Watchlist Investing

At $176/share, Boston Beer shares are down 33% from their 52-week highs. With 10.47 million shares outstanding, the current share price implies a market cap of $1.84 billion.

SAM has $129 million of net cash (no LTD + operating leases), but there’s a big asterisk next to it.

Ardagh Litigation

The big negative news of the quarter was a $216 million pre-tax charge ($162 million after-tax at 25%) related to a contract dispute with Ardagh Metal Packaging. A jury awarded Ardagh $175.5 million for SAM’s failure to meet contractual minimum purchases of aluminum cans during the height of the hard seltzer boom. The $216 million figure includes $36.5 million of pre-judgement interest expense and $4 million of legal fees (in G&A).

SAM says it will appeal the verdict. With absolutely no real knowledge of the legal merits of the case, I think it seems likely that SAM will have to pay. With no debt, cash on hand, and a $150 million line of credit, if/when SAM pays, it shouldn’t cause operational issues.

Operational Highlights

Volume/Pricing

The key driver for a beverage company is volume. You can’t generate revenue or profit if you don’t sell beer.

Q1 2026 volume of 1,561,000 barrels, a decline of 6.9% compared to the same quarter a year ago. Of note, this figure represents shipments. Depletions (distributor inventory) declined at a slower 4% rate.
The company produced 95% of its volume in-house during the quarter.
TTM volume was 7,025,000 barrels, a decline of 7.3% from a year ago.
On the plus side, pricing (rev/barrel) increased 2.7% Q/Q and 2.8% on a TTM basis.
At a recent industry conference, the company’s CFO noted that beer was around 18% of volume, putting SAM solidly in the beyond beer category. He also highlighted the company’s expertise in creating brands, putting it at an advantage over larger rivals who must pay premium multiples to acquire them.
The company’s Sun Cruiser brand, which was launched in-house, is a bright spot offsetting some weakness in Twisted Tea and Truly.

Revenue

Q1 2026: $433.9 million, down 4.7%
TTM: $1,945 million, also down 4.7%

Costs and Expenses

Gross margin came in at 49.3%, up 100 bps from a year ago.
SAM posted a $190 million operating loss due to the $216 million litigation expense. It also reported a $2 million impairment of brewery assets.
On the expense front, advertising, promotional, and selling expenses increased 200 bps to 32.3% as the company continues to invest in its brands ahead of summer.
SG&A increased 150bps to 12.1%; 100bps to 11.1% excluding $4 million legal fees.
Overall, the operating margin was negative due to the litigation expense. Ex. litigation, operating margin declined 240bps to 5.0%.
TTM operating margin was 7.2% ex. litigation expense, down from 8.3% a year ago.

Capital Allocation

As noted above, SAM has no LTD and only modest operating lease liabilities.
From December 28, 2025 to April 24, 2026, the company repurchased 137,912 shares of its Class A stock for $31.2 million ($23.3 million in the quarter itself through March 28), implying a price of $226/share.

Valuation

Watchlist Weekly: The Best of the Week Ending June 6, 2026

Fri, 05 Jun 2026 16:15:08 GMT

Fact of the Week:

Banks still had $306B of unrealized securities losses at year-end 2025.
Even after recovering from the worst levels, FDIC-insured banks were still sitting on losses roughly equal to a full year of industry earnings.

The Week Greg Abel Invested $18.5 Billion

Greg Abel is off to the races.

Taylor Morrison

First, with Taylor Morrison, a homebuilder, for $8.5 billion. Taylor reported $8.1 billion in revenue in 2025. Berkshire’s Clayton Homes reported $12.9 billion. Together, Berkshire will have a $20 billion revenue homebuilder operating in both manufactured and site-built homes.

I’m interested in finding out how Greg will integrate this acquisition. Historically, Berkshire has let managers continue to operate as is. Greg seems inclined to usher in an era of internal consolidation (like this in rail; and this in jewelry). I wouldn’t be surprised to see Kevin Clayton named as chairman of the housing unit with TM president responsible for his unit.

Another aspect is the loan portfolio. Berkshire would have one of the top 75 largest banks in the US with its $27 billion loan portfolio. TM originates and sells its mortgages. Even with its borrowing capacity and excellent credit rating, Berkshire may not be able to compete against traditional banks or securities markets. Buffett has also noted how good a deal it is to the homeowner to have a 30 year mortgage and how equally bad it is for the lender.

Alphabet / Google

Days later, Berkshire announced it would invest $10 billion in Google as part of an equity raise. By my math, this is a $4.2 trillion valuation for Google. Call me skeptical. This calls for some optimism, at the very least.

An angle I haven’t seen discussed is a deepened partnership between BRK Energy and Google for data center power agreements. NV Energy already has one in place from 2024. This may be Berkshire’s way to get a first crack at a mega energy deal with Google.

Two New Pilot Stores and 80 Remodels

FedEx Freight Spin-Off

FedEx Freight started trading as a stand-alone company on June 1 after splitting from FedEx. It’s the largest LTL carrier in the US.

Another Plug From Bill Ackman - Thanks, Bill!

This Week in Berkshire History

June 3, 1986: Fechheimer acquired.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

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Adam

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Your Margin of Safety Might Not Be What You Think It Is

Adam Mead — Wed, 03 Jun 2026 16:15:57 GMT

Imagine you find a company with $80 million in net operating profit after taxes (NOPAT), $50 million in cash, and $700 million in debt.

At a reasonable 10x multiple of NOPAT, the company is worth $800 million.

$800 million value less $650 million in net debt = $150 million of equity value.

To your great delight, the market value of equity is $75 million.

You’ve just found yourself a stock with a 50% margin of safety.

Not So Fast…

As you might expect from the title of this post, caution is warranted.

The setup above comes from Bruce Greenwald’s excellent book, Value Investing: From Graham to Buffett and Beyond, 2nd Edition.

As Greenwald notes on page 120, the margin of safety analysis above is incorrect.

The right way to think about the margin of safety is at the enterprise level.

