Corner of Berkshire & Fairfax Message Board

General Category => Berkshire Hathaway => Topic started by: fareastwarriors on July 17, 2014, 09:16:11 AM

Title: Buffett/Berkshire - general news
Post by: fareastwarriors on July 17, 2014, 09:16:11 AM
Buffett's Achilles' Heel: Investing in Retail

Billionaire and Berkshire Partner Munger Often Speak of 'Failures'



http://online.wsj.com/articles/buffetts-achilles-heel-retail-investing-1405539148?mod=WSJ_hp_LEFTWhatsNewsCollection (http://online.wsj.com/articles/buffetts-achilles-heel-retail-investing-1405539148?mod=WSJ_hp_LEFTWhatsNewsCollection)
Title: Re: Buffett news
Post by: bookie71 on July 17, 2014, 09:39:17 AM
Here is the non subscriber link:
http://online.wsj.com/articles/buffetts-achilles-heel-retail-investing-1405539148?tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB10001424052702303714604580029961891070790.html
Title: Re: Buffett news
Post by: fareastwarriors on July 23, 2014, 11:18:34 PM
Buffett’s Stock Gauge Seen Outdoing Shiller’s:




http://www.bloomberg.com/news/2014-07-24/buffett-s-stock-gauge-seen-outdoing-shiller-s-chart-of-the-day.html (http://www.bloomberg.com/news/2014-07-24/buffett-s-stock-gauge-seen-outdoing-shiller-s-chart-of-the-day.html)
Title: Re: Buffett news
Post by: fareastwarriors on August 03, 2014, 11:29:34 PM

Buffett Waits on Fat Pitch as Cash Hoard Tops $50 Billion


http://www.bloomberg.com/news/2014-08-04/buffett-waits-on-fat-pitch-as-cash-hoard-tops-50-billion.html (http://www.bloomberg.com/news/2014-08-04/buffett-waits-on-fat-pitch-as-cash-hoard-tops-50-billion.html)
Title: Re: Buffett news
Post by: longinvestor on August 04, 2014, 10:02:28 AM

Buffett Waits on Fat Pitch as Cash Hoard Tops $50 Billion


http://www.bloomberg.com/news/2014-08-04/buffett-waits-on-fat-pitch-as-cash-hoard-tops-50-billion.html (http://www.bloomberg.com/news/2014-08-04/buffett-waits-on-fat-pitch-as-cash-hoard-tops-50-billion.html)

I told myself on Friday, as the earnings came out that the media would fixate on this. It took all of two hours after the market opened. Same old arguments. When is the next elephant purchase? Why not a dividend? All questions have been answered in the annual report or at the AGM.

One thing is certain, few other companies have this kind of a problem! Life at BRK moves at a different pace than the headline.
Title: Re: Buffett news
Post by: peter1234 on August 04, 2014, 11:04:39 PM
Quote
While Buffett has said that low yields made him avoid bonds, not even stocks have tempted him much this year. The filing showed that Berkshire spent $2.05 billion on equities in the first half, about a third of the total from a year earlier. Its sales of stock more than doubled to $2.96 billion.

Thought this bit was interesting.

Looks like not even Todd and Ted found much to buy.

 ;)
Title: Re: Buffett news
Post by: fareastwarriors on August 25, 2014, 09:57:03 AM
Berkshire Sees Green With Geico

Gecko Ads Help Make the Auto Insurer a Money Spinner for Warren Buffett, Who Calls the Firm 'My First Business Love'


http://online.wsj.com/articles/berkshire-sees-green-with-geico-1408916799?mod=WSJ_hp_LEFTWhatsNewsCollection (http://online.wsj.com/articles/berkshire-sees-green-with-geico-1408916799?mod=WSJ_hp_LEFTWhatsNewsCollection)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 26, 2014, 05:25:48 AM
http://finance.yahoo.com/news/buffett-help-finance-burger-kings-004929762.html

Two years ago WEB asked business leaders to call him and that he would be happy to "unburden" them if they wanted to invest capital but felt burdened about the future.

Is this one of those?
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on August 26, 2014, 07:49:06 AM
BRK's $3 Billion preferred shares will accrue a 9% coupon
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 26, 2014, 08:13:11 AM
BRK's $3 Billion preferred shares will accrue a 9% coupon
Plus something?  Sweeteners?
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on August 26, 2014, 09:46:33 AM
We probably won't know until they make a filing.  I would guess that it has his usual redemption premium (~10%) and it is possible that it is a compounding security that earns 9% on accrued dividends (ie, doesn't pay cash dividends)

BRK's $3 Billion preferred shares will accrue a 9% coupon
Plus something?  Sweeteners?
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on September 03, 2014, 04:27:55 PM
We probably won't know until they make a filing.  I would guess that it has his usual redemption premium (~10%) and it is possible that it is a compounding security that earns 9% on accrued dividends (ie, doesn't pay cash dividends)

BRK's $3 Billion preferred shares will accrue a 9% coupon
Plus something?  Sweeteners?
Berkshire gets 1.75% of the BK-TH company, per the NYT report
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on October 02, 2014, 05:05:53 AM
http://www.cnbc.com/id/102052785
- initial CNBC report

http://www.berkshirehathaway.com/news/OCT0214.pdf
- Berkshire / Van Tuyl group joint press release

No information on price so far, but it looks around the same size as Sonic Automotive.

Title: Re: Buffett/Berkshire - general news
Post by: peter1234 on October 02, 2014, 05:52:39 AM
http://www.cnbc.com/id/102052785
- initial CNBC report

http://www.berkshirehathaway.com/news/OCT0214.pdf
- Berkshire / Van Tuyl group joint press release

No information on price so far, but it looks around the same size as Sonic Automotive.

I thought he only needed a new car. Now he buys the dealership...
 ;D
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on October 02, 2014, 05:56:07 AM
http://www.businessinsider.com/warren-buffett-speaks-on-cnbc-oct-2-2014-10


Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 02, 2014, 09:51:09 AM
http://www.cnbc.com/id/102052785
- initial CNBC report

http://www.berkshirehathaway.com/news/OCT0214.pdf
- Berkshire / Van Tuyl group joint press release

No information on price so far, but it looks around the same size as Sonic Automotive.

I thought he only needed a new car. Now he buys the dealership...
 ;D


went in for a car and came out with a dealership
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on October 02, 2014, 10:57:32 AM
Cross sell Geico.

Loan working capital to dealership for inventory. Put that $55B to work.

Financing car purchases?  Or partner with WFC for referrals ? Underwrite leases? GM partnership?

 Clayton Homes comes to mind.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 02, 2014, 11:41:33 AM

more general news on the deal


http://online.wsj.com/articles/berkshire-to-buy-car-dealership-group-1412253366?mod=WSJ_hp_LEFTTopStories (http://online.wsj.com/articles/berkshire-to-buy-car-dealership-group-1412253366?mod=WSJ_hp_LEFTTopStories)

Warren Buffett Buys New-Car Retail Chain

Legendary Investor Says He Plans to Buy More Dealerships Over Time
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 02, 2014, 02:40:36 PM
Buffett Nabs Car Dealership As First Step Into Fragmented Market

http://blogs.wsj.com/moneybeat/2014/10/02/buffett-nabs-car-dealership-as-first-step-into-fragmented-market/ (http://blogs.wsj.com/moneybeat/2014/10/02/buffett-nabs-car-dealership-as-first-step-into-fragmented-market/)
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on October 02, 2014, 04:16:00 PM
Similar in theme to his regulated investments, I guess, auto dealerships only exist because they are required to exist, and once you have enough scale, I assume it's hard for another guy to break in.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on October 04, 2014, 06:09:03 AM
http://www.bizjournals.com/kansascity/news/2012/11/21/kansas-city-entrepreneur-cecil-van.html?page=all

My inquisitiveness lead me to doing searches on the Van Tuyl group and why BRK was most interested in them. Well, this obituary for the senior, Cecil Van Tuyl captures it well. Their growth has come down to this..

“He would train people to run his dealerships throughout the country and eventually become partners and share an ownership stake with him,” Robinson said. “He impacted the lives of people from Sioux Falls, S.D., to Bloomington, Ill., Kansas City, St. Joseph, Houston and Dallas. He would train people to go out and buy dealerships, then he’d have people in strategic spots at those dealerships to make sure they were successful.”

Their secret sauce has been their mentoring of the dealer-owners. Their continued growth under Berkshire appears to only be limited by their ability to continue effectively mentoring any new dealers who come under the fold. Capital is not the limitation.
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on October 14, 2014, 01:06:05 PM
Exit strategy on Buffett deal? Not so fast, says Larry Van Tuyl

http://www.autonews.com/article/20141013/OEM02/141019958/exit-strategy-on-buffett-deal-not-so-fast-says-larry-van-tuyl
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 17, 2014, 08:44:32 AM

The Warren Buffett of Everything


http://www.bloomberg.com/news/2014-10-17/the-warren-buffett-of-everything.html (http://www.bloomberg.com/news/2014-10-17/the-warren-buffett-of-everything.html)
Title: Re: Buffett/Berkshire - general news
Post by: DCG on October 17, 2014, 09:33:27 AM
Van Tuyl is a big client of the company I work for. They've always seemed to be a well-run dealer group in my experience with them.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 23, 2014, 10:34:21 AM
Buffett Puts Wind in Berkshire’s Sails

Billionaire Investor Doubles Down on Renewables in Energy Strategy


http://online.wsj.com/articles/buffett-puts-wind-in-berkshires-sails-1414084146?mod=WSJ_hp_RightTopStories (http://online.wsj.com/articles/buffett-puts-wind-in-berkshires-sails-1414084146?mod=WSJ_hp_RightTopStories)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 27, 2014, 12:50:50 PM
Buffett’s Assistant Cool Named CEO of Pampered Chef Unit


http://www.bloomberg.com/news/2014-10-27/buffett-s-assistant-cool-named-ceo-of-pampered-chef-unit-1-.html (http://www.bloomberg.com/news/2014-10-27/buffett-s-assistant-cool-named-ceo-of-pampered-chef-unit-1-.html)
Title: Re: Buffett/Berkshire - general news
Post by: oddballstocks on October 27, 2014, 01:11:51 PM
Buffett’s Assistant Cool Named CEO of Pampered Chef Unit


http://www.bloomberg.com/news/2014-10-27/buffett-s-assistant-cool-named-ceo-of-pampered-chef-unit-1-.html (http://www.bloomberg.com/news/2014-10-27/buffett-s-assistant-cool-named-ceo-of-pampered-chef-unit-1-.html)

The next CEO of Berkshire adds one more loop to her belt.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 30, 2014, 01:21:34 PM
Buffett’s Assistant Cool Named CEO of Pampered Chef Unit


http://www.bloomberg.com/news/2014-10-27/buffett-s-assistant-cool-named-ceo-of-pampered-chef-unit-1-.html (http://www.bloomberg.com/news/2014-10-27/buffett-s-assistant-cool-named-ceo-of-pampered-chef-unit-1-.html)

The next CEO of Berkshire adds one more loop to her belt.





Advice from Buffett's 30-year-old right-hand woman

http://www.cnbc.com/id/102137315?trknav=homestack:topnews:3 (http://www.cnbc.com/id/102137315?trknav=homestack:topnews:3)
Title: Re: Buffett/Berkshire - general news
Post by: JAllen on October 30, 2014, 09:48:50 PM
StockBase.com, a stock news site I built that delivers SEC filings and news from dozens of sources into one easy to create feed, found a couple of articles I don't see here:


Q&A: Leo Carroll, Berkshire Hathaway Specialty Insurance
http://www.businessinsurance.com/article/20141028/NEWS06/141029828


and Buffett sold a business!


Berkshire Hathaway sells marketing unit


http://mobile.reuters.com/article/idUSL1N0SN36A20141028?irpc=932
Title: Re: Buffett/Berkshire - general news
Post by: thefatbaboon on October 31, 2014, 04:29:46 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html
Title: Re: Buffett/Berkshire - general news
Post by: Kraven on October 31, 2014, 05:11:54 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html

No, you're not being bitchy but it's pretty clear you don't understand.  I will help you here.  I could give you a long winded explanation, but instead I will go a step further.  There are several truisms in the investing world that the sooner you commit to memory, the easier your investing will be.  If after reading through these and digesting them you still don't understand please let me know and I will discuss further. 

In no particular order, here they are:

1.  Any decision by Buffett is correct.

2.  Any statement by Buffett or Munger is witty, profound and embedded with the truth of the universe.

3.  Fairfax will compound book value at 15% a year.

4.  Any time the market falls more than 0.1% Fairfax's hedges are proven correct.

5.  Eddie is a genius and the more his decisions are incomprehensible to the average person, the more genius they are.

6.  Eddie is a kick ass capital allocator and, thus, his capital allocation decisions are kick ass.

Hope this helps.
Title: Re: Buffett/Berkshire - general news
Post by: onyx1 on October 31, 2014, 05:26:23 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html

No, you're not being bitchy but it's pretty clear you don't understand.  I will help you here.  I could give you a long winded explanation, but instead I will go a step further.  There are several truisms in the investing world that the sooner you commit to memory, the easier your investing will be.  If after reading through these and digesting them you still don't understand please let me know and I will discuss further. 

In no particular order, here they are:

1.  Any decision by Buffett is correct.

2.  Any statement by Buffett or Munger is witty, profound and embedded with the truth of the universe.

3.  Fairfax will compound book value at 15% a year.

4.  Any time the market falls more than 0.1% Fairfax's hedges are proven correct.

5.  Eddie is a genius and the more his decisions are incomprehensible to the average person, the more genius they are.

6.  Eddie is a kick ass capital allocator and, thus, his capital allocation decisions are kick ass.

Hope this helps.

Classic!
Title: Re: Buffett/Berkshire - general news
Post by: warrior on October 31, 2014, 07:21:33 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html

No, you're not being bitchy but it's pretty clear you don't understand.  I will help you here.  I could give you a long winded explanation, but instead I will go a step further.  There are several truisms in the investing world that the sooner you commit to memory, the easier your investing will be.  If after reading through these and digesting them you still don't understand please let me know and I will discuss further. 

In no particular order, here they are:

1.  Any decision by Buffett is correct.

2.  Any statement by Buffett or Munger is witty, profound and embedded with the truth of the universe.

3.  Fairfax will compound book value at 15% a year.

4.  Any time the market falls more than 0.1% Fairfax's hedges are proven correct.

5.  Eddie is a genius and the more his decisions are incomprehensible to the average person, the more genius they are.

6.  Eddie is a kick ass capital allocator and, thus, his capital allocation decisions are kick ass.

Hope this helps.

Classic!


+1… , Indeed, classic Kraven
Title: Re: Buffett/Berkshire - general news
Post by: thefatbaboon on October 31, 2014, 09:17:03 AM
But Kraven I have long accepted this code  ;D  You'll note however that even on the list of commandments there is no mention of Brit Cool!
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on October 31, 2014, 09:23:25 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html

Now I ain't saying she a gold digger,
But she ain't messin' with no broke...
Title: Re: Buffett/Berkshire - general news
Post by: alwaysinvert on October 31, 2014, 02:57:00 PM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html
Is that part true? If it is, it really doesn't bode well for BRK post-Buffett. On the other hand, pardon me if I'm being sexist or something here, but hiring her straight out of school when he has turned down multiple super talents with far more experience (Pabrai comes to mind) who also offered to work for free/very little may not have been optimal either.
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on October 31, 2014, 07:38:41 PM
^To be fair, WEB does have a weakness for young, attractive blondes...
Title: Re: Buffett/Berkshire - general news
Post by: rmitz on November 01, 2014, 06:17:18 AM
^To be fair, WEB does have a weakness for young, attractive blondes...

I think it’s much more likely that she got lucky.  She can’t have been the first woman to try.  He may have started to realize just at that time that he needed more help for some of these things. 
Title: Re: Buffett/Berkshire - general news
Post by: sleepydragon on November 01, 2014, 10:26:18 AM
^To be fair, WEB does have a weakness for young, attractive blondes...

I think it’s much more likely that she got lucky.  She can’t have been the first woman to try.  He may have started to realize just at that time that he needed more help for some of these things.

To be fair, consider this: she was a new MBA graduate in 2009. During the summer of 2008, she had internship with Lehman Brothers, Bank of America, and 85 Broad (85 Broad is a None-profit organization founded by Women MDs/Partners at Goldman sachs). In 2008, every banks was firing people, nobody was hired. Lehman bankrupted. Yet, she got 3 jobs. And she had no real world work experience, especially in finance(before MBA, she was an undergraduate at harvard). After graduation, she got a job with Warren Buffet when I think she could be the only person in her MBA class who got a job.
Title: Re: Buffett/Berkshire - general news
Post by: LC on November 01, 2014, 10:44:49 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html
Is that part true? If it is, it really doesn't bode well for BRK post-Buffett. On the other hand, pardon me if I'm being sexist or something here, but hiring her straight out of school when he has turned down multiple super talents with far more experience (Pabrai comes to mind) who also offered to work for free/very little may not have been optimal either.

http://nypost.com/2013/10/13/buffett-protege-caught-in-ceo-sex-mess/

Haha this is funny. A 29 year old exec hires her 36 year old friend's 61 year old husband. A marriage based on undying love, no doubt, and an executive hire based entirely on merit, I'm sure. Results: as expected.
Title: Re: Buffett/Berkshire - general news
Post by: Value^2 on November 02, 2014, 12:16:50 AM
Maybe I'm being bitchy, but does anyone else think Brit Cool should stop giving advice and interviews until she has actually done something?  She's 30 years old and the only thing I'm aware of her having done is hire the husband of a friend of hers to run Benjamin Moore and subsequently fire him when he cheated on her friend with a secretary.

http://finance.yahoo.com/news/advice-buffetts-30-old-hand-174812229.html
Is that part true? If it is, it really doesn't bode well for BRK post-Buffett. On the other hand, pardon me if I'm being sexist or something here, but hiring her straight out of school when he has turned down multiple super talents with far more experience (Pabrai comes to mind) who also offered to work for free/very little may not have been optimal either.

Why Buffett should hire someone who mimics him shamelessly?

edit: other than that, i agree and understand your point.
Title: Re: Buffett/Berkshire - general news
Post by: rmitz on November 03, 2014, 08:25:21 AM
^To be fair, WEB does have a weakness for young, attractive blondes...

I think it’s much more likely that she got lucky.  She can’t have been the first woman to try.  He may have started to realize just at that time that he needed more help for some of these things.

To be fair, consider this: she was a new MBA graduate in 2009. During the summer of 2008, she had internship with Lehman Brothers, Bank of America, and 85 Broad (85 Broad is a None-profit organization founded by Women MDs/Partners at Goldman sachs). In 2008, every banks was firing people, nobody was hired. Lehman bankrupted. Yet, she got 3 jobs. And she had no real world work experience, especially in finance(before MBA, she was an undergraduate at harvard). After graduation, she got a job with Warren Buffet when I think she could be the only person in her MBA class who got a job.

Let me be clear: I have no doubt she’s good.  Very good.  But clearly inexperienced.  What I mean by luck is that surely many many people along the years, some of whom may have been objectively better (though that’s very difficult to actually measure) would have gotten turned down.  That’s life.  All of us who have been successful have some measure of luck, though we may do our best to tilt the odds in our favor.
Title: Re: Buffett/Berkshire - general news
Post by: bookie71 on November 03, 2014, 08:33:28 AM
To gain experience, you have to have screw-ups as well as successes.  That is why I liked Guy Spier's book,he admitted his screw-ups.
Title: Re: Buffett/Berkshire - general news
Post by: alwaysinvert on November 03, 2014, 10:51:40 AM
I don't think there's anything necessarily wrong in making a "nepotist" hiring. Sometimes it can be optimal because you know their capabilities best from prior experience.

But if it goes awry the way it did in this case, you clearly have not taken the necessary precautions, which due to biases should probably be even more stringent than if you hire someone you don't know. Philandering and sexual harassment are not habits you suddenly take up at age 61.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 03, 2014, 11:42:40 AM
As always, any association with Buffett makes good headlines. Especially about a 29 something woman who shares the Omaha office and seems to enjoy the confidence of the boss. It is also very possible that the combination of a Harvard Business degree and Midwestern farm work ethic/experience has more to do with her getting the job than any other bally-hoo swirling the media. All we know is that she is playing a role that will help the next CEO ease into the job. And no, she is not on that shortlist, that rumor was squashed already.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 03, 2014, 11:45:36 AM
How Buffett's Brooks Running plans to become a $1 billion brand


http://fortune.com/2014/10/31/how-buffetts-brooks-running-plans-to-become-a-1-billion-brand/ (http://fortune.com/2014/10/31/how-buffetts-brooks-running-plans-to-become-a-1-billion-brand/)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 10, 2014, 08:55:24 AM
Buffett Said He Paid a Steep Price. $15 Billion Later, BNSF Is a Cash Machine. 'He Stole It'


http://www.bloomberg.com/news/2014-11-10/buffett-s-15-billion-from-bnsf-show-railroad-came-cheap.html (http://www.bloomberg.com/news/2014-11-10/buffett-s-15-billion-from-bnsf-show-railroad-came-cheap.html)
Title: Re: Buffett/Berkshire - general news
Post by: peter1234 on November 10, 2014, 09:19:58 AM
Thanks for posting.

Let's not forget that some esteemed value people called the deal very expensive at the time.
 ;)
Title: Re: Buffett/Berkshire - general news
Post by: treasurehunt on November 10, 2014, 01:37:12 PM
Thanks for posting.

Let's not forget that some esteemed value people called the deal very expensive at the time.
 ;)

Indeed. I remember Bruce Greenwald, esteemed professor at Columbia University, claim that the BNSF purchase was a crazy deal. "At $100/share we think he has lost his mind." is a verbatim quote. Not so insane, it seems. There is probably some element of luck in how well the BNSF deal turned out, but we should also give Buffett credit for understanding the railroad business better than many others.
Title: Re: Buffett/Berkshire - general news
Post by: Tim Eriksen on November 10, 2014, 02:20:23 PM
The article says the 10-Q notes that $15 billion in dividends have been sent to Berkshire since the acquisition.   Does anyone know where that is in the 10-Q?  I personally wasn't a big fan of the purchase back then because it was so capital intensive.  If I understand things correctly BNSF still spends more on capex than depreciation, thus not all of its earnings can be sent to BRK.   If I recall correctly BNSF debt was $10 billion and has increased by nearly $10 billion since the acquisition. 

Any discussion of the merits of the BNSF deal should compare it to alternatives which is hard to do.  The S&P500 has doubled over the five year time frame.  Since shares were issued in the deal it diluted shareholder ownership in existing BRK businesses.

     
Title: Re: Buffett/Berkshire - general news
Post by: jay21 on November 10, 2014, 02:25:52 PM
The article says the 10-Q notes that $15 billion in dividends have been sent to Berkshire since the acquisition.   Does anyone know where that is in the 10-Q?  I personally wasn't a big fan of the purchase back then because it was so capital intensive.  If I understand things correctly BNSF still spends more on capex than depreciation, thus not all of its earnings can be sent to BRK.   If I recall correctly BNSF debt was $10 billion and has increased by nearly $10 billion since the acquisition. 

Any discussion of the merits of the BNSF deal should compare it to alternatives which is hard to do.  The S&P500 has doubled over the five year time frame.  Since shares were issued in the deal it diluted shareholder ownership in existing BRK businesses.

     

BNSF files. Check there as it is a line item in the CF statement. IIRC yes, a good chunk of the dividends appear to be debt recaps but thats driven by their increased earning power. I am sure you can lever it more aggressively (just like almost any other BRK business) if he needs the cash (i.e. the debt is entirely appropriate and he isnt sucking the business dry).

Agree on the dilution. Buffett should be forced to buyback the dilution  ;)

Edit: http://www.bnsf.com/about-bnsf/financial-information/form-10-k-filings/pdf/10k-llc-2013.pdf

Distributions 2011: 3500. 2012: 3750. 2013: 4000
Title: Re: Buffett/Berkshire - general news
Post by: Tim Eriksen on November 10, 2014, 03:57:15 PM
Thanks jay,
To me that still would mean 10 billion of the 15 billion was from BNSF taking on more debt.  So I exclude that since it is more like return of capital than return on capital.  To pay 34 billion and only have it throw off 5 billion over the last 4 years doesn't seem impressive to me.  I am not saying that BNSF is not worth more today than when BRK purchased it.  Clearly it is.  I just didn't see high free cash flow then or now.  It is better than a utility, but not as good as a capital light business.

It really makes me wonder at times if Buffett is focused on free cash flow or reported earnings.   BNSF, MidAmerican and Net Jets (things purchased in the last 15 years) are not the same quality  of businesses as Geico, WaPost, See's, Coke, AmEx, Wells, Gillette, etc.(businesses or stocks of the 70's through 90's).   

   
Title: Re: Buffett/Berkshire - general news
Post by: jay21 on November 10, 2014, 05:11:05 PM
I dont fully agree. Obviously if the distributions were fully FCF than it would be better than debt. But if you look at their debt/ebitda metric, they have kept it constant, not increased. So they are just maintaining their capital structure. Its not like he's putting on excessive leverage here, if anything BRK underlevers their assets (like every single asset they own, its crazy they generate the returns they do running with so much cash and little leverage).

See this presentation: http://www.bnsf.com/about-bnsf/financial-information/fixed-income-investors/pdf/fixed-income-investor-presentation-1-quarter-2014.pdf

Also, when I looked at their reported maintenance capex, I believe it approximated D&A. Their FCF returns look strong to me.

If you haven't, I would take a look at the BNSF thread in the subforum: http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/bnsf-and-midamerican/

Title: Re: Buffett/Berkshire - general news
Post by: ajc on November 11, 2014, 05:34:14 AM

"Having identified a source of float in the capital intensive assets, Buffett's next trick is to make it grow thereby increasing its value.
It is therefore no surprise that large components of Berkshires capital expenditures are being directed towards BNSF and MidAmerican - the two assets we identified above as being long-term DTL float generators.

Capex in BNSF/MidAmerican has a number of impacts:

 - It increases the level of fixed assets in long-term DTL float generators
 - Capex above depreciation will cause the DTL float to grow
 - As new capital depreciates quicker than existing capital given accelerated tax depreciation it creates more per dollar DTL float than the existing book.
 - Given the above, ever rising amounts of new capital expenditures will make the DTL float start to balloon (or should i say float?) upward"


http://seekingalpha.com/article/2428045-how-buffett-is-changing-the-future-of-berkshires-float-from-insurance-to-uncle-sam (http://seekingalpha.com/article/2428045-how-buffett-is-changing-the-future-of-berkshires-float-from-insurance-to-uncle-sam)


Title: Re: Buffett/Berkshire - general news
Post by: Tim Eriksen on November 11, 2014, 08:55:53 AM

"Having identified a source of float in the capital intensive assets, Buffett's next trick is to make it grow thereby increasing its value.
It is therefore no surprise that large components of Berkshires capital expenditures are being directed towards BNSF and MidAmerican - the two assets we identified above as being long-term DTL float generators.

Capex in BNSF/MidAmerican has a number of impacts:

 - It increases the level of fixed assets in long-term DTL float generators
 - Capex above depreciation will cause the DTL float to grow
 - As new capital depreciates quicker than existing capital given accelerated tax depreciation it creates more per dollar DTL float than the existing book.
 - Given the above, ever rising amounts of new capital expenditures will make the DTL float start to balloon (or should i say float?) upward"


http://seekingalpha.com/article/2428045-how-buffett-is-changing-the-future-of-berkshires-float-from-insurance-to-uncle-sam (http://seekingalpha.com/article/2428045-how-buffett-is-changing-the-future-of-berkshires-float-from-insurance-to-uncle-sam)

Maybe my point is being missed.  Let me try another way.  DTL (deferred tax liability) float from accelerated depreciation is not as good as DTL float from unrealized gains, which is not as good as float from insurance.  Increasing DTL float from accelerated depreciation requires substantial capital expenditures (part of which is recouped from tax benefits).  Increasing DTL float from unrealized gains does not require any capital expenditures even though it does not generate any cash to invest.  Thus it is better.  Insurance float does not require  meaningful capital expenditures and it generates actual cash that can be invested.  It is by far the best of the three.

It seems to me that Buffett is moving down in terms of quality of float.         
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 11, 2014, 10:28:44 AM

"Having identified a source of float in the capital intensive assets, Buffett's next trick is to make it grow thereby increasing its value.
It is therefore no surprise that large components of Berkshires capital expenditures are being directed towards BNSF and MidAmerican - the two assets we identified above as being long-term DTL float generators.

Capex in BNSF/MidAmerican has a number of impacts:

 - It increases the level of fixed assets in long-term DTL float generators
 - Capex above depreciation will cause the DTL float to grow
 - As new capital depreciates quicker than existing capital given accelerated tax depreciation it creates more per dollar DTL float than the existing book.
 - Given the above, ever rising amounts of new capital expenditures will make the DTL float start to balloon (or should i say float?) upward"


http://seekingalpha.com/article/2428045-how-buffett-is-changing-the-future-of-berkshires-float-from-insurance-to-uncle-sam (http://seekingalpha.com/article/2428045-how-buffett-is-changing-the-future-of-berkshires-float-from-insurance-to-uncle-sam)

Maybe my point is being missed.  Let me try another way.  DTL (deferred tax liability) float from accelerated depreciation is not as good as DTL float from unrealized gains, which is not as good as float from insurance.  Increasing DTL float from accelerated depreciation requires substantial capital expenditures (part of which is recouped from tax benefits).  Increasing DTL float from unrealized gains does not require any capital expenditures even though it does not generate any cash to invest.  Thus it is better.  Insurance float does not require  meaningful capital expenditures and it generates actual cash that can be invested.  It is by far the best of the three.

It seems to me that Buffett is moving down in terms of quality of float.      

Actually the reverse order is true when it comes to control and time frame the float is held. Captive capital allocation for "as far as the eye can see" and a shareholder base willing to go along with 100% retained earnings are wonderful.  Time will tell if the quality of float actually got better.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 11, 2014, 01:06:16 PM
Is the author reading this forum?
 :o


Buffett, Not a Fan of Capital-Heavy Firms, Spends $12B on Them in 2014
http://blogs.wsj.com/moneybeat/2014/11/11/buffett-not-a-fan-of-capital-heavy-firms-spends-12b-on-them-in-2014/ (http://blogs.wsj.com/moneybeat/2014/11/11/buffett-not-a-fan-of-capital-heavy-firms-spends-12b-on-them-in-2014/)
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on November 13, 2014, 06:40:11 AM
Anybody selling BRK? Looks to have hit 1.5xBV, which seems to be many people's estimate of FV...
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on December 01, 2014, 06:06:24 AM
http://www.bloomberg.com/news/2014-12-01/berkshire-to-buy-weatherford-units-for-at-least-750-million-1-.html?cmpid=yhoo

Operating units doing their part, billion at a time.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on December 01, 2014, 06:24:39 AM
It's the second bolt-on at Lubrizol in a week.  They are going to combine today's two companies with the PSX sub they swapped for.

Here is last week's LZ bolt-on - probably a couple hundred million but not disclosed:

http://newscenter.lubrizol.com/phoenix.zhtml?c=250972&p=irol-newsArticle&ID=1992404

http://www.bloomberg.com/news/2014-12-01/berkshire-to-buy-weatherford-units-for-at-least-750-million-1-.html?cmpid=yhoo

Operating units doing their part, billion at a time.
Title: Re: Buffett/Berkshire - general news
Post by: petec on December 01, 2014, 07:05:10 AM
Anybody selling BRK? Looks to have hit 1.5xBV, which seems to be many people's estimate of FV...

Certainly isn't mine ;)

I think it's on a mid-teens look-through PE which given the quality of the businesses and the capital allocation is absolutely fine by me.
Title: Re: Buffett/Berkshire - general news
Post by: redskin on December 01, 2014, 08:49:24 AM
Buffett stated in last years annual report that, 'When our current projects are completed, MidAmerican’s renewables portfolio will have cost $15 billion.'  If you look at the Q3 filing of BH Energy, the renewables segment had operating income of only $252 million for the 9 months year to date.  A 10% return on the $15 billion portfolio should produce $1.5B pre tax.  There is going to be a big jump in earnings as these projects come online in the next few years and new projects are added. 

During the annual meeting a couple years ago Buffett mentioned he could see an additional $100 billion invested in utilites over the next 10 years.
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on December 01, 2014, 11:46:55 AM
Anybody selling BRK? Looks to have hit 1.5xBV, which seems to be many people's estimate of FV...

Certainly isn't mine ;)

I think it's on a mid-teens look-through PE which given the quality of the businesses and the capital allocation is absolutely fine by me.

So what is your estimate of FV?
Title: Re: Buffett/Berkshire - general news
Post by: petec on December 03, 2014, 07:59:42 AM
Anybody selling BRK? Looks to have hit 1.5xBV, which seems to be many people's estimate of FV...

Certainly isn't mine ;)

I think it's on a mid-teens look-through PE which given the quality of the businesses and the capital allocation is absolutely fine by me.

So what is your estimate of FV?

To be completely blunt, I don't make one.   My main point (poorly expressed perhaps) was more that I find it easy to believe that a company like Berkshire might be worth a substantial premium to BV.   My subsidiary point is that 15x 2014 doesn't strike me as expensive when you look at the quality of the underlying businesses, the multiples that peers trade on (railcos for example), and the quality of the capital allocation which should have a huge impact on multiples.

Now clearly if I don't have a specific FV estimate I don't know where I'd sell.   That's true.   As long as I don't think it looks overvalued on a basic metric such as lookthrough PE, I won't think much more about it.   If it gets to the point where the basic metrics make me twitchy, I'll have a more serious dig into how fast IV might grow.   E.g., I might start thinking seriously at 2x bv, or 20x 1y fwd lookthrough earnings.   A big part of my investment philosophy is to ask if I'd like to own this operating business forever, get in at the right price, and then apply "lethargy bordering on sloth", as WB would put it.

