Thank you. Hello, I'm Susan Javinsky. Welcome to a bonus episode of the Morning Filter podcast. Now, as our regular viewers and listeners know, we're doing some bonus episodes of the podcast, sitting down with various Morning Star experts to discuss topics that you've told us you want to hear more about. So, if you have an idea for a bonus episode, send it to us via our email address, which is the morning filter at morningstar.com. Now, today's bonus episode is focusing on one of my colleague Dave Sakara's stock picks from earlier this year. That's Berkshire Hathaway. Now, it's a good time to be talking about Berkshire. With Warren Buffett stepping down as CEO at the end of last year, there are plenty of questions about what the future could bring. And today, I'm joined by someone who knows more about Berkshire Hathaway than most anyone. And that's Greg Warren. Greg is a senior analyst with Morning Star and he covers Berkshire Hathaway. Well, Greg, thank you for being here and welcome back to the morning filter. We usually talk to you after Berkshire Hathaway's annual meeting, but we've got a lot to talk about, so we didn't want to wait until then to bring you in. So, uh, >> well, thanks for having me, Susan. >> Yeah. So, we were talking before we started filming, and I said to you, I can't remember a time when you were not Morning Stars, Berkshire Hathaway analyst. So, how long have you been covering the company for us? >> Let's see. I believe our first report, or at least my first report came out in December of 2010. So we're looking at what 15 plus years from there. >> Okay. >> So So quite some time. >> Now before the pandemic uh hit, you were one of three people that Bergkshire had sort of hand selected to be on the analyst panel at the annual meeting. Uh and so you had the opportunity to ask Warren Buffett and Charlie Mer uh some questions. So what sort of what why do you think you were one of the lucky three? >> Well, it was it was a process for Bergkshire. They they actually introduced the analyst panel in 2012. Uh they already had journalist panel in place, but they they wanted to bring some analysts in. I think the key for Buffett was he was trying to get more company specific questions into the mix because the Q&A up until then had been really shareholder driven >> and it could veer off topic a lot. So from that perspective, that was his goal. Unfortunately, that first year they brought in three sellside insurance analysts >> and they really got into the weeds. >> Yeah. And it really, you know, a lot of complaints from shareholders. It was just it was it was nitpicky, you know, really sort of, you know, things that weren't really sort of >> where Buffett had hoped to go with the conversation. So that second year he brought in a buyside analyst. >> One of the sellside analysts he brought back and they were going to rotate >> and then he brought in a Bergkshire bear. >> Oh, okay. >> Now, unfortunately, you know, the Bergkshire bear didn't do himself any favors. You know, he didn't really ask tough questions and he basically kind of grandstanded a bit. So, you know, that was kind of a failure in that regard. But the the the sell side and buy side analyst being there was good. Now, in the middle of all this, we had been in communication with with, you know, Bergkshire saying, "Look, >> you know, we cover you. You know, you're familiar with our stuff." And they were like, "Okay, we'll put you in the the rotation with the insurance analyst, but then we just kept pressing and saying, look, we're independent research. We'd fit a nice niche between the buy side and the sell side guys." and they took a chance on that in 2014 and you know we did a good enough job you know then and continue to do a good solid job much like Jonathan Brandt did on the the buy side where we were getting asked back every year. >> Mhm. Now, it was a bit of a disappointment, you know, in our regards for them to sort of, you know, kill the panel, right? You know, >> some of it was COVID related, some of it was just sort of, you know, they they wanted to make some changes. >> But, as I look at it now, you know, they no longer have the analyst panel. They no longer even have a journalist panel. >> So, it's almost like the the value of the question and answer session is I in my view sort of gone down a bit. Mhm. So, you know, given that you were a panelist, you know, what are some of the things, you know, during your time going to the meeting and asking these questions, what sort of stood out to you about Warren and Charlie maybe the most or maybe just about the meeting in general? >> Well, you know, we were always trying to avoid getting peanut brittle thrown at us from from Charlie. I used to always tell Jonathan that was like, look, you know, my whole goal here is to a not ask a dumb question >> and b not ask the same question twice. So, you know, you had to be diligent. You had to be focused. You know, we would come to the meeting, you know, with anywhere between 10 and 25 questions even though we only got six each year. Mhm. >> Um but but overall I I always