Author Topic: Annual Letter 2018  (Read 9616 times)

longinvestor

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Annual Letter 2018
« on: February 18, 2019, 09:20:28 AM »
The letter is in the works as we speak. Here’s my wish list for what it should contain,

1. Intrinsic value discussion- in light of the change in underlying estimation parameters. BV, retained earnings etc.
2. Float; what are the future growth prospects?  love to see a piece by the new vice Chairman, Jain😉
3. A detailed update on capital deployment opportunities, especially re-investment into capital intensive businesses like BHE and PCP. Love to hear from the new vice Chairman, Abel.
4. More on the performance relative to the S&P.


Others?


SwedishValue

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Re: Annual Letter 2018
« Reply #1 on: February 19, 2019, 12:54:20 AM »
I'd love for him to discuss the repurchase mandate and his using it. He's written about repurchases to considerable lengths before, but I'm pretty sure I'm not the only one surprised with his limited use of the mandate at a time he finds Berkshire's price attractive enough to warrant repurchases at all. The use of the buyback mandate has, to borrow Mr. Buffett's own words, not "moved the needle".

nickenumbers

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Re: Annual Letter 2018
« Reply #2 on: February 19, 2019, 10:29:17 AM »
I think you nailed the best ones LongInvestor.

BNSF prospects, the RE Brokerage rollups, the Clayton Rollups, more prospects in China [with/with out partners].

Mostly, I want to hear about Capital Deployment.  He has created an amazing tool to collect capital/Cash with the ownership of business, amazing, super stupendous...  be careful what you wish for, now he has all this Cash Raining In and he has to put all that cash to work, year, after year after year...  He is like El Chapo 10 with all that cash.

I think he should repurchase BRK shares as much as he can and as much as he is legally able, as long as the price/value difference makes sense, because, I suspect he might top out at $10B per year due to regulatory limits.  [He doesn't even need to tell me/us his plan/tip his hand, just DO IT.  We can all watch and fill in the blanks as time goes by.]  But this business of waiting and waiting and waiting, as the cash accumulates, is unsustainable.  He has more cash than he will need for any deal or set of deals, and he can get access to more short term cash if he needed it.


Macro- I would like to hear him talk about the national debt and what he thinks.  Spin us some Omaha wisdom to put it in perspective.
The fastest Cheetah still waits for the lame baby antelope.  ..patience..

gfp

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Re: Annual Letter 2018
« Reply #3 on: February 19, 2019, 10:50:21 AM »
You think he might top out at $10 Billion worth of BRK share repurchases per year because of regulatory limits?  Why?

John Hjorth

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Re: Annual Letter 2018
« Reply #4 on: February 19, 2019, 11:15:17 AM »
..., because, I suspect he might top out at $10B per year due to regulatory limits. ...

Nicke,

I have estimated, that Berkshire in 2018Q4 alone could have bought back shares - in the market alone - for as much as USD 18.6 B [2.5 x USD 7.453 B], if it wanted to. Please see attachment to this post.
« Last Edit: February 19, 2019, 11:28:42 AM by John Hjorth »
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nickenumbers

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Re: Annual Letter 2018
« Reply #5 on: February 19, 2019, 11:56:44 AM »
$10B amount.  Good questions guys.  You guys might know the annual limit, I was just guessing at a reasonable number.

I know we are limited by daily volume, % that BRK is allowed to purchase, etc  I understand that they can purchase from large holders also.

My quick logic was that they purchased $2B before, and if they were to purchase $2-3B per quarter = $8-12B per year.

Their largest holding presently in their public company holdings is with Apple for $42B.  If BRK was to purcahse $10B per year, it would take them 4 years to get to this level.

I understand that they could tender offer, etc.  Buffett is a value guy at heart and he likes to accumulate without giving up his value arbitrage advantage.  [He prefers not to tender offer, as he would have to specify his upper price.]


What do you guys think the reasonable upper limit is?  Thanks!

« Last Edit: February 19, 2019, 11:58:36 AM by nickenumbers »
The fastest Cheetah still waits for the lame baby antelope.  ..patience..

John Hjorth

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Re: Annual Letter 2018
« Reply #6 on: February 19, 2019, 12:12:46 PM »
nicke,

That's already discussed in depth - datadriven - in this topic.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

longterminvestor

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Re: Annual Letter 2018
« Reply #7 on: February 19, 2019, 01:13:10 PM »
Pretty funny how we all complain about leadership not deploying capital at a rate in which we wish.  Most leaders of companies at the stage Buffet/Munger are at would be looking for the "Deal of a Century" to capstone their legacy.  No business ever went out of business from having too much cash around.  I am grateful they are not reaching for yield, overextending capital allocation.  When I sit back and wish more money was spent to breed more money - I have solace in the fact Buffet/Munger have not failed us to date and the lessons of Graham are just as prevalent today as they were in 1950.  Just more people chasing more deals with information VERY readily available make the opportunities more difficult to find. 

I too am curious on thoughts regarding asset allocation and share buybacks.  Echo thoughts on hearing from Ajit/Gregg.  I speculate more of the same chatter on how insurance is more and more difficult to gain market share.  My day job is an owner in a commercial insurance agency - Agent in my office just moved a large trucking account - $1.8MM premium - away from NICO because their premium was too high.  Would enjoy if he discusses Berks efforts to cut brokers out of distribution system and go direct in the commercial market.  I am seeing some of that on a national basis. 

Dynamic

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Re: Annual Letter 2018
« Reply #8 on: February 21, 2019, 05:07:55 AM »
The Annual Report and Chairman's Letter will be release on Berkshire's website Sat 23rd Feb 2019 at 8.00am Eastern US Time (UTC -5:00) = 13:00 UTC.

CNBC has also announced that Warren will be fielding viewer questions during his chat with Becky Quick on Monday morning's CNBC Squawk Box, starting around 6:00am Eastern (11:00 UTC) and video and transcripts will be available at buffett.cnbc.com afterwards.

gfp

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Re: Annual Letter 2018
« Reply #9 on: February 22, 2019, 06:24:10 AM »
So nobody answered me on the KHC thread, but it looks like Berkshire's reported earnings in Q4 will be a real shit show.  Berkshire's 26.7% interest in KraftHeinz's $12.608 Billion net loss for the quarter will pass through BRK's books under the equity method.  That's another $3.366 Billion taken out of BRK's Q4 operating earnings.  Then we also have the uncertain results from catastrophe losses.  The headline numbers will also be swamped by the large unrealized hit to the equity portfolio. 

Here's hoping we get an opportunity to buy some BRK next week.  Looking forward to the annual letter as always.  Enjoy your weekend