Earnings power is tied to enterprise value, which includes debt. What happens if sustainable NOPAT is really 10% less, or $72 million? Now the enterprise value is $720 million, and the value of equity is $720 million - $650 million = $70 million.1

To our horror, we’re now stuck with a negative margin of safety (a margin of risk? peril?) of -7%. A 19% decline in enterprise value would wipe out equity entirely!

A Leveraged Enterprise

What’s laid out above isn’t a surprise. Debt increases risk. Most investors understand that.

Just as return on capital employed (or invested capital; pick your metric) cuts across financing choices, the enterprise value margin of safety similarly allows us to view margin of safety in its proper light.

Graham’s Coverage Ratio

In Security Analysis 2, Ben Graham discusses a similar concept in coverage ratios. He notes how some analysts then (and I assume some do now) calculate the coverage of fixed charges for a preferred stock issue or junior bond after that of the more senior security, instead of together. To illustrate:

Earnings before interest: $3,978,000
Interest charges: $1,628,000
Preferred dividends: $160,000

The coverage ratio for the interest charges on the debt is simple enough: $3,978,000 divided by $1,628,000 or 2.4 times.

But what about the preferred?

After paying interest, there’s $2,350,000 leftover, which covers the preferred 14.7 times.

Hold on a minute…

If the preferreds have coverage of nearly 15x compared to the bonds at just 2.4x, then the preferreds are safer, right? Yet they’re junior securities. How can that be the case?

The answer is that the analysis is incorrect.

The right way to calculate the preferred coverage is to add $160,000 to $1,628,000 or $1,788,000. That amount is covered 2.2 times by the $3,978,000 available for debt service.

Thus, by framing the problem appropriately, we arrive at a slightly lower (and therefore slightly riskier) 2.2x for the preferreds vs 2.4x for the senior debt.

Berkshire Provides Leverage to Heinz

A final example of this analysis at work comes from Berkshire. When Berkshire bought Heinz with 3G Capital, Buffett described his partners as desiring more leverage. By providing the debt (as well as preferred and equity), Berkshire gave 3G the leverage it wanted, and maintained a sensible leverage profile for itself higher in the capital structure.

Conclusion

The bottom line here is simple: beware of the negative effects of leverage, both in its raw form and in your calculations of margin of safety.

More thoughts? Let me know in a private message or leave a comment.

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Adam

Pre-Order the 2nd Edition Now!

Amazon, Barnes & Noble, or directly from Harriman House, and at other major bookstores, for delivery in April 2026.

Praise for the 2nd Edition

I’m incredibly grateful for the people who took the time to review early drafts of the new material and provided feedback, as well as praise for both editions:

“If you want to understand how Warren Buffett built Berkshire Hathaway into one of the most valuable businesses in the world, you have to read this book. This is your opportunity to stand beside Picasso as he paints each brush stroke. A must read for all Buffett and Berkshire groupies.”

- Bill Ackman, Founder and CEO of Pershing Square

“I and my teammates at the Gabelli Organization have been tracking Warren’s success for some 50 years. Adam’s book captures the work and highlights the history of Berkshire and the hard and diligent work of Buffett and Munger, Jain and Abel, and Combs and Weschler.”

- Mario Gabelli, Chairman and CEO, Gabelli Funds

“Adam Mead’s discussion of the values and virtues which have shaped Berkshire Hathaway over 50 years is a must read for those investors in search of the forces that have delivered such investment value over time.” – Thomas A. Russo, Gardner Russo & Quinn LLC

“Few activities can be more rewarding for any value investor than studying the history and evolution of Warren Buffett and Berkshire Hathaway. Adam has done us a huge favor with his yeoman efforts in producing this treatise. Since it is chronologically ordered, it is an invaluable reference guide for all things Berkshire.” — Mohnish Pabrai

“Adam continues to deliver a resource very valuable to both Berkshire fans and the investor community as a whole, his depth of knowledge is clearly demonstrated here again. I thoroughly enjoyed this latest addition.” - Dan Calkins, Chairman & CEO, Benjamin Moore

“The question must be asked, ‘Why another Berkshire book?’ When you read this monumental effort by Adam Mead, the answer will be obvious. Read cover to cover, both the uninitiated to Berkshire and its most ardent followers will derive enormous utility and satisfaction from it. I learned so many new and important things about Berkshire and its history. It is my pleasure to encourage you to enjoy this gem.”

- Christopher P. Bloomstran

“Whatever Adam writes is always first-class - guaranteed.

-Andy Kilpatrick, Author, Of Permanent Value: The Story of Warren Buffett

I’ve deviated from Greenwald’s example slightly. He used a 15% decline in EV, which reduced equity to $30 million.

This analysis is on pages 192-194 of the 6th edition and in the supplement to the 7th edition here.

Watchlist Weekly: The Best of the Week Ending May 30, 2026

Fri, 29 May 2026 16:14:50 GMT

Fact of the Week: 4,336: The number of FDIC reporting banks at the end of 2025.

Michael Mauboussin Intern Reading List

A curated list of his reports.

Dairy Queen Incentivizing Growth

Forest River Navigating Tariffs and Shipments Expected to Rise

Walking and Thinking - What the Science Says

Seneca on Wasting Time

The Other GOAT

I’m guessing the overlap of this audience and those interested in dirtbikes is fairly small (please let me know!). I’m working my way through this interview with Ricky Carmichael, the undisputed GOAT of motocross, which has reignited an interest in the sport. I stopped racing about 20 years ago, and I still miss it. I was stoked to hear that RC is still involved in the sport, commentating on races. Equally impressive is his philosophic attitude toward life. Makes me admire the guy that much more. Anyway, I’ll be tuning into the first outdoor event this weekend at Fox Raceway. There’s nothing quite like the smell of race gas and the sound of the controlled explosion of a main event start!

This Week in Berkshire History

Nothing this week. Here’s another excerpt from my book: The economics vs. accounting of reinsurance float.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

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Stay Rational!

Adam

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Russell Rebalancing 2026

Adam Mead — Wed, 27 May 2026 16:15:09 GMT

Mark Your Calendars

Every year, the FTSE Russell announces its annual (now biannual) reconstitution or rebalancing, which takes place in stages from May to June.

Each index has its range, with the Russell 2000 being more commonly known.