felt it was a good useful exercise, you know, as an analyst because you know, here's a company that very very rarely talks to anybody, >> you know, so you're always looking for nuggets through conversations they're having with the press or at the meeting and and it was always our sort of goal to elicit those kind of nuggets from Charlie or from Warren and we got quite a few over the years. So I mean it was it it was always in our view a very useful exercise. I mean hopefully as as time goes on and you know they continue to do the uh the meeting you know and it is you know sizable I I would like to see them bring the p you know the panel back. >> Yeah. Um, so let's talk a little bit about last year's annual meeting. And I know you and I were both in our respective homes watching it and listening to it. And um, you know, Warren sort of dropped the big news right at the end of the meeting in May 2025 that he was going to retire at the end of 2025. So were you surprised? >> Yeah. Yeah. I think shocked would probably be more I mean it it it you know everybody I talked to were there and and everybody who was watching that you know I I communicated with they were all sort of the same thing. We did not expect this >> and he kept it pretty tight to the vest which you know is impressive >> um you know given how you know >> um you know things have had a knack of slipping out at some point or another. In fact, you know, the fact that Abel was going to be CEO, you know, Charlie Munger let slip at a meeting, right? >> Um, so it it was impressive that they were able to keep it that quiet. Um, but I mean, our our our feeling had always been that they would have to carry him out. >> Mhm. >> That he would be there working until he was done, right? >> Um, and you know, so him coming out and saying, "Look, I'm stepping away." was was kind of a shocker. >> Um, he's still going to be around. He's still going to be in the offices. He's still there as a sounding board for Greg. But it but it did surprise us to see sort of him make that announcement then. >> Yeah. Well, then let Oh, >> but I I also feel like, you know, Greg's what, 62 now, I think. >> So, it it's probably important to make the change now because I mean, his goal all along has been to have somebody there who's going to be around for a long time, >> right? >> You know, and consistency. Yeah. And continuing to sort of, you know, put this off. I mean, it it just it it would sort of wear down that time frame. >> Yeah. So let's talk a little bit about Greg Ebel who has you know taken over as CEO right at the end of last year. So what would you say are his strengths and then you know is there anything that you think that he might do differently? >> He he's different than Buffett. He's an operations guy >> and and I think at this point in Bergkshire's life cycle they need an operations guy. >> Um you know Buffett was never interested >> in overseeing the operations. He was not interested in getting down in the in the in the weeds and understanding >> how the business has operated. He was he was content with getting you updates regularly from the managers and the capital coming up from from below. >> So different management style, you know, to begin with. And I and again, like I said, I think that's what Bergkshire needs at this point. There there definitely places within the organization where I think they would benefit from having somebody >> who's more operations focused, >> okay? you know, helping the to to improve things, you know, and Greg's always been, in our view, a little bit more of a alpha personality, a little bit more driven. >> Um, you know, Buffett is is less confrontational, >> you know, prefers to sort of be, you know, you know, in the background. So it will change and and like I said I think Bergkshire needs to do that because we've we've gone from this you know historical you know 60 plus years where Buffett ran the show >> you know built up this very very large business had a certain way of doing things and that worked for the most part for a long time >> you know but it's gotten to the point now where there's just so much excess capital on the books. >> Yeah. Um and there's the the environment in which they're operating has shifted or you know the way they'd like to operate you know which is you know continuing to acquire companies and actually you know make big scale investments in stocks. It's a lot harder for them to do that than it was say 20 30 years ago. >> Sure. >> Let's talk a little bit about one of their you know larger investments and that's Craft Hind. Now earlier this year uh Berkshire filed paperwork uh sort of indicating that you know hey market we might get rid of our substantial stake in Craft Hind stock. No promise but by filing the paperwork that's sort of a big signal that they might. Um so before we talk a little bit about what might happen with that give us a brief reminder about first of all how big that craftiness stake is and how Bergkshire first got involved with Craftiness. Yeah, it's it's still about 28% of the equity. >> So that's that's how much