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Kyler Hasson
The only hill I will die on is that mostly matches its cash and fixed income portfolio size to its insurance float liabilities. Float growth explains like 80%+ of this increase.
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Kyler Hasson Nov 18
Replying to @kylerhasson
Here are the numbers by year. Fixed Income / Float is defined as (Cash + Fixed Income + Pref - Cash In Other) / Float. It's pretty much always over 100%!
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Kyler Hasson Nov 18
Correct. It's a ~$15bb excess as it stands today. I think he would deploy more than that but looking at the numbers he's never really done that. I'm also counting pref in the cash + FI in that chart, which gives more flexibility.
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Kyler Hasson Nov 18
I think it's all super debatable but the broader point is that he hasn't really used the float to invest in stocks over the past 20 years. IMO if you factor in that everything above $20bb should be valued at 100c on the dollar then you're being too aggressive.
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Kyler Hasson Nov 18
Replying to @hackcelerity
He has said that, yes, but he was selling stocks at the bottom of the market to buy BNSF and as the chart shows they weren't close to hitting $20bb. He might have the capacity but he's never used it.
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Kyler Hasson Nov 18
And yet he has never done it. Even when they did BNSF at the bottom of the market.
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Searching Nov 18
Replying to @kylerhasson
Best not to pick a hill. WEB has been thinking about duration for a long time and has a decent idea what the duration of his float looks like along with the cash flow of his other businesses. I do think he prefers cash flowing investments for float...
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Kyler Hasson Nov 18
Replying to @Negative_GW
You can see the data on my own response to the first tweet. He could use a lot of the cash, regulatorily speaking, but historically has not done so.
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Wild_Space Nov 18
Replying to @kylerhasson
Eureka! That makes a lot of sense! Do ppl argue this point with you? Whats the counter?
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Kyler Hasson Nov 18
Replying to @HansenAsset
Yes, generally it's that he's said he'll go down to cash of only $20bb. As a shareholder I'd probably be excited if he did do that! It's just that he never has so I don't assign it that much value.
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John Palicka CFA CMT Nov 19
Replying to @kylerhasson @wbakarman
Fusion has posted that Buffet should use the $128 billion to index the SP 500. It is unlikely he or successors can outperform, given the erosion.
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