P
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on December 03, 2014, 09:15:14 AM
Anybody selling BRK? Looks to have hit 1.5xBV, which seems to be many people's estimate of FV...

Certainly isn't mine ;)

I think it's on a mid-teens look-through PE which given the quality of the businesses and the capital allocation is absolutely fine by me.

So what is your estimate of FV?

To be completely blunt, I don't make one.   My main point (poorly expressed perhaps) was more that I find it easy to believe that a company like Berkshire might be worth a substantial premium to BV.   My subsidiary point is that 15x 2014 doesn't strike me as expensive when you look at the quality of the underlying businesses, the multiples that peers trade on (railcos for example), and the quality of the capital allocation which should have a huge impact on multiples.

Now clearly if I don't have a specific FV estimate I don't know where I'd sell.   That's true.   As long as I don't think it looks overvalued on a basic metric such as lookthrough PE, I won't think much more about it.   If it gets to the point where the basic metrics make me twitchy, I'll have a more serious dig into how fast IV might grow.   E.g., I might start thinking seriously at 2x bv, or 20x 1y fwd lookthrough earnings.   A big part of my investment philosophy is to ask if I'd like to own this operating business forever, get in at the right price, and then apply "lethargy bordering on sloth", as WB would put it.

P
+1
BRK was selling for BV and below BV 3-5 years ago. Bought then, it was the ultimate value buy in a lifetime. My BRK is not for sale until the money is needed.
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on December 05, 2014, 06:54:19 AM
"BRK was selling for BV and below BV 3-5 years ago. Bought then, it was the ultimate value buy in a lifetime."

+1
At the time I had 50% in Berkshire and bought more just before the repurchase announcement.
Since then I enjoyed the ride.  ;)
At the moment I´m invested 99% in Berkshire and 1% in IBM.
Regarding selling I am constantly reminded of Munger who said to his relatives at the Berkshire Meeting:
"Don´t be so dumb to sell your Berkshire shares."
and Buffett said: "That goes for the Buffett family as well."

 :)

Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on March 10, 2015, 10:44:48 PM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 11, 2015, 09:38:40 AM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)

http://www.berkshirehathawayautomotive.com/index.htm is the newly minted website. They also bought a Fort Worth dealership in the first week.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on March 11, 2015, 11:05:06 AM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)

Is it going to be the same "screw the customer" experience as in other auto dealerships?
Title: Re: Buffett/Berkshire - general news
Post by: oddballstocks on March 11, 2015, 11:42:23 AM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)

Is it going to be the same "screw the customer" experience as in other auto dealerships?

I guess I don't understand this purchase.  I have a friend who is in car dealerships and he's been saying valuations have been stretched for years.  When he and others are thinking of getting out you have Buffett climbing in.  The industry has completely changed in the last few years.

Previously there was a greater margin on new cars.  Now that margin has shrunk and dealers make their money on incentives from the manufacturers.  They also make money on service.

Used car sales offer some promise.  There is a LOT of margin in most sales especially in the $5-15k range.

Incentives have changed with online sales.  We recently purchased a car from a volume dealer near us.  The price changed on a fairly regular basis based on the surrounding market.  The dealer didn't actually set the price, they set parameters in the software and let the software set the price.  We paid what I'd consider a fair price.  The car is in great shape and is somewhat rare.  It was cheaper than other cars in the area by a few percentage points.  The dealer said the slight discount is how he moves volume.  They do 150-200 cars a month and have found for them that's the only way to make money.  It's an interesting business model.  I ran this by my friend who's in the dealer business, he knew the software immediately and said it's what everyone has moved to.  There isn't a guy out there guestimating a value anymore.

Part of me thinks Buffett is out of touch on this.  He's thinking dealerships are still full of guys in corduroy blazers with elbow patches working customers over for every last cent.  With the Internet and mobile I don't think too many customers have patience for that business model anymore.  Especially if you can go on TrueCar or a million other sites while at the dealer and see what others have paid.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on March 11, 2015, 12:02:00 PM
Interesting perspective oddball. +1  :)
Title: Re: Buffett/Berkshire - general news
Post by: CorpRaider on March 11, 2015, 12:11:40 PM
I like KMX but it never gets cheap enough for me.  Or it hasn't in a long while.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 11, 2015, 12:24:55 PM
Van Tuyl's attractiveness to Berkshire

- their consistently high volume per dealership. Buffett's words when the deal was announced.

-  they are heavily in smaller towns, mostly Southern states. Kinda follows the recent newspaper purchases

-  own collision centers in most states where they have dealerships. Having been to collision centers thrice in 5 years, I know that is a nice business,  and btw, also have to work closely with auto insurance companies.

- VanTuyl has pioneered the owner-operator model for a long time already.

Berkshire can sell insurance along with cars. arrange financing with partners (perhaps soon start lending money to Van Tuyl a la Clayton Homes) and deal with wrecks and insurance claims at the other end.

Van Tuyl will continue to run the business while this can become a capital allocation pathway for the gusher of cash flow at Berkshire.

Title: Re: Buffett/Berkshire - general news
Post by: Schwab711 on March 11, 2015, 12:44:28 PM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)

Is it going to be the same "screw the customer" experience as in other auto dealerships?

I guess I don't understand this purchase.  I have a friend who is in car dealerships and he's been saying valuations have been stretched for years.  When he and others are thinking of getting out you have Buffett climbing in.  The industry has completely changed in the last few years.

Previously there was a greater margin on new cars.  Now that margin has shrunk and dealers make their money on incentives from the manufacturers.  They also make money on service.

Used car sales offer some promise.  There is a LOT of margin in most sales especially in the $5-15k range.

Incentives have changed with online sales.  We recently purchased a car from a volume dealer near us.  The price changed on a fairly regular basis based on the surrounding market.  The dealer didn't actually set the price, they set parameters in the software and let the software set the price.  We paid what I'd consider a fair price.  The car is in great shape and is somewhat rare.  It was cheaper than other cars in the area by a few percentage points.  The dealer said the slight discount is how he moves volume.  They do 150-200 cars a month and have found for them that's the only way to make money.  It's an interesting business model.  I ran this by my friend who's in the dealer business, he knew the software immediately and said it's what everyone has moved to.  There isn't a guy out there guestimating a value anymore.

Part of me thinks Buffett is out of touch on this.  He's thinking dealerships are still full of guys in corduroy blazers with elbow patches working customers over for every last cent.  With the Internet and mobile I don't think too many customers have patience for that business model anymore.  Especially if you can go on TrueCar or a million other sites while at the dealer and see what others have paid.

What was the software?
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on March 11, 2015, 01:05:05 PM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)

Is it going to be the same "screw the customer" experience as in other auto dealerships?

I guess I don't understand this purchase.  I have a friend who is in car dealerships and he's been saying valuations have been stretched for years.  When he and others are thinking of getting out you have Buffett climbing in.  The industry has completely changed in the last few years.

Previously there was a greater margin on new cars.  Now that margin has shrunk and dealers make their money on incentives from the manufacturers.  They also make money on service.

Used car sales offer some promise.  There is a LOT of margin in most sales especially in the $5-15k range.

Incentives have changed with online sales.  We recently purchased a car from a volume dealer near us.  The price changed on a fairly regular basis based on the surrounding market.  The dealer didn't actually set the price, they set parameters in the software and let the software set the price.  We paid what I'd consider a fair price.  The car is in great shape and is somewhat rare.  It was cheaper than other cars in the area by a few percentage points.  The dealer said the slight discount is how he moves volume.  They do 150-200 cars a month and have found for them that's the only way to make money.  It's an interesting business model.  I ran this by my friend who's in the dealer business, he knew the software immediately and said it's what everyone has moved to.  There isn't a guy out there guestimating a value anymore.

Part of me thinks Buffett is out of touch on this.  He's thinking dealerships are still full of guys in corduroy blazers with elbow patches working customers over for every last cent.  With the Internet and mobile I don't think too many customers have patience for that business model anymore.  Especially if you can go on TrueCar or a million other sites while at the dealer and see what others have paid.

What was the software?


Excuse my ignorance, I thought dealers make money on the service side of the business. It seems like every time I go to a dealership their service bays are always full....
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 11, 2015, 01:18:47 PM
Buffett Says ‘Fun Has Just Started’ for Auto Sales at Berkshire


http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire (http://www.bloomberg.com/news/articles/2015-03-10/buffett-says-fun-has-just-started-for-auto-sales-at-berkshire)

Is it going to be the same "screw the customer" experience as in other auto dealerships?

I guess I don't understand this purchase.  I have a friend who is in car dealerships and he's been saying valuations have been stretched for years.  When he and others are thinking of getting out you have Buffett climbing in.  The industry has completely changed in the last few years.

Previously there was a greater margin on new cars.  Now that margin has shrunk and dealers make their money on incentives from the manufacturers.  They also make money on service.

Used car sales offer some promise.  There is a LOT of margin in most sales especially in the $5-15k range.

Incentives have changed with online sales.  We recently purchased a car from a volume dealer near us.  The price changed on a fairly regular basis based on the surrounding market.  The dealer didn't actually set the price, they set parameters in the software and let the software set the price.  We paid what I'd consider a fair price.  The car is in great shape and is somewhat rare.  It was cheaper than other cars in the area by a few percentage points.  The dealer said the slight discount is how he moves volume.  They do 150-200 cars a month and have found for them that's the only way to make money.  It's an interesting business model.  I ran this by my friend who's in the dealer business, he knew the software immediately and said it's what everyone has moved to.  There isn't a guy out there guestimating a value anymore.

Part of me thinks Buffett is out of touch on this.  He's thinking dealerships are still full of guys in corduroy blazers with elbow patches working customers over for every last cent.  With the Internet and mobile I don't think too many customers have patience for that business model anymore.  Especially if you can go on TrueCar or a million other sites while at the dealer and see what others have paid.

What was the software?


Excuse my ignorance, I thought dealers make money on the service side of the business. It seems like every time I go to a dealership their service bays are always full....

+1. Especially right after the warranty period is over. Best to promptly take it to the independent service shops.

A related juicy business is the same-hour-auto-repair-parts business that supports the service shops. I know a guy who is in this business, he rakes it in. The auto manufacturers try to protect this business very hard but are limited by the warranty period.
Title: Re: Buffett/Berkshire - general news
Post by: benhacker on March 11, 2015, 01:47:34 PM
I'm with FarEastWarriors on this.

The national dealership revenue breakdown is kind of the opposite of profit.  Revenue is like 55:35:10 for new:used:service sales.  But I would bet new car sales make the dealership $0 on average or close... used cars can be nice, agree there.  But I would bet service margins are astronomical... I'd guess blind that is 75% of dealership profits.  consequently, if you talk to someone who works at a dealer (assuming they aren't running it) they may not perceive how the money is made... or maybe I'm confused!

Some details here after some googling, basically says the service is most of the profits.  ROIC for dealerships is high.  New cars don't make a ton, used is more.  Service is the most.  (page 10) I guess makes sense re: new cars, they make money (haven't always in years past) but it's a loss-leader for service.

http://www.nada.org/NR/rdonlyres/DF6547D8-C037-4D2E-BD77-A730EBC830EB/0/NADA_Data_2014_05282014.pdf

This is a curious area, mostly because if electric cars really take off, they will turn the dealership model over and screw it... because the service aspect of an electric car should be fewer small ticket items, so I would imagine less need for a dealership.

I wonder if this isn't one of those businesses though that is perceived as dieing, but actually has a very long cash flow tail, with little competition and a strong competitive dynamic with car makers?  Leucadia and Berkshire both jumping in... it will be interesting to see it unfold.

Title: Re: Buffett/Berkshire - general news
Post by: jay21 on March 11, 2015, 04:23:16 PM
LUK/MKL/BRK all have exposure to auto dealers. I think they are right. BRK and MKL are focused on scale in a fragmented industry, LUK is focused around distressed dealers.
Title: Re: Buffett/Berkshire - general news
Post by: oddballstocks on March 11, 2015, 10:09:38 PM
Here's another way to look at it.  This is how auto dealerships were viewed classically by founders.

You start a dealership in an area.  Usually you purchase land on the outskirts of town, you need land for a dealership.  The dealer takes a loan on the land.  The dealership pays the loan down over 10 years or so maybe longer.  The dealership makes fairly poor profits unlevered, nice money levered.  Eventually the land is paid off and the owner mortgages it to buy a new dealership.  The process starts over. 

At the end of 30-40 years in the business the owner has a nice stable of dealership properties in ideal locations.  The business on top brings in alright money and the land is extremely valuable.  The owner then sells the dealerships but retains ownership of the land and leases the land to the new buyer.  This lease is their retirement income.

Obviously with some extra capital this process could be sped up, and things compound.  Some dealers are content to own a location or two and get paid decently.  Look at small towns, the car dealer is often the one doing the best.  In larger cities dealers needed to scale quickly to stay in business.  This is why the survivors have a stable of brands.

My buddy in the business is very attuned to costs and where they make their money.  In his view if car dealerships weren't levered there would be almost no money to be made in the business.  Almost all of the return comes from the leverage.  Much like home ownership.

Ben,

In terms of new car sales I believe the dealer makes a few hundred dollars on the initial sale.  Then they get an incentive around $1-3k per car from the manufacturer based on volume.  This can't be negotiated at purchase time because it's technically not part of the car's price.  It's a separate payment from Honda/Toyota/GM based on the number and types of cars sold in aggregate each month.

I don't believe dealers make a lot on financing.  It depends on the dealer.  Some will add 25 or 50 bps to each loan and make a killing.  I talked to a wholesale dealer and they said they make a straight $100 per loan originated.

Warranties are a big seller.  The dealer tried to sell us on an extended warranty, I believe it was going to cost us $3500 for two years or something.  For a high end car with no problems this is a sucker bet.  Of course my wife wanted to buy it for the "piece of mind" but I just said no.  I'd love to know the commission or markup on the warranties.
Title: Re: Buffett/Berkshire - general news
Post by: Rainforesthiker on March 12, 2015, 05:43:42 AM
Of course my wife wanted to buy it for the "piece of mind" but I just said no. 

You said "No" to your wife?  How did that go?  Do you do that often?  Brave man.  (Or foolish one) :)
Title: Re: Buffett/Berkshire - general news
Post by: oddballstocks on March 12, 2015, 05:57:27 AM
Of course my wife wanted to buy it for the "piece of mind" but I just said no. 

You said "No" to your wife?  How did that go?  Do you do that often?  Brave man.  (Or foolish one) :)

Happens all the time, a non-event.  Unlike most wives mine respects my opinions and thoughts.  I thought it was a bad deal, said no and she was fine with it.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on March 12, 2015, 07:58:21 AM
Happens all the time, a non-event.  Unlike most wives mine respects my opinions and thoughts.  I thought it was a bad deal, said no and she was fine with it.

+1

Off topic: when we buy cars, we usually have the "good cop - bad cop" routine with my wife. Not sure it helps, but ... 8)

I use it other cases too - of course with my wife's knowledge ;) - I say to contractor/whatever "sorry, I have to check with my wife" or "sorry, but my wife decided to do something else". She's the bad cop usually.  8)
Title: Re: Buffett/Berkshire - general news
Post by: Borgesian on March 12, 2015, 10:19:49 AM
Of course my wife wanted to buy it for the "piece of mind" but I just said no. 

You said "No" to your wife?  How did that go?  Do you do that often?  Brave man.  (Or foolish one) :)

If you can't say no to your wife, you're doing marriage wrong.
Title: Re: Buffett/Berkshire - general news
Post by: Value^2 on March 22, 2015, 05:23:57 AM
I've been thinking, where are warren buffett's ancestors from? I mean, which european country?
Title: Re: Buffett/Berkshire - general news
Post by: cubsfan on March 22, 2015, 05:33:07 AM
France, i believe
Title: Re: Buffett/Berkshire - general news
Post by: Value^2 on March 22, 2015, 06:29:30 AM
that makes sense,

thanks!
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on March 23, 2015, 09:21:05 PM
France, i believe

Right, they were eating at a buffet when Marie Antoinette told them to eat cake.




 8)
Title: Re: Buffett/Berkshire - general news
Post by: original mungerville on March 27, 2015, 06:30:29 AM
A related juicy business is the same-hour-auto-repair-parts business that supports the service shops. I know a guy who is in this business, he rakes it in.

Longinvestor,

This is interesting, can you describe/elaborate on this business just a bit - and the potential you see in it.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on March 31, 2015, 10:54:26 AM
Buffett on CNBC today



Buffett's automotive group goes shopping
http://www.cnbc.com/id/102549930 (http://www.cnbc.com/id/102549930)
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on March 31, 2015, 12:12:03 PM
Quote
"The billionaire businessman also dismissed the notion of an near-term takeover of self-driving cars, saying he thought "I think it's a long way off and I don't think everybody will adopt it." He said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030."

I will take that bet.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 31, 2015, 12:45:10 PM
Buffett on CNBC today



Buffett's automotive group goes shopping
http://www.cnbc.com/id/102549930 (http://www.cnbc.com/id/102549930)

Larry Van Tuyl: We like volume dealers that fit our entrepreneurial model
Buffett: They'd have to come to us

The phone's ringing off the hook.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 28, 2015, 04:56:49 PM
Is something up with Netjets?

This from the visitor's guide:

 Please Note: Shuttle Service is no longer provided to Eppley Airfield. Also there will not be a
NetJets Display at Signature Flight Support this year and therefore no shuttle provided to
Signature Flight Support.


And no mention about fly coach in and your own private plane out......

I've been subscribing to the WSJ for about 6 months and caught the ads( 2 or 3 times?)  by the Netjets union. And this recent union news,
http://money.cnn.com/news/newsfeeds/articles/prnewswire/DC90735.htm
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on April 28, 2015, 09:07:29 PM
Wow, it looks like NetJets continues to be a headache for Buffett.

I wonder if he's gonna throw Tracy at the problem and if she's gonna succeed in solving it somehow...
Title: Re: Buffett/Berkshire - general news
Post by: sleepydragon on April 29, 2015, 08:39:06 PM
Warren Buffett shows up at Coke's annual shareowners meeting

http://www.coca-colacompany.com/stories/warren-buffett-if-youre-looking-for-a-wonderful-business-its-hard-to-beat-coca-cola
Title: Re: Buffett/Berkshire - general news
Post by: petec on April 30, 2015, 01:22:41 AM
Quote
"The billionaire businessman also dismissed the notion of an near-term takeover of self-driving cars, saying he thought "I think it's a long way off and I don't think everybody will adopt it." He said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030."

I will take that bet.

Me too.   I think the adoption rate will be steep.   I'll buy one asap and I'm not an early adopter.   Technological breakthroughs are usually incremental; this is a big leap in productivity, like touch-screens.   

I wonder how much he's prepared to bet? ;)
Title: Re: Buffett/Berkshire - general news
Post by: petec on April 30, 2015, 01:31:22 AM
^To be fair, WEB does have a weakness for young, attractive blondes...

I think it’s much more likely that she got lucky.  She can’t have been the first woman to try.  He may have started to realize just at that time that he needed more help for some of these things.

To be fair, consider this: she was a new MBA graduate in 2009. During the summer of 2008, she had internship with Lehman Brothers, Bank of America, and 85 Broad (85 Broad is a None-profit organization founded by Women MDs/Partners at Goldman sachs). In 2008, every banks was firing people, nobody was hired. Lehman bankrupted. Yet, she got 3 jobs. And she had no real world work experience, especially in finance(before MBA, she was an undergraduate at harvard). After graduation, she got a job with Warren Buffet when I think she could be the only person in her MBA class who got a job.

Let me be clear: I have no doubt she’s good.  Very good.  But clearly inexperienced.  What I mean by luck is that surely many many people along the years, some of whom may have been objectively better (though that’s very difficult to actually measure) would have gotten turned down.  That’s life.  All of us who have been successful have some measure of luck, though we may do our best to tilt the odds in our favor.

Then again, 3G have made their success by putting very young people in positions of serious responsibility.   If they're good enough, it works brilliantly.
Title: Re: Buffett/Berkshire - general news
Post by: rpadebet on April 30, 2015, 05:49:59 AM
Quote
"The billionaire businessman also dismissed the notion of an near-term takeover of self-driving cars, saying he thought "I think it's a long way off and I don't think everybody will adopt it." He said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030."

I will take that bet.

Me too.   I think the adoption rate will be steep.   I'll buy one asap and I'm not an early adopter.   Technological breakthroughs are usually incremental; this is a big leap in productivity, like touch-screens.   

I wonder how much he's prepared to bet? ;)

Consumer adoption wont be a problem. But I see regulation being a major roadblock. Imagine the complexity of allowing some self driving cars with other mostly regular cars... there will be all sorts of debates on safety,control and hacking etc. All it would take is one bad accident involving a self driving car (and we know initial softwares can be buggy) and it would immediately slow down everything.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 30, 2015, 06:20:46 AM
Quote
"The billionaire businessman also dismissed the notion of an near-term takeover of self-driving cars, saying he thought "I think it's a long way off and I don't think everybody will adopt it." He said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030."

I will take that bet.

Me too.   I think the adoption rate will be steep.   I'll buy one asap and I'm not an early adopter.   Technological breakthroughs are usually incremental; this is a big leap in productivity, like touch-screens.   

I wonder how much he's prepared to bet? ;)

Consumer adoption wont be a problem. But I see regulation being a major roadblock. Imagine the complexity of allowing some self driving cars with other mostly regular cars... there will be all sorts of debates on safety,control and hacking etc. All it would take is one bad accident involving a self driving car (and we know initial softwares can be buggy) and it would immediately slow down everything.

Agree, disasters in the making. A great parallel to this was when the wall came down in Germany. Trabants/Wartburgs and Porsche/BMW's driving alongside on the Autobahns post-reunification was disastrous. Between safety, the required near 100% reliability and infrastructural changes, this is a long tail event.
Title: Re: Buffett/Berkshire - general news
Post by: petec on April 30, 2015, 06:33:47 AM
Quote
"The billionaire businessman also dismissed the notion of an near-term takeover of self-driving cars, saying he thought "I think it's a long way off and I don't think everybody will adopt it." He said that he would bet there is less than a 10 percent penetration rate for self-driving cars by 2030."

I will take that bet.

Me too.   I think the adoption rate will be steep.   I'll buy one asap and I'm not an early adopter.   Technological breakthroughs are usually incremental; this is a big leap in productivity, like touch-screens.   

I wonder how much he's prepared to bet? ;)

Consumer adoption wont be a problem. But I see regulation being a major roadblock. Imagine the complexity of allowing some self driving cars with other mostly regular cars... there will be all sorts of debates on safety,control and hacking etc. All it would take is one bad accident involving a self driving car (and we know initial softwares can be buggy) and it would immediately slow down everything.

Agree, disasters in the making. A great parallel to this was when the wall came down in Germany. Trabants/Wartburgs and Porsche/BMW's driving alongside on the Autobahns post-reunification was disastrous. Between safety, the required near 100% reliability and infrastructural changes, this is a long tail event.

I see those risks, but I don't agree.   First, it's not complex to imagine driven and driverless cars sharing the roads so long as they confirm to the same crash test standards (which Porsches and Trabants manifestly do not).   Second, the technology will have to be proven but existing drivers are not 100% reliable and it is quite possible that driverless cars will prove safer than driven cars quite quickly.   Third, early adopters (whether it's Uber or vehicles at fairgrounds or whatever) will get people used to the idea quite fast.   And finally, there are *huge* potential cost and productivity savings - imagine the work that could be done (or the sleep that could be had) during the commute! 

I don't see what infrastructure would need to change.   I don't see a demand for 100% reliability, just a significant increase in safety over the current drivers.   I don't see that one crash will hold things up any more than the Titanic stopped people using ocean liners.   (In fact I don't see why "my driverless cars saved my life" stories won't be just as prominent.)   Remember when people said no-one would put their credit card details online?   How many people don't do that today?   I think people have a good innate sense of when the reward exceeds the risk.

I'm not suggesting there will be no hurdles but I come back to the fact that this is a clear leap forward that demand will be significant and I believe plenty of jurisdictions will develop regulations quite quickly.

P
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on April 30, 2015, 11:45:28 AM
OT.

I completely agree with Petec.
Title: Re: Buffett/Berkshire - general news
Post by: cubsfan on April 30, 2015, 08:10:37 PM
You have to wonder how driverless software makes decisions and who has the liability. I think Warren alluded to this last year.
Imagine a scenario where a driverless car going at a high speed encounters a child crossing in front. What happens with 3 choices faced.

1 -  straight ahead and kill the child
2 -  swerve left into on coming traffic - how many potential deaths there
3-  swerve right into concrete wall and kill occupants of your car

All outcomes are bad - how do those decisions get made and who accepts liability?

Stuff like this will take place hundreds of times a year. Hard for me to understand how you easily roll out
driverless vehicles with these type of issues.

Should be interesting.
Title: Re: Buffett/Berkshire - general news
Post by: JBird on April 30, 2015, 09:38:59 PM
How about the car just slams the brakes as hard as possible and doesn't swerve. If a person steps into the road with no time for a car to stop that is a tragedy. Why should it be the driver's responsibility to risk his own well-being or others by swerving?
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on April 30, 2015, 10:03:58 PM
You have to wonder how driverless software makes decisions and who has the liability. I think Warren alluded to this last year.
Imagine a scenario where a driverless car going at a high speed encounters a child crossing in front. What happens with 3 choices faced.

1 -  straight ahead and kill the child
2 -  swerve left into on coming traffic - how many potential deaths there
3-  swerve right into concrete wall and kill occupants of your car

All outcomes are bad - how do those decisions get made and who accepts liability?

Stuff like this will take place hundreds of times a year. Hard for me to understand how you easily roll out
driverless vehicles with these type of issues.

Should be interesting.

This is a strawman argument. First of all, you have no data how often such situations happen. Second, the same situations happen with human drivers on board and obviously they cannot make any choice - they are not fast enough or clear headed enough or aware enough. So it is obvious that automated car will make a better choice whatever it chooses. Like JBird said, it could just slam on breaks and hope for the best. Note that it will detect the person faster than human and it will slam on the breaks faster than human. So even if the person on road dies, they would have died with human at wheel too.

You could as well make the same argument to prohibit humans to drive cars. Cause obviously they cannot t make decisions in situations like this and liability may bankrupt them. Yet, we allow people to drive.

If you are concerned about liability, let car manufacturers and insurers work it out. It's not your problem.

I am sick and tired of hearing this old and - sorry to say - broken argument.
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on May 01, 2015, 05:57:58 AM
BNSF poised to turn around 'crummy' year: CEO

http://www.cnbc.com/id/102639693?__source=yahoo%7cfinance%7cheadline%7cheadline%7cstory&par=yahoo&doc=102639693


Cheers!  :)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on May 01, 2015, 08:04:02 AM
You have to wonder how driverless software makes decisions and who has the liability. I think Warren alluded to this last year.
Imagine a scenario where a driverless car going at a high speed encounters a child crossing in front. What happens with 3 choices faced.

1 -  straight ahead and kill the child
2 -  swerve left into on coming traffic - how many potential deaths there
3-  swerve right into concrete wall and kill occupants of your car

All outcomes are bad - how do those decisions get made and who accepts liability?

Stuff like this will take place hundreds of times a year. Hard for me to understand how you easily roll out
driverless vehicles with these type of issues.

Should be interesting.
+1
Driving in Chicagoland or Atlanta, I worry more about the idiot behind me. Boy, they are angry as well. I can picture my self driving car with bumpers all around. But no worries, will be sleeping through all of the road rage,
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on May 01, 2015, 08:57:09 AM
Good interview with Carol Loomis:

http://www.thestreet.com/video/13135083/warren-buffetts-friend-carol-loomis-says-buffett-is-driven-by-having-fun-and-not-making-money.html?puc=yahoov&cm_ven=YAHOOV

Loomis doesn't expect Buffett to retire anytime soon, and says he keeps a rigorous schedule.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on May 01, 2015, 09:11:29 AM
After Warren Buffett: Berkshire Prepares for Life Without Legendary Leader

Berkshire Hathaway’s octogenarian CEO does ‘everything humanly possible’ to make sure culture grows without him

http://www.wsj.com/articles/after-warren-buffett-berkshire-prepares-for-a-life-without-legendary-leader-1430414729 (http://www.wsj.com/articles/after-warren-buffett-berkshire-prepares-for-a-life-without-legendary-leader-1430414729)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on May 01, 2015, 09:31:02 AM
Woodstock of Capitalism’s odd couple

http://www.ft.com/intl/cms/s/2/e7cae5e0-ef24-11e4-87dc-00144feab7de.html#slide0 (http://www.ft.com/intl/cms/s/2/e7cae5e0-ef24-11e4-87dc-00144feab7de.html#slide0)
Title: Re: Buffett/Berkshire - general news
Post by: rmitz on May 01, 2015, 12:31:24 PM
Jurgis - with you it's definitely personal. There is a lot to dislike about your lack of civility.

In this case, I think you’re actually adding his old arguments to this one and it makes you take his tone worse off than it is.

I will add; Jurgis is totally right.

What you are failing to account for is that the machines are not limited to the kinds of data that as humans we have to deal with.  They can see all around the car, react effectively instantaneously, etc.  They will also be able to predict these situations (lack of visibility of potential incoming objects) and reduce their speed preemptively to compensate.  There’s no contest.

All that said, it’s still going to be a pain to get the regs through, but it will happen.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 01, 2015, 02:19:02 PM
1st Quarter results are out -

http://berkshirehathaway.com/news/MAY0115.pdf

http://berkshirehathaway.com/qtrly/1stqtr15.pdf
Title: Re: Buffett/Berkshire - general news
Post by: Libs on May 01, 2015, 02:53:09 PM
1st Quarter results are out -

http://berkshirehathaway.com/news/MAY0115.pdf

http://berkshirehathaway.com/qtrly/1stqtr15.pdf

Good news:

Operating earnings ex investment and derivative gains / losses = $4.2 billion, by far a new Q1 record and up 20% Y/Y.

Bad news (?):

BV didn't budge. Haven't figured out why.

Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 01, 2015, 03:12:33 PM
"BV didn't budge. Haven't figured out why."

Page 4 of the Q breaks down the changes in comprehensive income.  Unrealized investment losses and foreign currency translation are responsible for most of the difference between the income and the $1.3 Billion increase in net worth.

"Other investments" was hit by a little over a billion dollars - remember that BAC was at 17.89 at year end and 15.39 at the end of the quarter...  warrants to purchase 700 million shares
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on May 01, 2015, 03:15:30 PM
Does anyone know offhand where did the share count drop come from? (I might dig later, asking in case someone already did).

Thanks
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 01, 2015, 03:17:02 PM
Graham Holdings stock swap primarily.

Does anyone know offhand where did the share count drop come from? (I might dig later, asking in case someone already did).

Thanks
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on May 01, 2015, 03:26:06 PM
Thanks. :)
Title: Re: Buffett/Berkshire - general news
Post by: bookie71 on May 01, 2015, 03:42:32 PM
Doesn't part of share drop come from gift to Gates Foundation (A shares converted to B shares)?
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 01, 2015, 03:45:37 PM
I assumed he was asking about total share count (A equivalents or B equivalents) and not changes in the categories that combine for total share count.

Doesn't part of share drop come from gift to Gates Foundation (A shares converted to B shares)?
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 04, 2015, 09:16:56 AM
BNSF 10-Q is out as well - always interesting to see.  Another Billion dollar dividended out to Omaha this quarter -

http://www.sec.gov/Archives/edgar/data/934612/000093461215000016/llc-3312015x10q.htm
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on May 12, 2015, 11:54:28 AM
A friend of mine came with me to Omaha, his first time. He is not a BRK shareholder but owns old names like DIS, WMT etc. and has attended those shareholder meetings. He is used to getting shareholder gifts, discount passes (DIS) etc. He was stunned that they don't given out any freebies at the BRK shareholder meeting. "Not even a can of Coke?" I shared with him Buffett's story of one of the early shareholder meetings, where he had vending machines set up. My friend's comment served as an epiphany of BRK ownership.


Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on May 12, 2015, 04:11:47 PM
A friend of mine came with me to Omaha, his first time. He is not a BRK shareholder but owns old names like DIS, WMT etc. and has attended those shareholder meetings. He is used to getting shareholder gifts, discount passes (DIS) etc. He was stunned that they don't given out any freebies at the BRK shareholder meeting. "Not even a can of Coke?" I shared with him Buffett's story of one of the early shareholder meetings, where he had vending machines set up. My friend's comment served as an epiphany of BRK ownership.
Well, BRK shareholders get discounts as well - at NFM, GEICO, etc. We also get an open bar and free food on Friday night and Sunday afternoon. And a cheap meal on Saturday evening.


Title: Re: Buffett/Berkshire - general news
Post by: ERICOPOLY on May 12, 2015, 04:48:10 PM
Jurgis - with you it's definitely personal. There is a lot to dislike about your lack of civility.

In this case, I think you’re actually adding his old arguments to this one and it makes you take his tone worse off than it is.

I will add; Jurgis is totally right.

What you are failing to account for is that the machines are not limited to the kinds of data that as humans we have to deal with.  They can see all around the car, react effectively instantaneously, etc.  They will also be able to predict these situations (lack of visibility of potential incoming objects) and reduce their speed preemptively to compensate.  There’s no contest.

All that said, it’s still going to be a pain to get the regs through, but it will happen.

How about driverless cars that have been hacked?  They become drones that seek out pedestrians and run them over deliberately.

Driverless car technology currently reads the painted lines on the road -- how does this work when a malicious person has deliberately repainted the road to guide the cars straight off a cliff?
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on May 12, 2015, 08:45:49 PM

How about driverless cars that have been hacked?  They become drones that seek out pedestrians and run them over deliberately.