they own. Yeah. And and and Bergkshire came by that by, you know, originally back in 2013, they they joined up with 3G Capital and bought out um Hines um Hines Foods, which you know, which was standalone at that point. >> Um and their initial stake included, you know, preferred preferred stock plus plus cash for the equity. Um, in 2015, 3G engineered the merger with Craft Foods, which, you know, gave us the Craft Hind business. And yeah, it seemed like everything was was all right. You Bergkshire did have to sort of give up the preferred stock within a few years. >> Um, that was a nice 9% yield on that, which which, you know, was disappointing to sort of give up. >> So, everything's been on the stock since then. Mhm. >> You know, unfortunately, you know, 3G's way of running businesses sometimes um can starve them for resources, >> you know, and and and they did a great job of sort of improving the margins, but at the same time, they cut so much to the bone. >> Mhm. >> That it created problems for them. And, you know, the packaged food industry continues to change, >> right? >> You know, so the dynamics of the business were not keeping up with what was going on, you know, within the industry. Um and you know and it's you know even though last year you know him and Ael were quite vocal about you know some of the changes craft was proposing it wasn't the first time you know I mean he's he's they've written the company down a few times over the years >> you know so their their cost base I think is eight and a half billion right now. So now to your point you know uh both Buffett and Abel were in the media you know last year saying you know they were dissatisfied with that investment and how it had turned out and then Craft Hind announced that it was going to uh split and I remember Buffett coming out and saying yeah well that's not going to solve he said it more politely than that but that's really not going to solve the problems. So then um Craftines recently backtracked and said oh we're not going to split after all. So given all of this and given what you know Greg Abel said in the shareholder letter that came out over last weekend, you know, do you think they're going to sell? >> I think they're sellers. Okay. I I think the issue is it's been a slow motion separation. >> You know, I I think if you go back five, six years ago, Buffett was out there saying, "Hey, if if 3G ever decided to sell, we'd be buyers." >> Okay? >> You know, and then 3G was selling and they weren't buyers, right? and and and then you get to the notion of you know a couple years back he's like you know you this was a mistake you know it it didn't pan out the way we thought and then last year the I mean last year even before the the announcement they're going to split the company Burkshire you know pulled out of the board >> so this has been >> this this this confidence in in craftine has been slowly deteriorating over the years so that's that's why I think even now I mean they did the filing what in early January the CEO the new CEO came out in early February and said hey we're putting a pause on this. I I I think they knew that they were probably going to put a pause on it. And I don't think it changed their mind. >> I I I think at this point it's if if I looked at the portfolio, it was it would probably be one of the, you know, highest likely stock to be, you know, trimmed or sold in the near term. >> All right. Well, then perfect segue into my next question, Greg. Thanks for that. So, you wrote a great stock analyst note after um Bergkshire had filed this paperwork about Craft Hinds and you had a great little line in there which was something along the lines of Craft Hind wasn't going to be the only change we'd see in the public portfolio. You were expecting more streamlining to come. What makes you think that? >> I think for two reasons. One just just from the fact that the portfolio is huge, you know, and and we've already seen Burks are willing to to trim back stakes in Apple and Bank of America the past couple years. Mhm. >> Um in fact I think they've they've reduced Apple the Apple state by 3/4 and Bank of America by 60% just in the past two years. So so there's a willingness there. >> Um and you know it it's yeah I think it was what 313 billion total I think if you include the equity investment holdings at the end of last year. Um there's there's definitely a case to be made that, you know, if if Abel wants a portfolio that's a bit more focused and a bit easier to sort of, you know, um pay attention to >> that that it makes sense to to trim back some holdings, you know. So, I think from that perspective, that's one. I think the other thing is Todd Combmes is gone now. >> Yeah. >> You know, he left at the end of last year >> and they're likely to continue to sell off holdings that he had. And if you think about the holdings that he was probably responsible for, I mean, Visa, Mastercard probably jump out right away because those were bought 2011. Those were holdings he had when he was at Castle Point before he joined Berkshire. >> Um, he's always been focused