Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (60384)	2/14/2018 7:37:28 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78740

Do you know of any publicly-held insurance companies that meet your buy criteria now?

To: Graham Osborn who wrote (60384)	4/13/2018 4:08:20 PM
From: Graham Osborn	Read Replies (2) \| Respond to of 78740

One other thing I noticed on Fairfax is that, since 1992, Berkshire has actually outpaced them in growth in book value per share. Poor Prem just can't keep his hand off the share issuance button (over the same period, Fairfax's float has risen nearly 400% while Berkshire's has risen about 40%). When you consider that Berkshire's sh equity at the start of the period was almost 100X Fairfax's, you start realizing that Buffett is just destroying Watsa on a comparative performance basis. The irony is that it's not simply that Buffett is a better investor than Watsa - although there may be some evidence of that. I think the even more important factor is that Watsa is not nearly as shareholder-oriented as Buffett due to the fact that a good chunk of his compensation comes from management fees from Hamblin Watsa. Watsa is therefore incentivized to grow assets even at the expense of shareholders. Don't get me wrong - he has bowed to that pressure far less than 99% of corporate America. But it is an excellent illustration of Munger's principle that misaligned incentives nearly always weigh on performance - making it hard for active managers to outperform the indices. Buffett let's other people rides side-car with him because he thinks it's fun - but he walks in the shoes of shareholders.