Driverless car technology currently reads the painted lines on the road -- how does this work when a malicious person has deliberately repainted the road to guide the cars straight off a cliff?

How about human driven cars that have been hacked? Or where malicious people cut brakes? Or put mirrors across the road at night near a cliff? We should definitely ban human driven cars!
Title: Re: Buffett/Berkshire - general news
Post by: Crip1 on May 12, 2015, 08:49:20 PM
Jurgis - with you it's definitely personal. There is a lot to dislike about your lack of civility.

In this case, I think you’re actually adding his old arguments to this one and it makes you take his tone worse off than it is.

I will add; Jurgis is totally right.

What you are failing to account for is that the machines are not limited to the kinds of data that as humans we have to deal with.  They can see all around the car, react effectively instantaneously, etc.  They will also be able to predict these situations (lack of visibility of potential incoming objects) and reduce their speed preemptively to compensate.  There’s no contest.

All that said, it’s still going to be a pain to get the regs through, but it will happen.

How about driverless cars that have been hacked?  They become drones that seek out pedestrians and run them over deliberately.

Driverless car technology currently reads the painted lines on the road -- how does this work when a malicious person has deliberately repainted the road to guide the cars straight off a cliff?


This could be a problem as well: http://i.imgur.com/2RZrwFZ.gif


-Crip
Title: Re: Buffett/Berkshire - general news
Post by: petec on May 13, 2015, 12:58:47 AM

How about driverless cars that have been hacked?  They become drones that seek out pedestrians and run them over deliberately.

Driverless car technology currently reads the painted lines on the road -- how does this work when a malicious person has deliberately repainted the road to guide the cars straight off a cliff?

How about human driven cars that have been hacked? Or where malicious people cut brakes? Or put mirrors across the road at night near a cliff? We should definitely ban human driven cars!

Let's face it, driving is a relatively mindless activity and humans aren't good at those.   They get bored, panic, rush, text people, fail to notice they're driving too fast, don't see an oncoming motorbike, misread junctions, or simply drive round a roundabout the wrong way like a friend of my mother's did a few years back.   Computers with 360 degree all weather vision and nanosecond processing ability will be FAR better at it than we are.   
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on May 13, 2015, 06:07:33 AM
Let's face it, driving is a relatively mindless activity and humans aren't good at those.   They get bored, panic, rush, text people, fail to notice they're driving too fast, don't see an oncoming motorbike, misread junctions, or simply drive round a roundabout the wrong way like a friend of my mother's did a few years back.   Computers with 360 degree all weather vision and nanosecond processing ability will be FAR better at it than we are.

Completely agreed. :)
Title: Re: Buffett/Berkshire - general news
Post by: redskin on May 13, 2015, 07:42:33 AM
BNSF 10-Q is out as well - always interesting to see.  Another Billion dollar dividended out to Omaha this quarter -

http://www.sec.gov/Archives/edgar/data/934612/000093461215000016/llc-3312015x10q.htm

Berkshire has taken $17 billion in dividends since acquiring BNSF.  What is BNSF worth?  $80 billion?  Currently on the books at $35 billion.  If it was valued at market, book value per share would increase by $27,000 per share.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on May 13, 2015, 08:57:14 AM
BNSF 10-Q is out as well - always interesting to see.  Another Billion dollar dividended out to Omaha this quarter -

http://www.sec.gov/Archives/edgar/data/934612/000093461215000016/llc-3312015x10q.htm

Berkshire has taken $17 billion in dividends since acquiring BNSF.  What is BNSF worth?  $80 billion?  Currently on the books at $35 billion.  If it was valued at market, book value per share would increase by $27,000 per share.

In 10 to 20 years, Berkshire will not be able to intelligently invest it's cash, raising the possibility of buyback/dividend/both. Along with a giant cash balance, the market value of the wholly owned businesses will be ridiculously different from book value. As they've done before, they would likely be looking for "single transactions" to buyback huge share blocks. With little transactional cost, and literally with a pen stroke.

Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on May 14, 2015, 11:04:05 AM
http://www.cnbc.com/id/102679488?__source=yahoo%7cfinance%7cheadline%7cheadline%7cstory&par=yahoo&doc=102679488

Peltz/Trian defeated. Very pleased that a 200+ year company was spared. Surely this doesn't look like stopping anytime soon. This is about actively managed funds trying their active management tantrums. "Do something, our investors are fleeing to passively managed funds"?

The topic of shareholder activism was brought up by Munger as a potential catalyst for businesses seeking a permanent home.

Should be interesting to watch as the active folks get their a$$e$ handed to them by the market and long term shareholders and boards
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on May 14, 2015, 04:36:46 PM
http://brooklyninvestor.blogspot.ca/2015/05/the-missing-manual-berkshire-hathaway.html
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on May 15, 2015, 12:48:45 PM
"While some Buffett  wannabees on Forbes’s list operate like Berkshire, using insurance float to fund investment in disparate business lines and publicly-traded securities, others are more specialized than the ‘Oracle of Omaha’ and focused on niche markets where they have a narrow expertise. A handful of Wall Streeters who once might have been deemed ‘corporate raiders’ or buyout kingpins, meanwhile, are beginning to display their Buffett stripes."

http://www.forbes.com/sites/antoinegara/2015/05/15/10-wannabe-berkshire-hathaways-warren-buffett/
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on May 16, 2015, 12:45:52 AM
Buffett's Berkshire adds to favorites IBM, Wells Fargo

http://finance.yahoo.com/news/buffetts-berkshire-adds-biggest-stock-202923678.html


Cheers!  :)
Title: Re: Buffett/Berkshire - general news
Post by: abitofvalue on May 31, 2015, 03:36:38 PM
Hadn't heard of this before - Warren reached out to IKEA about potentially buying them in the past

http://www.valuewalk.com/2015/05/mohnish-pabrai-did-warren-buffett-try-to-buy-ikea/


Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 16, 2015, 05:31:21 AM
General Berkshire news - Suncorp wasn't too thrilled that BHSI entered Australia as a competitor and pulled back from their relationship with Ajit, now Berkshire is doing this deal with IAG -

*edit: bloomberg article adds Buffett comments, including an uncharacteristic description of what he will invest the float in?
http://www.bloomberg.com/news/articles/2015-06-15/buffett-s-berkshire-hathaway-pays-a-500-million-for-stake-in-iag

another article quoting Buffett on the deal:
http://www.smh.com.au/it-pro/warren-buffett-to-spend-2bn-a-year-on-aussie-equities-20150616-ghpayi

From Insurance Insider yesterday:
-----------------------------
IAG agrees A$2.3bn Berkshire quota share

IAG has entered into a long-term partnership with Berkshire Hathaway underpinned by a 10-year 20 percent quota share arrangement across the Australasian insurer's consolidated insurance business.

Based on IAG's full-year 2015 gross written premium (GWP) growth expectations, Berkshire Hathaway will receive an estimated A$2.3bn ($1.8bn) of the company's consolidated GWP.

The whole account quota share is intended to reduce IAG's earnings volatility and capital requirements, the carrier said, and is effective from 1 July.

The deal also sees Berkshire Hathaway take a 3.7 percent stake in IAG via an A$500mn ($387mn) placement, acquiring 89.8 million new fully paid IAG ordinary shares at $5.57 each.

The Australian insurer has an option to place an additional 5 percent stake with Berkshire Hathaway within 24 months, with the conglomerate agreeing not to increase its stake beyond 14.9 percent over the next decade.

IAG will also acquire Berkshire Hathaway's local personal and SME business lines, while Berkshire will acquire the renewal rights to IAG's large corporate property and liability insurance business in Australia.

The rights to be transferred by IAG represent less than 1 percent of its annual GWP.

IAG said that the two companies would have an "exclusive relationship in Australia and New Zealand".

Berkshire Hathaway and IAG concluded a number of multi-year cat deals in the wake of the 2010/11 New Zealand earthquakes, helping to make New Zealand the conglomerate's largest probable maximum loss.

Chairman and CEO of Berkshire Hathaway Warren Buffett commented: "Our strategic partnership with IAG will help fast-track our entry into this region, and provides us with opportunities to leverage IAG's extensive capabilities while also making our expertise available to IAG."

The quota share arrangement will reduce IAG's exposure to catastrophe risks in Australia and New Zealand, but IAG said its strategic priorities in those regions remain unchanged.

IAG said it expected the quota share arrangement would result in a reduced capital requirement of approximately A$700mn over the next five years, with around A$400mn of that benefit expected to be realised in 2016.

The company said that the partnership would give it greater strategic and financial flexibility to pursue growth opportunities, particularly in Asia in its target markets of India, Thailand, Malaysia, China, Vietnam and Indonesia.

In India, IAG is looking to increase its stake in SBI General, the general insurance joint venture with State Bank of India, from 24 percent to 49 percent.

It also recently acquired an insurance licence in Indonesia via the purchase of general insurer PT Asuransi Parolamas.

The company said it would consider participating in any potential industry consolidation in Thailand, and further opportunities to expand its presence in Malaysia via the joint venture AmGeneral Holdings.

IAG managing director and CEO Mike Wilkins commented: "China is a source of enormous potential growth for IAG and we are actively working on opportunities to increase our presence in that market."

IAG chairman Brian Schwartz added: "We believe the partnership is an endorsement of our strategy, the strong franchises we have created in the Asia Pacific region and an acknowledgement of the complementary capabilities we can bring for our customers."

In addition to providing IAG with the capital for an Asian growth strategy, the quota share's structure should improve the firm's insurance margin by around 200 basis points - implying a significant amount of override.

It is also Berkshire Hathaway's most significant such deal since it agreed to provide Swiss Re with a 20 percent quota share of its P&C book in the throes of the financial crisis in 2008. In the final year of the deal Berkshire assumed $2.6bn of premiums.

That agreement, which also saw the carrier take a 3 percent stake in the Swiss giant, ran for five years and expired at the end of 2012.

More recently, Berkshire Hathaway concluded a quota share for 30 percent of Suncorp's Queensland homeowners' portfolio, but this was only worth annual premium of around A$300mn.

The agreement incepted in 2012 but was coming to an end at the mid-year renewals this year.

It is understood Berkshire Hathaway's entry into the primary market in Australia has caused friction with Suncorp, as The Insurance Insider has previously reported.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 16, 2015, 06:09:41 AM
A bit more on the deal and the Q&A with analysts:
---------------------
IAG to slash its open market reinsurance spend
Adam McNestrie

IAG expects to reduce its open market reinsurance spend by 20 percent to accommodate its new strategic partnership with Berkshire Hathaway, according to CFO Nick Hawkins.

Speaking to analysts earlier today (16 June), Hawkins said: "We will be shrinking our reinsurance buying by 20 percent on everything.

"As an example, when we go to market - assuming the same programme we currently have on the main cat tower - where at the moment we buy just over A$7bn ($5.4bn), that number will shrink by 20 percent."

IAG said that it would not be looking to restructure its current cat cover, which runs until 31 December, and that any changes would come for the 2016 placement.

This morning, IAG and Berkshire Hathaway announced a 10-year, 20 percent quota share across the Australian carrier's insurance businesses that will see A$2.3bn of premiums ceded annually.

The broad-ranging deal also included an A$500mn equity placement with Berkshire Hathaway that gives Berkshire a 3.7 percent stake in IAG, and a business swap where IAG will exit large commercial business and Berkshire discontinue writing personal lines and SME business.

IAG tried to maintain that the long-term agreement - which it expected to last beyond the initial 10-year term - would not impact its relationships with its other reinsurers.

"Our expectation is that it won't affect them at all," Hawkins argued, saying that he expected such relationships with other major reinsurers to "continue on as they are".

However, many of IAG's reinsurers were already understood to be disgruntled.

As previously reported, IAG headed into its 1 January renewal pursuing a major rate decrease on its huge cat programme, despite warning reinsurers to expect a major and unspecified loss deterioration from the New Zealand earthquakes in 2010 and 2011.

Following articles from this publication, IAG informed reinsurers just ahead of the renewal that its fully reinsured losses would rise by NZ$750mn-NZ$1bn, ($523mn-$697mn), but still pushed ahead with rate reductions of 10-20 percent.

IAG's shares responded positively to the announcement of the deal, surging by 4.3 percent to close at A$5.81.

However, analysts gave CEO Mike Wilkins and CFO Hawkins a hard ride during the Q&A session, as they repeatedly questioned the dilution to earnings that the deal looks set to produce.

Ross Curran of CBA asked if IAG had agreed to give away 20 percent of the company for a 3.7 percent equity investment.

A JP Morgan analyst said that it appeared the agreement would produce a 3 percent dilution in 2016 earnings, as well as increasing the group's share count by 3.8 percent.

"It seems like quite a dilutive deal. So to do this just for a strategic relationship seems like quite an expensive deal."

An analyst also questioned the value of a put option for a further 5 percent of the shares in issuance, given that IAG is now comfortably above its targeted capital range.

IAG's primary motivation for the agreement was the override that it will receive on the quota share and the move towards a more fee-heavy earnings stream which that would bring.

Hawkins said: "The key to the transaction is what the additional fee income, or commission income, or exchange commission we're receiving over and above the proportional share of claims and expenses to compensate IAG and IAG shareholders for the access to that profit stream."

Later, he expanded on this point: "We're trading volatility for more certainty; and you're trading insurance risk for fee-based income, and as part of that there's this opportunity to release capital off the books to the tune of A$700mn."

The JP Morgan analyst also seemed to find IAG's stated rationale for the deal hard to follow, particularly in terms of the capital changes.

"A question I have is around the need for the capital raise you're doing," he said, citing the A$700mn capital release and the A$500mn equity placement. "I'm just wondering what actually is triggering this. Because you're flagging opportunities in Asia, but nothing has really changed from what you said in the past."

He continued: "You said India, Indonesia - but they're all quite small in the scheme of things."

With so much capital freed up, Wilkins felt the need to address the possibility that IAG was gearing up for a major deal.

"The capital that we've got is not burning a hole in our pocket," he said, emphasising that there was no pressure to pursue a major transaction in Asia.

IAG said that following the equity raise and factoring in the impact of the quota share, its pro forma Prescribed Capital Amount ratio would be 2.14x - compared to a target range of 1.4x-1.6x.

Adam McNestrie can be found tweeting at @adammcnestrie
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on June 18, 2015, 08:07:48 AM
http://www.bloomberg.com/news/articles/2015-06-18/buffett-builds-heinz-stake-to-52-5-with-penny-a-share-warrant?cmpid=yhoo

I bought more Berkshire shares the last days.  :)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on June 29, 2015, 08:51:45 AM
http://www.bloomberg.com/news/articles/2015-06-18/buffett-builds-heinz-stake-to-52-5-with-penny-a-share-warrant?cmpid=yhoo

I bought more Berkshire shares the last days.  :)

Me too.

Wondering what Omaha is up to, during these days of euphoria? Kids out at the candy store, ha.
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on June 29, 2015, 01:13:05 PM
"Me too.

Wondering what Omaha is up to, during these days of euphoria? Kids out at the candy store, ha."

Tsipras and Varoufakis will make us a lot of money.  ;D

They are crazier than I could imagine.

As Benjamin Franklin said: "It is hard for an empty bag to stand upright."


Cheers!
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on June 30, 2015, 06:55:45 AM
http://finance.yahoo.com/news/warren-buffetts-berkshire-hathaway-expands-230047808.html

BHSI getting active down under. The exodus of execs from AIG world wide to BHSI continues!
Title: Re: Buffett/Berkshire - general news
Post by: Phaceliacapital on July 02, 2015, 11:58:00 PM
New filing:

http://www.sec.gov/Archives/edgar/data/1637459/000119312515244356/0001193125-15-244356-index.htm
Title: Re: Buffett/Berkshire - general news
Post by: valueinvesting101 on July 07, 2015, 01:51:18 PM
http://www.bloomberg.com/news/articles/2015-07-07/buffett-scores-cheapest-electricity-rate-with-nevada-solar-farms
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on July 08, 2015, 10:10:43 PM
http://www.bloomberg.com/news/articles/2015-07-07/buffett-scores-cheapest-electricity-rate-with-nevada-solar-farms

more solar news involving BHE

http://berkshirehathawayenergyco.com/news/new-subscriber-solar-program-will-offer-affordable-convenient-way-to-use-renewable-energy
Rocky mountain power launches the subscriber solar program as an alternative to rooftop. For those unwilling/unable to do rooftop, for renters etc.

http://www.bloomberg.com/news/articles/2015-07-08/berkshire-s-abel-says-musk-s-battery-needs-cost-breakthrough
 "Cost of batteries need to come down to make it viable for utilities"

At the annual meeting in Omaha, there were a number of questions about rooftops versus utility scale solar. Abel's answer was that the focus was on making their utility the lowest cost source. The subscriber solar program is interesting!

Title: Re: Buffett/Berkshire - general news
Post by: Charlie on July 25, 2015, 05:36:26 AM
Barron´s cover story: Berkshire Hathaway´s bright future

http://online.barrons.com/articles/berkshire-hathaways-bright-future-1437807148?tesla=y&mod=BOL_twm_ls?mod=BOL_hp_highlight_1


Cheers!  :)
Title: Re: Buffett/Berkshire - general news
Post by: KinAlberta on August 02, 2015, 09:32:44 PM

Warren Buffett letter to Leon Cooperman - Business Insider

http://www.businessinsider.com/warren-buffett-letter-to-leon-cooperman-2015-7
Title: Re: Buffett/Berkshire - general news
Post by: Grenville on August 02, 2015, 10:59:20 PM

Warren Buffett letter to Leon Cooperman - Business Insider

http://www.businessinsider.com/warren-buffett-letter-to-leon-cooperman-2015-7


Thanks!

"I could give examples of the reverse, but I follow the dictum praise by name, criticize by category."
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on August 05, 2015, 08:19:37 AM
Buffett’s Celebration Tempered by 50th Anniversary Stock Slump

http://www.bloomberg.com/news/articles/2015-08-05/buffett-s-celebration-tempered-by-50th-anniversary-stock-slump (http://www.bloomberg.com/news/articles/2015-08-05/buffett-s-celebration-tempered-by-50th-anniversary-stock-slump)
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on August 05, 2015, 09:07:40 AM
"Buffett’s Celebration Tempered by 50th Anniversary Stock Slump

http://www.bloomberg.com/news/articles/2015-08-05/buffett-s-celebration-tempered-by-50th-anniversary-stock-slump"

Reinsurance prices don´t look too bad:

UPDATE 1-Hannover Re raises 2015 profit target after Q2 net gain

http://www.reuters.com/article/2015/08/05/hannover-rueck-results-idUSL5N10G0K620150805

We could get a small Lollapalooza in Berkshire´s share price.  ;)
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on August 06, 2015, 02:36:42 AM
Munich Re ups forecast for 2015 on low damage claims:

http://www.reuters.com/article/2015/08/06/munich-re-group-results-idUSL5N10H0Q820150806

Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 13, 2015, 09:21:09 AM
Whitney Tilson: Berkshire Hathaway Now Worth $275K A Share

A Safe, High-Quality, Growing Company With 42% Upside Over the Next Year


http://www.valuewalk.com/2015/08/tilson-berkshire-hathaway/
Title: Re: Buffett/Berkshire - general news
Post by: Txvestor on August 13, 2015, 09:39:16 AM
Munich Re ups forecast for 2015 on low damage claims:

http://www.reuters.com/article/2015/08/06/munich-re-group-results-idUSL5N10H0Q820150806

I'm surprised with the relatively modest underwriting results at Berkshire recently compared to the other historically good underwriters in the industry.
Title: Re: Buffett/Berkshire - general news
Post by: rb on August 14, 2015, 02:27:00 PM
Looks like BRK is building some equity stakes somewhere. Maybe that's why they financed part of PCP with debt?

http://www.bloomberg.com/news/articles/2015-08-14/berkshire-increases-stake-in-charter-keeps-some-trades-secret
Title: Re: Buffett/Berkshire - general news
Post by: undervalued on August 14, 2015, 03:48:18 PM
Looks like BRK is building some equity stakes somewhere. Maybe that's why they financed part of PCP with debt?

http://www.bloomberg.com/news/articles/2015-08-14/berkshire-increases-stake-in-charter-keeps-some-trades-secret

In the article it says:

Quote
“They’ve got to put money to work,” Jeff Matthews, a Berkshire investor and the author of books about the company, said before the filing was released. “They can’t tell Warren, ‘I hate this market, I’m going to wait for a crisis.’”

Really? That's weird. I guess they operate like a mutual fund?
Title: Re: Buffett/Berkshire - general news
Post by: rb on August 14, 2015, 06:00:18 PM
Jeff Mathews is actually a pretty decent writer, but sometimes he blurts out stupid things like that
Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 17, 2015, 10:36:24 PM
Whitney Tilson: Berkshire Hathaway Now Worth $275K A Share

A Safe, High-Quality, Growing Company With 42% Upside Over the Next Year


http://www.valuewalk.com/2015/08/tilson-berkshire-hathaway/

Any thoughts?
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 18, 2015, 06:23:42 AM
Whitney Tilson: Berkshire Hathaway Now Worth $275K A Share

A Safe, High-Quality, Growing Company With 42% Upside Over the Next Year


http://www.valuewalk.com/2015/08/tilson-berkshire-hathaway/

Any thoughts?

Nothing new here, Tilson has been valuing BRK with upside for many years now. Looks reasonable to me, BRK remains undervalued. The CEO is fine with this arrangement. Now, that's rather uncommon. 
Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 18, 2015, 09:19:17 PM
What strikes me as new is the overvalued market which makes BRK look relatively unique:

Conclusion: Berkshire Has Everything I Look for in a Stock: It's Safe, Cheap and Growing at a Healthy Rate

Extremely safe: Berkshire's huge hoard of liquid assets, the quality and diversity of its businesses, the fact that much of its earnings (primarily insurance and utilities) aren't tied to the economic cycle, and the conservative way in which it's managed all protect Berkshire's intrinsic value, while the share repurchase program provides downside protection to the stock

Cheap stock: trading 22% below intrinsic value, without giving any credit to immense optionality, with 42% upside over the next year

Intrinsic value is growing at roughly 8-10% annually


Seems few safer, cheaper, faster growing alternatives.
Title: Re: Buffett/Berkshire - general news
Post by: rb on August 18, 2015, 09:40:21 PM
Seems few safer, cheaper, faster growing alternatives.
That's all true. It is a testament to BRK's value creating abilities that they can still be cheap after the great run the stock had for the past couple of years.

The real question is what to do from a portfolio management standpoint. I think this may apply to a lot of people here. What do you do if you already have a large BRK position and you have cash and you are looking at this market. Do you say that position sizes don't matter and go and buy more? Or are you satisfied that you have a large position in something that is undervalued and will appreciate further and wait for something else to come along?

I'm guessing opinions are all over the spectrum but I'd be interested if someone has a well thought out and rational position rather than just gut feeling.
Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 19, 2015, 09:28:34 PM
What do you do if you already have a large BRK position and you have cash and you are looking at this market. Do you say that position sizes don't matter and go and buy more? Or are you satisfied that you have a large position in something that is undervalued and will appreciate further and wait for something else to come along?

BRK's safety makes the position size less an issue for me.

And while cheap, I've been waiting not for something else, but for a market correction (bear/crash) that would make even cheaper.

Seems overdue, but maybe it silly not to add at P/B 1.4 whenever can?
Title: Re: Buffett/Berkshire - general news
Post by: rb on August 19, 2015, 09:55:35 PM
You see that's the same question I ask myself all the time as I like to buy more. Also 1.4 P/B pre PCP deal is not the same post PCP deal. But also one must ask oneself where is the line, what is a right BRK. I'm pretty sure I can't just be 100% though that has worked out very well for some people in the past.

I have an extensive finance education and I know that those Portfolio classes didn't teach me anything. We as value investors have to figure out these thing for ourselves.

Who knows, maybe CoB&F will get a Nobel Prize
Title: Re: Buffett/Berkshire - general news
Post by: ourkid8 on August 20, 2015, 04:51:43 AM
1.4x book is PRE KHC as well. If KHC is included, you are Closer to 1.3x book.

What do you do if you already have a large BRK position and you have cash and you are looking at this market. Do you say that position sizes don't matter and go and buy more? Or are you satisfied that you have a large position in something that is undervalued and will appreciate further and wait for something else to come along?

BRK's safety makes the position size less an issue for me.

And while cheap, I've been waiting not for something else, but for a market correction (bear/crash) that would make even cheaper.

Seems overdue, but maybe it silly not to add at P/B 1.4 whenever can?
Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 20, 2015, 07:26:14 AM
I don't think it [P/B] really changes. Cash down, debt up, assets up...balancing.

http://boards.fool.com/bv-after-pcp-31867693.aspx?sort=whole


I did just add to my position today.
Title: Re: Buffett/Berkshire - general news
Post by: ourkid8 on August 20, 2015, 10:25:49 AM
RE KHC, book has to change to reflect the gain in value.

I don't think it [P/B] really changes. Cash down, debt up, assets up...balancing.

http://boards.fool.com/bv-after-pcp-31867693.aspx?sort=whole


I did just add to my position today.
Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 21, 2015, 05:39:10 AM
How can book value not reflect the change in cash and debt as well?

I do believe P/B is positively impacted, but only because I believe $1 of PCP/KHE > $1 cash.

Again, I did just add to my position, believing BRK's listed P/B of 1.38 really now below the one-year P/B low of 1.37 (though that only the median P/B since the last buy-back announcement).

(Probably too early, but I'd too much cash/not enough patience.)
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on August 22, 2015, 09:41:24 AM
How can book value not reflect the change in cash and debt as well?

I do believe P/B is positively impacted, but only because I believe $1 of PCP/KHE > $1 cash.

Again, I did just add to my position, believing BRK's listed P/B of 1.38 really now below the one-year P/B low of 1.37 (though that only the median P/B since the last buy-back announcement).

(Probably too early, but I'd too much cash/not enough patience.)

Because initially the investment in Heinz was only listed for $12 billion on the balance sheet. Now that it's a publicly traded company again, the change in value will be reflected and marked as such every quarter.
Title: Re: Buffett/Berkshire - general news
Post by: james22 on August 22, 2015, 09:30:54 PM
Ah.

Thanks, M.
Title: Re: Buffett/Berkshire - general news
Post by: berkshire101 on August 28, 2015, 07:53:04 PM
http://www.bloomberg.com/news/articles/2015-08-29/berkshire-discloses-4-5-billion-stake-in-refiner-phillips-66

Berkshire Reports $4.5 Billion Stake in Refiner Phillips 66
Title: Re: Buffett/Berkshire - general news
Post by: rb on August 28, 2015, 08:29:03 PM
Didn't they get that when they did the swap with ConocoPhillips a couple of years ago?
Title: Re: Buffett/Berkshire - general news
Post by: jay21 on August 28, 2015, 08:35:23 PM
Other way around. They exited through an asset swap: http://www.bloomberg.com/news/articles/2013-12-30/berkshire-to-buy-phillips-66-unit-for-shares-of-refiner-s-stock

Guess WEB likes it now.

IIRC:

WEB owned COP which spun off PSX. T&T bought PSX as WEB sold down. Todd exited through an asset swap. Now WEB is buying again.
Title: Re: Buffett/Berkshire - general news
Post by: rb on August 29, 2015, 05:42:55 AM
Right. Thanks for reminding me Jay. :)
Title: Re: Buffett/Berkshire - general news
Post by: CorpRaider on August 29, 2015, 06:49:01 AM
Strikes me as kind of odd.  Wasn't PSX around $74 when they disposed of 19 million shares, less than two years ago?
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on August 29, 2015, 07:32:08 AM
Maybe he'll swap the stake again for another piece of PSX business...  ::)
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on August 29, 2015, 12:31:18 PM
Perhaps he sees refining as a good business in a sustained low oil price environment. For example, what I heard from the business in Canada, oil prices are 1/2 but gas prices at the pump not that much because the refineries can keep their profit margins - also it's a more value added product than just oil. Seems Berkshire's philosophy with lots of industrial acquisitions is the thought that value-added products/services in the supply chain can command better margins and are overall a superior business than pure commodity plays.

Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on August 29, 2015, 01:38:57 PM
OK, but refining is periodically very crappy business. And I don't believe even Buffett can know that we are in sustained low oil price environment.

I'd not be surprised if T&T bought this for a short term play.
I'd be surprised if Buffett bought it without some kind of an angle, and I mean more than "refining is gonna be great business now for ... forever".
I'm not completely joking that he might be looking for another stock swap for some part of the business. But this is of course just pure guess.
Title: Re: Buffett/Berkshire - general news
Post by: valueinvesting101 on August 29, 2015, 02:01:20 PM
Refining business is 53% of Phillips 66 refining earning. They also have chemical and mid-stream operations.

Chemical, marketing and specialities are large part remaining earning sources. Midstreams assets are being moved to MLP. They own 50% interest in DCP midstream LLC and 66% ownership in Phillip 66 partners.

Refining business is usually commoditized play but given spread between Brent-WTI seems to be driving high margins at US refiners. This advantage can be best exploited by refiner with large sweet crude processing capacity located strategically close to oil production states and consuming markets. I believe this is biggest source of competitive advantage for PSX.

Export ban on US crude is driving Brent-WTI spread. If this ban is lifted margins of US refiners are likely to come down but I doubt this would lifted soon. If this is indeed lifted, then midstream assets should include in value which can essentially transform low price oil/gas at well to high value export items.

Company seems to be increasing its dividend and buyback for last few years as well as focusing on building new mid stream operations and moving them to MLP.

Most of the refiners are following above described strategies with varying degree. PSX must be good at executing them or BRK prefers them due to their size advantage.

I need to explore their differentiating factor vs. other refiner. Any thoughts on PSX advantages over other refiners?
Title: Re: Buffett/Berkshire - general news
Post by: jay21 on August 29, 2015, 03:06:34 PM
Cant think of anyone with more insight into PSX then someone just doing due diligence on a potential asset swap with them. WEB must have liked what he saw.

Jurgis - very low chance T&T bought it due to the size of the position.

Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on August 29, 2015, 03:14:53 PM
Jurgis - very low chance T&T bought it due to the size of the position.

Right, what I was trying to say is that T&T could have bought it for short term gains, but since Buffett did it (apparently), we can exclude short term gains as a reason.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on September 10, 2015, 06:46:19 AM
http://finance.yahoo.com/video/warren-buffet-never-below-20b-153900364.html

Is $500 million a typical week (of buying) at Berkshire?

It could be $200M ...or $500M, depends on if we are buying 15-20% or 10% of volume.

We have laid out $32B over the next 6 weeks or so.


$200M a day is a mighty pen.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on September 17, 2015, 10:31:06 AM
http://blogs.wsj.com/moneybeat/2015/09/17/buffett-to-3g-call-me-maybe/?mod=yahoo_hs

Deal in the works?
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on September 22, 2015, 05:50:55 AM
I hope Buffett is doing some equity purchases in Germany. The DAX is a volatile beast  :D:

https://www.comdirect.de/inf/indizes/detail/chart.html?TIME_SPAN=1D&ID_NOTATION=20735#timeSpan=SE&e&

Lately I thought real estate agency Engel & Völkers could be a good purchase for Berkshire.
It´s a good and popular brand name in the real estate agency businesses.
Title: Re: Buffett/Berkshire - general news
Post by: menlo on September 24, 2015, 08:47:45 AM
Morningstar updates their value of Berkshire:

http://news.morningstar.com/articlenet/article.aspx?id=715603&SR=Yahoo%E2%88%82=1 (http://news.morningstar.com/articlenet/article.aspx?id=715603&SR=Yahoo%E2%88%82=1)

(Apologies if this was linked in another thread)
Title: Re: Buffett/Berkshire - general news
Post by: DCG on September 28, 2015, 05:27:28 AM
(http://a1.espncdn.com/combiner/i?img=/photo/2015/0927/warrenbuffetsuhjersey.JPG)


Not sure why Buffett is apparently friends with Ndamukong Suh, who is one of the biggest assholes in professional sports.
Title: Re: Buffett/Berkshire - general news
Post by: NoCalledStrikes on September 28, 2015, 07:46:48 AM
If Attila the Hun was an All-American on the Cornhusker's D-Line, Warren would have something nice to say about him.
Title: Re: Buffett/Berkshire - general news
Post by: TwoCitiesCapital on September 29, 2015, 03:06:37 PM
Buffett cuts take in MunichRE from 12% to 9.7%
http://www.ft.com/intl/cms/s/0/972a759a-66ae-11e5-a57f-21b88f7d973f.html (http://www.ft.com/intl/cms/s/0/972a759a-66ae-11e5-a57f-21b88f7d973f.html)
Title: Re: Buffett/Berkshire - general news
Post by: rb on September 29, 2015, 06:32:28 PM
I would love it if that's the sound of the elephant gun reloading.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on September 29, 2015, 09:08:38 PM
I would love it if that's the sound of the elephant gun reloading.

Me too. But I suspect that when the 10Q confirms that they bought $32 B in securities as reported, plus the PCP deal early 2016, they could be down to the $20B cash cushion. That's not happened in a while. I'd love for the media to fixate next on them not having enough cash! No talk of buy backs, elephant deals for a while, ha!
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on September 29, 2015, 10:42:50 PM
I would love it if that's the sound of the elephant gun reloading.

Me too. But I suspect that when the 10Q confirms that they bought $32 B in securities as reported, plus the PCP deal early 2016, they could be down to the $20B cash cushion. That's not happened in a while. I'd love for the media to fixate next on them not having enough cash! No talk of buy backs, elephant deals for a while, ha!

If they are down to the 20 billion cash cushion, the inability to execute a buyback for a few months or a year is a real possibility as per the 2014 annual report: "However, repurchases will not be made if they would reduce Berkshire’s consolidated cash and cash equivalent holdings below $20 billion". But of course, they can always sell securities....
Title: Re: Buffett/Berkshire - general news
Post by: thefatbaboon on September 29, 2015, 11:18:10 PM
I would love it if that's the sound of the elephant gun reloading.