Thanks to my assistant, ChatGPT, for charting the size of the largest and smallest companies in each of the last 17 years.

Choosing My Ponds

I chose to fish in the Russell 3000 deletions and the Russell Microcap additions, reasoning that there would be some fallen angels from the 3000 and some tiny but perhaps investable companies in the microcap index.

Compared to prior years, my roughly two hours of initial sleuthing yielded little fruit.

ARKO Petroleum (ARKO)

Funny enough, this Microcap addition crossed my desk two weeks ago while working with a private investment coaching client.

ARKO is a convenience store/fuel station roll-up with retail stores, wholesale fuel distribution, and a lock card fueling business. The company’s strategy has centered on buying cheaper assets/chains, keeping the good ones, and converting the remainder into customers of its wholesale business. It often executes sale-leaseback transactions to keep capital investment low.

There’s definitely some hair to work through: The company just spun off its wholesale business - sort of. It sold a noncontrolling 25% stake to outside shareholders. The other oddity is that both companies share the same CEO.

Community Bancorp (CMTV)

I think I’m late to the party on this one.

CMTV is a small, $1.2bn assets bank in Derby, Vermont. It’s February 2026, move from the OTC to Nasdaq boosted its visibility, leading to a jump in the share price from the mid teens to the high 30s.

With a market cap of $216 million, it now trades at 1.84x Q1 2026 book value of $117 million. Valuation looks more reasonable at ~13x 2025 net income of $17 million.

The loan book looks fairly typical for a bank this size, though the municipal lending category stands out.

While this one might have gotten away, it could be worth keeping an eye on if the price recedes from its post-listing highs.

First Northern Community Bancorp (FNRN)

FNRN is a $1.9 billion asset community bank located in the Sacramento, California area. It currently trades at 1.3x book value for a market cap of $283 million. It seems fairly valued at current prices, having earned $21 million in 2025 and $20 million the year before.

Again, fairly typical loan composition, heavy in CRE.

Sharps Technology (STSS) (Or how to screw up a company)

I include this more as an “are you kidding me” place to vent.

Sharps had a nice little business collecting used syringes and the like. Then, in 2025, it raised $400 million to light on fire…I mean invest in digital assets aka cryptocurrency.

Oh, but it gets better.

Today, the company announced it was changing its name to SkyAI to become the “leading Agentic Finance Platform for the Global South” (whatever that means).

I’m not joking when I say the board members and managers of this company should be publicly shamed for following fads like they’re adolescents.

Other than that, I have no opinion.

More thoughts? Let me know in a private message or leave a comment.

Leave a comment

Stay Rational!

Adam

Pre-Order the 2nd Edition Now!

Amazon, Barnes & Noble, or directly from Harriman House, and at other major bookstores, for delivery in April 2026.

Praise for the 2nd Edition

I’m incredibly grateful for the people who took the time to review early drafts of the new material and provided feedback, as well as praise for both editions:

- Bill Ackman, Founder and CEO of Pershing Square

- Mario Gabelli, Chairman and CEO, Gabelli Funds

- Christopher P. Bloomstran

“Whatever Adam writes is always first-class - guaranteed.

-Andy Kilpatrick, Author, Of Permanent Value: The Story of Warren Buffett

“With this project, Adam has done a wonderful job extending the Berkshire Classroom by providing a comprehensive analysis of the rich corporate history and unique entrepreneurial leadership.” — Mac Sykes, Gabelli Funds

“Adam Mead’s The Complete Financial History of Berkshire Hathaway is the definitive history of Berkshire. While there have been countless books written about Warren Buffett’s investment approach, none have so meticulously documented Berkshire’s capital allocation decisions from the very beginning. The depth of research is staggering, transforming the complex and sometimes chaotic story of how a small textile mill became a financial conglomerate into a clear, year-by-year narrative of every significant investment and acquisition. In this updated edition, Adam carries the narrative through Berkshire’s sixth decade and the methodically planned leadership transition to Greg Abel. For students of business history, this is an indispensable resource.”

-Patrick Gaughen, President and Chief Operating Officer, Hingham Institution for Savings

“The definitive story of Berkshire Hathaway—how Buffett and Munger turned a failing textile mill into one of history’s greatest wealth-creating enterprises, with timeless lessons in business, investing, and leadership.”

-Vitaliy Katsenelson, CEO of IMA, Author of Soul in the Game

“Berkshire Hathaway is a company with few, if any, parallels in business history. Under the leadership of Warren Buffett, it was transformed from a New England textile mill that would ultimately be shuttered to a sprawling conglomerate with a market valuation of more than $1 trillion. With this updated edition of “The Complete Financial History of Berkshire Hathaway”, Adam provides a thorough review of the key decisions that created the modern Berkshire Hathaway, an outcome inextricably tied to the investment and business wisdom of Warren Buffett and his business partner, Charlie Munger. In a few hundred pages, Adam adeptly runs through six decades of Berkshire’s history. For Buffett and Munger fans who want to truly understand how Berkshire was created, this book is a must read.”

- Alex Morris, Founder of TSOH Investment Research and the Author of Buffett & Munger Unscripted

“A meticulous chronicle of Berkshire Hathaway’s remarkable final act under Buffett’s leadership. Mead’s granular analysis of Buffett’s capital allocation decisions—from the $78 billion in share repurchases to the masterful Apple investment—provides unmatched insight into how the world’s most successful conglomerate navigated unprecedented scale and succession challenges.”

-Tobias Carlisle, Portfolio Manager, Acquirers Funds®

“This exceptional history of Berkshire Hathaway will appeal to history buffs, finance enthusiasts, and investing professionals alike. Mead combines rigorous research with remarkably clear storytelling, tracing the company’s ascent from a struggling textile mill to one of the world’s most admired conglomerates. The book is impressively detailed yet fully accessible—equally valuable for students learning the foundations of investing and for seasoned professionals looking to deepen their understanding of Berkshire’s evolution.”

-Gillian Zoe Segal

“With his ability to make complex things seem simple, Warren Buffett made the difficult work of building Berkshire Hathaway look easy. With this excellent history, Adam Mead takes us behind the scenes to see the details of how that work happened and was so successful. For anyone interested in Berkshire Hathaway, or the development of American capitalism, this is essential reading.”