on financial services, fintech, um, you know, sort of value stocks. Uh I can't remember what the other one I was thinking about that could likely fall into that realm. But but overall there's there's other holdings within the portfolio that we're like to see fall off as the year progresses because we saw this >> oh was it 20 years ago when L Simpson left >> because he was managing the the GEICO portfolio. >> Okay. >> And you know they it basically you know fell under you know Buffett's opices and and he slowly gradually you know traded off some of those holdings. Now you mentioned Bank of American Apple and Berkshire released its fourth quarter 202513F a couple weeks ago. Um and that of course covered that final quarter where Buffett was still CEO and you know they continue to scale back in Apple though it's still the largest holding continue to scale back in in Bank of America. Um do you expect these two stocks to remain in the portfolio over time? Maybe just at smaller positions than they are rather than the number one and number two. >> Depends on your time frame. Hm. Yeah. >> Um I I I don't think they're averse to to to selling and and and I think what I think what people need to focus on too is is why are they selling? >> Mhm. >> You know, and and and and in in my view, >> you know, yes, it's building up cash that's that's going to a big reserve that that Greg can use, you know, sort of a break a glass in case of emergency, big fund, right? You know, I mean, I've always felt that way. I always felt that the buildup in the cash on the the balance sheet was was to give him a lot more flexibility. >> But I think there's also some tax considerations going on here. You know, I pointed this out a few years ago when they first started selling Apple is like, >> you know, Bergkshire is subject to the 15% corporate alternative minimum tax. And if they don't pay an effective tax rate more than 15%, you know, in cash taxes over a three-year running period, >> they will be taxed >> on their unrealized gains. >> Interesting. And basically what they're doing is they're realizing gains to ensure that they get over that hump. >> Wow. >> You know, over that over that time frame. And and that's why that that in my opinion is the main reason why we see them selling off Apple and and Bank America. So also because they're sitting on such huge >> unrealized gains on them even after all the selling they've done and we're still talking about billion, right? >> I think it's like almost 50 billion on on Apple, >> right? >> And and 21 billion or something like that on on Bank of America. They're sitting on unrealized gains. Yeah. >> So from that perspective, it it it makes sense for them to sort of approach it from from from from that angle. And >> these are names that help them in that regard, >> you know. I mean, it's harder for them to say go after and sell Coke or or American Express or Moody's because the cost bases on those are so low. >> Right. Right. what what does the complexion look like right now from an an asset allocation standpoint so to speak between you know the the public portfolio cash and then sort of the private companies >> I had the numbers in my head before I came in here I think cash and T bills right now so basically cash equivalents is about 373 billion >> okay >> the investment portfolio I think we said was a 320 billion okay in that in that realm the equity >> okay Um, and then the bonds are dimminimous. They're like$18 billion dollars, >> right? >> So, you've got a a a cash portfolio that's larger than your >> invested portfolio in equities and stocks. >> Um, and I think all in is I think it was like 705 billion. Okay. >> Is I think the number I had in my head. >> Um, >> so that's all liquid assets. >> Okay. >> That are available to them. >> Okay. On the private side, it's a, you know, we still haven't done our updates, you know, for end of 4Q, but you know, prior to that, you know, it was about 455 million. >> Okay. Okay. >> So, you add those two together, it's 1 point what.15 somewhere in there. >> Yeah. Yeah. >> You know, so so, so definitely or I should say billion. I've said million. I'm billion. I said billion. >> Yeah. Okay. So then let's talk a little bit about sort of the the private company stake which you know you know we don't talk quite as much about you know do you expect changes there with Greg Ael in charge I guess those will be harder changes to make in general because they own the companies outright but um >> I mean we expect we expect to see changes I mean like you even though he didn't say it in the letter >> you know BNSF has to adopt you precision schedule you know he said he was disappointed ointed with the gap in profitability between them and his largest peers which means Union Pacific >> and that's what we've been saying for >> you know five plus years now >> right >> um >> so that that will be coming down the pike um >> and there there's definitely other areas where >> you know >> I I felt for many years that you know Berkshire's managers may be harming themselves in the long run by focusing more