Me too. But I suspect that when the 10Q confirms that they bought $32 B in securities as reported, plus the PCP deal early 2016, they could be down to the $20B cash cushion. That's not happened in a while. I'd love for the media to fixate next on them not having enough cash! No talk of buy backs, elephant deals for a while, ha!

Are you saying that they have spent $32bn as well as the PCP commitment?

If so, on what are you basing it?
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on September 30, 2015, 05:35:33 AM
I would love it if that's the sound of the elephant gun reloading.

Me too. But I suspect that when the 10Q confirms that they bought $32 B in securities as reported, plus the PCP deal early 2016, they could be down to the $20B cash cushion. That's not happened in a while. I'd love for the media to fixate next on them not having enough cash! No talk of buy backs, elephant deals for a while, ha!

Are you saying that they have spent $32bn as well as the PCP commitment?

If so, on what are you basing it?
http://finance.yahoo.com/video/warren-buffet-never-below-20b-153900364.html
After listening again, I realize that he did not say $32+$30B. All he said was they've laid out 32 B over the next 4-5 months and that they tend to buy aggressively, like 15-20% of volume when markets are in turmoil which results in high overall volumes.My bad.
Title: Re: Buffett/Berkshire - general news
Post by: rb on September 30, 2015, 09:23:25 AM
The 32B he mentioned is the PCP deal.
Title: Re: Buffett/Berkshire - general news
Post by: wescobrk on September 30, 2015, 09:54:07 AM
Correct, cnbc misreported it
Title: Re: Buffett/Berkshire - general news
Post by: thefatbaboon on October 01, 2015, 01:39:58 AM
At end Q2 Berkshire had $67bn of consolidated cash

- 5bn for Kraft
-22bn for PCP (he's said $10bn of the $32bn will be debt financed)

+8bn-10bn for 6 months operating cash build

Assuming no insurance catastrophes and no net investment in stocks/bonds consolidated cash should be back around $50bn by the end of the year.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on October 01, 2015, 04:22:43 AM
The PCP deal probably will not have closed by the end of the year.  Also there is a large new purchase of Phillips 66.  Kraft Heinz has signaled it will redeem BRK's costly preferred at their earliest opportunity, which I believe to be sometime next year.  Expect a decent redemption premium for BRK if KHC redeems at the earliest date.  Then you've got BRK selling down the Munich Re stake, Marmon Holdings buying GE Capital's Tank Car leasing business yesterday..

There are so many sources of cash and so many moving parts it's tough to predict where cash will be at any given time.  But there will always be plenty.
Title: Re: Buffett/Berkshire - general news
Post by: thefatbaboon on October 01, 2015, 09:40:48 AM
The PCP deal probably will not have closed by the end of the year.  Also there is a large new purchase of Phillips 66.  Kraft Heinz has signaled it will redeem BRK's costly preferred at their earliest opportunity, which I believe to be sometime next year.  Expect a decent redemption premium for BRK if KHC redeems at the earliest date.  Then you've got BRK selling down the Munich Re stake, Marmon Holdings buying GE Capital's Tank Car leasing business yesterday..

There are so many sources of cash and so many moving parts it's tough to predict where cash will be at any given time.  But there will always be plenty.

My point wasn't really to nit pick if PCP closes before or after New Years Day...nor predict exactly the final tally of Q3/4 new purchases and sales...just think it's interesting in a general sense how easily a $32bn acquisition gets swallowed.   
Title: Re: Buffett/Berkshire - general news
Post by: netnet on October 07, 2015, 10:18:10 AM
Berkshire Specialty Insurance enters the cyber-security market:
http://www.ibamag.com/news/warren-buffett-enters-the-cybersecurity-insurance-market-25540.aspx (http://www.ibamag.com/news/warren-buffett-enters-the-cybersecurity-insurance-market-25540.aspx)

And BRK reduces stake in Munich Re:
http://www.forbes.com/sites/gurufocus/2015/10/07/why-warren-buffett-sold-munich-re/ (http://www.forbes.com/sites/gurufocus/2015/10/07/why-warren-buffett-sold-munich-re/)

Forbes article cites Jain as saying:“What was a very lucrative business [reinsurance] is no longer a very lucrative business going forward,”

all the best
netnet
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 07, 2015, 02:59:38 PM
Buffett Builds Rail Superhighway to Grab Truck Freight


http://www.bloomberg.com/news/articles/2015-10-07/buffett-bets-on-rail-superhighway-to-beat-trucks-as-coal-fades (http://www.bloomberg.com/news/articles/2015-10-07/buffett-bets-on-rail-superhighway-to-beat-trucks-as-coal-fades)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 21, 2015, 07:50:19 AM
light reading.  ;)


http://www.wsj.com/articles/warren-buffetts-lucky-millionaires-club-1445419800 (http://www.wsj.com/articles/warren-buffetts-lucky-millionaires-club-1445419800)

Warren Buffett’s Millionaires Club

Early Berkshire stockholders have used shares to finance children’s educations, buy homes, donate to charity
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 02, 2015, 09:22:33 AM
Buffett's Record Gain on Kraft Heinz Masks Stock Market Lapses

http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses (http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses)
Title: Re: Buffett/Berkshire - general news
Post by: KinAlberta on November 04, 2015, 09:53:54 AM
Buffett's Record Gain on Kraft Heinz Masks Stock Market Lapses

http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses (http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses)

Cliff sounds like an amateur - that's not good for Cliff.

“For a guy whose reputation rests on his investing in the stock market, that’s not good,” said Cliff Gallant, an analyst at Nomura Holdings Inc. “It’s been a tough year.”
Title: Re: Buffett/Berkshire - general news
Post by: Libs on November 04, 2015, 10:32:29 AM
Buffett's Record Gain on Kraft Heinz Masks Stock Market Lapses

http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses (http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses)

Cliff sounds like an amateur - that's not good for Cliff.

“For a guy whose reputation rests on his investing in the stock market, that’s not good,” said Cliff Gallant, an analyst at Nomura Holdings Inc. “It’s been a tough year.”

It's a fair comment, the stock portfolio has not done well this year. Buffett would be the first to own up to it.

Honestly I see the stock portfolio as an anchor. I wish BRK could just spin the whole portfolio off to shareholders. Then the market would recognize BRK's  terrific growth as an operating company, and give it a much higher P/E ratio.

How many companies are growing this fast, with such low risk, and selling at such a low P/E ratio ( I think ~13X my 2016 estimates, haven't updated it fow a while).

BRK's advantages as a hunter for operating Co's seem far greater than what we can do in the stock market. I believe Buffett said he can only look at maybe 300 potential stocks now, given BRK's size.

Plus, BRK is stuck with the giant stocks forever. Come hell or high water, if Buffett wanted to sell KO, WFC, AXP, or IBM, it would cause a huge firestorm...could he even sell them without crushing the price?

Heresy, all of this, I know.


Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on November 04, 2015, 10:48:39 AM
Buffett's Record Gain on Kraft Heinz Masks Stock Market Lapses

http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses (http://www.bloomberg.com/news/articles/2015-11-02/buffett-s-record-gain-on-kraft-heinz-masks-stock-market-lapses)

Cliff sounds like an amateur - that's not good for Cliff.

“For a guy whose reputation rests on his investing in the stock market, that’s not good,” said Cliff Gallant, an analyst at Nomura Holdings Inc. “It’s been a tough year.”

It's a fair comment, the stock portfolio has not done well this year. Buffett would be the first to own up to it.

Honestly I see the stock portfolio as an anchor. I wish BRK could just spin the whole portfolio off to shareholders. Then the market would recognize BRK's  terrific growth as an operating company, and give it a much higher P/E ratio.

How many companies are growing this fast, with such low risk, and selling at such a low P/E ratio ( I think ~13X my 2016 estimates, haven't updated it fow a while).

BRK's advantages as a hunter for operating Co's seem far greater than what we can do in the stock market. I believe Buffett said he can only look at maybe 300 potential stocks now, given BRK's size.

Plus, BRK is stuck with the giant stocks forever. Come hell or high water, if Buffett wanted to sell KO, WFC, AXP, or IBM, it would cause a huge firestorm...could he even sell them without crushing the price?

Heresy, all of this, I know.

I thought the equity portfolio was embedded within the capital of the insurance companies. Therefore a spin-off would require a separation of the entire insurance business and the engine of Berkshire's float and investment capital.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 13, 2015, 07:43:21 AM
Warren Buffett Has an Image Problem

Some say billionaire hides behind image of folksy businessman

http://www.wsj.com/articles/warren-buffett-has-an-image-problem-1447371811 (http://www.wsj.com/articles/warren-buffett-has-an-image-problem-1447371811)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 13, 2015, 09:10:28 AM
Warren Buffett Has an Image Problem

Some say billionaire hides behind image of folksy businessman

http://www.wsj.com/articles/warren-buffett-has-an-image-problem-1447371811 (http://www.wsj.com/articles/warren-buffett-has-an-image-problem-1447371811)

The article lays out a laundry list of statements that Buffett/Munger have made, in the media and the AR's that puts them clearly in the blue corner versus WS in the red. Just wondering if WSJ with the increasing frequency of anti-Buffett headlines is a suggestion for Buffett to back down? To me, it appears so. Good luck with that.

The large truth is that WSJ and the interests it represent substantially come between people and their wealth. Buffett/Munger have 50 years of credibility by having created incredible wealth far away from WS and that lends much credence to discerning audience. In fact, I'd argue that the education of a value investor is not complete without digesting the follies that are fostered by WS. I now understand them well, thanks to the folksy Omahans.

All WSJ can do is to villify the messenger for long enough and hope for Buffett/Munger go away!
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on November 13, 2015, 11:33:39 AM
The Berkshire Hathaway 50th Anniversary symposium just took place and featured conversations with the likes of Seth Klarman, Bill Ackman, Tom Gayner, Byron Trott, Carol Loomis, Roger Lowenstein, Tom Russo, John Phelan, and Whitney Tilson.  The notes were compiled by Jacques Romano, MD.


Notes From Berkshire Hathaway 50th Anniversary Symposium

Carol Loomis (CL) and Byron Trott's (BT) Conversation

Warren Buffett (WB) was invited but he graciously declined explaining his presence would change the nature of the discussions. BT met WB because the GS partner that had handled his account, Tom Murphy, Jr., had retired.  Hank Paulsen told Warren that BT was the only guy for him.  Initial one hour meeting lasted about three hours.  This was in early 2002.

WB created through GS a negative coupon convertible bond of about $300 million called SQUARZ in April 2002, whereby he was paid to borrow money and the institutional holder of the security was able to purchase Berkshire Hathaway (BRK) stock in the future at a higher price.  Charlie didn’t like the idea.

BT represented Pritzker in the Marmon deal and was involved with MacLeans and Pampered Chef transactions.  BT also involved in Wrigley and Mars deal.

BT describes WB as a perfect ten times two.  He has an incredible mind and able to do math in his head and his discipline is incredible.  On the human side, he is humble and has the best sense of humor.  He is someone you want to be with and is always positive about anyone.

Regarding discipline, he cited some KKR transaction that WB could have done for 10-15% more in price while having a cheaper cost of capital but WB felt he could use that cash more effectively at another time.  He waits for his pitch.  “You should see the stuff he turns down over the years”.

WB looks at cash on cash returns and doesn’t factor in leverage.  He looks for durable long lasting cash flow stream businesses.  He realizes that sometimes to get great businesses you have to reach but he is incredibly disciplined and completely unemotional.

WB told BT that CL started as a reporter but is great in accounting and finance and is a stickler for details.  She’s from Missouri.  CL expanded on a vignette about her dating Ty Cobb.  She had come to NYC in 1950s and was on the quiz show Tic Tac Dough where she did well and was subsequently contacted by Ty’s nephew for an invite by Ty to the 21 Club.  “How could a baseball fan turn that down?”  She was his subsequent “date” to Yankee Stadium during an Old Timer’s Game where she was presented with a Mantle, Maris, Whitey Ford autographed baseball.  That’s about where it went.  She was in her late 20s and he was in his late 60s.

In 2008, Goldman Sachs was experiencing a small but daily run on the bank and wanted to raise capital.  BT said it was about a 20 minute negotiation with WB.  In addition to making his BRK investment, WB wanted to make a big statement about being confident in that investing climate.  He subsequently made his GE investment and wrote his Oct. 2008 NY Times op-ed.  One of his points was that markets go up first and that there is reasonable cause to regain confidence.

WB is an American icon.  The world doesn’t understand how important WB was to the solutions during the financial crisis of 2008.  I would describe him as a “pragmatic optimist grounded in reality”. 

Hank Paulson told BT that during a late night phone call, it was Warren’s idea to make TARP capital attractive to banks and for it not to be stigmatized so all the banks should receive it and none look particularly weak or strong.  But he also wanted to make it more expensive for the banks if they kept this capital for a longer period. 

WB was doing this to help the country.  Some may be cynical about this because he owned Wells but Hank knew and everyone else who knows WB knew that he was creatively playing a constructive role.

Warren is disciplined, opportunistic and long term.   Charlie is not my number two; he is my equal and has kept us on the straight and narrow. Warren doesn’t want to do small deals but will do minority deals as long as it is big.

Warren’s the greatest, nicest and most accessible person.  He’s a great teacher and a great student of investing and business.  He provides a safe home for business owners that want liquidity and still passionately want to run their businesses. Warren is one of a kind and will be the best investor of all time and his record will not be beaten.

He thinks very long term and Berkshire will still be intact a century from now. “Warren, you can’t control things from below the ground.” “Maybe not, but I can try.” The term “investor” is not quite expansive enough to describe Warren.  He’s also a great acquirer, manager and owner of businesses. Matt Rose of Burlington Northern told me that Warren knows more about the railroad now than I do.  And he can interconnect it to everything else.  He makes the complex seem simple.  When I talk to Warren, I feel like I’m 2 steps behind him.

They discussed how Andrew Carnegie is known more now as a philanthropist than as a businessman and Warren may have similar impact and be known more expansively.


Seth Klarman (SK), Bill Ackman (BA), and Roger Lowenstein's (RL) Conversation

Bill went to Larry Cunningham’s Cardoza symposium in 1996 and fortuitously sat next to Suzzie Buffett who invited him to sit next to Warren at lunch!  When he went to HBS, there were not any classes in investing although there were classes in investment management.  There were no investment clubs at that time either.  He read Graham’s Intelligent Investor and then Warren’s annual reports.

Seth Klarman took a job at Mutual Shares after college and “Warren” was common parlance once I got into the business.  He thought Warren’s Superinvestor article was very logical.  SK feels that there must be some type of gene that makes people have an affinity for value and value investing.  He told a story about a friend of his whom enthusiastically tried value investing full time but three months later ended up quitting:  “It doesn’t work”. 

BA says some of the things he tries to emulate are Buffett’s focus on quality, durability and concentration.  Although given “my” experience in Valeant, perhaps I should change one of his aphorisms to “be fearful when others are fearful”. 

Making good investments is not about performing discounted cash flow analyses or reading footnotes but more about assessing the moat in our dynamic world. Many of Buffett’s investments in the 1970s like encyclopedias and newspapers did not hold their advantages.  You can’t “just buy and hold”.  The world has changed rapidly.

The difficulty is the qualitative assessment and the implementation. Railroads now seem to pass the 100 year test but how many businesses can pass that test? Lowenstein made the point that Wall Street loves those 99:1 bets but not WB.

SK said that the maxim of “don’t lose money” does not mean at every time and in every instance but to the extent that it puts you out of business.  Sometimes you can bet or invest in favorable expected value situations where you lose the bet.  This is similar to an insurance operation.  Some investments in a portfolio will lose but you don’t put the operation at risk. 

SK: In the 1980s you could actually buy quality inexpensively; you didn’t have to pay up.  I remember Nabisco selling for 7 times after tax earnings.   You can’t just kneel at the temple of Graham and Dodd, you and the world will change.  We will evolve and ought to evolve because the world requires us to.  WB teaches us how to make our own map.

I don’t know WB well enough to know how he feels, but I suspect that he feels that him being held as an investing demigod is a bit silly.  WB isn’t about that. WB is not about giving you a formula.  “Business is hard.  Everything is overlaid with judgment”. WB has been fortuitous to invest at a time when you could get quality inexpensively.  He has built on certain advantages.  No one else gets the calls that he gets. Some people are overly focused on him as opposed to understanding how he thinks.

BA: Buffett has made more people rich than anyone else in history.  And he gives it all away.  He’s one of the great educators. I believe in response to a questioner, BA went into a diatribe about Coca Cola (KO).  It does enormous damage to society and people consume too much sugar contributing to obesity and diabetes.  He wouldn’t be against supermarkets that sell coke.  And he owns Mondelez: all things in moderation.  But Coke doesn’t seem to have had a bad effect on Buffett.  I believe he has said WB hasn’t had water since the 1950s!  He thinks Coke has great distribution and marketing but it is not good for children to get too much sugar water.

There was some discussion that the BRK model with insurance, concentrated positions and possible illiquidity may have problems in future.  You need to be a fortress and inspire confidence and trust with regulators.  Will that survive Buffett? Conglomerates do not have a great history.

Buffett is a fabulous communicator.  He has stayed on the right side of politics and has avoided becoming a target of Washington.  It is not automatic that the next CEO will be able to tell the story of the company as well. SK said he stole the idea of writing meaningful partner letters from WB.  And he feels that the overall quality of fund letters in general has improved because of Buffett’s lead.  Consistency, reassurance, and transparency give shareholders comfort.

BRK can be a Warren centric model.  He is uninvolved in the management of the businesses and there may be an opportunity for “optimization”.  With 3G he is “outsourcing” the less attractive aspects of the business. Catastrophic risks can destroy enormous amounts of value.

SK: excessively raising prices on drugs may not be illegal but there are social costs.  Capitalism may face a more constrained environment as a result of bad behavior. WB has conducted himself generally beyond reproach.  He has not become a target.  The next CEO may not get a pass so easily. Value investing is nuanced but we will always have it.  “Human nature will not yield”.  Greed, fear and lack of intellectual honesty will result in bargains from time to time. There is always going to be a share of the investment business that is following the crowd.  There are those watching over their shoulder and who have misalignment of goals.  They may be forced to do things they may not want to do for human reasons.

Someone asked SK if he wanted to be an investment manager at BRK or if he had any discussions about this with WB.  He said he was never a candidate and loves his job. He said he was surprised on the upside with WB’s decisions about investment managers.  It was hard to do and it has gone incredibly well.   


Berkshire Shareholder Panel: Tom Russo, Paul Lountzis, Whitney Tilson

“Only WB can fill a room without even being in it”.

Whitney Tilson has been adding to his BRK position.  It is safe, cheap and with decent growth.  He puts fair value about $267,000 give or take 10%.  You can find his slide presentation on the Internet (there were no slides at this conference).

Tom Russo said there are no agency costs and an extraordinary alignment of interests.  WB owns 30% of the stock and makes $100,000 for managing. The corporate form allows for tax efficiency with respect to capital allocation.   He has the willingness to do anything if it makes sense and the capacity to do absolutely nothing if conditions warrant.  Great businesses can find a home at BRK where they will be protected.

Paul Lountzis tries to understand BRK broadly and deeply.  There is embedded optionality in BRK.  Regarding Berkshire, he is reminded of the Ralph Waldo Emerson quote: “Every institution is the length and shadow of one man.”  We try to understand it now and in the future. He mentioned that Geico is on the books for $2-3B but is worth 10-15 times that.

WT told WB that he is his role model in Jan. 1999 and he tries to emulate how he runs the business.  Given how WB communicates, BRK is the opposite of a black box.  He has incredible humility and even looks for ways to self-flagellate.

PL:  WB is a wonderful human being and exemplifies consistency and loyalty to a high degree.  He focuses on permanence over the long term and looks out 10-20 years. His example impacts everything you do both personally and professionally.  BRK values permeate seamlessly and consistently throughout its business. Despite the fact that BRK has gone down by 50% several times it has still been extraordinarily rewarding.

Few businesses have great reinvestment opportunities.  If you can defer taxes on unrealized gains, this is a great advantage. The problem with many public companies is their inability to take advantage of some of their potential opportunities, unlike family controlled companies.  Public companies may need to make earnings estimates as opposed to investing in opportunities that may penalize current earnings.  They may worry about activists.

BRK is a unique public marriage between private and public investments.  BRK gets $1.5B month in free cash.  It is effectively a source of permanent capital and a robust re-investment engine. During times of stunning market drops, WB was never forced to sell. Permanent capital is very valuable. The ability to do nothing is valuable in the investment business. Operationally, they can turn down the noise of Wall St. Buffett has the flexibility to do nothing.  He is unique and special and combines analytical strengths with strong people skills to a degree that is very rare. He has unique qualitative insights. You don’t see the 99% of opportunities he says “no” to. 

Buffett plays a very important cheerleading role.  Many company CEOs are rich and old and feel personally loyal to Buffett.  Are they going to be as loyal to the next CEO? There is somewhat limited corporate governance but Buffett holds it all together. 

What is the next BRK? The best BRK is BRK. One interesting point that was made: investors that held the S&P 500 going into the financial crisis more than likely sold when everyone was running for the hills.  But given their understanding of and loyalty toward BRK, shareholders were much more likely to garner the full return of the company and not otherwise sell low and buy high.  This is a point that can be missed when one compares BRK returns to the index.  The index’s returns are more likely illusory and less likely realized. Other companies “wave people in at the peak”.


Partnership Session With Markel's Tom Gayner and John Phelan

John Phelan.  We don’t take 1% or more positions without visiting the company. Should you locate far from Wall St?  Mindset trumps location.   We think we have semi-permanent capital.  There is always a balance between the short term and long term. Our benchmark is not the S&P 500.  Our benchmark is to make money.  The risk free rate is your benchmark. We have the luxury of not being invested all the time. Simplicity is a virtue and we have fewer problems that way. If you hire someone that is not from a top school, they are less likely to think, “You’re lucky to get me”.  Some of our best hires are from the military.  They know how to get things done. We currently have 18% cash which is on the high side. We are company focused and not market focused.

Tom Gayner: “Good meat priced right is better than poor meat priced cheap”. JP worries about the credit markets.  Now a $250M 10 year Treasury trade moves the market whereas before $1B wouldn’t make it blink. We are defensively positioned but not bearish on the US economy.  We are seeing wage pressure in our companies.   The best hedge is a great attractively priced business. Paying up for a business is counter-intuitive.  It costs more but may be worth a lot more.

Lawrence Cunningham: Buffett’s presence here would steal the stage and by electing not to come, he is letting us have the conversation. LC organized a conference at Cardoza Law School in 1996.  One questioner asked what happens to the shareholders when Buffett dies.  Buffett said, “it won’t be as bad for you as it will for me!” BRK looks a lot different today than it did then but the core values have stayed the same.  He has created an institution that goes beyond him in the quality of the people, businesses and values and that is the best succession plan possible.

BRK gets funds from internal generation and insurance float versus the cost of borrowing to make acquisitions.  The float is currently $85B with no due dates, covenants or banker negotiations.

The Board is not there to monitor management but to partner with it.  They have no options, liability insurance and bought stock with their own cash. Company CEOs have clear and simple mandates.  Called out Bruce Whitman, CEO of Flight Safety who was at the conference. He has never sold a subsidiary and sometimes business sellers accept a discount compared with offers from other business buyers. We would rather bear the visible costs of a few bad decisions than suffer under stifling bureaucracy.

GenRe would have gone bankrupt after 9/11 without BRK! Dexter Shoe was another “mistake”. BRK sometimes is a juicy target for journalists-recently Clayton Homes and National Indemnity.

He spoke about a recent acquisition called Detlev Louis from Germany that sells motorcycle gear.  Similar to See’s being a small deal but defining the future of the company, he sees this company as a possible harbinger of future deals in Europe.  He points out that it only has about $40M in earnings which is less than WB’s minimum size but he made an exception to get a toehold in Germany and Europe.

He made mention that Pampered Chef’s sales have considerably decreased and that there is some turmoil in the capital intensive business of NetJets.

Don’t focus on beating the market but in finding the greatest discrepancy between price and value.


Cheers!  :)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 14, 2015, 10:29:38 AM
Thanks for sharing. Great stuff.
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on November 16, 2015, 05:54:01 AM
Thanks Charlie!
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 16, 2015, 12:19:55 PM
The Warren Buffett approach to investing overseas

Three of Berkshire Hathaway's top U.S. stockholdings receive more than 50 percent of revenue overseas

http://www.cnbc.com/2015/11/16/the-warren-buffett-approach-to-investing-overseas.html (http://www.cnbc.com/2015/11/16/the-warren-buffett-approach-to-investing-overseas.html)
Title: Re: Buffett/Berkshire - general news
Post by: Shooter MacGavin on November 19, 2015, 04:53:50 PM
here's a hypothetical wild idea to earn around 18-20%+ per year on your portfolio for a while without breaking a sweat.  Someone please tell me why this is dumb.

Why not sell everything you own to start?  dump into into BRK B . Margin 2:1 and then buy the jan 18 $120 puts for the borrowed portion to hedge your downside from a margin call. 

put are around $7 or 5% on $136 trading price, and margin cost is around 2% per year. 

So you're paying a total of 2.5% plus 2% per year so 4.5% per annum pre-tax.  About 3.6% (post tax rate) per year. 

I think from here Berkshire incrementally compounds at 10%-13%, and maybe you get a little better for buying at a slight discount today.

Even if the market crashes..you're not going to get a margin call for a $120 put (especially if you have portfolio margin in IB).  Just make sure to roll the put forward 6 months ahead of time so you never are going to be forced to exercise it if the market does crash.

The other hedge here is that in the event of a market crash, Berkshire will buyback stock at about $124 by my math...so its unlikely it will stay low for too long.  (And god forbid if it did stay low, the stock buyback should be highly valuable to remaining shareholders so that the internal compounding per share may go up another few points)

So basically the stock itself say it does like 12% per year (10% internal and 2% from a slight market multiple increase to more fair level) over the next two years.

by my math thats about 18.6% per year.  not too shabby.  just hang out at the beach and check back here once in a while.

why you would do this with berkshire ONLY is quite obvious..it's the safest financial instrument you can own in the world, its undervalued, and the put is cheap because the option market knows ( I think) that the stock isn't going to fall by too much and if it does it'll come back because of the repurchase.
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on November 19, 2015, 05:08:28 PM
If things go right - the default case - doesn't the put negate the point of doing the 2:1 margin thing in the first place? And if things go wrong, doesn't that also negate the point of doing the 2:1 margin thing? Seems to me if you hedge using borrowed money you might as well not use borrowed money at all.

Title: Re: Buffett/Berkshire - general news
Post by: Shooter MacGavin on November 19, 2015, 05:38:12 PM
you're just hedging the borrowed portion so you don't ever get a margin call.  You still have to be right on the thesis.  So in this case, unless buffett himself is wrong on the thesis he thinks its very valuable at $124 (1.2x book).
Title: Re: Buffett/Berkshire - general news
Post by: Shooter MacGavin on November 19, 2015, 05:41:29 PM
I guess just to clarify, yeah don't borrow the put premium.
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on November 19, 2015, 06:20:04 PM
So let's say you buy $50000 (~365 shares) and put up $25k.   You buy ~2 contracts at $7 each or $1400 Over 2 years cost will be - ~$2400 (2% interest+the put)
If the put expires worthless you just bought insurance for $1400.
If the stock goes to say $100 ($36,500, or a drop of 36% from today's price) you have a margin call ($18.25k - 11.5k) of $6.75k.
Will the put be worth $20 ($120 strike - $100 stock price) or $4000, about $3k short of the margin call?
Or is the assumption that Buffett's stated buyback level is a kind of floor for the price and your assumed margin call?
Title: Re: Buffett/Berkshire - general news
Post by: Shooter MacGavin on November 19, 2015, 08:35:22 PM
Bear with me.... I'm slow.  I'm not following your math completely.  So I'll just lay it out the way I think about it.  If my math is wrong here, please let me know.

1) I fund $27.2k of equity
2) I borrow $25k
3) My starting assets 366 shares at $136 (=$49.8k) + 2 put contracts 120x strike, Jan 2018 = ($7 *200 = $1.4k), and $1.0k of cash for interest payments


Scenario 1: (forget about puts for the moment)
Brk.B tanks to $90 the very next day.

1) total assets (not including puts): (366 shares * $90 or $32.9k in stock) + $1.0k cash for interest payments
2) Total liability is still $25.k
3) so equity is worth $8.9k
4) If maintenance margin is 30%, then I'm below.  Because I'm at 26%.  (8.9 / 33.9 ).  So I need to cough up $1.3k, otherwise they close me out.



Scenario 2: (Put hedge kicks in)
1) total assets: $32.9k in stock (366 * $90 per share ), new put value = (($120 - $90) * 200 contracts) = $6.0k, cash for interest payments of $1.0k
2) total liability = $25k
3) equity = ($32.9k +$6.0k + 1.0k) - ($25k) =  $15k.
4) my equity % of assets = 37.5% ($15k /$39.9k) , so in this I'm not getting called out.  My put hedge counts for equity

So no matter how much the stock falls below $136, I'm not going to require more margin. Without the puts, I would get a margin call at around $97 or so, but the puts become more valuable once the stock declines below $120 offsetting my equity losses.

In fact, one could make the argument that i should just buy $100 strike put instead of a $120.  That's something to think about as well. 
Title: Re: Buffett/Berkshire - general news
Post by: Shooter MacGavin on November 19, 2015, 08:44:05 PM

If the stock goes to say $100 ($36,500, or a drop of 36% from today's price) you have a margin call ($18.25k - 11.5k) of $6.75k.


ah i see what you did.  you're using 50% maintenance margin (18.25 / 36.5) .  However the maintenance margin requirement (for IB at least ) is 25%.

https://www.interactivebrokers.com/en/?f=margin&p=overview3#margin-01

Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on November 19, 2015, 09:17:47 PM
Gotcha, yes, I used 50%. If the goal is to maintain a fixed number of leveraged shares regardless of how much the share price drops, then this could work. Perhaps another way to look at it is - getting a margin call at 30% might be a favour from your broker if you feel you might start to sweat - even with the put - if Berkshire hit $50 and your equity went from $25k to $6.3k, even temporarily. But one thing that did make sense in your example is that it's better to buy put insurance when you don't need it and it's cheap rather then when prices are dropping and it's expensive :)




Title: Re: Buffett/Berkshire - general news
Post by: physdude on November 21, 2015, 01:34:24 PM
The exact equivalent of buying DITM calls is safer from a margin perspective and far more advisable IMHO (eg., if a broker suddenly raises the margin requirement).
Title: Re: Buffett/Berkshire - general news
Post by: Shooter MacGavin on November 21, 2015, 04:19:08 PM
hmm.

I guess if you bought a closer to the money put (at a higher premium) you could also alleviate that problem, say $130 instead of $120. 

The problem i see with a call though is it is not tax efficient.  If it works, you're going to, before expiration, be forced to sell and book a gain. So unless you're in  a tax free account, where I believe but am not sure that you can't borrow on margin anyway, then I'm not sure a call is the best option. 

Maybe in a tax free account, entering a call makes sense, at the right premium of course. If you go deep-in-the money, with a long dated strike however, my gut tells me that you're paying for a put that may be pretty useless if the market doesn't agree with you in two years.  Some math to illustrate may be in order, but I'm having a lazy Sat so maybe I'll re-post at a later date.   ;D
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 23, 2015, 09:10:16 AM
Warren Buffett teaches students unforgettable lessons

http://finance.yahoo.com/news/warren-buffett-s-master-class-005532745.html# (http://finance.yahoo.com/news/warren-buffett-s-master-class-005532745.html#)
Title: Re: Buffett/Berkshire - general news
Post by: WneverLOSE on December 04, 2015, 09:22:46 AM
Found this great interview with Warren that I have never seen before, I highly encourage you to take a look.
One question I have for you, at 41:20 I can't understand buffett's answer to the question if berkshire hathaway stock is cheap, can someone help me ? (Probably because english isn't my native language I can't understand)

https://youtu.be/KuYBeBCx19g?t=2478
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on December 04, 2015, 09:42:51 AM
"The businesses it [BRK] owns is worth more than its [BRK's] market price"
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on December 04, 2015, 12:39:22 PM
Found this great interview with Warren that I have never seen before, I highly encourage you to take a look.
One question I have for you, at 41:20 I can't understand buffett's answer to the question if berkshire hathaway stock is cheap, can someone help me ? (Probably because english isn't my native language I can't understand)

https://youtu.be/KuYBeBCx19g?t=2478

Yes, he pretty much said it was a buy in 2012 when it was 80 or so per share.

Title: Re: Buffett/Berkshire - general news
Post by: LongTermView on December 04, 2015, 04:33:56 PM
One question I have for you, at 41:20 I can't understand buffett's answer to the question if berkshire hathaway stock is cheap, can someone help me ? (Probably because english isn't my native language I can't understand)

https://youtu.be/KuYBeBCx19g?t=2478
The question was whether it was a buy.

Like John Hjorth and scorpioncapital pointed out, Buffett said the following which was pretty much saying yes indirectly:
Quote
Well, the businesses it owns are worth more than the market price.  But that's true of other businesses too.

I think Buffett's answer was better than just saying "yes" directly for several reasons:
1. Buffett didn't know what the stock market would do in the short run.
2. There were other great companies out there that might have been even more undervalued.
Title: Re: Buffett/Berkshire - general news
Post by: LowIQinvestor on December 11, 2015, 08:56:52 AM
Getting fairly close to Buffett's buyback price!