- Bryan Lawrence, Founder, Oakcliff Capital

“There is simply no book that details the economic lore of Berkshire Hathaway better. A true exposé that every intelligent investor should read.”

- Gwen Hofmeyr, Founder, Maiden Financial

“The most comprehensive book on Berkshire Hathaway that has ever been written. It belongs on the shelf of every business enthusiast!”

-Andrew Wagner, Author of the Economics of Online Gaming and Founder & Chief Investment Officer of Wagner Road Capital Management

“Adam’s accounting of the Financial History of Berkshire is like candy for Finance and Business Junkies alike. It’s a must read if you’re interested in studying the greats.”

- Carter Johnson, Managing Partner, Singleton Valuations

“I thought nothing else of value could be written about Warren Buffett. I was wrong. Adam’s detailed chronology of Berkshire’s evolution reveals the successes and failures of Warren in a unique and digestible way. A worthwhile read for every Buffett scholar, amateur and professional alike.” — Drew Estes, Banyan Capital

“Mead has done the Berkshire faithful an incredible service by stitching together the narrative and numbers so tightly, you can see the compounding in action—updated and genuinely useful.”

-Jacob Taylor, CEO of Baserate

“Adam Mead’s work reminds us that true value is found not just in numbers, but in the lasting quality where few care to linger. By doing exceptional due diligence his book clones the lessons of Warren and Charlie.”

-Jeff Gilbert

Adam Mead’s updated “Complete Financial History of Berkshire Hathaway” is a book like no other—chronicling six decades of evolution while reminding us that Berkshire, though Buffett’s masterpiece, remains subject to constant change—an indispensable addition to any serious investor’s bookshelf.

-Bogumil Baranowski, Founder of Blue Infinitas Capital, Author of “Money, Life, Family”, Host of Talking Billions Podcast

Watchlist Weekly: The Best of the Week Ending May 23, 2026

Fri, 22 May 2026 16:15:58 GMT

Fact of the Week: Americans traveled 3.3 trillion miles in 2025

Copart Resumes Buybacks In Force

Copart reported Q3 results and disclosed that it bought back $1.6 billion or almost 4% of the company in the span of two quarters.

GEICO is hiring again after years of cuts under Todd Combs

BNSF Reveals America 250 Locomotives

Berkshire’s 13F

Greg Abel is wasting no time putting his touches on the portfolio. Not surprisingly, we saw the exit of many of Todd Comb’s positions. The big surprises were the additional Alphabet shares and a new position in Delta Airlines. For whatever reason, air seems to be Berkshire’s Achilles heel. Is the third time the charm?

Electric Vehicles in the US

CleanTechnica’s Substack

EV Marketing Failure in USA and Honda's Crisis

I just saw the following headline from the Wall Street Journal: “Honda’s Never Faced a Crisis Like This—and a Comeback Won’t Be Easy.” The subheading is as follows: “The Japanese automaker reported a $2.7 billion loss amid EV whiplash in the U.S., its biggest market…

a month ago · 27 likes · 13 comments · CleanTechnica

Built to Rent Housing

Construction Physics

The Rise of Build-to-Rent Housing

A major shift in the housing market in the last several years is the rapidly increasing popularity of “build-to-rent” homes — single-family homes that are built specifically for the purpose of being rented out. According to the National Association of Homebuilders…

25 days ago · 113 likes · 17 comments · Brian Potter

This week in Berkshire History

May 23, 2003: Berkshire acquires McLane from Walmart for $1.5 billion.

McLane is an interesting case study and proof that it’s not return on sales (margin) but return on capital that matters. McLane, at the time Berkshire bought it, earned 1% on sales but turned its capital many times over. As a result, Berkshire earned a going-in return of over 15% on its purchase price.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

Leave a comment

Stay Rational!

Adam

Order the 2nd Edition Now!

Growth Thoughts

Adam Mead — Wed, 20 May 2026 16:15:55 GMT

Watchlist Weekly: The Best of the Week Ending May 16, 2026

Fri, 15 May 2026 16:15:24 GMT

Fact of the Week:

Berkshire Hathaway generated more equity capital in the five years ended 2025 than in Buffett’s first 53 years running the company. It generated $321 billion, of which $47 billion was returned to shareholders via buybacks.

Note: This comes from my presentation at VALUExBRK, which you can find here: The Oracle’s Classroom.

(Thanks for the idea, Carter.)

Auto Rates on the Decline in Florida

Auto insurers have enjoyed strong profits in recent years. GEICO’s target is a 4% profit (96% combined), but it has been writing closer to 90% in recent years.

BRK vs. Softbank (Economist)

The Economist argues that either Berkshire (net cash) or Softbank (heavy borrower) will survive. I don’t think it’s mutually exclusive. Berkshire will survive anything, but it doesn’t need a 1929 / 1987 / 2009 to prove its worth. Softbank is fragile and will only look brilliant if things work out.

Driverless Trucks at Berkshire’s McLane

The Galaxy That Doesn’t Spin

This week in Berkshire History

Nothing this week.

How about an excerpt from the 2nd edition of my book? In 2024, Berkshire completed the final purchase of Berkshire Hathaway Energy.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

Leave a comment

Stay Rational!

Adam

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Copart Valuation Update

Adam Mead — Wed, 13 May 2026 16:15:46 GMT

Disclosure: Long

Copart is getting interesting again.

I first bought shares in 2018. The business itself grew substantially over the next few years, with a nearly 22% CAGR in net income through 2024. Then the stock price far outpaced the underlying business and traded north of 40x earnings.

I made the decision to sell at a price of $60, implying a market cap of $58.5 billion.

Shares today traded at $33.25, implying a market cap of around $32 billion.

Below are some comments on recent operating performance and capital allocation, and my thoughts on valuation.

Watchlist Weekly: The Best of the Week Ending May 9, 2026

Fri, 08 May 2026 20:22:07 GMT

In Case You Missed It: Berkshire AGM Debrief + Valuation Update

17th Annual Gabelli Panel

VALUExBRK

Ajit Jain’s Successor Named (WSJ)

This is big news. I'm hoping he’ll join Ajit and Greg on stage next year.