on sending capital up to Bergkshire to the corporate then you of delving into sort of their long-term, you know, needs. I mean, we saw that with Geico where, you know, the company underinvested in their tech stack, >> you know, their their ability to sort of improve and upgrade their their technology systems to allow them to run telematics, >> right? >> You know, and it went on for such a long time until I Jane came in there >> and basically was like, we need to fix that. And even then, it still took three or four years for them to sort of get that right. So from that perspective, I mean th those are those are things I think he's probably identified, you know, because he he started overseeing the non- insurance businesses in early 2018. >> Um, and worked, you know, talked to the managers, you know, figured out where where they were, what their focus was. But I think he's always sort of held back on on pushing anything harder because really he didn't have the the full authority because Buffett was still in charge. >> Um, but now that he is in charge, I would expect to see some of that, you know, coming down a little bit harder. >> Okay. Now, last December, and you mentioned this, that um Todd Combmes, who had been overseeing Geico, um was leaving Bergkshire for a new position at uh JP Morgan, uh Chase. So, what did you make of that? And are you expecting to maybe see I I know I think their CFO >> Yeah. >> moved out as you know, retired as well. So, you know, talk a little bit about executive changes at Bergkshire aside from, of course, Warren Buffett. >> I mean, with with Mark Hamburg, it doesn't surprise I mean, he's he's been there forever >> and he was the CFO, right? >> Yeah. Okay. So, so his his departure doesn't surprise me. I mean, um and and you know, basically Able's bringing in somebody he knows. It's you know, guy was running running the books over at at Brookshire A Energy for a long long time. So, from from that perspective, um that wasn't too surprising. Todd Todd leaving was a bit of a surprise. >> Um I thought he did a fantastic job at GEICO. Mhm. >> I I don't think he got enough credit, you know, from investors for what a monumental task he had to deal with because if you don't remember, he took over in December of 2019. >> And at that point, Geico was already dealing with several years of poor underwriting performance based on poor decisions they made. >> You know, they they got too aggressive, you know, going after market share, underwrit a lot of business that they shouldn't have. Mhm. >> And you know it it it basically hurt them you know on the loss ratio front for for many years and you know so when he came in he was going to target that and then lo and behold co hit right >> and the whole US auto insurance market got turned on its head for for a number of years. I mean we're only >> we're only really now sort of getting back to sort of normalized results. >> Yeah. >> Um but it's taken >> I mean you know auto insurance prices are up 55% >> in the past the end of 2019. Yeah. So, so from that perspective, I mean it's, you know, they had to do that because, you know, the the cost of replacing vehicles, the cost of replacement parts, even even the the the amount of incidences, amount of accidents, the severity of accidents and stuff like that went spiked, >> right, >> for for a number of years. I mean, some of that's starting to come down, >> but the inflation is still there. I mean, the inflation didn't go away, >> right? >> So, so we'll have to see how things pan out from here. I mean, >> it would it would be nice to have him sort of in the helm because we're we're looking at a >> probably a multi-year sort of declining price environment, you know, for this because the state regulators at this point, >> yeah, >> you know, are starting to look at the the profitability of the industry and they're they're they're calling for >> right >> for pricing to come down. So, >> so from that perspective, be interesting to see what happens. But, I mean, >> he hadn't been as focused on the the investment portfolio in that time, >> right? you know, and and he got a you know, he's been sitting on the board of JP Morgan for a number of years. He's very close with Jamie Diamond. So, he got an offer that he just couldn't refuse. I mean, it's it's a good opportunity for him. So, so I understand why, but at the same time, you know, I I I think >> I think it's just one less good adviser that able to have Orion Brown to help him >> over there. All right, let's talk a little bit about the cash horde that seems to be growing every time we get a new uh earnings report or 13F to look at. Um now, you know, of course Berkshire hasn't bagged a big private deal in a long time. Um what do you think of that? Like given would you expect there to be more private deals with with Greg Ael in charge? I mean, or is it just Ben? Do you think he's going to be I hate to say it this way, but like less picky than Warren Buffett would have been? Like what what could be a catalyst here for >> Yeah. For that? >> It's it's it Bergkshire's had a tough time the