1.2x book is 7% lower
Title: Re: Buffett/Berkshire - general news
Post by: marazul on December 11, 2015, 09:00:11 AM
would love to see this buyback and how aggresive WEB gets.
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on December 11, 2015, 09:18:00 AM
Getting fairly close to Buffett's buyback price!

1.2x book is 7% lower

Only the case if BV doesn't contract. It's a moving target, unlikely to be done instantly. He might wait 3 to 6 months to see the numbers. If the market portfolio of 100b+ drops 10%, reduce the buyback price accordingly.
Title: Re: Buffett/Berkshire - general news
Post by: marazul on December 11, 2015, 11:57:27 AM
The 10% decline in the stock portfolio would impact BV by ~5%. In addition, DTL would shrink and that would make the impact less than 5%. Also, earnings from operating businesses and dividends from securities would add to BV. So BRK BV is less exposed to market fluctuations than a couple of years ago, and less than people think imo.
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on December 11, 2015, 12:33:27 PM
Always a good news for Berkshire investors when the stock market declines. Buffett recently said he likes the big down days.  :)
I bought more Berkshire today.
Title: Re: Buffett/Berkshire - general news
Post by: ourkid8 on December 11, 2015, 01:01:44 PM
I also added to my Berkshire position.  I cannot wait for him to announce a bump into the buyback threshold to 1.3x!!!

Always a good news for Berkshire investors when the stock market declines. Buffett recently said he likes the big down days.  :)
I bought more Berkshire today.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on December 11, 2015, 02:30:31 PM
Personally, I don't expect a rise in the "soft" buy back level anytime soon.
However, I would love a positive surprise.
Title: Re: Buffett/Berkshire - general news
Post by: jrunner on December 11, 2015, 07:35:44 PM
I bought more today, too.
Title: Re: Buffett/Berkshire - general news
Post by: james22 on December 13, 2015, 04:05:34 AM
Would anyone not buy if fell to buy-back?

A Hussman fan, I'm half expecting a crash (and so might expect to be able to later buy at better than buy-back), but believe I'll always have to buy at buy-back.
Title: Re: Buffett/Berkshire - general news
Post by: Spekulatius on December 13, 2015, 10:18:46 AM
Bulls should note that BRK's main business aren't doing so hot lately:

BNSF - declining revenues and earnings if UP is an guide
Insurance earnings have been weak lately
Industrial demand has been weak and the strong US$ does not help (Mormon, PCP, Tungsten tool business)
Utility earnings impacted by low NG prices

I think here is a reasonable chance to get  BRK at  $120/share.
Title: Re: Buffett/Berkshire - general news
Post by: jay21 on December 13, 2015, 11:17:51 AM
Bulls should note that BRK's main business aren't doing so hot lately:

BNSF - declining revenues and earnings if UP is an guide
Insurance earnings have been weak lately
Industrial demand has been weak and the strong US$ does not help (Mormon, PCP, Tungsten tool business)
Utility earnings impacted by low NG prices

I think here is a reasonable chance to get  BRK at  $120/share.

Agree - not super cheap compared to when you could get ~BV before. Interesting but not a slam dunk.
Title: Re: Buffett/Berkshire - general news
Post by: racemize on December 13, 2015, 11:20:19 AM
I'm working on an essay and auxiliary to it, I created a spreadsheet that compares book value, price, and Tilson's IV over time.  I thought some might be interested so I'm posting it. 
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on December 13, 2015, 02:19:20 PM
Bulls should note that BRK's main business aren't doing so hot lately:

BNSF - declining revenues and earnings if UP is an guide
Insurance earnings have been weak lately
Industrial demand has been weak and the strong US$ does not help (Mormon, PCP, Tungsten tool business)
Utility earnings impacted by low NG prices

I think here is a reasonable chance to get  BRK at  $120/share.

And you think BRK is at $130 why?

Newsflash: BRK is at $130 exactly because its investments and its businesses are not doing so well lately.

Is all the negative information already reflected in the price? Maybe, maybe not. You'll never know.

What is exactly the point of
Quote
here is a reasonable chance to get  BRK at  $120/share.
?

Of course there is. BRK went to $125 this year, so within 4% of $120.

Does this mean that we should sell BRK and wait to rebuy at $120? Just hold cash until it gets to $120? Buy something else?
I don't find such prognostications helpful. At least if you do it, do it the superforecaster way and give the time frame + probabilities. Otherwise, it's like talking heads on TV - they are always right, since they never specify probabilities or timeframes.

Take care
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on December 13, 2015, 04:51:00 PM
Basicly +1 to what Jurgis posted.

Personally, I believe many investors underestimate what Warren Buffett, Charlie Munger, Ted Weschler & Tod Combs [in combination, including "synergy", by internal discussion, sparring and exchange of ideas and assesments] can and will do for BRK shareholders going forward, based on the [still] huge cash inflows, expected to continue [expected by me] going forward, despite non stellar results this year.

Spekulatius, perhaps you will get it @ 120, perhaps you will stand on the sideline forever.
Title: Re: Buffett/Berkshire - general news
Post by: Spekulatius on December 18, 2015, 03:29:14 PM
We will see how the share price goes. What I can say is that one can now build your own BRK buying business like UNP , relatively cheap industrials like PH, ITT, ETN, selected utilities and possibly some other stocks and have a similLar value than just buying BRK - the recent pullback in stock prices made that possible, despite the overall indices looking fairly healthy still.

What I do like about buying BRK rather than individual stocks is the discipline in capital allocation that I see with BRK, which I think alone is going to give an extra 1-2% of annual  performance.  We also get the deals that only Buffet seems to be able to get like the GS/BAC preferred and more recently the Heinz deals. So these special deals probably will give us another 1% of outperformance. Take this together and you hAve. Pretty sound chance of beating the index buy a couple percent each year over the long run. That is a very sound value proposition. If you can buy it really cheap at 1.2x book (or whatever price Buffet would buy back) than you can tack on another one time 10% revaluation going on this, that you likely will get. That's even better.

I think Todd and Weschler are very important now and will deeply influence investment decisions. Maybe they will be more important than Buffet soon. I think this will take BRK also in a different direction, but hopefully the culture will stay intact.
Title: Re: Buffett/Berkshire - general news
Post by: ourkid8 on December 18, 2015, 04:13:00 PM
Don't forget that Berkshire runs a well run insurance operation in which they gets paid for their float which juices individual stock returns.  It's something a lot of people miss and has and will continue to make shareholders a tremendous amount of money. 

We will see how the share price goes. What I can say is that one can now build there own BRK buying business like UNP , relatively cheap industrials like PH, ITT, ETN, selected utilities and possibly some si surname company stocks and have a similLar value than just buying BRK - the recent pullback in stock prices made that possible, despite the overall indices looking fairly healthy still.

What I do like about buying BRK rather than individual stocks is the discipline in capital allocation that I see with BRK, which I think alone is going to give an extra 1-2% of annual  performance.  We also get the deals that only Buffet seems to be able to get like the GS/BAC preferred and more recently the Heinz deals. So these special deals probably will give us another 1% of outperformance. Take this together and you hAve. Pretty sound chance of beating the index buy a couple percent each year over the long run. That is a very sound value proposition. If you can buy it really cheap at 1.2x book (or whatever price Buffet would buy back) than you can tack on another one time 10% revaluation going on this, that you likely will get. That's even better.

I think Todd and Weschler are very important now and will deeply influence investment decisions. Maybe they will be more important than Buffet soon. I think this will take BRK also in a different direction, but hopefully the culture will stay intact.
Title: Re: Buffett/Berkshire - general news
Post by: marazul on December 18, 2015, 05:00:20 PM
From a quantitative valuation using book value or other multiples you miss the following:
-Tax efficiencies from allocating exces cash flows of certain businesses into other productive assets with no leakage
-Buffett special deals (sellers that will only sell to BRK, network of contacts or distressed companies that need the credibility)
-Deferred tax liability that will probably never be realized
-Float historically has EARNED not COST Berkshire money, so it is a good growing liability to have.
-As time goes on and Berkshire becomes more of a conglomerate of operating companies the difference between IV and BV should expand.
-You have the best capital allocator in the world running the show for free, no fees.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on December 31, 2015, 07:08:39 AM
http://finance.yahoo.com/video/warren-buffett-lost-touch-204700337.html

We'll see more such in the coming days. For me, 2015 marked a large divergence of price from value. The value coffer was filled in bucketfuls
Title: Re: Buffett/Berkshire - general news
Post by: longtermdave on December 31, 2015, 07:59:31 AM
And more...

Buffett's Bad Year Puts Berkshire Shares In A Funk

http://www.forbes.com/sites/greatspeculations/2015/12/31/buffetts-bad-year-puts-berkshire-shares-in-a-funk/?utm_campaign=yahootix&partner=yahootix
Title: Re: Buffett/Berkshire - general news
Post by: bookie71 on December 31, 2015, 08:59:10 AM
Reminds me of the articles being written just before the "tech crash".   :)
Title: Re: Buffett/Berkshire - general news
Post by: CassiusKing1 on December 31, 2015, 01:05:11 PM
Agreed.  Over the last week especially, I've heard so many talking heads saying that Warren has lost it, he's too old, etc.  They're harping on KO, AXP and the stock positions. 
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on January 27, 2016, 08:45:28 PM
The PCP aquisition expected to close on January 29th 2016 :

www.berkshirehathaway.com/news/JAN2516.pdf (http://www.berkshirehathaway.com/news/JAN2516.pdf) .
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on January 28, 2016, 07:33:25 AM
Entertaining [biased?] read from Bloomberg with the title : "Who owns the sun?" [Buffett or Musk] - about NV Energy:

http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/ (http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/)

The ending part made me chuckle:
Quote
...Collier had planned to retire from his job flying small cargo planes. But he doesn’t want to stop working until he has a better handle on his monthly bills from Buffett’s utility. “If it goes totally haywire, I’m going to look at batteries,” he says. “I’d love to just go off the grid totally, and tell them to f--- off.”
Title: Re: Buffett/Berkshire - general news
Post by: ATLValue on January 28, 2016, 01:23:42 PM
http://www.bloomberg.com/news/articles/2016-01-28/buffett-to-join-ballmer-alba-on-nbc-s-celebrity-apprentice-

Title: Re: Buffett/Berkshire - general news
Post by: BTShine on January 28, 2016, 02:26:06 PM
It's the new training ground for becoming POTUS.
Title: Re: Buffett/Berkshire - general news
Post by: ajc on January 29, 2016, 09:02:06 AM
Entertaining [biased?] read from Bloomberg with the title : "Who owns the sun?" [Buffett or Musk] - about NV Energy:

http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/ (http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/)

The ending part made me chuckle:
Quote
...Collier had planned to retire from his job flying small cargo planes. But he doesn’t want to stop working until he has a better handle on his monthly bills from Buffett’s utility. “If it goes totally haywire, I’m going to look at batteries,” he says. “I’d love to just go off the grid totally, and tell them to f--- off.”


Surely, good old Uncle Warren wouldn't abuse his position to keep rooftop solar from spreading? Don't you know he only invests in businesses with durable competitive advantages, so that just couldn't be what's happening.

Title: Re: Buffett/Berkshire - general news
Post by: clayroad on January 29, 2016, 09:09:40 AM
http://www.bloomberg.com/news/articles/2016-01-28/buffett-to-join-ballmer-alba-on-nbc-s-celebrity-apprentice-

I hope David Sokol will be one of the contestants.
Title: Re: Buffett/Berkshire - general news
Post by: Spekulatius on January 29, 2016, 09:45:37 AM
It's the new training ground for becoming POTUS.

Let me guess, ole Warren will pick the blonde.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on January 29, 2016, 10:03:51 AM
Entertaining [biased?] read from Bloomberg with the title : "Who owns the sun?" [Buffett or Musk] - about NV Energy:

http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/ (http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/)

The ending part made me chuckle:
Quote
...Collier had planned to retire from his job flying small cargo planes. But he doesn’t want to stop working until he has a better handle on his monthly bills from Buffett’s utility. “If it goes totally haywire, I’m going to look at batteries,” he says. “I’d love to just go off the grid totally, and tell them to f--- off.”


Surely, good old Uncle Warren wouldn't abuse his position to keep rooftop solar from spreading? Don't you know he only invests in businesses with durable competitive advantages, so that just couldn't be what's happening.

Well, I guess that running a highly regulated business just means that lobbying is part of managing and running the business.

Mr. Buffett has several times in his shareholder letters written about a "social contract" with society in which the company operates.

BRK has so far commited about USD 25B to wind power and solar power.

Just take a look at the german energy companies E.ON and RWE to see what happens "when a social contract is not any longer needed". [It's about nuclear power in the first place [after the Japaneese TEPCO incident], and now also coal powered plants].
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on January 29, 2016, 01:46:31 PM
Buffett will apparently webcast the annual meeting for the first time this year. Great move.

http://blogs.wsj.com/moneybeat/2016/01/29/for-the-first-time-ever-warren-buffett-plans-to-webcast-berkshires-annual-meeting/
Title: Re: Buffett/Berkshire - general news
Post by: ajc on January 29, 2016, 01:47:34 PM

Well, I guess that running a highly regulated business just means that lobbying is part of managing and running the business.

Mr. Buffett has several times in his shareholder letters written about a "social contract" with society in which the company operates.

BRK has so far commited about USD 25B to wind power and solar power.

Just take a look at the german energy companies E.ON and RWE to see what happens "when a social contract is not any longer needed". [It's about nuclear power in the first place [after the Japaneese TEPCO incident], and now also coal powered plants].

Clearly they're great lobbyists. And not just of politicians and regulators.


Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on January 29, 2016, 01:54:12 PM
Buffett will apparently webcast the annual meeting for the first time this year. Great move.

http://blogs.wsj.com/moneybeat/2016/01/29/for-the-first-time-ever-warren-buffett-plans-to-webcast-berkshires-annual-meeting/

That's wonderful. Can't wait!
Title: Re: Buffett/Berkshire - general news
Post by: adesigar on January 29, 2016, 03:01:47 PM
Buffett will apparently webcast the annual meeting for the first time this year. Great move.

http://blogs.wsj.com/moneybeat/2016/01/29/for-the-first-time-ever-warren-buffett-plans-to-webcast-berkshires-annual-meeting/

That's wonderful. Can't wait!

Its about time. He should've done this years ago.
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on January 29, 2016, 04:06:35 PM
Its about time. He should've done this years ago.

Agreed. What a wonderful archive of videos it would be if they had started in the early Youtube days..
Title: Re: Buffett/Berkshire - general news
Post by: Parsad on January 29, 2016, 04:13:32 PM
Its about time. He should've done this years ago.

Agreed. What a wonderful archive of videos it would be if they had started in the early Youtube days..

Probably no choice at this point...crowds are just too big.  There is no other venue big enough if the crowd gets significantly larger.  People are renting cars after flying into Lincoln, Nebraska or Iowa, because you can't get rental cars in Omaha.  Hotels in Omaha and Council Bluffs are fully booked...many a year ahead of time. 

Also, a lot of the old-time BRK shareholders are approaching their 70's, 80's and 90's, so many might prefer to just watch it online now instead of dealing with the crowds...and only going to get worse.  Cheers!
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on January 29, 2016, 05:22:09 PM
Its about time. He should've done this years ago.

Agreed. What a wonderful archive of videos it would be if they had started in the early Youtube days..

Probably no choice at this point...crowds are just too big.  There is no other venue big enough if the crowd gets significantly larger.  People are renting cars after flying into Lincoln, Nebraska or Iowa, because you can't get rental cars in Omaha.  Hotels in Omaha and Council Bluffs are fully booked...many a year ahead of time. 

Also, a lot of the old-time BRK shareholders are approaching their 70's, 80's and 90's, so many might prefer to just watch it online now instead of dealing with the crowds...and only going to get worse.  Cheers!
I suppose this was inevitable. I'm committed to going this year, it's a ritual that I perhaps will continue at least as long as "the current management" sits up front. There's no other such event that has shaped my thinking as much in recent times. In a sense, it helps in uncluttering my mind from crap that builds between Mays. I go there in gratitude.

Won't miss the standing in line part. Hotels will become more reasonable too. Value!
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on January 30, 2016, 04:19:09 AM
Facebook and BRK at the same market cap
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on January 30, 2016, 07:07:05 AM

Well, I guess that running a highly regulated business just means that lobbying is part of managing and running the business.

Mr. Buffett has several times in his shareholder letters written about a "social contract" with society in which the company operates.

BRK has so far commited about USD 25B to wind power and solar power.

Just take a look at the german energy companies E.ON and RWE to see what happens "when a social contract is not any longer needed". [It's about nuclear power in the first place [after the Japaneese TEPCO incident], and now also coal powered plants].

Clearly they're great lobbyists. And not just of politicians and regulators.

Lol
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 01, 2016, 09:42:34 AM
The PCP aquisition expected to close on January 29th 2016 :


www.berkshirehathaway.com/news/JAN2516.pdf (http://www.berkshirehathaway.com/news/JAN2516.pdf) .

The deal announced completed on January 29th 2016:

http://www.berkshirehathaway.com/news/JAN2916.pdf (http://www.berkshirehathaway.com/news/JAN2916.pdf) .
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on February 11, 2016, 06:51:08 AM
The letter should be in the final stages of editing, readied to go to press.

Coming in the heels of the 50th, would this be underwhelming?

As a shareholder I'd like to hear more about,

- Where's the insurance business going? Specifically float growth expectations
- More on the place of subsidiaries within BRK over the coming 2 decades - role of the Omaha Chairperson at the subs
- A progress report / table showing how much capital deployed across the 5 allocation priorities in per-share terms - hope they go back retroactive to 2009 and make this a standard going forward.

On the parable side, would like more commentary on the "ignore the macro" theme.

Looking forward to March 1

 


Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 24, 2016, 02:46:16 PM
Here's What Buffett Wouldn't Do, and Maybe You Shouldn't Either

http://www.bloomberg.com/news/articles/2016-02-24/here-s-what-buffett-wouldn-t-do-and-maybe-you-shouldn-t-either (http://www.bloomberg.com/news/articles/2016-02-24/here-s-what-buffett-wouldn-t-do-and-maybe-you-shouldn-t-either)
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on February 24, 2016, 10:13:18 PM
"Here's What Buffett Wouldn't Do, and Maybe You Shouldn't Either

http://www.bloomberg.com/news/articles/2016-02-24/here-s-what-buffett-wouldn-t-do-and-maybe-you-shouldn-t-either"

Thanks for posting. I like this quote:

Don’t be distracted by macroeconomic forecasts: “The cemetery for seers has a huge section set aside for macro forecasters. We have in fact made few macro forecasts at Berkshire, and we have seldom seen others make them with sustained success.” (2004)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 08, 2016, 11:35:48 AM
http://www.bloomberg.com/news/articles/2016-03-08/buffett-s-berkshire-plans-bond-sale-to-repay-10-billion-loan?cmpid=yhoo.headline

So, cash balance post-PCP is $39b (61 minus 23). What's the next elephant look like? Depending on when it happens, they could be bumping against the $20B cash cushion. OTOH, roughly $100B of cash gushers into Omaha over the next five years! What a problem to have.
Title: Re: Buffett/Berkshire - general news
Post by: marazul on March 08, 2016, 11:51:35 AM
Think Deere might be a candidate in a year or so.
Title: Re: Buffett/Berkshire - general news
Post by: LC on March 08, 2016, 01:43:16 PM
With 100B he could buy Nike, Starbucks, or 3M.

I mean, wow.
Title: Re: Buffett/Berkshire - general news
Post by: doughishere on March 23, 2016, 05:55:32 PM
Base Hit Investing.

http://basehitinvesting.com/berkshire-hathaway-is-safe-and-cheap/

Quote
For $140 per share, we are getting $98 of cash and investments, and roughly $9 per share of pretax earning power. So backing out the investments per share, we are paying roughly 4.5 times pretax earnings for Berkshire’s businesses.

At Berkshire’s tax rate of around 30%, this is a P/E of around 6.5 for a diversified group of quality businesses that produce above average returns on equity and—as a group—are growing their earning power. Seems like a good bet.

Buffett once said he likes to pay 10 times pretax earnings for good businesses. I think this is because he thinks the businesses he buys can a) grow their earning power over time, and b) are probably worth somewhat more than 10 times pretax earnings.

At the current price, we’re getting these businesses for half of this general rule of thumb.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 28, 2016, 07:20:05 AM
http://finance.yahoo.com/news/ubs-love-berkshire-hathaway-because-135520572.html

Online media headlines are usually click-and-bait for eyeballs and ads, but the message behind this headline is correct. Berkshire's capital has increasingly been allocated by others for several years now. The reason for a Buffett premium does not exist anymore. One could argue that a Buffett discount prevails, with concern over his age. The longer this continues the better, on many fronts; the most important reason for me would be the mentoring opportunities other allocators would have with Buffett. Or Munger, that'd be potent medicine. I can picture one of them running an idea by Munger and looking stupid, ooh! More than Buffett, it would be Munger's role that Berkshire would need the most in the next 50 years. I highly doubt that other Mungers exist. Hope the successors are absorbing his lessons well. 
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 05, 2016, 01:21:44 PM
http://finance.yahoo.com/news/berkshire-hathaway-upside-whitney-tilson-book-value-intrinsic-value-buyback-floor-174045742.html

Tilson has the current IV at $283k and EOY 16 at $308k.

using the simple math of per share Investments + pre-tax earnings x 10.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on April 12, 2016, 02:22:16 PM
A Potential Warren Buffett Successor Gets More Duties at Berkshire

Ajit Jain to assume oversight of Gen Re insurance business as unit CEO Tad Montross retires

http://www.wsj.com/articles/gen-re-ceo-tad-montross-to-retire-by-year-end-1460475844 (http://www.wsj.com/articles/gen-re-ceo-tad-montross-to-retire-by-year-end-1460475844)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 14, 2016, 04:14:50 PM
More wind power ($3.6B) in Iowa. Now stating a 100% wind goal for the state!

https://www.berkshirehathawayenergyco.com/news/midamerican-energy-announces-3-6-billion-investment-in-renewable-energy
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 15, 2016, 06:03:31 AM
http://news.morningstar.com/articlenet/article.aspx?id=749007&SR=Yahoo

Montross retirement and speculation over Jain's evolving role at Berkshire.

IMO, given his mastery over "risk" across all kinds of businesses, Jain would be the only candidate to replace Munger. I can see all big deals made by others coming to Jain for the last word. Given how well it has worked for the last 50 years, having two people look at each deal makes a lot of sense. One for circle of competence and the other for assessing risk and more importantly making the decision if the price is right for risks that may happen down the road. In some ways, spreading the capital allocation across people with deep domain knowledge could be better than trying to find another prodigy who's mastered the method of learning across a swath of life. Now, there's not two of that kind. 
Title: Re: Buffett/Berkshire - general news
Post by: Kiltacular on April 15, 2016, 09:33:54 AM
http://news.morningstar.com/articlenet/article.aspx?id=749007&SR=Yahoo

Montross retirement and speculation over Jain's evolving role at Berkshire.

IMO, given his mastery over "risk" across all kinds of businesses, Jain would be the only candidate to replace Munger. I can see all big deals made by others coming to Jain for the last word. Given how well it has worked for the last 50 years, having two people look at each deal makes a lot of sense. One for circle of competence and the other for assessing risk and more importantly making the decision if the price is right for risks that may happen down the road. In some ways, spreading the capital allocation across people with deep domain knowledge could be better than trying to find another prodigy who's mastered the method of learning across a swath of life. Now, there's not two of that kind.

+1
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on April 16, 2016, 06:41:01 AM
http://www.gurufocus.com/news/407278/david-rolfes-lengthy-analysis-of-berkshire-hathaway


Cheers!  :)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 16, 2016, 03:54:55 PM
http://www.gurufocus.com/news/407278/david-rolfes-lengthy-analysis-of-berkshire-hathaway


Cheers!  :)

This...

But since outstanding shares do not grow, per-share growth explodes. Per-share earnings have compounded at 28% for the past five years and 24% for the past ten years
...their 2004 commentary

.....just follow the cash. $101B since 2011.  And earnings remain understated to GAAP, as the Semper analysis had it, by about $ 5B currently. It doesn't get better than this.
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on April 17, 2016, 02:28:19 PM
Surprising. Tad is pretty young by BRK standards no? I still don't think Jain will inherit the Iron Throne, I doubt a nearly 70 year old Indian guy is moving to Nebraska.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on May 18, 2016, 11:50:59 AM
Warren Buffett’s protégés flex investment muscle
http://www.ft.com/intl/cms/s/0/7a6937c4-16cc-11e6-b197-a4af20d5575e.html#axzz4929E5pJi (http://www.ft.com/intl/cms/s/0/7a6937c4-16cc-11e6-b197-a4af20d5575e.html#axzz4929E5pJi)
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on May 18, 2016, 12:06:00 PM
I think the CEO job goes to Ted or Todd but probably Ted. Managing the investment portfolio and acquiring businesses are tied at the hip as one provides the source of capital for the other.

Wouldn't it be awkward if the CEO firmly believes in a certain acquisition but requires the portfolio manager to sell down shares he believes in? Obv the CEO makes the final call but it's clearly a better process if it's one person. In this case perhaps the two of them as a team.

Also capital allocation is a broad talent which can be used in both functions. Whereas say, Matt Rose and Greg Abel have very focused skills.

Furthermore we've already seen greater involvement from them, esp Ted, in operations/acquisitions. And they're young, and both work in Omaha.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 20, 2016, 05:53:07 AM
Raiguel to succeed Montross as Gen Re CEO
Adam McNestrie

Kara Raiguel, a senior executive from Berkshire Hathaway's reinsurance division, is to replace Tad Montross as CEO of Gen Re, according to an internal memo seen by The Insurance Insider.

In the memo Berkshire Hathaway reinsurance chief Ajit Jain, who now has overall oversight of Gen Re, described Raiguel as his "secret weapon".

Raiguel, an actuary by background, has worked with Jain in the reinsurance division for 15 years, according to the memo.

Jain said that the executive had been involved in establishing Berkshire's workers' comp business in California, overseeing its expansion into the Indian reinsurance market and setting up its municipal bond insurer.

In the note Jain said discussions in recent weeks with insiders and outsiders had led him to judge that there was a feeling that Gen Re had become "less relevant".

"That concern, together with the serious headwinds that the reinsurance business is facing and will continue to face, requires us all to consider whether and what actions might be taken to best position Gen Re for the next chapter," Jain said.

He continued: "So, for the next 90 days or so, I have asked Kara to have as her first priority and chief objective to determine how best to grow Gen Re's book of business without sacrificing the underwriting discipline and integrity that has been the hallmark of the past few years, as well as how best to broaden business relationships without doing damage to the platform."

Last month The Insurance Insider revealed that Montross was to step down as Gen Re CEO.

Jain paid tribute to the executive, saying that he had done "an unbelievable job" and that his decision to step down was "the most unwelcome news".

Some observers have suggested that the decision to have Raiguel report directly to Jain - whereas Montross had reported directly to Buffett - may suggest that he is in pole position to succeed the Sage of Omaha as Berkshire group CEO.
Title: Re: Buffett/Berkshire - general news
Post by: maxthetrade on May 20, 2016, 06:56:15 AM
Here is the complete memo:
http://www.wsj.com//public/resources/documents/GenReCEOsuccession.pdf
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on May 20, 2016, 06:58:01 AM
I think the CEO job goes to Ted or Todd but probably Ted. Managing the investment portfolio and acquiring businesses are tied at the hip as one provides the source of capital for the other.

Wouldn't it be awkward if the CEO firmly believes in a certain acquisition but requires the portfolio manager to sell down shares he believes in? Obv the CEO makes the final call but it's clearly a better process if it's one person. In this case perhaps the two of them as a team.

Also capital allocation is a broad talent which can be used in both functions. Whereas say, Matt Rose and Greg Abel have very focused skills.

Furthermore we've already seen greater involvement from them, esp Ted, in operations/acquisitions. And they're young, and both work in Omaha.
The skill most needed to be successful in the successor job would be to attract, retain, cheerlead and assure that the leadership transition at the subsidiaries goes without too much disruption. Someone who has mastery over designing incentives would be hugelyv valuable. I don't know enough about Todd and Ted to say they fit the above. My sense is they'd be more in line to take on the entire portfolio of $120b from the $9 b
Title: Re: Buffett/Berkshire - general news
Post by: Palantir on May 20, 2016, 07:28:39 AM

Furthermore we've already seen greater involvement from them, esp Ted, in operations/acquisitions. And they're young, and both work in Omaha.

I think both are still in their home offices.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 20, 2016, 08:04:23 AM
Todd Combs moved to Omaha.  Ted Weschler commutes from Virginia.  Both have offices down the hall from Buffett.  I'm sure they have home offices as well
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on May 20, 2016, 11:52:42 AM
The skill most needed to be successful in the successor job would be to attract, retain, cheerlead and assure that the leadership transition at the subsidiaries goes without too much disruption. Someone who has mastery over designing incentives would be hugelyv valuable. I don't know enough about Todd and Ted to say they fit the above. My sense is they'd be more in line to take on the entire portfolio of $120b from the $9 b


For sure they will take over the entire portfolio; that's already been decided.

I'd argue that the #1 skill needed is allocating capital across a variety of industries - which they already have a good sense for as they manage investment portfolios. In contrast, Ajit Jain, Matt Rose (or whomever the BNSF CEO is now), and Greg Abel allocate capital in very specific industries. They also spend their time in operations of their specific companies.

It would be hard for Jain, for example, to manage the insurance companies and also manage the rest of Berkshire and filter through hundreds of potential acquisitions every year. On the other hand making acquisitions goes right into Ted/Todd's job function, only instead of just public companies they'd also be looking at privately held companies.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 31, 2016, 05:47:24 AM
Westar Energy had been rumored to be a possiblility for Berkshire Hathaway Energy.  Looks like they either weren't interested - or much more likely - the bidding got too rich to justify.  Great Plains Energy won the "auction" - acquisition premium has been building in the stock for months

http://www.wsj.com/articles/great-plains-energy-to-buy-westar-energy-for-8-6-billion-1464691927
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on June 10, 2016, 07:02:25 AM
Warren Buffett’s Dicey Power Play

MGM and Wynn move to leave Nevada’s Berkshire-owned utility.

http://www.bloomberg.com/news/articles/2016-06-10/buffett-s-power-play-pits-las-vegas-casinos-against-energy-unit (http://www.bloomberg.com/news/articles/2016-06-10/buffett-s-power-play-pits-las-vegas-casinos-against-energy-unit)
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on June 10, 2016, 08:18:15 AM
Warren Buffett’s Dicey Power Play

MGM and Wynn move to leave Nevada’s Berkshire-owned utility.

http://www.bloomberg.com/news/articles/2016-06-10/buffett-s-power-play-pits-las-vegas-casinos-against-energy-unit (http://www.bloomberg.com/news/articles/2016-06-10/buffett-s-power-play-pits-las-vegas-casinos-against-energy-unit)

Is Berkshire Energy the high cost provider or are other companies loss-selling (or very-low-margin selling)?
Title: Re: Buffett/Berkshire - general news
Post by: rb on June 10, 2016, 08:19:48 AM
They're the only provider.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on June 10, 2016, 08:24:31 AM
They're the only provider.

Obviously not if casinos are switching to other providers.
Title: Re: Buffett/Berkshire - general news
Post by: rb on June 10, 2016, 08:31:25 AM
From what I understand in the article they'll buy wholesale on the energy market. Tenaska for example doesn't have any generation in Nevada. Not sure whether Exelon does or doesn't.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 10, 2016, 08:40:31 AM
They are the only transmission provider.  The casinos will still be transmission customers.

They're the only provider.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on June 10, 2016, 09:27:18 AM
Yes, I understand that casinos will still use Berkshire Energy as transmission provider.

My question meant specifically the energy provider part.
So to repeat: Is Berkshire Energy the high cost energy provider or are other companies loss-selling (or very-low-margin selling) it (in wholesale market)?

I thought Buffett or Abel said that they are low cost energy provider. But perhaps they meant low-cost energy+transmission combined - although that makes little sense, since you can't compare transmission since usually there's only a single transmission provider.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 10, 2016, 10:11:42 AM
In some markets, Berkshire Hathaway Energy's local companies are the low cost provider - MidAmerican for example.  Obviously in Vegas there is a savings by purchasing power from other generators.  NVE's rates are set by the regulator while a large customer can negotiate market rates directly with a producer.

Yes, I understand that casinos will still use Berkshire Energy as transmission provider.

My question meant specifically the energy provider part.
So to repeat: Is Berkshire Energy the high cost energy provider or are other companies loss-selling (or very-low-margin selling) it (in wholesale market)?

I thought Buffett or Abel said that they are low cost energy provider. But perhaps they meant low-cost energy+transmission combined - although that makes little sense, since you can't compare transmission since usually there's only a single transmission provider.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on June 10, 2016, 10:33:10 AM
OK, thanks.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on June 15, 2016, 11:57:07 AM
See’s Candies to open first New York retail shop this summer

http://www.nytimes.com/2016/06/15/realestate/commercial/recent-commercial-real-estate-transactions.html?_r=2 (http://www.nytimes.com/2016/06/15/realestate/commercial/recent-commercial-real-estate-transactions.html?_r=2)

60 West Eighth Street (between Avenue of the Americas and MacDougal Street) Manhattan

See’s Candies, based in San Francisco, is to open its first New York shop toward the end of the summer in a 625-square-foot retail space, with a 325-square-foot basement, in this five-story walk-up, which was built around 1900, in the Greenwich Village Historic District.