Sue Decker on CNBC: Execution is More Important Than Capital Allocation

A great interview! Some really interesting points and comparisons about Berkshire.

Going A Little Deeper on Changes at BNSF

Lubrizol and AI Cooling

I don’t usually think about Lubrizol and AI being connected, but this shows how the company is important to many industries beyond traditional oil/gas.

This week in Berkshire History

May 3, 2025: Warren Buffett announces his retirement at the end of the 2025 annual meeting and recommends that Greg Abel take over as president and CEO beginning January 1, 2026.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

Leave a comment

Stay Rational!

Adam

Order the 2nd Edition Now!

Reminder: Watchlist Meetup Today

Fri, 08 May 2026 10:02:02 GMT

Meetup Link

By joining, you agree to be recorded for the benefit of subscribers who could not make it.

Berkshire AGM Debrief + Valuation Update

Adam Mead — Wed, 06 May 2026 16:15:53 GMT

SAVE THE DATE!

Join me Friday, May 8 at 1pm Eastern to talk about all things Berkshire and anything else on your mind. Link for paid subscribers below.

Annual Meeting Debrief

My 13th trip to Omaha for the Berkshire AGM is in the books. What a weekend!

The day before the meeting was filled to the brim: I participated on the Gabelli Value Investing Conference BRK panel, then headed over to ’s VALUExBRK to listen to some amazing speakers and give a short talk myself.

I received a handful of comments afterward about how I don’t seem like the introvert Guy described. My introverted-extroversion comes out when I get the chance to talk about something I love (Berkshire) in a welcoming environment among friends. Guy literally and figuratively set the stage for me to come out of my shell, and I can’t thank him enough!

I also had the good fortune to meet Greg for the second time, and I ran into former AMEX CEO, Ken Chenault. And having my book for sale at the meeting with a giant mockup right next to Poor Charlie’s was an incredible feeling.

BRK Annual Meeting Notes

On a high level, Greg met my high expectations. And the lower attendance made it easier to get around Omaha and the exhibition hall. I’d estimate that attendance was down by a third. It may be much smaller than peak Warren/Charlie, but still the largest and best-attended AGM in the world by far.

I thought Greg was confident and put on a great show. It incorporated Warren, showed deference to him and Charlie, and included new touches from Greg, plus a healthy dose of humor. Pound for pound this was the most substance of almost any Berkshire AGM I’ve attended.

Berkshire will be a builder of tech, not just a buyer. Building tech in GEICO > BNSF > BHE.
Using AI with a clear outcome not just for its own sake.
“All around operational excellence” - Greg
Data centers will bear the full cost of buildout (to applause)
15% of all gas is touched by Berkshire
Precision Castparts has a ten-year backlog (you read that right)
Clayton has a home that, with $40K of land, will cost $249K. It has a $35K traditional “box” mobile home not including land/park fees. Pretty incredible when you think of it.
Just $235 million of buybacks in Q1
Ajit said Tokio Marine did first class business in a first class way. Berkshire’s arrangement includes the purchase of 2.49% of its common stock, a whole account quota share agreement, and a handshake deal to participate in M&A together in the future.
The ABC’s of business decay: Arrogance, Bureaucracy, Complacency
Discussion about cyber risk and deep fake risk (“Warren from Omaha” who asked the first question was entirely AI generated)
Greg on the stock portfolio: It’s a lower lift (my words) because of the size of the main positions. Ted is managing around $20 billion.
Ajit and Greg had some great exchanges, and even some Warren/Charlie vibes going on. Ajit I’ts difficult to recruit people to say “no”. He tells new hires they should say no unless it hits you over the head with a 2x4.
Ajit’s insurance lessons: 1. Small and decisive teams; 2. Fixed compensation to avoid misincentives; 3. Insulate people from the ups and downs of the market
Katie Farmer (BNSF) and Adam Johnson (NetJets + 31 other consumer/service/retailing) did a great job on stage. They were informative and confident. I also thought Greg and Katie had a good chemistry.
Greg said Berkshire would divest if there were labor issues, reputational risks to BRK, or if the business became unsustainable. Berkshire would “absolutely not” be broken up.
Greg called Berkshire an efficient conglomerate. I loved his story about telling Adam Johnson he had to manage 31 additional businesses with no help from Omaha. Classic Berkshire.
At the same time, Greg noted that they had frameworks to share best practices across subsidiaries.
Greg was also very clear that he was in charge, noting that there was one leader at Berkshire, but they operated as a team.

Valuation Update

I’ll touch on valuation below, including a few important updates from the latest 10Q.

Subscribers have access to the valuation model on Google Sheets, which includes a per-share valuation and earnings calculator.

Private Investment Coaching

Adam Mead — Tue, 05 May 2026 20:31:48 GMT

I work with a small number of motivated investors to improve their ability to research businesses, build models, and make better investment decisions.

We work on businesses that they actually want to understand, helping them develop a practical, repeatable value investing process.

Who Is This For:

Serious individual investors
Aspiring investment analysts
Early-career professionals with a basic understanding of accounting and financial statements

What You’ll Get:

A 10-week program
Weekly one-on-one meetings and support between meetings
Hands-on help with idea generation, company research, modeling, watchlist construction, and portfolio decision-making
Weekly assignments designed to strengthen your research process and judgment
A behind-the-scenes look at how I research, evaluate, and track businesses

Why It’s Different:

Built around your own watchlist and interests, not a canned curriculum
Individualized support through one-on-one coaching (no groups)
Direct feedback on your thinking, models, and process

The goal is simple: to help you become a more capable, independent investor.

What others have to say…

“Adam is thoughtful, practical, and consistently focused on exceeding expectations. His depth of knowledge and experience translates into exceptional coaching with clear, real-world insights. I would strongly recommend working with him.”

"Adam's coaching class is a great value for the price proposition. Adam tailored the program to my level of knowledge and worked very hard to ensure I learned and was comfortable with all the concepts needed to improve my knowledge in intelligent value investing. Whether you are just starting out or have been investing for a while this course will be very valuable to you and pay off tremendously in the long term if you use the concepts he teaches."

