loom: 1999 Bankruptcy, 2002 acquisition by BH He even bought into Berkshire Hathaway itself, on the cheap

>He even bought into Berkshire Hathaway itself, on the cheap

This is incorrect. He bought it and wanted to sell it back because of how bad the company was...but they tried to "steal" a small portion of the agreed upon price.

Buffet than went ahead and bought up shares and fired the guy who tried to short change him.

Re: The Berkshire Hathaway of the Internet (2017)

#39

Post by tobyjsullivan »

sfobiab wrote: post #29

Andrew Wilkinson recently took a company public in Canada through a reverse takeover https://www.google.com/search?q=CVE:+WE Very early in the life of the company they have undertaken some pretty dishonest accounting of their revenues, net retention and other key metrics. The CFO resigned after the first reporting quarter. I have a strong feeling there is more to this character than just the recycling of virtue fille…

Just for my own edification, is the suggestion here that a reverse takeover is inherently dishonest? I'm asking out of genuine ignorance.

I read up on reverse mergers a while ago and couldn't get a read one way or the other - felt kinda similar to a direct listing (which I understand even less). Anecdotally, the company that was considering doing it seemed suss af.

Re: The Berkshire Hathaway of the Internet (2017)

#40

Post by hellbannedguy »

missedthecue wrote: post #13
unityByFreedom wrote: post #8

Earlier quoted context omitted.

> Clayton Homes TBD per John Oliver: https://www.youtube.com/watch?v=jCC8fPQOaxU

John Oliver doesn't approve of certain aspects in their business model, but when Clayton was acquired in 2003, it was a healthy company and has grown massively since.

They sell mobile homes to poor people using basically car loans. 15% is right. Plus--there are tons of fees.

It's like Payday loans.

I imagine this company will just get bigger, and bigger.

I wish our government would revisit every law concerning high interest loans.

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