Tenant: See’s Candies
Title: Re: Buffett/Berkshire - general news
Post by: valueinvesting101 on June 16, 2016, 08:28:27 AM
See's candy was available at Macy's during Christmas season. With their own store, they will be able to sell more product variety. But location choice seems odd to me. I think it would have better fit in midtown but then rents would be higher in Midtown.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on July 01, 2016, 06:34:41 PM
Buffett Applies to Fed to Build Wells Fargo Stake Beyond 10%

http://www.bloomberg.com/news/articles/2016-07-01/buffett-applies-to-fed-to-expand-wells-fargo-holding-beyond-10 (http://www.bloomberg.com/news/articles/2016-07-01/buffett-applies-to-fed-to-expand-wells-fargo-holding-beyond-10)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on July 08, 2016, 07:25:19 PM
AMZN just left BRK behind on mkt cap.

FB at 331 is within shouting distance.

That leaves NFLX @42 B and that'd completely bring on the new FANG 4x world order.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on July 17, 2016, 09:46:25 AM
I shared this elsewhere, but some here might be interested in this A.M. Best magazine article on Ajit Jain with comments from Warren - this links to the article in PDF format, might not be available forever at this link but working now:

http://www3.ambest.com/review/article/July2016/32_KeyInfluencers_AjitJain.pdf
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on July 17, 2016, 10:26:56 AM
I shared this elsewhere, but some here might be interested in this A.M. Best magazine article on Ajit Jain with comments from Warren - this links to the article in PDF format, might not be available forever at this link but working now:

http://www3.ambest.com/review/article/July2016/32_KeyInfluencers_AjitJain.pdf

Interesting piece on Ajit but there's not much by way of new information, Buffett has said these things about Jain all along. Just fueling the succession story, it appears. As a shareholder, it would be great for everyone at Berkshire to come to Jesus for vetting their ideas. At least the very big ones. Keep us all out of trouble.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on July 17, 2016, 01:28:30 PM
Berkshire Hathaway Said to Be Among Leading Oncor Bidders

http://www.bloomberg.com/news/articles/2016-07-14/berkshire-hathaway-said-to-be-among-leading-bidders-for-oncor (http://www.bloomberg.com/news/articles/2016-07-14/berkshire-hathaway-said-to-be-among-leading-bidders-for-oncor)
Title: Re: Buffett/Berkshire - general news
Post by: alpha asset strategies on July 17, 2016, 04:06:02 PM
Berkshire Hathaway Said to Be Among Leading Oncor Bidders

http://www.bloomberg.com/news/articles/2016-07-14/berkshire-hathaway-said-to-be-among-leading-bidders-for-oncor (http://www.bloomberg.com/news/articles/2016-07-14/berkshire-hathaway-said-to-be-among-leading-bidders-for-oncor)

Hasn't Buffett stated in the past that he doesn't participate in auctions?  Is this a new practice for him, or has he bought companies via auction in the past?  I personally can't recall any off the top of my head.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on July 18, 2016, 12:32:12 AM
Berkshire Hathaway Said to Be Among Leading Oncor Bidders

http://www.bloomberg.com/news/articles/2016-07-14/berkshire-hathaway-said-to-be-among-leading-bidders-for-oncor (http://www.bloomberg.com/news/articles/2016-07-14/berkshire-hathaway-said-to-be-among-leading-bidders-for-oncor)

Hasn't Buffett stated in the past that he doesn't participate in auctions?  Is this a new practice for him, or has he bought companies via auction in the past?  I personally can't recall any off the top of my head.

Yes it's mentioned in the aqusition criteria section of the shareholder letter every year.  Wasen't there a similar situation a few years back, where Ajit Jain on behalf of Berkshire Re placed a bid [one final bid] on a listed reinsurance company [Transocean Re or something like that was the name of the company, if I remember correctly].
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on July 18, 2016, 04:27:26 AM
Jain bid on Transatlantic Re, but there may have been more to it than a simple auction bid.  He may have been doing a friend a favor to get another bidder to come up or block someone - I can't remember the specifics but Berkshire didn't buy the company.  Despite Berkshire's long stated "rule" that they don't participate in auctions, they absolutely do and this isn't new.  Most of the companies they purchased out of Bankruptcy and several negotiated takeovers that had other interested parties over the years.  Warren can define "auction" loosely and keep it in the "rules".  It primarily serves to remind sellers that Berkshire doesn't like to duke it out with others so don't try it or you risk us pulling our offer, as well as the standard "we don't want to bring in managers/founders who care so little about their baby that they would sell it to the highest bidder vs the best permanent home"

edit - Alleghany ended up winning TransRe, which Gen Re - now under Ajit's management - just signed a broker market cooperation deal with.  I do believe Ajit is close with TransRe management and Berk's bid was a sort of favor for a friend.  TransRe didn't want Validus to get the company for whatever reason.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on July 18, 2016, 10:33:41 AM
http://www.bloomberg.com/news/articles/2016-07-18/buffett-buys-1-8-billion-gem-of-a-medical-insurer-in-new-york
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on July 26, 2016, 04:46:27 PM
http://www.utilitydive.com/news/buffetts-berkshire-hathaway-protests-ferc-market-based-rate-restrictions/423042/

Is this likely to have some effects on pricing power during inflation if Berkshire energy cannot charge market rates?
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on August 03, 2016, 04:41:16 AM
Bloomberg ran an article on Precision Castparts and CEO Donegan today ->

http://www.bloomberg.com/news/features/2016-08-03/buffett-s-bet-on-a-relentless-ceo
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on August 03, 2016, 05:53:11 AM
Bloomberg ran an article on Precision Castparts and CEO Donegan today ->

http://www.bloomberg.com/news/features/2016-08-03/buffett-s-bet-on-a-relentless-ceo
Thanks for posting the link to this article, globalfinancepartners. I'm not trying to start some kind of heated discussion here about the content of the article, but I must say that I'm shocked by the picture painted of this Berkshire CEO at some places in the article.
Title: Re: Buffett/Berkshire - general news
Post by: cubsfan on August 03, 2016, 06:12:40 AM
I spoke to one of the  managers at the Berkshire meeting. He rose through the ranks under Donegan.
Mark is widely admired by many, but he confirmed that working there is not for the faint of heart.
Performance culture is everything - so it's not for everybody, as it gets rough.
Title: Re: Buffett/Berkshire - general news
Post by: captkerosene on August 03, 2016, 03:49:41 PM
Nothing in that article bothered me. Let the guy be himself - he's earned it.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on August 03, 2016, 04:30:48 PM
Nothing in that article bothered me. Let the guy be himself - he's earned it.


Probably similar to working at a  3G company
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 03, 2016, 05:10:41 PM
I spoke to one of the  managers at the Berkshire meeting. He rose through the ranks under Donegan.
Mark is widely admired by many, but he confirmed that working there is not for the faint of heart.
Performance culture is everything - so it's not for everybody, as it gets rough.
Welcome the performance culture at the subsidiaries. Berkshire Hathaway's future performance depends on it. Even better if the culture comes with an acquisition. Here's where the next CEO has a great chance to do better than Buffett. He has admitted to being slow to intervene.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on August 08, 2016, 05:37:13 PM
Saturday I spent some hours trying to find out, if SAN had some exposure against Italian banks and/or Italy in general, basicly to no avail, because the needed specifications and notes in the financial statements about the off balance sheet items were not there specified by country. One thing that caught my attention during that work was that SAN has a separate section desribing reputational risk.

To me, Mr. Donegan is adding reputational risk to the whole BRK system, if things mentioned in the Bloomberg article are true. If things mentioned in the Bloomberg article are true, and his is not changing behavior going forward after PCP becoming a part of BRK, and I just don't like it.

A couple of questions here to my fellow board members participating in this topic:

1. What is the overall perception of the credibility of Blomberg as a source? - I was [also] surprised [but not shocked] by Bloomberg taking on hard BRK - so hard - with this article.
2. What do you think might be the reaction [group internally] by Mr. Buffett and Mr. Munger, ref. Mr. Buffetts speaking in interviews and shareholder letters about "the middle of the road"? [Mr. Donegan is not just "some" BRK sub employeé, he is the CEO of a fairly big - and thereby important BRK sub.]

My basis for this line of thinking is my local conditions. I live in a zero tolerance society with regard to violence and threats. One of the situations described in the article is embraced in the Danish civil criminal code, and the penalty bracket goes from a fine to 2 years in jail [threat of serious physical violence against another person - most likely doing this sort of thing in front of wittnesses for the second time will result in an so called "insta-verdict", meaning going directly from the court room to the box to get sunshine in stribes, without getting the opportunity to settle your stuff and kissing your partner/spouse/kids goodbye for so or so long time].

Third question about the situation that I'm focusing on in the Bloomberg article:

3. What does US State or Federal civil criminal code say about punishment for threat of serious physical violence?

Any input from fellow board members on those three questions  would be much appreciated. Thank you in advance.
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on August 11, 2016, 08:40:58 AM
Good Buffett interview: 

http://www.politico.com/story/2016/08/the-playbook-interview-warren-buffett-226892


Cheers!  :)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on August 26, 2016, 02:10:06 PM
Here’s Why the Pundits Are Wrong About Warren Buffett


http://fortune.com/2016/08/25/pundits-wrong-about-warren-buffett/ (http://fortune.com/2016/08/25/pundits-wrong-about-warren-buffett/)
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on August 26, 2016, 02:22:51 PM
Here's an article talking about Jain's cost cutting memo at General Re from Insurance Insider:
----------------------------

Jain seeks cost cuts at Gen Re: Report
Berkshire Hathaway's reinsurance chief Ajit Jain has told staff at Gen Re to fix the cost "problem" at the subsidiary, according to a memo obtained by Bloomberg.

The letter called on employees to tackle the issue "intelligently" to give the carrier "a shot at making a real dent in the expense-to-premium ratio", according to the newswire.

It reportedly rounded off by saying: "If we can't, we will need to explore other ways to do so."

The executive called for Gen Re to become leaner and less bureaucratic as he looks to slash costs and narrow the expense ratio.

He said this could be achieved by handing more autonomy to individual business units as well as accepting modifications to some reinsurance deals in a bid to reduce complexity.

Jain reportedly said Gen Re had a "cost problem", adding: "The ratio of expenses to premiums is not where it should or could be."

The executive talked about overhauling the reinsurer's compensation structure, arguing that its underwriters had an incentive to turn away business that had the potential to turn a profit.

He blamed this on a model under which bonuses were tied to margins and not overall earnings.

"We are fortunate that Gen Re has so many employees that place the interests of the company above their personal interests," he reportedly wrote.

"But that doesn't justify leaving a plan in place that puts that instinct under stress," he was said to have continued.

He suggested countering that structure with discretionary bonuses that were assessed using subjective metrics. This would see high-achievers compensated at the expense of underperformers.

He discussed reducing bureaucracy in the business by slashing the number of levels of management from six to just four or three.

Also in the crosshairs were travel and entertainment expenses for internal meetings.

Jain effectively took the helm of Gen Re earlier this year as his oversight was broadened across Berkshire's reinsurance operations.

He appointed long-time Gen Re executive Kara Raiguel as CEO of the unit, replacing Tad Montross, and signaled a change in strategy at the reinsurer to widen its distribution platform from its traditional direct model.

The reinsurer subsequently signed a deal with TransRe for the Alleghany subsidiary to act as its MGA in the US broker market.

Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 26, 2016, 04:06:13 PM
Here's an article talking about Jain's cost cutting memo at General Re from Insurance Insider:
----------------------------

Jain seeks cost cuts at Gen Re: Report
Berkshire Hathaway's reinsurance chief Ajit Jain has told staff at Gen Re to fix the cost "problem" at the subsidiary, according to a memo obtained by Bloomberg.

The letter called on employees to tackle the issue "intelligently" to give the carrier "a shot at making a real dent in the expense-to-premium ratio", according to the newswire.

It reportedly rounded off by saying: "If we can't, we will need to explore other ways to do so."

The executive called for Gen Re to become leaner and less bureaucratic as he looks to slash costs and narrow the expense ratio.

He said this could be achieved by handing more autonomy to individual business units as well as accepting modifications to some reinsurance deals in a bid to reduce complexity.

Jain reportedly said Gen Re had a "cost problem", adding: "The ratio of expenses to premiums is not where it should or could be."

The executive talked about overhauling the reinsurer's compensation structure, arguing that its underwriters had an incentive to turn away business that had the potential to turn a profit.

He blamed this on a model under which bonuses were tied to margins and not overall earnings.

"We are fortunate that Gen Re has so many employees that place the interests of the company above their personal interests," he reportedly wrote.

"But that doesn't justify leaving a plan in place that puts that instinct under stress," he was said to have continued.

He suggested countering that structure with discretionary bonuses that were assessed using subjective metrics. This would see high-achievers compensated at the expense of underperformers.

He discussed reducing bureaucracy in the business by slashing the number of levels of management from six to just four or three.

Also in the crosshairs were travel and entertainment expenses for internal meetings.

Jain effectively took the helm of Gen Re earlier this year as his oversight was broadened across Berkshire's reinsurance operations.

He appointed long-time Gen Re executive Kara Raiguel as CEO of the unit, replacing Tad Montross, and signaled a change in strategy at the reinsurer to widen its distribution platform from its traditional direct model.

The reinsurer subsequently signed a deal with TransRe for the Alleghany subsidiary to act as its MGA in the US broker market.

The float generated at BHRG per associate in comparison to General Re is huge. For Berkshire, General Re has brought on way more headaches than it being a gem. Any big benefit could come only after Jain is done righting it.

If BHSI turns out to be a gem, the lesson @ Berkshire would be that make is way better than buy in insurance.

Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 30, 2016, 08:33:33 AM
http://finance.yahoo.com/quote/PSX/holders?p=PSX

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on August 30, 2016, 10:32:05 AM
http://finance.yahoo.com/quote/PSX/holders?p=PSX

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

I was thinking the same for DVA.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on August 30, 2016, 10:43:11 AM
http://finance.yahoo.com/quote/PSX/holders?p=PSX

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

I was thinking the same for DVA.

Seems like the script. Take a stake, watch how it does and buy whole. BNSF, PCP followed the script. To a certain extent, Duracell  was also like that.

" Buy shares as if you own the whole thing" . Then own the whole thing.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on August 30, 2016, 12:28:23 PM
http://finance.yahoo.com/quote/PSX/holders?p=PSX (http://finance.yahoo.com/quote/PSX/holders?p=PSX)

Now own 15% of the company. Market cap at $41B. Does this become a wholly owned target?

I was thinking the same for DVA.

Seems like the script. Take a stake, watch how it does and buy whole. BNSF, PCP followed the script. To a certain extent, Duracell  was also like that.

" Buy shares as if you own the whole thing" . Then own the whole thing.
longinvestor,

To me, this looks like an educated guess. Let's see what the [near?] future brings.
Title: Re: Buffett/Berkshire - general news
Post by: Libs on September 02, 2016, 06:47:08 AM
Is Berkshire shorting Dow Chemical?


Dow Chemical’s Stock Action Works in Warren Buffett’s Favor
By ANUPREETA DAS
Sept. 1, 2016 10:11 p.m. ET
0 COMMENTS
Dow Chemical Co.’s shares are showing clear signs of tinkering, according to an analysis by a Yale University professor.

The shares come within cents of an important threshold—$53.72—pretty often, but they have closed above that level so rarely that there’s less than a one-in-a-thousand chance that​it’s happening randomly, according to the analysis.

If the stock closes above $53.72 enough times, Dow has the option to buy back $3 billion worth of preferred shares from Warren Buffett’s Berkshire Hathaway. The Wall Street Journal reported last week that people familiar with the matter say that executives at Dow believe someone is selling its stock short—or betting that its price will fall—to keep it from rising above $53.72.

In his analysis, Yair Listokin, who teaches contracts at Yale Law School and is a trained economist, picked 48-cent ranges for the daily closing price of Dow stock from April 1, 2014 to Monday. He plotted every 48-cent increment of the share price during this period against the number of times the shares have closed in that range.

For instance, the shares have closed just below $53.72 more than 50 times. They have closed in the​$52.71 to $53.71 window 91 times. The number of times they have closed​in the window just above $53.72? Seven times.​

This week, the shares closed at $54.13 on Monday and $53.99 on Tuesday after the Journal story was published.

Mr. Listokin’s histogram shows the dramatic drop-off. Even accounting for different methods, Mr. Listokin said the chance of this being a random occurrence is remote.

“The probability that this would happen by chance is essentially zero,” he said, noting that his findings offer “pretty clear evidence of manipulation.”


​Mr. Listokin said he’s working on a more detailed paper and plans to make the Dow action part of his class discussion.​

Who would benefit from Dow’s share price being below $53.72? Berkshire comes to mind, since it gets a $255 million annual dividend from Dow for helping finance its 2009 takeover of Rohm & Haas. Kuwait’s sovereign-wealth fund also helped fund the deal and owns $1 billion of Dow preferred securities.

When asked, Mr. Buffett declined to comment last week on whether he or his deputies at Berkshire were shorting Dow to exert downward pressure on the stock price. Under the original agreement, Berkshire was forbidden from engaging in short selling or hedging its preferred stake in Dow until April 2014. The clause ensured that Berkshire was locked into its investment in Dow and couldn’t reduce “the economic consequence” of ownership through a hedge.




http://www.wsj.com/articles/dow-chemicals-stock-action-works-in-warren-buffetts-favor-1472782317
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on September 02, 2016, 07:17:47 AM
Is Berkshire shorting Dow Chemical?


Dow Chemical’s Stock Action Works in Warren Buffett’s Favor
By ANUPREETA DAS
Sept. 1, 2016 10:11 p.m. ET
0 COMMENTS
Dow Chemical Co.’s shares are showing clear signs of tinkering, according to an analysis by a Yale University professor.

The shares come within cents of an important threshold—$53.72—pretty often, but they have closed above that level so rarely that there’s less than a one-in-a-thousand chance that​it’s happening randomly, according to the analysis.

If the stock closes above $53.72 enough times, Dow has the option to buy back $3 billion worth of preferred shares from Warren Buffett’s Berkshire Hathaway. The Wall Street Journal reported last week that people familiar with the matter say that executives at Dow believe someone is selling its stock short—or betting that its price will fall—to keep it from rising above $53.72.

In his analysis, Yair Listokin, who teaches contracts at Yale Law School and is a trained economist, picked 48-cent ranges for the daily closing price of Dow stock from April 1, 2014 to Monday. He plotted every 48-cent increment of the share price during this period against the number of times the shares have closed in that range.

For instance, the shares have closed just below $53.72 more than 50 times. They have closed in the​$52.71 to $53.71 window 91 times. The number of times they have closed​in the window just above $53.72? Seven times.​

This week, the shares closed at $54.13 on Monday and $53.99 on Tuesday after the Journal story was published.

Mr. Listokin’s histogram shows the dramatic drop-off. Even accounting for different methods, Mr. Listokin said the chance of this being a random occurrence is remote.

“The probability that this would happen by chance is essentially zero,” he said, noting that his findings offer “pretty clear evidence of manipulation.”


​Mr. Listokin said he’s working on a more detailed paper and plans to make the Dow action part of his class discussion.​

Who would benefit from Dow’s share price being below $53.72? Berkshire comes to mind, since it gets a $255 million annual dividend from Dow for helping finance its 2009 takeover of Rohm & Haas. Kuwait’s sovereign-wealth fund also helped fund the deal and owns $1 billion of Dow preferred securities.

When asked, Mr. Buffett declined to comment last week on whether he or his deputies at Berkshire were shorting Dow to exert downward pressure on the stock price. Under the original agreement, Berkshire was forbidden from engaging in short selling or hedging its preferred stake in Dow until April 2014. The clause ensured that Berkshire was locked into its investment in Dow and couldn’t reduce “the economic consequence” of ownership through a hedge.




http://www.wsj.com/articles/dow-chemicals-stock-action-works-in-warren-buffetts-favor-1472782317


I read this too but it says nothing about Kuwait’s investment. I think it's more likely them shorting than Berkshire but that is just my opinion.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on September 06, 2016, 05:26:18 AM
A bolt-on aquisition for CTB in my back yard (http://www.fyens.dk/erhverv/210-job-skifter-haender-Warren-Buffet-koeber-fynsk-fabrik/artikel/3062557) .

Edit:

Article on Yahoo Finance about the aquisition (http://finance.yahoo.com/news/ctb-acquire-majority-share-danish-080000547.html) .
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on September 20, 2016, 05:56:09 AM
Combs joining JPM's board

http://www.bloomberg.com/news/articles/2016-09-20/jpmorgan-chase-names-buffett-deputy-combs-to-board-of-directors
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on September 21, 2016, 04:53:05 AM
Small acquisition at Marmon -

http://www.chicagobusiness.com/article/20160920/NEWS07/160929978/buffetts-marmon-buys-italys-dominioni-in-pasta-equipment-wager
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 06, 2016, 05:50:11 PM
end of Mars pref
https://www.bloomberg.com/gadfly/articles/2016-10-06/berkshire-s-wrigley-windfall-isn-t-even-its-best-bet (https://www.bloomberg.com/gadfly/articles/2016-10-06/berkshire-s-wrigley-windfall-isn-t-even-its-best-bet)
Title: Re: Buffett/Berkshire - general news
Post by: rb on October 06, 2016, 05:55:24 PM
Cash in now north of $70B. Time to bag another elephant!  :)
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on October 08, 2016, 02:06:26 AM
Yes, net cash flows from operations is now about USD 2.5 B - per month. BRK could almost take out a CAT now - or easily a DEERE.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 11, 2016, 11:01:43 AM
Cash is piling up faster than Warren Buffett can invest it
http://finance.yahoo.com/news/cash-piling-faster-warren-buffett-151851036.html (http://finance.yahoo.com/news/cash-piling-faster-warren-buffett-151851036.html)
Title: Re: Buffett/Berkshire - general news
Post by: ourkid8 on October 11, 2016, 12:43:58 PM
I am waiting for a true elephant, ahem... KO!   Yes, it would require significant leverage however with over $1.5B/month coming in and with Berkshire AA credit rating, it is attainable. 

Cash is piling up faster than Warren Buffett can invest it
http://finance.yahoo.com/news/cash-piling-faster-warren-buffett-151851036.html (http://finance.yahoo.com/news/cash-piling-faster-warren-buffett-151851036.html)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on October 21, 2016, 10:35:41 AM
reinsurance
http://www.bloomberg.com/news/articles/2016-10-20/warren-buffett-loves-this-business-maybe-a-little-too-much (http://www.bloomberg.com/news/articles/2016-10-20/warren-buffett-loves-this-business-maybe-a-little-too-much)

Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on October 21, 2016, 10:53:51 AM
reinsurance
http://www.bloomberg.com/news/articles/2016-10-20/warren-buffett-loves-this-business-maybe-a-little-too-much (http://www.bloomberg.com/news/articles/2016-10-20/warren-buffett-loves-this-business-maybe-a-little-too-much)

Don't we all have those attractions to certain industries? [<- place smiley here]. Mr. Buffett was quite candid about it at the last shareholder AGM, that both insurance and reinsurance as industries aren't any longer what they used to be.
Title: Re: Buffett/Berkshire - general news
Post by: dajidali on October 24, 2016, 12:10:49 PM
Berkshire Portfolio Manager Explains Apple Investment

http://blogs.wsj.com/moneybeat/2016/10/24/berkshire-portfolio-manager-explains-apple-investment/?mod=WSJBlog
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on October 25, 2016, 06:49:44 AM
Insurance Insider article ->
--------------------------------

Swiss Re and Berkshire Hathaway explore legacy alliance
David Bull and Dan Ascher

Swiss Re is in talks with Berkshire Hathaway as part of a $1bn+ internal restructure of its legacy business that will put important new regulations for run-off books in the US to the test, The Insurance Insider can reveal.

If the transaction goes ahead it could pave the way for the two industry titans to collaborate on future deals enabled by the new Rhode Island legislation, carving up legacy books between themselves.

Sources said that Swiss Re is considering using the new rules - which are expected to be a boon for the $100bn US legacy market - to divest itself of the $1bn portfolio, freeing up capital.

The pioneering transaction would see Swiss Re transfer those liabilities into a separately capitalised cell company in Rhode Island, for which it would then write the retro programme in conjunction with Berkshire.

If the precedent-setting deal goes ahead, the two carriers would look to benefit from first-mover advantage in order to grow their foothold in the US legacy sector.

The complex deal is still in its formative stages but the wheels have already been put into motion, with industry outsourcer and consultancy Pro Global Insurance Solutions - which used to be owned by the Swiss reinsurer - in the process of establishing a cell company.

The vehicle, named ProTucket, would be used to house the mammoth book of liabilities.

Swiss Re is hoping to transfer the business into the new entity and put in place a 100 percent retrocession programme to protect the cell.

Sources have said that the Swiss giant is locked in talks with Berkshire about the structure of the proposed cover.

It is understood that Berkshire would write the cover for any asbestos, pollution and health (APH) liabilities in the portfolio as Swiss Re looks to reduce its exposure to such risks.

Swiss Re would write the retro for all other liabilities contained within the cell.

Both Swiss Re and Pro are understood to be working closely with Rhode Island's regulator to get the deal completed.

If it is rubber-stamped, the Swiss reinsurer would have to seek commercial court approval.

Swiss Re, Pro and Berkshire would then look to replicate the process for other carriers with legacy books, which could effectively be lifted and dropped into a similar structure to ProTucket.

The new regulations are intended to give US carriers an exit mechanism much like that offered by the Part VII transfer in Europe.

Pro announced its intention to test the new legislation earlier this year.

The new Rhode Island regulations provide a way for run-off portfolios to be transferred in a way that offers legal finality. Previous methods of disposing of discontinued US insurance books did not provide true final risk transfer.

Swiss Re said it does not comment on market rumour and Pro declined to comment. Berkshire could not be reached.
Title: Re: Buffett/Berkshire - general news
Post by: Dynamic on October 26, 2016, 06:15:25 AM
Berkshire Portfolio Manager Explains Apple Investment

http://blogs.wsj.com/moneybeat/2016/10/24/berkshire-portfolio-manager-explains-apple-investment/?mod=WSJBlog

If you don't subscribe to WSJ, ValueWalk also had this story the other day:
http://www.valuewalk.com/2016/10/interview-ted-weschler-says-likes-apples-subscription-element/ (http://www.valuewalk.com/2016/10/interview-ted-weschler-says-likes-apples-subscription-element/)

Re-reading my purchase notes (bought at $95, mostly by selling BRK.B at $142), I pretty much concur with Ted's views on the customer loyalty and lock-in and the consistent services revenue which should remain healthy even if the device upgrade cycle slows down. I have almost 30% of my concentrated portfolio in Apple right now. I was slightly nervous of having the stake get too high. While it still COULD "do a Nokia" and be supplanted by something new, I believe it's less risky than that, but 25% of my portfolio was a pretty big bet for this kind of company (whereas I'd be comfortable with 100% in BRK.B) and I'd be tempted to trim my position if it rose to nearer 50% of my portfolio, and/or if the price/value margin of safety was very much reduced.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 10, 2016, 03:45:10 PM
Today, I had the chance to visit Chemtool in IL. Very well run company that makes primarily manufacturing/industrial specialty greases/lubricants.

 http://chemtool.com/

Turns out they were bought by Lubrizol, in Dec 2011, almost immediately after joining Berkshire. Terms of purchase unknown. Also read that Lubrizol was a supplier to Chemtool for a long time. Sort of explains the connection.

Chemtool is the archetype of BRK's MSR businesses. Products that will likely be used for as far as the eye can see, well run family business (son of founder in charge now). Don't know the moat for this business but being a manufacturing guy myself, once something like a specialty grease/lubricant is specified for an application, it is very unlikely to be switched out. Maintenance guys typically don't take that kind of risk. "no messin around". This is rather similar to ISCAR's moat, metalworking tools tends to be very sticky business.

To paraphrase Munger, I'd love for them to keep buying more such businesses; Most importantly this kind of deal gets made from somewhere other than Omaha. Good for the future.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on November 11, 2016, 08:24:11 AM
Edit: I'm double posting this here for BRK/Buffett info completeness: http://money.cnn.com/2016/11/11/investing/warren-buffett-donald-trump-stock/

However, most of the interview is on politics, so I also posted it on General and IMO any further discussion probably should go there. ;)
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on November 11, 2016, 09:05:24 AM
Thanks for posting the interview Jurgis
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on November 11, 2016, 09:10:21 AM
Thanks for posting the interview Jurgis

+1. And actually nice to see and hear Mr. Buffett out again of his selfinduced "media hibernation" / silent period.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on November 11, 2016, 10:09:19 AM
BNSF

https://www.bloomberg.com/gadfly/articles/2016-11-11/berkshire-hathaway-bnsf-railroad-deal-shines-bright-in-hindsight (https://www.bloomberg.com/gadfly/articles/2016-11-11/berkshire-hathaway-bnsf-railroad-deal-shines-bright-in-hindsight)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 11, 2016, 11:19:46 AM
BNSF

https://www.bloomberg.com/gadfly/articles/2016-11-11/berkshire-hathaway-bnsf-railroad-deal-shines-bright-in-hindsight (https://www.bloomberg.com/gadfly/articles/2016-11-11/berkshire-hathaway-bnsf-railroad-deal-shines-bright-in-hindsight)
Implied valuation of $93 Billion. I'm pounding the table for a break up of BRK. Enuff of the implied stuff, ha.
Title: Re: Buffett/Berkshire - general news
Post by: netnet on November 11, 2016, 01:03:09 PM
BNSF

https://www.bloomberg.com/gadfly/articles/2016-11-11/berkshire-hathaway-bnsf-railroad-deal-shines-bright-in-hindsight (https://www.bloomberg.com/gadfly/articles/2016-11-11/berkshire-hathaway-bnsf-railroad-deal-shines-bright-in-hindsight)

Remember all those 'pundits' who said that Buffett had lost it buying a railroad. hmm ;)
Title: Re: Buffett/Berkshire - general news
Post by: rb on November 11, 2016, 01:05:41 PM
Yeah.... That was what? The 50th time that we heard that the old man went senile and lost it?
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on November 11, 2016, 01:20:41 PM
From none other than Bruce Greenwald:


"It’s a crazy deal.  It’s an insane deal.  We looked at Burlington Northern at $75 and I’ll give you the exact calculation we did.  You don’t have a high earnings return.  They are paying 18 times earnings, but it’s really much worse than that.  They report maintenance cap-ex very carefully.  They report depreciation and amortization, and they report only about 70% of the maintenance cap-ex.  So they are under-depreciating, and their profit numbers are lower than the true profit numbers – and in a bad way, because the tax shield for the depreciation is undergone too.  Their profitability is much lower than it looks.

Buffett’s paying 18-times [at $100/share] and at $75 he was paying 16-times.  Our calculation is he was paying 21-times.

Secondly, there are two kinds of assets.  There are the rights-of-way, which you can’t get rid of.  So there’s no issue about having to earn a return on them because you have to keep it in the business, and because there’s nothing they can do with those rights-of-way.  If you look at the asset value of the non-right-of-way equipment, and you write it up because it’s more expensive than it was originally, you get an asset value that’s very close to the earnings power value.  We didn’t see a lot franchise value or hidden asset value.

The other thing is that if you try to calculate sustainable earnings, you have to cope with the fact that earnings are up enormously since 2003, when oil went up.  There is a simple calculation you can do, which compares the cost-per-ton-mile for freight for a truck versus a railroad.  If you build the increase in the price of diesel fuel into the post-2003 experience, when revenues suddenly start to grow, what you see is that the entire growth of the revenue is accounted for by the energy advantage that the railroads have and therefore how much business they can capture from the truckers, and how much pricing they can get because the competition is now more expensive.

There is nothing special about the railroads.  It’s entirely an energy play.

If you look at what their margins should have gone up by, given the energy efficiency, the margins go up by only about half of that.  So you don’t have a good aggressive management over these five years producing outsized returns.

We looked back at when they did the merger with Santa Fe, because then they did increase margins.  But they got bored with it, and margins started to come down.  The same thing happened recently.  We don’t see a lot of hidden profitability in the culture of the company.

It looked to us like an oil play.  He has a history of making bad oil play decisions.  And that was at $75/share, we thought there were better oil plays.  At $100/share we think he has lost his mind."
Title: Re: Buffett/Berkshire - general news
Post by: rb on November 11, 2016, 01:42:04 PM
Well if I can be a bit of a dick, there's a reason why Bruce Greenwald is Bruce Greenwald and Warren Buffett is Warren Buffett.
Title: Re: Buffett/Berkshire - general news
Post by: shalab on November 11, 2016, 08:21:49 PM
Well said...

Well if I can be a bit of a dick, there's a reason why Bruce Greenwald is Bruce Greenwald and Warren Buffett is Warren Buffett.
Title: Re: Buffett/Berkshire - general news
Post by: VersaillesinNY on November 21, 2016, 10:55:12 AM
Warren Buffett’s Meeting with University of Maryland MBA/MS Students – November 18, 2016

https://blogs.rhsmith.umd.edu/davidkass/
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on November 21, 2016, 12:27:35 PM
Warren Buffett’s Meeting with University of Maryland MBA/MS Students – November 18, 2016

https://blogs.rhsmith.umd.edu/davidkass/

Thank you. Some of the same things he's always said, but a few new tidbits that I enjoyed.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on November 21, 2016, 02:39:24 PM
Berkshire filed a standard correspondence note back and forth with the SEC today - no big deal, but some might find management's summary of Precision Castparts' business and the oligopoly markets it sells into interesting.  I did.  Starts on page five on this section of correspondence "As background, PCC..."  ->

https://www.sec.gov/Archives/edgar/data/1067983/000119312516732679/filename1.htm

edit :  Bloomberg wrote a piece about the exchange ->
https://www.bloomberg.com/gadfly/articles/2016-11-22/warren-buffett-and-berkshire-a-matter-of-trust
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 21, 2016, 03:23:00 PM
Berkshire filed a standard correspondence note back and forth with the SEC today - no big deal, but some might find management's summary of Precision Castparts' business and the oligopoly markets it sells into interesting.  I did.  Starts on page five on this section of correspondence "As background, PCC..."  ->

https://www.sec.gov/Archives/edgar/data/1067983/000119312516732679/filename1.htm

Interesting.