“Adam integrated deep financial analysis into my investing toolbox. His blend of theory, practice, and proper cadence pushed me to learn by doing. I didn't just study the craft; I acquired it.”

Apply Now

I will review all applications and follow up with an email on the next steps.

Omaha or Bust!

Fri, 01 May 2026 10:15:49 GMT

Buy The Book Here

Come Say Hello

I’ll be at a few great events this weekend, in addition to signing copies of my book at the CHI Center and downtown at the Bookworm Omaha store (it’s a wonderful place!).

Friday

Gabelli Value Investor Conference

VALUExBRK (livestream if you’re not able to make it)

Sunday

The Intellectual Investor Breakfast

Join me at ’s breakfast. I’ll be there along with other authors, signing books and learning from Vitaliy’s investing and philosophical wisdom!

Praise for the 2nd Edition

- Bill Ackman, Founder and CEO of Pershing Square

- Mario Gabelli, Chairman and CEO, Gabelli Funds

- Christopher P. Bloomstran

“Whatever Adam writes is always first-class - guaranteed.

-Andy Kilpatrick, Author, Of Permanent Value: The Story of Warren Buffett

-Patrick Gaughen, President and Chief Operating Officer, Hingham Institution for Savings

-Vitaliy Katsenelson, CEO of IMA, Author of Soul in the Game

- Alex Morris, Founder of TSOH Investment Research and the Author of Buffett & Munger Unscripted

-Tobias Carlisle, Portfolio Manager, Acquirers Funds®

-Gillian Zoe Segal

- Bryan Lawrence, Founder, Oakcliff Capital

“There is simply no book that details the economic lore of Berkshire Hathaway better. A true exposé that every intelligent investor should read.”

- Gwen Hofmeyr, Founder, Maiden Financial

“The most comprehensive book on Berkshire Hathaway that has ever been written. It belongs on the shelf of every business enthusiast!”

-Andrew Wagner, Author of the Economics of Online Gaming and Founder & Chief Investment Officer of Wagner Road Capital Management

“Adam’s accounting of the Financial History of Berkshire is like candy for Finance and Business Junkies alike. It’s a must read if you’re interested in studying the greats.”

- Carter Johnson, Managing Partner, Singleton Valuations

“Mead has done the Berkshire faithful an incredible service by stitching together the narrative and numbers so tightly, you can see the compounding in action—updated and genuinely useful.”

-Jacob Taylor, CEO of Baserate

-Jeff Gilbert

-Bogumil Baranowski, Founder of Blue Infinitas Capital, Author of “Money, Life, Family”, Host of Talking Billions Podcast

Intrigue at Berkshire: The Pilot Saga

Thu, 30 Apr 2026 11:15:58 GMT

Yesterday, the second edition of The Complete Financial History of Berkshire Hathaway was released.

One of the more unusual additions is the story of Berkshire’s acquisition of Pilot Flying J: a staged purchase, pushdown accounting, litigation, a countersuit, and a settlement before trial. Oh, and incredible insight into Berkshire’s purchase framework.

Below are two pages from the new edition.

…

Buy The Book Here

Praise for the 2nd Edition

- Bill Ackman, Founder and CEO of Pershing Square

- Mario Gabelli, Chairman and CEO, Gabelli Funds

- Christopher P. Bloomstran

“Whatever Adam writes is always first-class - guaranteed.

-Andy Kilpatrick, Author, Of Permanent Value: The Story of Warren Buffett

-Patrick Gaughen, President and Chief Operating Officer, Hingham Institution for Savings

-Vitaliy Katsenelson, CEO of IMA, Author of Soul in the Game

- Alex Morris, Founder of TSOH Investment Research and the Author of Buffett & Munger Unscripted

-Tobias Carlisle, Portfolio Manager, Acquirers Funds®

-Gillian Zoe Segal

- Bryan Lawrence, Founder, Oakcliff Capital

“There is simply no book that details the economic lore of Berkshire Hathaway better. A true exposé that every intelligent investor should read.”

- Gwen Hofmeyr, Founder, Maiden Financial

“The most comprehensive book on Berkshire Hathaway that has ever been written. It belongs on the shelf of every business enthusiast!”

-Andrew Wagner, Author of the Economics of Online Gaming and Founder & Chief Investment Officer of Wagner Road Capital Management

“Adam’s accounting of the Financial History of Berkshire is like candy for Finance and Business Junkies alike. It’s a must read if you’re interested in studying the greats.”

- Carter Johnson, Managing Partner, Singleton Valuations

“Mead has done the Berkshire faithful an incredible service by stitching together the narrative and numbers so tightly, you can see the compounding in action—updated and genuinely useful.”

-Jacob Taylor, CEO of Baserate

-Jeff Gilbert

-Bogumil Baranowski, Founder of Blue Infinitas Capital, Author of “Money, Life, Family”, Host of Talking Billions Podcast

It's Publication Day!

Tue, 28 Apr 2026 10:32:07 GMT

The Second Edition Is Here

Today is release day for the second edition of The Complete Financial History of Berkshire Hathaway.

The first edition covered Berkshire’s history through 2019. This new edition updates the story through 2025, a period that included the pandemic, inflation, a return to more normal interest rates, the Apple investment becoming even more central to Berkshire’s results, the Japanese trading house investments, Alleghany, Pilot, Berkshire Hathaway Energy, large-scale repurchases, and finally Warren Buffett’s retirement announcement at the 2025 Annual Meeting.

That announcement was the real impetus for this edition. I was in Omaha when Buffett made it, and I immediately felt that the final brushstrokes of his Berkshire masterpiece needed to be put down in writing before the next meeting.

Here are two excerpts from the new material:

Buy The Book Here

Thank you to everyone who read the first edition, gave feedback, shared it, or stopped me in Omaha to talk Berkshire. That feedback helped shape this second edition.

I’m excited to finally have it out in the world.

Praise for the 2nd Edition

- Bill Ackman, Founder and CEO of Pershing Square

- Mario Gabelli, Chairman and CEO, Gabelli Funds

- Christopher P. Bloomstran

“Whatever Adam writes is always first-class - guaranteed.

