May 27, 2015

Berkshire Hathaway is updated and rated Buy at $144.75. What Buffett has accomplished with Berkshire is almost beyond comprehension (stock price up 1.8 million per cent from the 1965 starting price which was in the range of about $12 for the A shares, which today are $217,000 or equivalent to about 0.8 cents for the B shares which did not exist in 1965.) And the accomplishments of the last decade are also remarkable given that it was not easy to keep increasing in size when the company was already one of the largest companies in the world.

We will definitely NOT see gains in the range of 20% per year like in the old days but Berkshire can be expected to grow in the range of perhaps 8 to 10% per year over the next decade. I consider it to be worth buying. I had sold the shares I owned due to a potential conflict of interest when Berkshire bought an electric transmission utility in Alberta. That possible conflict of interest has ended and I plan to buy at least a small position in Berkshire.

On Wednesday, the S&P 500 was up 0.7% and Toronto was up 0.4%.

My own portfolio did not do well because Toll Brothers fell 2.2% to $36.16 after it released earnings this morning. I thought the earnings report was good based on contracts for home sales being up 10% in units and 25% in dollars versus the prior year. Toll Brothers is unusual in that its revenues are booked about a year after it makes a sale contract to build a house. It was known that earnings would not grow much this year because signed contracts from the prior year were relatively flat. The market seems to be focusing on reported earnings when in this case the new signed contracts may be more relevant. I plan to update the Toll Brothers report in the next day or so and I expect it to remain rated Buy. It’s one of my two largest positions.

I escalated a complaint to TD Direct about the high exchange spread fee and they got back to me and seem interested. However, there is not a lot of incentive for them to reduce the fee unless they get a lot of complaints or bad publicity about it. All the big bank brokerages charge similar high spreads over and above the wholesale exchange rate and in my opinion the fees are unjustifiably high. These fees are not regulated.