There is a thing called "back-to-birth-traceability" that aerospace parts come under. That in effect means switching out suppliers is darn near impossible. In my work, I've worked with a small aerospace parts supplier that was poorly run and went into bankruptcy. Their main customer (one of the eight oligopolies named in the above filing) played a pivotal part in nursing this co back to health. That's how sticky aerospace business can be.
Title: Re: Buffett/Berkshire - general news
Post by: flesh on November 21, 2016, 03:23:31 PM
Berkshire filed a standard correspondence note back and forth with the SEC today - no big deal, but some might find management's summary of Precision Castparts' business and the oligopoly markets it sells into interesting.  I did.  Starts on page five on this section of correspondence "As background, PCC..."  ->

https://www.sec.gov/Archives/edgar/data/1067983/000119312516732679/filename1.htm

Sweet, thanks for posting! Can anyone articulate the relevant effects on the financial statements in which brk would benefit from having these intagibles subjected to impairment opposed to amortization?
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on November 21, 2016, 03:42:34 PM
Berkshire filed a standard correspondence note back and forth with the SEC today - no big deal, but some might find management's summary of Precision Castparts' business and the oligopoly markets it sells into interesting.  I did.  Starts on page five on this section of correspondence "As background, PCC..."  ->

https://www.sec.gov/Archives/edgar/data/1067983/000119312516732679/filename1.htm

Sweet, thanks for posting! Can anyone articulate the relevant effects on the financial statements in which brk would benefit from having these intangibles subjected to impairment opposed to amortization?


Although WEB does not specifically address impairment versus amortization as it relates to intangibles, here is something on the subject and it's potential to boost earnings 5 years or so down the road. The below is from the 2014 letter.


Our income and expense data conforming to GAAP is on page 49. In contrast, the operating expense
figures above are non-GAAP and exclude some purchase-accounting items (primarily the amortization of certain
intangible assets). We present the data in this manner because Charlie and I believe the adjusted numbers more
accurately reflect the true economic expenses and profits of the businesses aggregated in the table than do GAAP
figures.
I won’t explain all of the adjustments – some are tiny and arcane – but serious investors should understand
the disparate nature of intangible assets. Some truly deplete over time, while others in no way lose value. For
software, as a big example, amortization charges are very real expenses. The concept of making charges against
other intangibles, such as the amortization of customer relationships, however, arises through purchase-accounting
rules and clearly does not reflect reality. GAAP accounting draws no distinction between the two types of charges.
Both, that is, are recorded as expenses when earnings are calculated – even though from an investor’s viewpoint
they could not be more different.
14
In the GAAP-compliant figures we show on page 49, amortization charges of $1.15 billion have been
deducted as expenses. We would call about 20% of these “real,” the rest not. The “non-real” charges, once nonexistent
at Berkshire, have become significant because of the many acquisitions we have made. Non-real
amortization charges will almost certainly rise further as we acquire more companies.
The GAAP-compliant table on page 67 gives you the current status of our intangible assets. We now have
$7.4 billion left to amortize, of which $4.1 billion will be charged over the next five years. Eventually, of course,
every dollar of non-real costs becomes entirely charged off. When that happens, reported earnings increase even if
true earnings are flat.
Depreciation charges, we want to emphasize, are different: Every dime of depreciation expense we report
is a real cost. That’s true, moreover, at most other companies. When CEOs tout EBITDA as a valuation guide, wire
them up for a polygraph test.
Our public reports of earnings will, of course, continue to conform to GAAP. To embrace reality, however,
you should remember to add back most of the amortization charges we report
Title: Re: Buffett/Berkshire - general news
Post by: KinAlberta on November 22, 2016, 11:27:51 AM
Not sure if this has been posted anywhere yet.

A Buffett interview

Buffett after Trump win: '100%' optimistic about America
CNNMoney
 

https://www.youtube.com/watch?v=auukuYuizq4


Oops - I see it warranted it's own thread here:
http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/buffett-interview-on-cnn-money-11-nov-2016/

Title: Re: Buffett/Berkshire - general news
Post by: flesh on November 23, 2016, 09:39:57 AM
Berkshire filed a standard correspondence note back and forth with the SEC today - no big deal, but some might find management's summary of Precision Castparts' business and the oligopoly markets it sells into interesting.  I did.  Starts on page five on this section of correspondence "As background, PCC..."  ->

https://www.sec.gov/Archives/edgar/data/1067983/000119312516732679/filename1.htm

Sweet, thanks for posting! Can anyone articulate the relevant effects on the financial statements in which brk would benefit from having these intangibles subjected to impairment opposed to amortization?


Although WEB does not specifically address impairment versus amortization as it relates to intangibles, here is something on the subject and it's potential to boost earnings 5 years or so down the road. The below is from the 2014 letter.


Our income and expense data conforming to GAAP is on page 49. In contrast, the operating expense
figures above are non-GAAP and exclude some purchase-accounting items (primarily the amortization of certain
intangible assets). We present the data in this manner because Charlie and I believe the adjusted numbers more
accurately reflect the true economic expenses and profits of the businesses aggregated in the table than do GAAP
figures.
I won’t explain all of the adjustments – some are tiny and arcane – but serious investors should understand
the disparate nature of intangible assets. Some truly deplete over time, while others in no way lose value. For
software, as a big example, amortization charges are very real expenses. The concept of making charges against
other intangibles, such as the amortization of customer relationships, however, arises through purchase-accounting
rules and clearly does not reflect reality. GAAP accounting draws no distinction between the two types of charges.
Both, that is, are recorded as expenses when earnings are calculated – even though from an investor’s viewpoint
they could not be more different.
14
In the GAAP-compliant figures we show on page 49, amortization charges of $1.15 billion have been
deducted as expenses. We would call about 20% of these “real,” the rest not. The “non-real” charges, once nonexistent
at Berkshire, have become significant because of the many acquisitions we have made. Non-real
amortization charges will almost certainly rise further as we acquire more companies.
The GAAP-compliant table on page 67 gives you the current status of our intangible assets. We now have
$7.4 billion left to amortize, of which $4.1 billion will be charged over the next five years. Eventually, of course,
every dollar of non-real costs becomes entirely charged off. When that happens, reported earnings increase even if
true earnings are flat.
Depreciation charges, we want to emphasize, are different: Every dime of depreciation expense we report
is a real cost. That’s true, moreover, at most other companies. When CEOs tout EBITDA as a valuation guide, wire
them up for a polygraph test.
Our public reports of earnings will, of course, continue to conform to GAAP. To embrace reality, however,
you should remember to add back most of the amortization charges we report


I'm trying to think through the benefit or having pcp subject to impairment vs amortization. What motivated brk to do this? Shield taxes and maintain book value over time? Anything else I"m missing?

 
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on November 23, 2016, 10:30:32 AM
flesh,

It's an accounting decision - related to the consolidation of PCP in the group financials for BRK at the first time - based on the assessed economics inherent in the aquisition, and based on the price paid for the company, compared to the book value of the company at the time of the aquisition.

It has nothing to do with taxes in BRK group financials.
Title: Re: Buffett/Berkshire - general news
Post by: flesh on November 24, 2016, 09:50:52 AM
Sure, I understood that part, probably reading into it too much. Thanks.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on November 29, 2016, 06:47:22 AM
No big news but it's always nice to see the borrowing rates that Berkshire Energy subs get when they borrow post-acquisition.  One the the easiest levers to pull on these debt-heavy industries is borrowing under the BRK halo despite BRK not guaranteeing the debt (outside of BRK Finance Corp / Clayton, etc).

30 year, 3.7%

http://www.marketwired.com/press-release/altalink-lp-to-issue-450-million-in-medium-term-notes-2179086.htm
Title: Re: Buffett/Berkshire - general news
Post by: Munger_Disciple on December 01, 2016, 06:05:43 PM
New CEO named at Fruit of The Loom:

http://www.wsj.com/articles/fruit-of-the-loom-inc-names-melissa-burgess-taylor-as-chairman-ceo-1480636167
Title: Re: Buffett/Berkshire - general news
Post by: Dynamic on December 02, 2016, 01:59:43 AM
A non-paywalled press-release version:
http://www.businesswire.com/news/home/20161201006567/en/Fruit-Loom-Names-Melissa-Burgess-Taylor-Chairman-CEO (http://www.businesswire.com/news/home/20161201006567/en/Fruit-Loom-Names-Melissa-Burgess-Taylor-Chairman-CEO)
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on December 05, 2016, 05:02:56 AM
Warren resurfaced for another short interview with Fortune - only his second that I know of since the election

http://fortune.com/2016/12/05/warren-buffett-donald-trump-election/

Talking about the returns of Mid-American / BHE he took issue with the interviewer's characterization of BHE as producing a low return for BRK:
"But I think the return figures that you have are wrong. We paid $35.05 a share for the utility [in 2000]. And this year it’ll earn something around $30 a share, after tax."

edit:
In other news, BHE Renewables has just purchased Alamo 6 Solar San Antonio for $385 million-
http://renewables.seenews.com/news/to-the-point-oci-selling-us-unit-for-usd-385m-549362
https://www.hubs.biz/power/explore/2016/10/110-mw-oci-alamo-6-solar-project-in-texas-to-go-commercial-by-dec-31
Title: Re: Buffett/Berkshire - general news
Post by: Munger_Disciple on December 05, 2016, 10:13:09 AM
Buffett
Quote
But I think the return figures that you have are wrong. We paid $35.05 a share for the utility [in 2000]. And this year it’ll earn something around $30 a share, after tax.

Most of the earnings growth at BHE/Mid American occurred prior to 2007. Per the 2007 annual report, Mid American earned $15 per share in 2007. So its per share earnings doubled in 9 subsequent years, a pretty decent result (8% CAGR) given what we went thru' during 2008-2009.  But it is not amazing.

However from 1999-2007, Mid American earnings per share increased at a CAGR of 24.5%, a stunning result.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on December 05, 2016, 10:30:32 AM
Buffett
Quote
But I think the return figures that you have are wrong. We paid $35.05 a share for the utility [in 2000]. And this year it’ll earn something around $30 a share, after tax.

Most of the earnings growth at BHE/Mid American occurred prior to 2007. Per the 2007 annual report, Mid American earned $15 per share in 2007. So its per share earnings doubled in 9 subsequent years, a pretty decent result (8% CAGR) given what we went thru' during 2008-2009.  But it is not amazing.

However from 1999-2007, Mid American earnings per share increased at a CAGR of 24.5%, a stunning result.
Does this $30 per share include the earnings from Home Services?
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 05, 2016, 10:40:06 AM
It's true that earnings at Mid-American are up a lot. But Berkshire also dropped a lot of capital into Mid-American.
Title: Re: Buffett/Berkshire - general news
Post by: Munger_Disciple on December 05, 2016, 10:44:06 AM
Quote
Does this $30 per share include the earnings from Home Services?

My guess is yes. There is a line called "Real estate brokerage" under BHE earnings in all the annual reports.
Title: Re: Buffett/Berkshire - general news
Post by: Munger_Disciple on December 05, 2016, 10:45:57 AM
 
Quote
But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 05, 2016, 10:49:50 AM
Quote
But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.
Title: Re: Buffett/Berkshire - general news
Post by: DooDiligence on December 05, 2016, 10:59:22 AM
Quote
But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

This seems like a huge advantage for them over other utlilities.

What do you think the effect will be on the competitive landscape & will capital allocation change for other utilities?
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 05, 2016, 11:04:43 AM
Quote
But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

This seems like a huge advantage for them over other utlilities.

What do you think the effect will be on the competitive landscape & will capital allocation change for other utilities?
Well being part of Berkshire is a huge advantage for them. But I don't think that other utilities will change their capital allocation to match.

The point i was trying to make though is that if I retain all earnings and reinvest I'm gonna grow my EPS a lot faster than my dividend paying competitors even if I have no idea what I'm doing. Obviously the people at BHE know what their doing. But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.
Title: Re: Buffett/Berkshire - general news
Post by: Munger_Disciple on December 05, 2016, 11:09:30 AM
Quote
But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.

So do you think 24.5% CAGR in earnings from 1999-2007 at BHE is not impressive?

With or without dividends, 24.5% CAGR is stunning in my mind especially given that return on invested capital is decent.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on December 05, 2016, 03:22:09 PM
Quote
But Berkshire also dropped a lot of capital into Mid-American.

Additional shares were issued by BHE to Berkshire due to the additional capital invested along the way, so per share comparisons are quite valid.
Still BHE doesn't pay a dividend to BRK and plows all earnings back. That's basically still a lot of capital being dropped in but gets you better PR.

This seems like a huge advantage for them over other utlilities.

What do you think the effect will be on the competitive landscape & will capital allocation change for other utilities?
Well being part of Berkshire is a huge advantage for them. But I don't think that other utilities will change their capital allocation to match.

The point i was trying to make though is that if I retain all earnings and reinvest I'm gonna grow my EPS a lot faster than my dividend paying competitors even if I have no idea what I'm doing. Obviously the people at BHE know what their doing. But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.
BHE is a thorn to other Utilities by holding rates charged for long periods. Iowa as an example. While Illinois is deliberating adding surcharges to keep nuclear plants operating.
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 05, 2016, 04:26:56 PM
Quote
But still a larger EPS CAGR should not be that surprising since they employ larger and larger amounts of capital.

So do you think 24.5% CAGR in earnings from 1999-2007 at BHE is not impressive?

With or without dividends, 24.5% CAGR is stunning in my mind especially given that return on invested capital is decent.
No I didn't say that at all. They've done well. I'm just saying that those numbers are juiced up. So you can't really do a side by side comparison.

I also think that the reporter was trying to get some sort of reaction but didn't do the homework to understand how the utility is being run as a part of the Berkshire black hole.
Title: Re: Buffett/Berkshire - general news
Post by: Ballinvarosig Investors on December 06, 2016, 03:14:01 AM
Warren resurfaced for another short interview with Fortune - only his second that I know of since the election

http://fortune.com/2016/12/05/warren-buffett-donald-trump-election/

Talking about the returns of Mid-American / BHE he took issue with the interviewer's characterization of BHE as producing a low return for BRK:
"But I think the return figures that you have are wrong. We paid $35.05 a share for the utility [in 2000]. And this year it’ll earn something around $30 a share, after tax."

edit:
In other news, BHE Renewables has just purchased Alamo 6 Solar San Antonio for $385 million-
http://renewables.seenews.com/news/to-the-point-oci-selling-us-unit-for-usd-385m-549362
https://www.hubs.biz/power/explore/2016/10/110-mw-oci-alamo-6-solar-project-in-texas-to-go-commercial-by-dec-31
Not much there, but I did think that this bit was interesting.
Quote
More and more investors have embraced passive management—investing in index funds and ETFs. Is the next Warren Buffett going to be an index fund?

I don’t know about ETF, but passive will beat active over time. But not for the manager. The manager’s going to make money out of active and the investor’s going to do better with passive. I’m writing a lot about this subject in next year’s annual report. I really am. A lot.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on December 07, 2016, 10:29:09 AM
i didn't know that HBO had made a new Warren Buffett documentary - release date set:
http://www.thewrap.com/becoming-warren-buffett-hbo-premiere-date/

Looks like it is with his cooperation and he will be largely narrating the film -
http://www.thisisinsider.com/hbo-documentary-on-warren-buffett-becoming-warren-buffett-2016-12
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on December 13, 2016, 11:47:31 AM
A shares crossed a new threshold, can start stating in millions. All right, in proper fractions thereof.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on December 13, 2016, 01:58:33 PM
Honestly, - about time!

Since the beginning of 2014: 2014: Up some, 2015: Down some, 2016: Up some [so far].

Since the beginning of 2014:

Net cash flow from operations: USD 88.672 B
Cash flow from investing activities [negative]: USD 70.289 B,

Both, a lot! ... so, about time.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on December 15, 2016, 03:03:16 PM
Buffett Era of 8.5% Dividends Ends as Dow Swaps Stake
https://www.bloomberg.com/news/articles/2016-12-15/buffett-era-of-8-5-dividends-ends-as-dow-swaps-3-billion-stake (https://www.bloomberg.com/news/articles/2016-12-15/buffett-era-of-8-5-dividends-ends-as-dow-swaps-3-billion-stake)
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 15, 2016, 06:17:28 PM
And so the cash pile grows some more.
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on December 15, 2016, 07:04:27 PM
They're converting to common stock, cashless (and taxless) transaction
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 15, 2016, 07:06:22 PM
Quote
The billionaire has previously said that he’s unlikely to keep the common stock.
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on December 16, 2016, 02:10:50 AM
Missed that part, you're right
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on December 16, 2016, 05:12:21 AM
Any assets at Dow that he could swap the shares for?
Title: Re: Buffett/Berkshire - general news
Post by: rb on December 16, 2016, 07:19:45 AM
Well dow is huge. They must have a little something BRK can squeeze into Lubrizol.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on December 16, 2016, 09:26:17 AM
Well dow is huge. They must have a little something BRK can squeeze into Lubrizol.

I'm sure Buffett & co will talk to Dow about that. Whether Dow will be willing to part with anything worthwhile for BRK is another question.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on January 01, 2017, 06:59:06 AM
2016 gain for BRK-A= 26%; 193k to 244k

Still selling at a nice discount to IV. Will wait for the annual letter to confirm my numbers.
 
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on January 03, 2017, 06:44:45 AM
Ajit made a deal for a reinsurance policy with a $650m single premium -
-----------------------------------------
(from insurance insider)

The Hartford buys $1.5bn adverse development cover
Catrin Shi

The Hartford has struck a $1.5bn reinsurance agreement with Berkshire Hathaway unit National Indemnity Company (Nico) to cover certain legacy asbestos and environmental liability exposures, it announced today.

The aggregate excess-of-loss cover provides up to $1.5bn of reinsurance for adverse net loss reserve development above estimated net loss reserves of $1.7bn as of 31 December, when the cover took effect. The reinsurance premium was $650mn.

The cover excludes the £477mn ($588mn) of legacy exposures held by The Hartford's UK P&C run-off subsidiaries. Legacy acquirer Catalina agreed to buy those subsidiaries in July and the deal is expected to complete in the first quarter.

The Hartford will take a charge of about $423mn, after tax, against fourth quarter net income as a result of the Nico arrangement. It will continue to handle claims and retain the risk of recoveries under third party reinsurance contracts for the exposures.

"Our asbestos and environmental exposures have generated adverse loss reserve development over time, creating uncertainty for investors and others about the ultimate cost of these policy liabilities, most of which were underwritten prior to 1985," said The Hartford CFO Beth Bombara.

The reinsurance premium is expected to have a "slightly negative" impact on 2017 P&C net investment income. The Hartford said its previously announced 2017 capital management plan, including share buybacks of $1.3bn, should be unaffected by the Nico deal.

Mayer Brown represented The Hartford on the reinsurance agreement.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on January 03, 2017, 01:07:53 PM
New CEO at Lubrizol-

http://www.plasticsnews.com/article/20170103/NEWS/170109987/lubrizol-names-schnur-as-ceo
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on January 04, 2017, 07:55:25 AM
i didn't know that HBO had made a new Warren Buffett documentary - release date set:
http://www.thewrap.com/becoming-warren-buffett-hbo-premiere-date/

Looks like it is with his cooperation and he will be largely narrating the film -
http://www.thisisinsider.com/hbo-documentary-on-warren-buffett-becoming-warren-buffett-2016-12

Here's a 1-minute trailer for the HBO doc:

https://www.youtube.com/watch?v=jXg0V2tyhXo&feature=youtu.be
Title: Re: Buffett/Berkshire - general news
Post by: Ballinvarosig Investors on January 05, 2017, 12:40:26 PM
https://www.sec.gov/Archives/edgar/data/1067983/000119312517002728/d287902dfwp.htm

When in Rome.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on January 05, 2017, 02:10:28 PM
https://www.sec.gov/Archives/edgar/data/1067983/000119312517002728/d287902dfwp.htm

When in Rome.

Isen't this the first time BHF is issuing notes in EUR? Ballinvarosig Investors, if you are in Rome right now, enjoy!
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on January 05, 2017, 03:06:33 PM
Not the first time, Warren has become fond of mixing in EUR notes with his US borrowings, especially at recent rates.  March 2015 was one of the first if not the first time he sold debt in Euros.

https://www.sec.gov/Archives/edgar/data/1067983/000119312517002728/d287902dfwp.htm

When in Rome.

Isen't this the first time BHF is issuing notes in EUR? Ballinvarosig Investors, if you are in Rome right now, enjoy!
Title: Re: Buffett/Berkshire - general news
Post by: tede02 on January 05, 2017, 06:18:36 PM
To the corporate finance experts out there, help a novice understand what a US based company does with proceeds from a Euro debt offering?  Obviously Berkshire has some European holdings, would they raise capital to use in those subsidiaries or would these borrowings be used for the parent (and therefore have to be converted to dollars).  This is definitely an area I don't know much about, not that I know much about anything, LOL.  Thanks in advance for the foreign borrowing lesson. 
Title: Re: Buffett/Berkshire - general news
Post by: rb on January 05, 2017, 06:26:16 PM
They can do a lot of things. Convert to other currency and invest/finance ops. Make EUR denominated investments. Finance European operations. While on the surface BRK doesn't have a lot of European business. The subs do a lot of business in Europe. The insurance subs and PCP quickly spring to mind.

Warren also has a history of taking debt when it's cheap. I think sometimes is just for shit and giggles, just for fun cause he can do it. The issuance is quite small and fairly short term for BRK so I think this may be the case here.
Title: Re: Buffett/Berkshire - general news
Post by: scorpioncapital on January 05, 2017, 08:21:42 PM
If he thinks underwriting profits are approaching break-even and cost of float is approaching zero to slightly positive then borrowing for a few years at a few % points above zero is the same thing but without having to take on any underwriting risk or do any business at all.

Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on January 12, 2017, 08:30:51 AM
Tiny acquisition -
http://www.businesswire.com/news/home/20170111006145/en/Richline-Group-Acquires-Aaron-Group

http://the-aaron-group.com/#home
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on January 19, 2017, 08:08:17 AM
Will Donald Trump Blow Warren Buffett’s Clean-Energy Bet Off Course?

Berkshire Hathaway is one of the biggest players in wind power, but the president-elect may strip away some of the company’s financial advantages.

http://fortune.com/warren-buffett-wind-power-berkshire-hathaway-energy/ (http://fortune.com/warren-buffett-wind-power-berkshire-hathaway-energy/)
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on January 19, 2017, 09:06:13 AM
A couple of SA articles:

Berkshire Hathaway Is Not Built To Last (http://seekingalpha.com/article/4037745-berkshire-hathaway-built-last).
Berkshire Hathaway: Potential For $95 Billion In Book Value Growth By Year-End 2017 (http://seekingalpha.com/article/4037907-berkshire-hathaway-potential-95-billion-book-value-growth-year-end-2017).
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on January 20, 2017, 05:49:45 AM
AIG strikes $34bn legacy deal with Berkshire Hathaway
Matthew Neill

AIG has agreed the biggest legacy deal in the history of the P&C insurance market, with Berkshire Hathaway set to take on 80 percent of the risk on $34bn of the insurer's US commercial reserves.

Ajit Jain's National Indemnity Company (Nico) will assume 80 percent of the net losses and net allocated loss adjustment expenses on the reserves of the first $25bn for the 2015 accident year and prior. Nico's liability is capped at $20bn.

The $9.8bn consideration is payable in full by 30 June with interest at 4 percent per annum from the 1 January 2016 inception date until the payment date.

The payment will be placed into a collateral trust account as security for Nico's payment obligations to the AIG operating subsidiaries.

AIG will retain sole claims handling and resolution authority, while Nico will be granted various access, association and consultation rights.

AIG said the agreement will be accounted for in the first quarter of this year as a retroactive reinsurance agreement.

The carrier said if the agreement had been entered into on 1 January 2016 it would have recognised a loss of approximately $2.9bn based on carrier reserves of $34bn.

AIG president and CEO Peter Hancock commented: "This decisive step enables us to focus firmly on the future and build on the progress we've made in transforming AIG.

"The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders."

AIG has targeted $25bn of capital return in 2016 and 2017 as part of a broader plan to turn the business around.

The New York-listed insurance giant said that it expected to disclose a material reserve charge in its forthcoming fourth quarter results.

AIG said that it had signed a binding term sheet related to the adverse development cover, but that closing was subject to receipt of regulatory approvals, execution of definitive transactions documentation and other conditions.

TigerRisk is understood to have advised on the deal.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on January 20, 2017, 09:02:40 AM
AIG strikes $34bn legacy deal with Berkshire Hathaway
Matthew Neill

AIG has agreed the biggest legacy deal in the history of the P&C insurance market, with Berkshire Hathaway set to take on 80 percent of the risk on $34bn of the insurer's US commercial reserves.

Ajit Jain's National Indemnity Company (Nico) will assume 80 percent of the net losses and net allocated loss adjustment expenses on the reserves of the first $25bn for the 2015 accident year and prior. Nico's liability is capped at $20bn.

The $9.8bn consideration is payable in full by 30 June with interest at 4 percent per annum from the 1 January 2016 inception date until the payment date.

The payment will be placed into a collateral trust account as security for Nico's payment obligations to the AIG operating subsidiaries.

AIG will retain sole claims handling and resolution authority, while Nico will be granted various access, association and consultation rights.

AIG said the agreement will be accounted for in the first quarter of this year as a retroactive reinsurance agreement.

The carrier said if the agreement had been entered into on 1 January 2016 it would have recognised a loss of approximately $2.9bn based on carrier reserves of $34bn.

AIG president and CEO Peter Hancock commented: "This decisive step enables us to focus firmly on the future and build on the progress we've made in transforming AIG.

"The agreement supports our stated strategy and gives us additional risk capacity to serve our clients and return capital to shareholders."

AIG has targeted $25bn of capital return in 2016 and 2017 as part of a broader plan to turn the business around.

The New York-listed insurance giant said that it expected to disclose a material reserve charge in its forthcoming fourth quarter results.

AIG said that it had signed a binding term sheet related to the adverse development cover, but that closing was subject to receipt of regulatory approvals, execution of definitive transactions documentation and other conditions.

TigerRisk is understood to have advised on the deal.

Accounting ?

Is the acquired float on BRK books $9.8 Billion or $25Billion? Tia
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on January 20, 2017, 09:19:59 AM
The float will be in the $9.x Billion area.  Not sure how the structure of the collateral trust account influences the accounting, but the premium is upfront and the capital is being transferred to Berkshire.  Ajit hung out with Warren last night in NYC for his movie premier - I'm sure they were quite pleased to announce such a huge deal together.  AIG had to start playing nice with BRK after their employee poaching dust-up because they realized they needed BRK to do these legacy deals with
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on January 20, 2017, 10:35:29 AM
The float will be in the $9.x Billion area.  Not sure how the structure of the collateral trust account influences the accounting, but the premium is upfront and the capital is being transferred to Berkshire.  Ajit hung out with Warren last night in NYC for his movie premier - I'm sure they were quite pleased to announce such a huge deal together.  AIG had to start playing nice with BRK after their employee poaching dust-up because they realized they needed BRK to do these legacy deals with

Thanks for the color. So decades of poor underwriting at AIG huh? The supply of idiot behavior never short. Wonder how much reinsurance business that's being written as we speak will turn into float in Ajit's hands after this decade?
Title: Re: Buffett/Berkshire - general news
Post by: KinAlberta on January 20, 2017, 01:13:15 PM
Berkshire’s Decker Says Buffett Can Take His Time With Cash
by Noah Buhayar, January 18, 2017, Bloomberg

https://www.bloomberg.com/news/articles/2017-01-18/berkshire-s-decker-says-buffett-can-his-take-time-with-cash-pile
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on January 22, 2017, 03:08:28 PM
CEO of PCP putting capital to work...


https://www.bloomberg.com/news/articles/2017-01-22/buffett-s-berkshire-buys-german-pipe-company-handelsblatt-says (https://www.bloomberg.com/news/articles/2017-01-22/buffett-s-berkshire-buys-german-pipe-company-handelsblatt-says)
Buffett’s Berkshire Buys German Pipe Company,
Mark Donegan, chief executive officer of Berkshire’s Precision Castparts unit, confirmed it’s buying Wilhelm Schulz but declined to elaborate on terms


Title: Re: Buffett/Berkshire - general news
Post by: VersaillesinNY on January 29, 2017, 07:04:21 AM
Bill Gates and Warren Buffet at Columbia University - 27th Jan 2017

https://www.youtube.com/watch?v=8K9QvPGHug0
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on January 29, 2017, 08:16:27 AM
Bill Gates and Warren Buffet at Columbia University - 27th Jan 2017

https://www.youtube.com/watch?v=8K9QvPGHug0

Mr Buffet looks a bit chubbier than his previous appearances.

May good health stays with him for another decade and beyond!
Title: Re: Buffett/Berkshire - general news
Post by: alpha on January 31, 2017, 06:37:44 AM
 Recent Buffett and Gates interview with Charlie Rose: https://charlierose.com/videos/29774
Title: Re: Buffett/Berkshire - general news
Post by: KinAlberta on January 31, 2017, 10:37:52 AM
Three Ways Warren Buffett Is Not A Typical Billionaire
JAN 31, 2017
1. His home:
2. His car:
3. His diet:

“In my entire lifetime everything that I spend will be quite a bit less than 1% of everything I make,” Buffett explains in the documentary. “The other 99%-plus will go to others because it has no utility to me, so it’s silly for me to not transfer that utility to people who can use it. It’s doing me no good.”

https://www.forbes.com/sites/chasewithorn/2017/01/31/three-ways-warren-buffett-is-not-a-typical-billionaire/#67ab0ce03610
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on February 06, 2017, 01:42:50 PM
Here's an article that discusses some of Clayton's recent acquisitions - they've basically hit a wall in terms of manufactured home market share so have been diversifying into site-built communities...  Hope it goes well for them -
http://www.builderonline.com/builder-100/strategy/why-sell-to-clayton_o

And another on Homeservices' growing title insurance business
http://westfaironline.com/85707/homeservices-of-america-adds-houlihan-lawrences-title-agency/
Title: Re: Buffett/Berkshire - general news
Post by: VersaillesinNY on February 07, 2017, 04:49:04 PM
Bill Gates and Warren Buffet at Columbia University - 27th Jan 2017

https://www.youtube.com/watch?v=8K9QvPGHug0

Mr Buffet looks a bit chubbier than his previous appearances.

May good health stays with him for another decade and beyond!

IMO Buffett gained some weight because he is disappointed with the Presidential election result, and that’s an understatement.
Some of Warren and Susie Buffett’s gifts to society have gone to areas opposed by Trump’s program:

-   public schools
-   supporting independent journalism
-   access to safe abortion
-   refugee support service
-   promoting democracy internationally
-   LGBTQ rights
-   migrant worker rights
-   nuclear disarmament

Quote
“I’ve taken the view that each of us can be bystanders, or we can be upstanders. I choose upstander.” Seth Klarman
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on February 10, 2017, 07:57:16 AM
The Man Behind Warren Buffett's Big Insurance Bet
http://news.morningstar.com/all/dow-jones/us-markets/201702106584/the-man-behind-warren-buffetts-big-insurance-bet.aspx (http://news.morningstar.com/all/dow-jones/us-markets/201702106584/the-man-behind-warren-buffetts-big-insurance-bet.aspx)
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on February 12, 2017, 07:17:53 AM
No PR yet, but similar to prior years, we are two weeks away from the release of the letter and Q4 and FY 2016 results. That will get me out of my ennui.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 12, 2017, 08:29:57 AM
... That will get me out of my ennui.

:-) In a few days there will be the 13F-HR to study and talk about on here. Digesting a few Howard Mark's memos and thinking about their contents also helps to get out of some kind of feeling of missery, or boredom while waiting - diversion of the mind, based on placebo... It works for me. I also use the Semper Augustus client letter that way - less placebo, more BRK.

Beeing invested in BRK long term actually screews up your hierarchy of needs (https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs).
Title: Re: Buffett/Berkshire - general news
Post by: DooDiligence on February 12, 2017, 09:51:19 AM

Beeing invested in BRK long term actually screews up your hierarchy of needs (https://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs).

Be of good cheer my long distance friend!

Berkshire provides customers with all of their physiological needs:

Air - NetJets 😜
Water - Boats US 😜
Food - Kraft Heinz, Dairy Queen, CTB & of course See's
Shelter - Clayton, Johns Manville & MiTek, etc.
Safety - via a myriad of insurance products

(Not to mention covering you arse with Fruit of the Loom)

Berkshire provides a path for self actualization & self esteem for employees & "Here's to Love" with Helzberg Diamonds!

Now if it'd just trade down to 1.2 or below (I probably shouldn't wait but I'm a tightwad...)
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on February 16, 2017, 10:21:34 AM
Warren Buffett Says Money Managers Charge Too Much

 The investing great picks a bone with stockpickers.

https://www.bloomberg.com/news/articles/2017-02-16/warren-buffett-says-money-managers-charge-too-much (https://www.bloomberg.com/news/articles/2017-02-16/warren-buffett-says-money-managers-charge-too-much)
Title: Re: Buffett/Berkshire - general news
Post by: racemize on February 16, 2017, 10:27:48 AM
I don't really understand this article--Buffett hasn't said anything recently, and this is just some dude talking about what Buffett said a few years ago.  Misleading title honestly.
Title: Re: Buffett/Berkshire - general news
Post by: Munger_Disciple on February 16, 2017, 10:38:28 AM
Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on February 16, 2017, 01:14:37 PM
Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.

Too many Buffett disciples charge way too much. Even the oft-touted Ruane, Cunniff & Goldfarb (Sequoia Fund) ... 1%+ for essentially a large cap fund. Why not 0.50%....?
Title: Re: Buffett/Berkshire - general news
Post by: rb on February 16, 2017, 05:59:00 PM
Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.

