Author Topic: Buffett/Berkshire - general news  (Read 440154 times)

BPCAP

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Re: Buffett/Berkshire - general news
« Reply #1240 on: July 14, 2019, 06:27:16 PM »
The Berkshire discount keeps growing.  Id be surprised if Buffett didnt show a record (for them) buyback in the next filing. 


AdjustedEarnings

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Re: Buffett/Berkshire - general news
« Reply #1241 on: July 16, 2019, 06:54:09 AM »
If Berkshire can replace all its debt and insurance float with negative rate debt why even be in the insurance business? You can shut it down for a few years or decades. But I suspect the problem is volume. No corporation is going to raise negative debt of 70 billion in Europe or anywhere anytime soon.

Insurance overall is already negative yielding. Other than volume, the second problem is why go through the trouble of shutting something down that works very well? What if rates turn positive in Europe at the time of refinancing the initial issue negative interest debt (they'll have to refi occasionally)? Are they then going to rebuild insurance from scratch? The negative rates are also not negative enough to the degree of income provided by insurance. Cash flows are wildly different too (take a read on how negative rate bonds work). Plus, the way insurance liabilitis work, you can't simply pay them off from a bond issue any way. They have their own attrition based on paid losses. So this process would take forever given the long tail. It would make no sense to shut down Geico, etc. which are shorter duration, shorter tail segments but is profitable and growing. So, for many reasons, this is not a very practical idea.

gfp

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Re: Buffett/Berkshire - general news
« Reply #1242 on: July 17, 2019, 05:24:25 AM »


Dynamic

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Re: Buffett/Berkshire - general news
« Reply #1244 on: July 25, 2019, 03:19:45 PM »
There's a new Sec Form 3 filling making an early reveal of the Bank of America position increasing to 950 million shares precisely (was 900 million exactly at 31 March 2019) which exceeded 10% thanks to BAC buybacks being unexpectedly large.

I suspect the Bank Holding Company 10% threshold will force them to sell some immediately unless there is any room for an exception being granted provided Berkshire doesn't but any more. The last time they asked for an exception regarding Wells Fargo WFC it was refused, forcing Berkshire to sell a little WFC almost every quarter since, but with new proposals being considered to increase the threshold to 25% perhaps it could be different this time. If any of you have any insights it could be interesting.

We'll have to wait until early August for the 10-Q filling to reveal the BAC position value as at 30 June's previous close price (rounded to nearest $0.1 billion), then 14 August for the 13-F to confirm the exact number of shares.

I imagine the purchase was made during Q2 rather than since its end but we won't know for sure until later. The BAC price during the early May Trump Trade war slump was quite tempting.

gfp

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Re: Buffett/Berkshire - general news
« Reply #1245 on: July 25, 2019, 04:35:38 PM »
I think Warren knew the pace of BAC's repurchases.  He probably is expecting to be able to keep the position given the evolving guidance on what constitutes "control" as far as the Fed is concerned.  I wouldn't be surprised if Berkshire is allowed to stop selling Wells shares as well.  He may not buy more, but I would expect the government to allow Berkshire to drift up passively.  BRK owns more than 18% of American Express, which itself is a bank holding company.

Dynamic

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Re: Buffett/Berkshire - general news
« Reply #1246 on: July 25, 2019, 11:00:10 PM »
Thanks gfp, I was hoping to hear your perspective as I've only read briefly about the proposals to relax the rule and don't have much feel for how restricted Berkshire truly is right now. I hope it works out like that.

John Hjorth

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Re: Buffett/Berkshire - general news
« Reply #1247 on: July 25, 2019, 11:09:47 PM »
I'm a bit surprised to observe today this move by Mr. Buffett, honestly. How about the three days reporting rule? Does that also apply for the initial Form 3? -If it does, the purchase must be in July, right?

Well, at least, 50 M shares at ~ USD 30, that's USD 1.5 B allocated.

Edit :

I just reread gfp's last post. If I think about it from the perspective : "What is going on - so to say - "behind the curtains" at Berkshire?" on this matter, I come up with that Mr. Buffett have already filed for permission to go above 10 % for both WFC and BAC, and perhaps based on signals in the ongoing positive dialogue with the FED [why wouldn't it be that, with the existing proposal for change of regulation?], he decided already now to buy more BAC.
« Last Edit: July 26, 2019, 12:40:14 AM by John Hjorth »
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Dynamic

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Re: Buffett/Berkshire - general news
« Reply #1248 on: July 26, 2019, 01:06:38 AM »
From looking at the footnotes to the filing it appears that when they purchased the 50 million extra shares, they were still below 10% and it was only when they much later learned of BAC's revised share count that they realised they were now above 10% and then had to file Form 3:
Quote
Remarks:
The beneficial ownership of the shares of Common Stock reported herein exceeds 10% as a result of the issuer's repurchases of its own securities, based on the issuer's most recently announced number of shares of Common Stock outstanding.

If they had just purchased, they would have had to file Form 13D or 13D/A which I imagine would have been the case if they had bought in the last 3 days, as happened with DAL earlier this year, which they thought they were buying below the 10% level, and within 3 days they discovered it was above 10% due to a reduced share count being announced, and having been obliged to file 13D within 3 days, they took the opportunity to buy more prior to that filing being published and filed again to report that further buying, having increased it further to 10.44%). I don't imagine they'll make any further trades in DAL unless rule 13's threshold gets changed.

I remember looking at their percentage ownership in Q4 from the 10-K and noting they were not as close to the 10% mark as they were with WFC (It was 9.5% at year end versus 9.8% for Wells Fargo).

I realised then that despite the recent low prices (I had recently been put to at $26.50 per share, well below 2018Q3 prices and it had gone even lower at times) they weren't going to have been able to buy anything like another 200 million shares like they did in 2018Q3, then taking them from 700 million to 900 million, and something probably below 52 million, I think, was going to correspond to about 9.9%.

They didn't buy more in Q1, so I figured maybe that was it until the buybacks eventually brought them to around 10%. As it happens they have bought more, but after the latest round of stress tests and approval of increased capital return plans, it looks like even if they do have to sell some it's probably a worthwhile purchase to have bought the extra 50 million shares, assuming they probably bought a little below $30 prior to these announcements. If they can keep the shares, even better,

gfp

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Re: Buffett/Berkshire - general news
« Reply #1249 on: July 26, 2019, 04:28:13 AM »
Yeah, the timing of the filing was based on BAC's quarterly results.  The press release with supplemental financial details was filed on July 17th.  Usually Berkshire would wait until a couple days after the 10Q to file something like their Form 3, which was required once they learned of the most recent share count. 

In this case, I don't think BAC has even filed their 10Q yet unless I am missing it somewhere.  But the 8K had enough in it that someone probably made the call to file the Form 3.  Its still an SEC filing with a share count listed after all...

https://www.sec.gov/Archives/edgar/data/70858/000007085819000037/0000070858-19-000037-index.htm

** now that I look at the Form 3, it actually says, "date of even requiring statement: 7/17/2019" - which would be the BAC filing linked above.

I wonder where the 10Q is?
« Last Edit: July 26, 2019, 04:40:18 AM by gfp »