past 10 to 15 years. um mainly because you know Buffett has had a very sort of strict um discipline >> and criteria when it comes to doing acquisitions and and his his motus operandi always has been you know he puts a price on the table that's it >> he doesn't renegotiate he doesn't you know rework it or anything else and that's cost them some deals over the years. Yeah. >> And the problem is in that time frame, you know, from the from the financial crisis till now, um, private equity, private capital has raised tons and tons and tons of money. And when you're dealing with those guys who don't have a problem, yeah, >> you know, u pushing the envelope when it comes to to to price and deals and stuff like that, it just gets harder to sort of, you know, get anything done. >> Now, they've managed to do some things over time. I mean, Alagany, in my opinion, was a was a good deal. Um, you know, the the OxyCon deal looks like it was a pretty good deal last year. Um, you know, Precision Cast Parts, not so much. So, I mean, I think from that perspective, we'll have to see what happens. But, you know, I was a little disappointed with the letter and and the fact that he dismissed one deal that would basically knock a big chunk of cash off the books. >> Yeah. Let's talk about that shareholder letter. So, that came out over the weekend. I read it. Of course, you read it and wrote about it. Um, and it was a very different letter than the letters we would get from Warren Buffett every year. So, talk about it. >> Well, all I can say is 18 pages. >> It was a lot to sip through. Um I I I feel like he did a good job from the outset of of explaining Berkshire. >> Mhm. you know what what has made it successful, what the core priorities, the core the core values, the culture, you know, the things that they should be focusing on, you know, capital allocation decisions, you know, risk management, >> um, operational excellence, you know, a lot of things that, you know, in in way looking to sort of just plate investors and say, look, I I understand this business. I know what needs to be done, >> you know, and I think he needed to do that. M um but there were some areas where I was like h I wish you hadn't committed yourself that one way or another. One of them is is you know basically saying we're not interested in buying you know another class one railroad which you know I think is you know boxing yourself in the corner a bit because in our view they need to >> you know if any Pacific and Northern Norfolk Southern get together and have one huge transcontinental railroad they'll be able to bypass Chicago they'll be able to bypass Houston they'll be able to offer better service to customers shipping stuff out of the west coast ports and invite versa. Um, and and BNSF will be at a disadvantage >> and and I and I think that, you know, they they should be looking harder at CSX. I mean, yeah, granted, it's probably going to cost them $90 billion, >> you know, to acquire it, if not, you know, a little bit more. Um but it it would a reduce the cash right >> on the balance sheet would help them in that regard and b would ensure that they weren't going to fall behind significantly you know relative to to Union Pacific. So I was a little little disappointed with that. You know the other thing is is the idea of a dividend. Yeah, I wanted to talk about that because boy, wouldn't a dividend help reduce the cash? And that was something, you know, that, you know, you and I have talked about in the past is is something that you you know, not just you, but like a lot of people thought would be more likely once >> Buffett wasn't CEO because he was always very opposed to paying a dividend. And Greg Ael came out in that shareholder letter and basically said, "Don't hold your breath. There won't be a dividend anytime soon." >> Yeah. I think my I think my comments were, you know, he just basically threw a dividend off the table. Um >> yeah, >> but I I don't know. I mean, I think >> Warren's reason for not giving a dividend for for all those years was look, we can earn more with the retain capital that our shareholders can. >> And for for a long time that was true. >> Yeah. past 15 plus years, I wouldn't say that, you know, and and I and I think that what kept him from from ultimately changing his mind and and and and actually initiating one was that basically he wanted to leave that for the next guys. >> Yeah. >> He didn't want to take a tool out of the toolbox that that they could have if if they needed to, >> you know, basically keep shareholders in place. Mhm. >> Um that said, you know, initiating dividend commits you. >> Yes. >> You know, and and you you have to keep paying it on a regular basis if that's what you do. Yes, you could do a special dividend that that that is an option, but then you leave shareholders wondering, well, when's the next one? Well, if you gave me this because you said you had too much excess capital and now you have more capital than you did before, you know, it just it it it creates a lot of other issues. Well, you know, it's fair to say that he's