-Andy Kilpatrick, Author, Of Permanent Value: The Story of Warren Buffett

-Patrick Gaughen, President and Chief Operating Officer, Hingham Institution for Savings

-Vitaliy Katsenelson, CEO of IMA, Author of Soul in the Game

- Alex Morris, Founder of TSOH Investment Research and the Author of Buffett & Munger Unscripted

-Tobias Carlisle, Portfolio Manager, Acquirers Funds®

-Gillian Zoe Segal

- Bryan Lawrence, Founder, Oakcliff Capital

“There is simply no book that details the economic lore of Berkshire Hathaway better. A true exposé that every intelligent investor should read.”

- Gwen Hofmeyr, Founder, Maiden Financial

“The most comprehensive book on Berkshire Hathaway that has ever been written. It belongs on the shelf of every business enthusiast!”

-Andrew Wagner, Author of the Economics of Online Gaming and Founder & Chief Investment Officer of Wagner Road Capital Management

“Adam’s accounting of the Financial History of Berkshire is like candy for Finance and Business Junkies alike. It’s a must read if you’re interested in studying the greats.”

- Carter Johnson, Managing Partner, Singleton Valuations

“Mead has done the Berkshire faithful an incredible service by stitching together the narrative and numbers so tightly, you can see the compounding in action—updated and genuinely useful.”

-Jacob Taylor, CEO of Baserate

-Jeff Gilbert

-Bogumil Baranowski, Founder of Blue Infinitas Capital, Author of “Money, Life, Family”, Host of Talking Billions Podcast

Watchlist Weekly: The Best of the Week Ending April 25, 2026

Fri, 24 Apr 2026 16:15:08 GMT

In Case You Missed It: Pool Corp. First Look

In case you missed it just hours ago…not Wednesday… It’s been a busy week here at Watchlist Investing. I thought I’d scheduled my Wednesday post only to find it still sitting in drafts. Oops!

Brooks & Disney Pair Up

A Great Profile of Greg Abel

Some great work by

Bearstone

New Era of Berkshire Hathaway

The Des Moines operator gets the keys…

2 months ago · 5 likes · 2 comments · Bear

Failure is Systematically Underestimated

Timelapse of the Tech Sector Part Deux

Scenic Route Investing by Wagner Road

TTS Part 2: After the Internet — Technology as a Cyber Space (The Dot-Com Boom)

This is Part 2 in my series, A Timelapse of the Tech Sector. Catch up if you missed Part 1…

2 months ago · 4 likes · Andrew Wagner

Chris Bloomstran on Excess Returns Podcast

This week in Berkshire History

No historical news this week. However…

I’m happy to report that Berkshire selected my book to be among those sold at next week's annual meeting. Check out the full selection.

Here’s a photo of me with See’s Candies CEO, Pat Egan, from 2023.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

Leave a comment

Stay Rational!

Adam

Pre-Order the 2nd Edition Now!

Pool Corporation (POOL)

Adam Mead — Fri, 24 Apr 2026 13:11:15 GMT

Disclosure: None

Diving In

I thought it was about time to take a look at Pool Corporation. Berkshire Hathaway first disclosed a stake in the pool products distribution business in Q3 2024, and upped it to a 9.2% stake in August 2025. Shares currently trade at $231 compared to Berkshire’s estimated average cost of $320.

Said differently, Berkshire’s average price implies a market cap of about $12 billion compared to today’s $8.1 billion, a drop of about a third.

What’s In A Name?

Pool Corporation distributes … pool supplies. Well, mostly. Its primary business is that of distributing swimming pool supplies, equipment, and related products, with a smaller (~8% revenues) portion derived from its landscaping and irrigation business.

The company operates 456 sales centers and distributes its products through five networks: SCP Distributors, Superior Pool Products, Horizon Distributors (irrigation/landscaping), National Pool Tile, and Sun Wholesale Supply.

Pool Corp sits between 120,000 wholesale customers (pool service contractors, builders, retailers, etc.) and 3,500 suppliers, although its three largest suppliers accounted for 43% of COGS (20%, 12%, and 11%).

Some stats about Pools’ pool business and the industry:

Pool Corp Product Breakdown:
- 64% recurring maintenance and repair of existing installed pools
- 22% pool remodeling, renovations, and upgrades
- 14% from new pool construction
Pool Corp Geographic Breakdown:
- 95% of sales in the US
- 57% of 2025 sales in the sunbelt states of California, Florida, Texas, and Arizona
There are 14 million swimming pools and hot tubs in the US, including 5.5 million in-ground pools
The pandemic led to a surge in installations, rising from about 60,000 new installs per year to 100,000 at the peak. The pandemic surge increased the installed base by about 5%
Source: 2025 Pool Corp Annual Report
Pool Corp is the largest wholesale distributor of pool supplies in the world. It doesn’t disclose market share; however, it is thought to have a market share of between 25% and 35% of between $15 and $20 billion of industry sales.

A Short History of Pool Corp

1981: Founded by Frank St. Romain and Richard Smith in New Orleans, Louisiana
1993: Partnered with private equity to form SCP Pool Corporation
1995: IPO
1999: Manuel “Manny” Perez de la Mesa named CEO
2005: Entered the irrigation and landscaping business with the acquisition of Automatic Rain Company aka Horizon for $87 million
2008: Acquired National Pool Tile for $28.9 million
2019: Manny steps down as CEO and is replaced by Peter Arvan who joined the company in 2017
2021: Acquisition of Porpoise Pool & Patio for $788.7 million brought Sun Wholesale Supply servicing Pinch A Penny franchise locations, significantly expanding the company’s distribution and retail support capabilities.

Management / Ownership

Peter Arvan: As noted above, Arvan joined Pool Corp in 2017. Previously, he was the CEO of BrightSpring Health Services. He was tapped as CEO in 2019. Arvan was paid a base salary of $900,000 and earned $6.6 million of total compensation in 2025.

Directors earn total fees of about $250,000 per year.

Former CEO, Manuel Perez de la Mesa owns about 3% of the company.

As of the 2026 proxy:

Berkshire Hathaway owned 8%
Kayne Anderson Rudnick Investment Management owned a 5% stake

Financial Analysis

One glance at the income statement and it’s clear that Pool has grown tremendously.

