Author Topic: Buffett/Berkshire - general news  (Read 416822 times)

alpha

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Re: Buffett/Berkshire - general news
« Reply #1200 on: June 15, 2019, 07:17:11 PM »

Thank you for sharing.


+1 Thanks for the followups gfp


shalab

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Re: Buffett/Berkshire - general news
« Reply #1201 on: June 15, 2019, 10:40:33 PM »
I am fairly certain it is the pension funds of Europe. Berkshire is a better/safer bet than the negative yields.

https://www.ipe.com/analysis/analysis/ipe-top-1000-european-pension-assets-grow-by-9/10014864.article

https://www.bloomberg.com/opinion/articles/2019-06-11/why-is-warren-buffett-s-berkshire-hathaway-borrowing-in-europe

edit:
Red herring prospectus filed, no size or rates yet.  Expect rates to be awfully low for such long dated paper
https://www.sec.gov/Archives/edgar/data/1067983/000119312519170674/d753526d424b2.htm

I don't believe this signals any impending European acquisition.  Berkshire isn't the type to borrow and then announce a buyout.  Just an opportunistic sale of ridiculously low interest bonds.

2nd edit:

Sounds like they dropped the Euro issuance and borrowed 1.75 Billion pounds instead (20 year and 40 year durations)
https://www.globalcapital.com/article/b1fthckhhnk9hc/berkshire-hathaway-drops-euros-breaks-sterling-long-bond-record-instead

Final rates -

https://www.sec.gov/Archives/edgar/data/1067983/000119312519172618/d753526d424b2.htm

Amazing notes transactions, gfp,

Thank you for sharing. Berkshire working on both sides of its balance sheet. Do you know who is the decision maker at Berkshire on such transactions? - Mr. Buffett, or is this perhaps the playground for Mr. Hamburg?

To me it's incomprehensible that somebody will tie up capital for 20 & 40 years respectively on such conditions. I wonder who is buying this stuff?

John Hjorth

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Re: Buffett/Berkshire - general news
« Reply #1202 on: June 16, 2019, 12:33:38 AM »
I am fairly certain it is the pension funds of Europe. Berkshire is a better/safer bet than the negative yields. ...

Thanks, shalab,

That makes sense, perhaps combined with local/national capital allocation restrictions among asset classes for those pension funds. Viewed isolated it just looks like the last idiot isen't dead yet.
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Cigarbutt

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Re: Buffett/Berkshire - general news
« Reply #1203 on: June 16, 2019, 03:13:11 AM »
"To me it's incomprehensible that somebody will tie up capital for 20 & 40 years respectively on such conditions. I wonder who is buying this stuff?"

The long and low interest game has introduced a relative idiocy paradigm. Another area to look for potential candidates are European life insurers who own huge chunks of the fixed income market and who have to deal with guaranteed return and duration mismatches. The 90's Japanese experience comes to mind for life insurers. Fairfax recently issued 10-year bonds with (from memory) the lowest coupon ever for that duration. Forgetting all global unintended consequences for a minute, what's not to like when risk is basically free?

On the who's buying question and their state of mind in Europe, prolonged ultra-low interest rates can produce weird phenomena. In the last few years, it has been possible, in some instances and in a few European countries, to finance or refinance individual mortgages at a negative (!) yield for quite significant durations. In those specific cases, it looks like the financial institution would choose to incrementally lower the principal owed instead of paying interest to the customer. ???
https://www.bloomberg.com/news/articles/2019-05-23/bankers-stunned-as-negative-rates-sweep-across-danish-mortgages

Mr. Buffett is a fundamental investor though he has been suspected of occasional bets on currencies. The recent UK currency issue seems just like a specific opportunity for cheap capital and perhaps will match in due course specific asset investments. Yesterday, I came across an interesting piece that shows how challenging it will be for him or his legacy to beat the crowd. I would bet that the ability to do so will be based on rationality.
https://politicalcalculations.blogspot.com/2019/06/warren-buffett-versus-s-500.html#.XQPiZ9NKjOQ


Jurgis

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Re: Buffett/Berkshire - general news
« Reply #1204 on: June 18, 2019, 07:56:45 AM »
In the last few years, it has been possible, in some instances and in a few European countries, to finance or refinance individual mortgages at a negative (!) yield for quite significant durations. In those specific cases, it looks like the financial institution would choose to incrementally lower the principal owed instead of paying interest to the customer. ???
https://www.bloomberg.com/news/articles/2019-05-23/bankers-stunned-as-negative-rates-sweep-across-danish-mortgages

Our CoBF European (or just Danish?) friends should be buying RE hand over fist for negative mortgages.  8)
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John Hjorth

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Re: Buffett/Berkshire - general news
« Reply #1205 on: June 19, 2019, 01:44:50 AM »
It's not that kind of real estate that I prefer to own, that the Danes are doing this with, Jurgis, [ : - ) ]

They are [generally speaking] doing it with that kind of real estate, that is called homes, which have the properties of not being cash generating - only cost generating. So basically it's borrowing with a liability posted as collateral.

Cigarbutt's post made me look around [we have public records here about how real estate is mortgaged]. That action caused a grenade shock.

- - - o 0 o - - -

Perhaps we should continue this discussion in Seth's topic about cost of capital instead of here.
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DooDiligence

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longterminvestor

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Re: Buffett/Berkshire - general news
« Reply #1208 on: June 24, 2019, 07:13:19 AM »
EWM joining Berk Real Estate is misleading.  Berkshire acquired EWM in 2003.  The story should be more about branding as EWM is changing their brand to match the ownership. 

DooDiligence

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Re: Buffett/Berkshire - general news
« Reply #1209 on: June 24, 2019, 04:52:51 PM »
EWM joining Berk Real Estate is misleading.  Berkshire acquired EWM in 2003.  The story should be more about branding as EWM is changing their brand to match the ownership.

You are correct sir.

https://therealdeal.com/miami/2019/06/20/so-long-ewm-coral-gables-brokerage-rebrands-as-berkshire-hathaway-homeservices/
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