I first met Tom Gaynor, and Steve Markel, at a Berkshire annual in the early ‘90s. They became regulars—and were attentive students. As Tom said to me once, Berkshire had the kind of shareholder that Markel aspired to attract; so, they decided to buy us Sunday brunch.
I think one of Tom’s long-term objectives is to qualify, as Berkshire was able to in the mid ‘80s, to invest its insurance float in concentrated equities and minimum fixed income. Its Markel Ventures might help in that direction. But Markel has been an insurance company from the beginning, while Berkshire evolved from a waining textile business turned portfolio company. The purchase of National Indemnity enabled it to expand without being forced to report as a trust company. The combination of being an over-capitalized insurance company coupled to wholly owned companies—See’s to BNSF—was enough for its insurance commissioner to free Berkshire from the normal constraints on investing insurance ‘float’.
Katrina resulted in nearly $3 billion in losses. Berkshire had already made quarterly tax payments of $750 million in the first nine months of the year. Berkshire’s operating companies serve as a form of reinsurance. And that reinsurance is paid on the recording of the loss, not only at payment of the loss.
Thanks, Kevin, for keeping us informed. You—and Becky—confirm that Berkshire will not react to the Union Pacific deal as the investment bankers would hope.
That's awesome that you were there for one of the first Markel Omaha Brunches! This reminds me that I still need to watch the video from this year's event.
The idea of a partnership with CSX short of a shotgun wedding makes a great deal of sense. Buffett was never going to be “forced” into an expensive acquisition and it is amazing that so many in the business media thought that a shotgun wedding was a foregone conclusion. Perhaps at some point a merger will make sense, such as during a recession when stock prices are more reasonable (and Berkshire would still have plenty of cash). Of course, such circumstances would also offer up many other possibilities for intelligent deployment of capital.
Yes, despite all the speculation from railroad industry insiders, this definitely seems like the most Berkshire-like solution. And, like you said, who knows how it might develop down the road when prices are lower.
I joined DuPont in 1969 and retired in 2018. Financial performance during that time was abysmal as were the CEOs. Ed Jefferson bought Conoco in 1981 with oil around $30/bbl and Chad Holliday (by far the dumbest of the bunch) decided to split off Conoco in 1999 with oil at a nadir and half the price of 18 years earlier. Absolutely the worst timing possible. I was happy to exchange my DuPont shares for Conoco in 1999.
According to Grok in 1969 DuPont was #10 in revenues of US stocks and about #15 in market cap ($9.5 billion) and Berkshire was worth $95 million…1/100 of DuPont. Fast forward to 2025 and Berkshire’s market cap is 13 times what remains of DuPont. The good news is DuPont’s businesses became more sustainable with a lower carbon footprint.
I first met Tom Gaynor, and Steve Markel, at a Berkshire annual in the early ‘90s. They became regulars—and were attentive students. As Tom said to me once, Berkshire had the kind of shareholder that Markel aspired to attract; so, they decided to buy us Sunday brunch.
I think one of Tom’s long-term objectives is to qualify, as Berkshire was able to in the mid ‘80s, to invest its insurance float in concentrated equities and minimum fixed income. Its Markel Ventures might help in that direction. But Markel has been an insurance company from the beginning, while Berkshire evolved from a waining textile business turned portfolio company. The purchase of National Indemnity enabled it to expand without being forced to report as a trust company. The combination of being an over-capitalized insurance company coupled to wholly owned companies—See’s to BNSF—was enough for its insurance commissioner to free Berkshire from the normal constraints on investing insurance ‘float’.
Katrina resulted in nearly $3 billion in losses. Berkshire had already made quarterly tax payments of $750 million in the first nine months of the year. Berkshire’s operating companies serve as a form of reinsurance. And that reinsurance is paid on the recording of the loss, not only at payment of the loss.
Thanks, Kevin, for keeping us informed. You—and Becky—confirm that Berkshire will not react to the Union Pacific deal as the investment bankers would hope.
That's awesome that you were there for one of the first Markel Omaha Brunches! This reminds me that I still need to watch the video from this year's event.
Thanks! Please continue your informative work!
The idea of a partnership with CSX short of a shotgun wedding makes a great deal of sense. Buffett was never going to be “forced” into an expensive acquisition and it is amazing that so many in the business media thought that a shotgun wedding was a foregone conclusion. Perhaps at some point a merger will make sense, such as during a recession when stock prices are more reasonable (and Berkshire would still have plenty of cash). Of course, such circumstances would also offer up many other possibilities for intelligent deployment of capital.
Yes, despite all the speculation from railroad industry insiders, this definitely seems like the most Berkshire-like solution. And, like you said, who knows how it might develop down the road when prices are lower.
I joined DuPont in 1969 and retired in 2018. Financial performance during that time was abysmal as were the CEOs. Ed Jefferson bought Conoco in 1981 with oil around $30/bbl and Chad Holliday (by far the dumbest of the bunch) decided to split off Conoco in 1999 with oil at a nadir and half the price of 18 years earlier. Absolutely the worst timing possible. I was happy to exchange my DuPont shares for Conoco in 1999.
I'm sure that Mr. Holliday was richly rewarded for his business acumen. Along with all of the Board members who supported him.
Interesting! I must admit I'm not terribly knowledgeable about DuPont.
According to Grok in 1969 DuPont was #10 in revenues of US stocks and about #15 in market cap ($9.5 billion) and Berkshire was worth $95 million…1/100 of DuPont. Fast forward to 2025 and Berkshire’s market cap is 13 times what remains of DuPont. The good news is DuPont’s businesses became more sustainable with a lower carbon footprint.