Sales grew from $2.25 billion in 2014 to $3.2 billion in 2019 (a 7% CAGR) before nearly doubling to $6.2 billion in 2022.

Thank the pandemic for the surge in at-home spending and the related product shortages that allowed a temporary surge in margins (just look at that bump in the second chart below).

Additionally, Pool acquired Porpoise/Sun Wholesale in December 2021, resulting in a structural increase in its distribution capabilities.

Working Capital

Pool Corp’s working capital structure is a function of its distribution model. The company carries significant inventory (purchased from manufacturers, including early-buy pre-season inventory) financed in part by accounts payable to those manufacturers.

The structural shift toward more working capital as a percentage of sales is a function of a few things:

Pre-pandemic increase in SKUs, sales center growth, and early buy program (where Pool buys inventory ahead of time from suppliers at a discount)
Product shift toward equipment/building products
Pandemic spike
Drawdown to a post-pandemic plateau reflecting the above factors (more SKUs and broader geographic footprint), in part from the Porpoise acquisition in late 2021.

Balance Sheet & Capital Allocation

Pool took on debt to fund the Porpoise acquisition in 2021. From a traditional debt to equity/capital/tangible capital, leverage has remained flat. However, debt now stands at a somewhat worrisome 7.5x EBIT.

Over the last 10 years (2016-25), Pool:

Spent 11% of cash flow from operations on capex, including 3% on growth
26% spent 26% on acquisitions, with the largest being Porpoise ($788.7MM) and four tuck-in acquisitions in 2020
53% on net share repurchases
30% on dividends
Funded by $866 million (22% OCF) of new debt

I’m wary of management taking on debt to fund big share repurchases when the balance sheet is already moderately encumbered.

Here’s an interesting chart from the 2025 annual report showing the company’s uses of cash since inception.

Return on Capital

Pool generates very strong returns on total and tangible capital, although those returns have come down from their post-pandemic peaks.

In the working capital section, I noted that Pool’s capital investment appeared structurally higher. I wonder if that means capital turnover will cap at about 2.0x. Similarly, margins would appear to be normalizing around 11%. If those two factors hold, then pre-tax return on total capital will stabilize around 20%. At 3.0x for tangible capital turnover, pre-tax return on capital would be 30%.

Valuation

Watchlist Weekly: The Best of the Week Ending April 18, 2026

Fri, 17 Apr 2026 16:15:14 GMT

How Are We Not In An AI Bubble?

Really? A shoe company pivots to AI. Right…

Latest International Monetary Fund Report

Jason Zweig on TIPS Yields

Bloomberg Podcast: BNSF Intermodal Strength

PacifiCorp Case Overturned in Oregon

Brooks Shoes is Running Hot!

Changes Happening at Forest River

BRK 2026 - Events

The Berkshire AGM is approaching fast! This will be my 13th year attending in person in Omaha. You can find me at the Gabelli panel (Friday), at VALUExBRK (Friday), and signing copies of my book at The Bookworm inside the arena. If you see me please say hello!

This week in Berkshire History

April 15, 1977: Blue Chip Stamps acquires The Buffalo Evening News for $35.5 million.

That’s it for this week. Hit reply and let me know what you think. What have you been reading that’s worth sharing? Let me know in the comments.

Leave a comment

Stay Rational!

Adam

Watchlist Investing

Watchlist Weekly: The Best of the Week Ending June 13, 2026

In Case You Missed It:

Fact of the Week:

Guy Spier on CNBC

This Week in Berkshire History

Boston Beer Q1 Update

Ardagh Litigation

Operational Highlights

Volume/Pricing

Revenue

Costs and Expenses

Capital Allocation

Valuation

Watchlist Weekly: The Best of the Week Ending June 6, 2026

In Case You Missed It:

Fact of the Week:

The Week Greg Abel Invested $18.5 Billion

Taylor Morrison

Alphabet / Google

Another Plug From Bill Ackman - Thanks, Bill!

This Week in Berkshire History

Your Margin of Safety Might Not Be What You Think It Is

Not So Fast…

A Leveraged Enterprise

Graham’s Coverage Ratio

Berkshire Provides Leverage to Heinz

Conclusion

Pre-Order the 2nd Edition Now!

Praise for the 2nd Edition

Watchlist Weekly: The Best of the Week Ending May 30, 2026

In Case You Missed It: Russell Rebalancing

Fact of the Week: 4,336: The number of FDIC reporting banks at the end of 2025.

Forest River Navigating Tariffs and Shipments Expected to Rise

The Other GOAT

This Week in Berkshire History

Russell Rebalancing 2026

Mark Your Calendars

Choosing My Ponds

ARKO Petroleum (ARKO)

Community Bancorp (CMTV)

First Northern Community Bancorp (FNRN)

Sharps Technology (STSS) (Or how to screw up a company)

Pre-Order the 2nd Edition Now!

Praise for the 2nd Edition

Watchlist Weekly: The Best of the Week Ending May 23, 2026

In Case You Missed It: Thoughts on Growth

Fact of the Week: Americans traveled 3.3 trillion miles in 2025

Copart Resumes Buybacks In Force

Electric Vehicles in the US

Built to Rent Housing

This week in Berkshire History

Growth Thoughts

Watchlist Weekly: The Best of the Week Ending May 16, 2026

In Case You Missed It: Copart Valuation Update

Fact of the Week:

This week in Berkshire History

Copart Valuation Update

Watchlist Weekly: The Best of the Week Ending May 9, 2026

In Case You Missed It: Berkshire AGM Debrief + Valuation Update

17th Annual Gabelli Panel

VALUExBRK

This week in Berkshire History

Reminder: Watchlist Meetup Today

Berkshire AGM Debrief + Valuation Update

SAVE THE DATE!

Annual Meeting Debrief

BRK Annual Meeting Notes

Valuation Update

Private Investment Coaching

Who Is This For:

What You’ll Get:

Why It’s Different:

What others have to say…

Omaha or Bust!

Come Say Hello

Friday

Sunday

Praise for the 2nd Edition

Intrigue at Berkshire: The Pilot Saga