going to sit on it for now, >> but it it seemed a bit more dismissive than it needed to be. >> Got it. >> You know, sort of in his verbiage. And and I you know, and that's why I said I mean, you know, it >> it it seemed like he was spent more time focusing on towing the company line, >> you know, as far as what what Bergkshire has done historically, then maybe sort of carving out this is what I would potentially look at down the road. And as you pointed out, maybe that's something that it's appropriate for him to be doing. >> It's appropriate right now. Right now, but it's also easier. >> Yeah. >> Because true. >> Because Bergkshire is not struggling, >> right? >> And and you know, basically I I'm not sure you know where David was when he was recommending earlier this year, but Bergkshire is a safe haven stock. >> Yes. >> You know, when the markets go into the the the crappers, I mean, basically, it's a it's a good defensive stocks that people like to have. And having 373 billion in cash, >> right, >> you know, really helps. So, so from those perspectives, I don't feel like he he felt the need to do anything dramatic, but >> but I I I would just be hopeful to hear things from him that would sort of indicate that look, >> you know, things are going to change. Yeah. >> Because Bergkshire for for a while now, we we've been saying has to evolve from being a >> a you know, reinvestment machine, which it was for a long time, >> to being a returning cash shareholders machine because because basically >> it's kind of run its course. >> Yeah. Yeah. Now talk a little bit about valuation in Berkshire today. You know you mentioned you know Dave recommended Bergkshire. It was in January at some at some point. So I think at that point it was slightly undervalued. Um how how does it look today when we take >> it's still slightly undervalued. I think you know based on today's price is about 6% below our fair value estimate. I think we're 705 on the class A and I think 510 on the Bes. >> Okay. >> Um so it is a little bit undervalued there. you know, if you look at, you know, price to book multiples, it's trading about 15 times last year's, which is about where it's, you know, has historically. So, it's not anything really to to to jump up and down about. Okay? >> You know, I mean, it's it's it's a slight discount, but it's not a huge discount. But I think I think part of that, too, is just, you know, sort of where we are in the cycle, >> right? And so, you know, sort of all things being equal, it's a little undervalued. I mean, do you think, you know, with Greg Ael at the helm, what we know today about Berkshire, I mean, do you still think it's a good defensive investment for people? >> Yeah, I think it's still a good I think it's still a good holding and and I think there's still things that can be improved. >> Mhm. >> You know, I can't remember the the the numbers he put out there, but I think it was like a 1 percentage in percentage point increase in the operating ratio of BNSF would increase earning or their their operating earnings by like 230 million or something like that. So, I mean, there's there's there's there's definitely ways for them to sort of improve different parts of the business and and everything else. And and again, it's it's the way I look at it is he's now free to make changes that he might have been looking at when he was vice chairman overseeing, you know, a lot of this stuff. I think I think I think I Jane >> was probably in a better position than than Abel was because he took over the the insurance operations at the same time in early 2018. But but Jane basically went in there and started knocking some heads >> um and and and started you know um pushing for change within a few of the insurance operations but that's because he had >> right >> you know 30 plus years you know running it and Warren and he was Warren's you know trusted >> you know sort of insurance guru so so Warren was never going to contest nobody was ever going to go complain to Warren about something that that Ajet was doing right >> you know was on the other side even more I mean you know the the the cornicopia companies that that he was overseeing and the the the the amount of companies and you know the relationships that have been built you know Buffett buying these from family members and stuff like that right >> I I think that posed a different sort of scenario for for Abel but I think now I mean he's he's the guy he's in charge and you Buffett's already said you know look >> you you need something you got to talk to him >> right well Greg thank you so much for your time we could talk all day about really appreciate seeing you and uh we'll have you back sometime soon to talk about >> Berkshire thanks >> um So, for those of you who'd like more information about Berkshire Hathway, you can find links to some related content in our show notes. And of course, you can read Greg's full analysis of the company on morningstar.com. I hope you'll join Dave Sakara and I every Monday for the Morning Filter podcast at 9:00 a.m. Eastern, 8 a.m. Central. Happy investing.