Too many Buffett disciples charge way too much. Even the oft-touted Ruane, Cunniff & Goldfarb (Sequoia Fund) ... 1%+ for essentially a large cap fund. Why not 0.50%....?
Yes! On second thought, why not do it for free? Maybe they can sell ads on the investor letters and sponsor the annual meeting.
Title: Re: Buffett/Berkshire - general news
Post by: Mephistopheles on February 16, 2017, 06:29:32 PM
Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.

Too many Buffett disciples charge way too much. Even the oft-touted Ruane, Cunniff & Goldfarb (Sequoia Fund) ... 1%+ for essentially a large cap fund. Why not 0.50%....?
Yes! On second thought, why not do it for free? Maybe they can sell ads on the investor letters and sponsor the annual meeting.

Lol +1

Meanwhile Buffett's fees were huge as a % of assets (well deserved).
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 17, 2017, 05:09:56 AM
Bloomberg: Kraft Heinz Makes Approach to Unilever on Possible Merger (https://www.bloomberg.com/news/articles/2017-02-17/kraft-heinz-says-unilever-rejected-approach-on-combination).
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on February 17, 2017, 05:20:55 AM
Well that's one way to win in mayonnaise...  Definitely a role for Berkshire to play in a deal this size - and if the structure results in Berkshire going below the threshold for Equity Method accounting of KHC it would bump Berkshire's reported book value and buyback threshold's by a bit.  Will be interesting to watch

Bloomberg: Kraft Heinz Makes Approach to Unilever on Possible Merger (https://www.bloomberg.com/news/articles/2017-02-17/kraft-heinz-says-unilever-rejected-approach-on-combination).
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 17, 2017, 05:41:00 AM
globalfinancepartners,

The headline of the article is actually to some extent misleading, because it does not indicate, that the proposal was turned down, but that is mentioned in the article. And yes, depending on the structure, this could really move the needle for BRK.

I also find the article interesting, because the content of the article gives some indication of, what's passing the desks of Mr. Buffett and Mr. Munger of potential stuff. This is [was?] huge.

This could not take place without the involvement of both BRK at top level and the 3G people. Those 3G people are really into the space of huge deals now.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on February 17, 2017, 07:35:32 AM
globalfinancepartners,

The headline of the article is actually to some extent misleading, because it does not indicate, that the proposal was turned down, but that is mentioned in the article. And yes, depending on the structure, this could really move the needle for BRK.

I also find the article interesting, because the content of the article gives some indication of, what's passing the desks of Mr. Buffett and Mr. Munger of potential stuff. This is [was?] huge.

This could not take place without the involvement of both BRK at top level and the 3G people. Those 3G people are really into the space of huge deals now.

Actually, the large theme called out by Buffett and Munger over the past few years is the definite threat to packaged consumer goods, the tug of war between store and marquee brands. Cost cutting and consolidation are key ingredients. Plus at these sizes, fix-and-flip is difficult. After all we're talking about 100 year brands. Why Berkshire and 3G stand unique at the table.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 18, 2017, 01:33:45 PM
Without putting too much into it: The Unilever dilemma: What comes now? (http://seekingalpha.com/news/3244566-unilever-dilemma-comes-now).
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on February 27, 2017, 06:56:44 AM
 Mr. Buffett on CNBC this morning (http://www.cnbc.com/2017/02/27/warren-buffett-on-trump-no-president-has-ever-made-me-want-to-stop-buying-stocks.html) - a series of small clips, among them comments about buying more AAPL in 2017, and some comments from Mr. Buffett about the Unilever offer.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on February 27, 2017, 03:24:59 PM
Here is the full transcript of billionaire investor Warren Buffett's interview with CNBC


http://www.cnbc.com/2017/02/27/billionaire-investor-warren-buffett-speaks-with-cnbcs-becky-quick-on-squawk-box.html (http://www.cnbc.com/2017/02/27/billionaire-investor-warren-buffett-speaks-with-cnbcs-becky-quick-on-squawk-box.html)
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on February 27, 2017, 04:12:24 PM
Thanks for posting the transcript.  I was asleep for the first part and it was interesting to hear him describe his shorting DOW common in anticipation of their conversion.  He ended up timing it perfectly, with a net zero position the day after they sent him 72 million shares -

----------------------------------------------------------

"Quick: The reason I ask-- that question just now is because Dow Chemical preferred shares-- they called those the preferred shares on December 30th. And from what I read it said that it should've translated into about 6 percent of the shares outstanding of the company—

Buffett: 70, 72 million shares, yeah.

Quick: But I did not notice Dow Chemical on the 13-F in this most recent filing. Would have--

Buffett: We timed our sales so that once it got above the conversion price-- we timed our sales-- we tried to time 'em—because 72 million shares would be a lot of shares to get and we did not want to own the common stock we don't own any common stocks of any chemical companies so and as the stock when higher we sold it more aggressively because we wanted to get 72 million shares done by the day which was becoming more probable all the time that they would call it and they called it exactly when we thought they would call it. And I think our last shares were sold the day before, the day after, the same day we timed it to be out of 72 million shares when we received those shares.

Quick: So I was going to say you didn't sell 72 million shares on December 30 and 31st

Buffett: No we didn't want to be in that position.

Quick: but you had been timing those shares all along and preparing for it.

Buffett: exactly and it became you were in a very strong market and as Dow kept moving up we would get more aggressive so towards the end we might have been selling a couple million shares a day when it got up to 56 or some price like that. We were hoping to get out of it, out of the common by the time they sold the common and like I said it worked out to the day we were kind of lucky on that we could have ended up with 10 million shares but we were going to quit obviously when we got to the amount that was going to be handed to us.

Quick: Why don't you like Dow or the other chemical shares?

Buffett: We've never owned chemical shares. We own a specialty chemical company Ebersol a chemical common stock we own we bought the preferred stock of Dow because we wanted a preferred position and we held it. It was kind of interesting we bought that stock in July of 2008, the preferred and they were going to acquire, Dow was going to acquire Rohm & Haas and they needed money for it and then the world fell apart in the fall and Dow wanted to get out of the contract, they sued Rohm & Haas to get out of the contract but it was held that they had to stick with it. So we closed the deal to buy the preferred stock in April of 2009 by which time the market had totally disintegrated the time we closed that we bought $3 billion worth it probably wasn't worth tops more than
60 cents on the dollar so we showed up with $3 billion for something that was worth $1.8 billion at the time which is one reason why people offer us deals they know we will be around at the closing. We showed up for the Wrigley closing too that was on October 4 or something but during that whole period we had commitments and that kept me from doing some other things we might have done at that time. The fact that we had this $3 billion going out the door

Quick: What did you ultimately end up making on Dow Chemical shares.

Buffett: we ended up making about a billion dollars and plus we had an 8.5 percent coupon those years.

Quick: You made a billion even before the preferred dividend that was paid?

Buffett: We had a billion dollar of capital gain very roughly, and then we had $255 million a year dividends during the time we owned it."
Title: Re: Buffett/Berkshire - general news
Post by: Liberty on February 27, 2017, 04:52:23 PM
Here is the full transcript of billionaire investor Warren Buffett's interview with CNBC


http://www.cnbc.com/2017/02/27/billionaire-investor-warren-buffett-speaks-with-cnbcs-becky-quick-on-squawk-box.html (http://www.cnbc.com/2017/02/27/billionaire-investor-warren-buffett-speaks-with-cnbcs-becky-quick-on-squawk-box.html)

Thank you for posting, I appreciate it.
Title: Re: Buffett/Berkshire - general news
Post by: Valuehalla on March 02, 2017, 07:45:57 AM
Total BV 31.12.2016 = 283,001 B

Add to adjust KHC till 31.12.2016    13,1 B  for fairvalue

Add further till today (Jan+Feb+1March):

Add for Investment gains app         12,4 B    (Appel accumulation before 30th Jan, KHC, BAC warrents incl.)
Add for Operative Jan+Feb app        3,0 B

TOTAL BV today                           311,501 B

This means BV per B share on 1. March 2017 = app 126,30 $ (KHC adjusted)
 
If its correct 177,28 $ (B closing price yesterday) is 40 % over (KHC adjusted) BV and seems still cheap to me.

ATTENTION: deffered taxes are not embedded. Also unknown subjects from 1th Jan till today. Imo it is not possible to calculate an exact figure; so all is just approximatly...
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 10, 2017, 07:17:50 PM
http://finance.yahoo.com/m/14a6b356-2b0c-3d30-b870-80f7d2911430/could-buffett%27s-berkshire-buy.html

The street smarties would like Berkshire to buy AIG and pay a hefty premium as well!
Title: Re: Buffett/Berkshire - general news
Post by: RadMan24 on March 12, 2017, 10:41:47 PM
Interesting aspect on Lubrizol's loss for the year: http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield (http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield)
Title: Re: Buffett/Berkshire - general news
Post by: BG2008 on March 12, 2017, 11:46:53 PM
Interesting aspect on Lubrizol's loss for the year: http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield (http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield)

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire".   

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?
Title: Re: Buffett/Berkshire - general news
Post by: Cigarbutt on March 13, 2017, 04:10:11 AM
Mr. Buffett is revered for his good decisions leading to good results.
The Lubrizol loss is significant.
However, despite the amazingly large size of BRK, these types of losses occur at a relatively very low frequency and, when they occur, are embedded in a sea of black ink.
Another aspect of his accomplishments is the unbelievably low rate of bad decisions leading to bad results.
But nobody's perfect.
Thanks for the link.
Title: Re: Buffett/Berkshire - general news
Post by: rolling on March 15, 2017, 09:30:49 AM
Interesting aspect on Lubrizol's loss for the year: http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield (http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield)

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire".   

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?
It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.

This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 15, 2017, 11:42:37 AM
Interesting aspect on Lubrizol's loss for the year: http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield (http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield)

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire".   

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?
It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.

This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

The whole subject of tuck in acquisitions and capital allocation at subsidiaries is a very important topic for the future. From the outside looking in, we can see some very aquisitive subs. Marmon, PCP, Midamerican etc. Would be a great question at the AGM. Understanding the parameters under which deals are allowed/made, how to determine the per share impact at the BRK level etc. It's not comforting to find out later.
Title: Re: Buffett/Berkshire - general news
Post by: villainx on March 16, 2017, 10:13:50 AM
This is unrelated to any ongoing thread, but an interesting divertissement: http://www.reuters.com/article/us-sec-kraft-heinz-idUSKBN16M2UI.

Security guard (or something else if he reviews emails for his boss) did some small inside trades.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on March 16, 2017, 10:40:09 AM
This is unrelated to any ongoing thread, but an interesting divertissement: http://www.reuters.com/article/us-sec-kraft-heinz-idUSKBN16M2UI.

Security guard (or something else if he reviews emails for his boss) did some small inside trades.

Yep, security guards and Martha Stewart get all the press and punishment but never Wall Streeters. Just yesterday, WSJ reported on the "possible" evidence that inside trading happens before release of public information, GDP, jobs report etc. Let's see what happens in Lower Manhattan post-Bharara.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on March 17, 2017, 07:35:42 AM
Small update on Ajit's reorganization of General Re (from Insurance Insider):
-----------------------
Gen Re shakes up international P&C leadership
Adam McNestrie and Catrin Shi
Gen Re has appointed new regional heads for its international P&C operations as part of a wider revamp of the reinsurer initiated by Berkshire Hathaway's Ajit Jain, The Insurance Insider understands.

Gen Re had previously divided its P&C reinsurance business into treaty and facultative arms, as well as underwriting and marketing operations, creating a plethora of senior roles in each region. The P&C business in each region will now have a single leader.

Achim Bosch, previously regional treaty marketing head, has been made P&C head for Germany, Central and Eastern Europe, and Benelux - which together form the largest part of Gen Re's international operations.

It is further understood that Gen Re's Spanish and Portuguese P&C operations will be headed by Adolfo Martinez, who was previously chief underwriter for treaty in the region.

Emmanuel Brouquier, regional manager for Europe excluding the UK and Germany, has taken on the role of P&C head for France, Scandinavia and the Middle East.

Andrew Flitcroft, previously treaty marketing head for Asia Pacific outside of Japan, is now P&C head for Australia and New Zealand. Rainer Schurmann, formerly treaty marketing head for Asia, has become P&C head for Asia, excluding Japan.

It is understood that a small number of senior staff have chosen to retire as part of the restructure, although most have remained in place under different roles, suggesting there may be further streamlining of management to come from Gen Re.

The restructure has only affected the P&C operations, with Gen Re's international life management structure remaining the same.

Berkshire Hathaway reinsurance chief Jain has set about restructuring Gen Re since the carrier fell under his remit when CEO Tad Montross retired last year.

Jain appointed Kara Raiguel as CEO, and has moved to simplify the complicated management structure of Gen Re in a bid to take out layers and speed up decision-making.

An initial reorganisation of the UK and Italian leadership in October last year, as revealed by this publication at the time, saw Faraday CEO Pietro Toffanello named P&C head for both countries.

Steve Michael, previously CEO of one of Berkshire Hathaway's legacy units,‎ then moved across to lead Gen Re's Lloyd's arm Faraday.

Gen Re did not respond to a request for comment.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on March 20, 2017, 04:48:24 PM
Berkshire 2017 Bracket Contest (http://berkshirehathaway.com/news/2017bhbracket.pdf).

It seems like even the guys at Berkshire HQ are getting a bit bored. I really hope this thing is insured... - somewhere else!

It's not even 1st April yet.

Perhaps I should have posted this in the topic: "What do folks think or do while markets are at highs?"
Title: Re: Buffett/Berkshire - general news
Post by: alpha on April 04, 2017, 07:35:59 AM
Cherry Coke launches in china with Warren Buffett on the label -

http://www.cnbc.com/2017/04/03/cherry-coke-launches-in-china-with-cans-featuring-likeness-of-warren-buffett.html
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 04, 2017, 07:52:18 AM
Cherry Coke launches in china with Warren Buffett on the label -

http://www.cnbc.com/2017/04/03/cherry-coke-launches-in-china-with-cans-featuring-likeness-of-warren-buffett.html

Chinese love of old, wise and rich men!
Title: Re: Buffett/Berkshire - general news
Post by: captkerosene on April 04, 2017, 10:00:32 AM
Is it just me or does WEB look a little Chinese on the can?
Title: Re: Buffett/Berkshire - general news
Post by: netnet on April 05, 2017, 01:00:29 PM
Is it just me or does WEB look a little Chinese on the can?
It is most certainly not you.  It is interesting. It's CPG so undoubtedly it was a design choice. 

That said, other cultures and ethnic group will put their stamp on a figure or image from another culture or ethnicity. Images of Alexander the Great for example.  In a more modern context, see for example, the statue of Martin Luther King by a Chinese sculptor, on the mall in DC. The statue makes him look like he is about to lead the cultural revolution by posture and with, shall I say, eyes not as 'round' as they obviously were!
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on April 06, 2017, 10:37:30 AM
An SA article, by Left Shark Investing, in my humble opinion, worth a link here: Berkshire Hathaway: An In-Depth Look at Normalized Return on Equity (https://seekingalpha.com/article/4060737-berkshire-hathaway-depth-look-normalized-return-equity).

I like the line of thinking and method of shaving off "Insurance" from "Insurance and other", thereby trying to analyze the earnings etc. of the big black box called "Other".
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on April 11, 2017, 07:06:35 AM
Sounds like Star Furniture CEO was fired by the parent company.  NFM grandson added to the board for oversight that Warren trusts -

http://hfbusiness.com/hfbnow/ArticleId/15622/kimbrell-resigns-as-star-furniture-ceo-blumkin-named-to-board
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on April 12, 2017, 02:50:16 PM
Berkshire starts selling WFC shares, to keep position on 10 per cent, or just below (http://berkshirehathaway.com/news/apr1217.pdf).

Edit:

What's next with regard to Berkshire and bank stocks long term? Building a position in JPM? Or a merger between WFC and JPM? If this continues long term, Berkshire will own about 10 per cent of the whole US banking system, without even being a bank holding company - I'm just speculating and kidding here.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on April 13, 2017, 10:29:27 AM
They can buy more UAL with proceeds.  8)
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on April 13, 2017, 10:38:24 AM
They can buy more UAL with proceeds.  8)

Jurgis,

I just hope that the extra proceeds from the enormous Berkshire position in WFC ends up in something that has the capacity to suffer - something antifragile ... not airlines! - Time will tell.
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on April 13, 2017, 11:10:17 AM
They can buy more UAL with proceeds.  8)

Jurgis,

I just hope that the extra proceeds from the enormous Berkshire position in WFC ends up in something that has the capacity to suffer - something antifragile ... not airlines! - Time will tell.

Maybe if United falls, Delta and American can have a duopoly. Even more pricing power.
Title: Re: Buffett/Berkshire - general news
Post by: Spekulatius on April 15, 2017, 07:27:48 AM
Thanks for posting the transcript.  I was asleep for the first part and it was interesting to hear him describe his shorting DOW common in anticipation of their conversion.  He ended up timing it perfectly, with a net zero position the day after they sent him 72 million shares -

----------------------------------------------------------

"Quick: The reason I ask-- that question just now is because Dow Chemical preferred shares-- they called those the preferred shares on December 30th. And from what I read it said that it should've translated into about 6 percent of the shares outstanding of the company—

Buffett: 70, 72 million shares, yeah.

Quick: But I did not notice Dow Chemical on the 13-F in this most recent filing. Would have--

Buffett: We timed our sales so that once it got above the conversion price-- we timed our sales-- we tried to time 'em—because 72 million shares would be a lot of shares to get and we did not want to own the common stock we don't own any common stocks of any chemical companies so and as the stock when higher we sold it more aggressively because we wanted to get 72 million shares done by the day which was becoming more probable all the time that they would call it and they called it exactly when we thought they would call it. And I think our last shares were sold the day before, the day after, the same day we timed it to be out of 72 million shares when we received those shares.

Quick: So I was going to say you didn't sell 72 million shares on December 30 and 31st

Buffett: No we didn't want to be in that position.

Quick: but you had been timing those shares all along and preparing for it.

Buffett: exactly and it became you were in a very strong market and as Dow kept moving up we would get more aggressive so towards the end we might have been selling a couple million shares a day when it got up to 56 or some price like that. We were hoping to get out of it, out of the common by the time they sold the common and like I said it worked out to the day we were kind of lucky on that we could have ended up with 10 million shares but we were going to quit obviously when we got to the amount that was going to be handed to us.

Quick: Why don't you like Dow or the other chemical shares?

Buffett: We've never owned chemical shares. We own a specialty chemical company Ebersol a chemical common stock we own we bought the preferred stock of Dow because we wanted a preferred position and we held it. It was kind of interesting we bought that stock in July of 2008, the preferred and they were going to acquire, Dow was going to acquire Rohm & Haas and they needed money for it and then the world fell apart in the fall and Dow wanted to get out of the contract, they sued Rohm & Haas to get out of the contract but it was held that they had to stick with it. So we closed the deal to buy the preferred stock in April of 2009 by which time the market had totally disintegrated the time we closed that we bought $3 billion worth it probably wasn't worth tops more than
60 cents on the dollar so we showed up with $3 billion for something that was worth $1.8 billion at the time which is one reason why people offer us deals they know we will be around at the closing. We showed up for the Wrigley closing too that was on October 4 or something but during that whole period we had commitments and that kept me from doing some other things we might have done at that time. The fact that we had this $3 billion going out the door

Quick: What did you ultimately end up making on Dow Chemical shares.

Buffett: we ended up making about a billion dollars and plus we had an 8.5 percent coupon those years.

Quick: You made a billion even before the preferred dividend that was paid?

Buffett: We had a billion dollar of capital gain very roughly, and then we had $255 million a year dividends during the time we owned it."

Looks like WEB really dislikes DOW and hedges his exposure. I think he is onto something,because DOW was snreally to a large extend a commodity chemical company that claims to be a specialty checmical company and that will at some point see a Dramatic reduction in margin. I think it will be a great short at some point. Besides that, even specialty chemicals see large variations in margins, that tend to expand early in the economic cycle and contract in the mature state. There is a lot of petrochemical capacity being build in NA, which I think can lead to oversupply issues.
Title: Re: Buffett/Berkshire - general news
Post by: Spekulatius on April 15, 2017, 07:43:12 AM
Interesting aspect on Lubrizol's loss for the year: http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield (http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield)

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire".   

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?
It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.


This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

I suspect the acquired business weren't that great and t wasn't just the decline in the price of crude that impaired the,. WFT for example appears to run their business very poorly, or they become poor business while they own them. The executive probably was canned, because that was an unforced error - WEB encourages bold on acquisitions, but does so, because they are supposedly low risk. I think he sees the acquisition price and probably was Ok will what they paid, but if the business owners twelfth is crap, it's on the executive and in my opinion should be dealt with,
From my perspective, the due diligence that a lot is of executives do on these acquisitions is laughable. I have experienced a few as an engineer where I thought that sending a few good engineers and operations people into the to be acquire company for some due diligence would have uncovered issues very quickly, the came later back to haunt. in public companies, failure with acquisitions are rarely acknowledged an much less leads firings, at least not at the executives ve level. It can lead to consequences at a mid r upper management levels, when they can't get a handle on fixing something that supposedly did not need to get fixed to begin with.

My favorite quote from the Sopranos applies to the business wowners world as well, maybe even more so than for the Mafia:

"Money flows up, shit flows down"
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on April 15, 2017, 08:24:44 AM
Interesting aspect on Lubrizol's loss for the year: http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield (http://www.crainscleveland.com/article/20170228/NEWS01/170229809/berkshire-hathaways-lubrizol-takes-365-million-loss-on-oilfield)

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire".   

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?
It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.


This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

I suspect the acquired business weren't that great and t wasn't just the decline in the price of crude that impaired the,. WFT for example appears to run their business very poorly, or they become poor business while they own them. The executive probably was canned, because that was an unforced error - WEB encourages bold on acquisitions, but does so, because they are supposedly low risk. I think he sees the acquisition price and probably was Ok will what they paid, but if the business owners twelfth is crap, it's on the executive and in my opinion should be dealt with,
From my perspective, the due diligence that a lot is of executives do on these acquisitions is laughable. I have experienced a few as an engineer where I thought that sending a few good engineers and operations people into the to be acquire company for some due diligence would have uncovered issues very quickly, the came later back to haunt. in public companies, failure with acquisitions are rarely acknowledged an much less leads firings, at least not at the executives ve level. It can lead to consequences at a mid r upper management levels, when they can't get a handle on fixing something that supposedly did not need to get fixed to begin with.

My favorite quote from the Sopranos applies to the business wowners world as well, maybe even more so than for the Mafia:

"Money flows up, shit flows down"

Agreed on the poor due diligence. I've found that short term bonuses drive deals and it's funny that the guy who put the white paper justifying the deal is rarely in position to seethe purported synergies through. Lots of Bullshit happens with acquisitions, shareholder benefits are far from clear.
Title: Re: Buffett/Berkshire - general news
Post by: DooDiligence on April 15, 2017, 11:49:37 AM
If they say synergy more than 5 times when touting an acquisition, run the other way...
Title: Re: Buffett/Berkshire - general news
Post by: Spekulatius on April 15, 2017, 02:19:22 PM
Cherry Coke launches in china with Warren Buffett on the label -

http://www.cnbc.com/2017/04/03/cherry-coke-launches-in-china-with-cans-featuring-likeness-of-warren-buffett.html

Chinese love of old, wise and rich men!
WEB is sort of the 21st century Buddha.
Title: Re: Buffett/Berkshire - general news
Post by: DooDiligence on April 15, 2017, 06:04:09 PM
Cherry Coke launches in china with Warren Buffett on the label -

http://www.cnbc.com/2017/04/03/cherry-coke-launches-in-china-with-cans-featuring-likeness-of-warren-buffett.html

Chinese love of old, wise and rich men!
WEB is sort of the 21st century Buddha.

Ayup...
Title: Re: Buffett/Berkshire - general news
Post by: alpha on April 17, 2017, 01:49:20 PM
Berkshire Hathaway Home Services announced a partnership with Juwai.com:

http://www.bnn.ca/berkshire-hathaway-partners-with-chinese-real-estate-site-juwai-com-1.726283
Title: Re: Buffett/Berkshire - general news
Post by: fareastwarriors on May 01, 2017, 12:31:09 PM
cash - usual deal spec

https://www.bloomberg.com/news/articles/2017-05-01/buffett-s-86-billion-cash-pile-has-some-dreaming-of-a-huge-deal (https://www.bloomberg.com/news/articles/2017-05-01/buffett-s-86-billion-cash-pile-has-some-dreaming-of-a-huge-deal)
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 04, 2017, 07:12:30 AM
QSR did a bond issue with the stated intention to redeem BRK's 9% preferred:
https://www.sec.gov/Archives/edgar/data/1618755/000119312517156640/d390898dex991.htm


from the original securities purchase agreement - looks like they will redeem in full or in part before October, no redemption premium:
"Optional Redemption
The Issuers may redeem some or all of the Notes at any time prior to October 1, 2017 at a price equal to 100% of the principal amount of the Notes redeemed plus a “make whole” premium and, at any time on or after October 1, 2017, at the redemption prices set forth in the Indenture. In addition, at any time prior to October 1, 2017, up to 40% of the aggregate principal amount of the Notes may be redeemed with the net proceeds of certain equity offerings, at the redemption price specified in the Indenture."
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 04, 2017, 05:15:53 PM
http://www.cnbc.com/2017/05/04/warren-buffett-has-revalued-ibm-downward-cites-big-strong-competitors.html
Title: Re: Buffett/Berkshire - general news
Post by: Txvestor on May 04, 2017, 06:34:54 PM
I had wondered how long it would take for him to finally throw in the towel. This last Q of declining revenues was what did it for me. Management has zero credibility left. They have misread the trends and underestimated the new entrants and I fear permanently impaired their competitive position. They have further compounded their woes by weakening their balance sheet with recent stock buybacks and dividend hikes. All of this can only work when you later find the growth and increased profitability. All their financial shenenigans are now coming home to roost.
Title: Re: Buffett/Berkshire - general news
Post by: sleepydragon on May 04, 2017, 06:48:15 PM
I had wondered how long it would take for him to finally throw in the towel. This last Q of declining revenues was what did it for me. Management has zero credibility left. They have misread the trends and underestimated the new entrants and I fear permanently impaired their competitive position. They have further compounded their woes by weakening their balance sheet with recent stock buybacks and dividend hikes. All of this can only work when you later find the growth and increased profitability. All their financial shenenigans are now coming home to roost.

Plus the excessive CEO compensation.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on May 05, 2017, 04:55:32 AM
"Ordinary" AGM Press Release of yesterday, including streaming info (http://berkshirehathaway.com/news/may0417.pdf).
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 05, 2017, 07:49:01 AM
In case anyone else is curious about the shareholder intelligence firms Buffett referred to in his CNBC interview, here is an example of one -

http://www.shareintel.com/howitworks.cfm

Here is the interview in the Kiewit plaza lobby in its entirety from Becky Quick.  She was kind of surprised to receive the scoop / breaking news.  "Why are you telling us this?"

http://video.cnbc.com/gallery/?video=3000616150
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on May 05, 2017, 08:44:26 AM
Awesome interview! - Mr. Buffett is now at the age of 86 - still sharp as a razor - even in situations with headwinds. [I wonder if we will see Amazon in the Berkshire portfolio in due course?]

- - - o 0 o - - -

Kicking in a footnote here:

globalfinancepartners,

You are doing a great job for us all here at CoBF taking the time to guide other board members to interesting things! - Tirelessly and consistently - It is very much appreciated!

Thank you!, - and have a nice weekend.
Title: Re: Buffett/Berkshire - general news
Post by: DooDiligence on May 05, 2017, 09:10:14 AM
In case anyone else is curious about the shareholder intelligence firms Buffett referred to in his CNBC interview, here is an example of one -

http://www.shareintel.com/howitworks.cfm

Here is the interview in the Kiewit plaza lobby in its entirety from Becky Quick.  She was kind of surprised to receive the scoop / breaking news.  "Why are you telling us this?"

http://video.cnbc.com/gallery/?video=3000616150

WEB hates cash!

At Geico "you can almost hear the checks hitting the mailbox..."

Housing strong but people holding off on furniture.

Apple borrowing $ from US to buy back shares (until repatriation - my words not his)

Modest hiring of RR employees.

Disclosed the IBM sale (good call doing it before 13F & the meeting) & said he should've bought the S & P instead of IBM.

Picking losses for future harvest.

Still uses a flip phone.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 05, 2017, 09:47:31 AM
DD, I believe the comment about people holding off on purchases from his sources at the Furniture Mart was in reference to the iPhone, not furniture.  NFM has a large electronics business as well.
Title: Re: Buffett/Berkshire - general news
Post by: Charlie on May 06, 2017, 04:56:23 AM
As a warm-up for the annual meeting. Here is the transcript of the Becky Quick interview:

http://www.cnbc.com/2017/05/05/cnbc-excerpts-billionaire-investor-warren-buffett-speaks-with-cnbcs-becky-quick-ahead-of-the-berkshire-hathaway-annual-meeting.html


Cheers!
Title: Re: Buffett/Berkshire - general news
Post by: DooDiligence on May 09, 2017, 10:48:27 AM
DD, I believe the comment about people holding off on purchases from his sources at the Furniture Mart was in reference to the iPhone, not furniture.  NFM has a large electronics business as well.

I read that wrong - thanks...
Title: Re: Buffett/Berkshire - general news
Post by: sleepydragon on May 10, 2017, 06:45:08 PM
In case anyone else is curious about the shareholder intelligence firms Buffett referred to in his CNBC interview, here is an example of one -

http://www.shareintel.com/howitworks.cfm

Here is the interview in the Kiewit plaza lobby in its entirety from Becky Quick.  She was kind of surprised to receive the scoop / breaking news.  "Why are you telling us this?"

http://video.cnbc.com/gallery/?video=3000616150

I wondering if company like this is legal? Effective the CEO and certain executives can have access to information that's never available to  public investors. SEC shall ask such information be published with delays (same as 13F) and watch for anybody who get access to this information and trade on it.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 22, 2017, 05:04:23 AM
Berkshire applying to the Federal Reserve to continue to hold an ever-increasing percentage of Amex, due to AXP's share repurchases.  Same deal as Well's, hopefully with a better outcome for BRK ->
https://www.bloomberg.com/news/articles/2017-05-19/berkshire-asks-fed-to-boost-cap-on-amex-ownership-to-almost-25

oops - I see this was already mentioned on the AXP thread - my apologies
Title: Re: Buffett/Berkshire - general news
Post by: sleepydragon on May 22, 2017, 06:09:23 AM
Berkshire applying to the Federal Reserve to continue to hold an ever-increasing percentage of Amex, due to AXP's share repurchases.  Same deal as Well's, hopefully with a better outcome for BRK ->
https://www.bloomberg.com/news/articles/2017-05-19/berkshire-asks-fed-to-boost-cap-on-amex-ownership-to-almost-25

oops - I see this was already mentioned on the AXP thread - my apologies

So what Feds can come up with now. Berkshire not allowed to use AXP cards? lol
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 22, 2017, 06:13:23 AM
It's funny - Berkshire was required to run a tiny ad in a newspaper in NYC to publicly announce this -
https://www.bloombergquint.com/markets/2017/05/22/buffett-plan-revealed-amid-ads-for-co-op-strippers-old-honda
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 23, 2017, 03:17:35 PM
I noticed something today for the first time while re-reading Berkshire's most recent 10Q (while stuck at the Social Security office waiting room for 2 hours..)

On page 39 of the PDF 10-Q from Berkshire's own website, the company notes that starting in 2018 they will adopt a new accounting standard that will reclassify the net unrealized gains for investments (presently reflected in accumulated other comprehensive income) to retained earnings instead.

The important part of this, as I understand it, is that going forward the changes in both realized AND unrealized gains in equity securities and certain other investments will be included in the periodic Consolidated Statements of Earnings.

Berkshire notes, "We do not expect the adoption of this standard will affect our total consolidated shareholders' equity.  However, it will likely produce a very significant increase in the volatility our periodic net earnings given the magnitude of our existing equity securities portfolio and the inherent volatility of equity securities prices."

So - economically, zero change.  But the headline earnings reporting is going to be a mess some quarters.  Too bad.
Title: Re: Buffett/Berkshire - general news
Post by: rb on May 23, 2017, 03:29:57 PM
There will probably be a line on the P&L for gains/losses in securities. So you should be able to easily back those out to get to "normalized earnings".

Aside note: Why do you guys have social security offices?
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on May 23, 2017, 03:30:32 PM
I noticed something today for the first time while re-reading Berkshire's most recent 10Q (while stuck at the Social Security office waiting room for 2 hours..)

On page 39 of the PDF 10-Q from Berkshire's own website, the company notes that starting in 2018 they will adopt a new accounting standard that will reclassify the net unrealized gains for investments (presently reflected in accumulated other comprehensive income) to retained earnings instead.

The important part of this, as I understand it, is that going forward the changes in both realized AND unrealized gains in equity securities and certain other investments will be included in the periodic Consolidated Statements of Earnings.

Berkshire notes, "We do not expect the adoption of this standard will affect our total consolidated shareholders' equity.  However, it will likely produce a very significant increase in the volatility our periodic net earnings given the magnitude of our existing equity securities portfolio and the inherent volatility of equity securities prices."

So - economically, zero change.  But the headline earnings reporting is going to be a mess some quarters.  Too bad.
A question regarding this was batted away by Buffett and Munger as not material.

But who knows, some robo-ai algorithm could drive stock down to1.3x for me and 1.2x for the buyback.Make that happen, ha.
Title: Re: Buffett/Berkshire - general news
Post by: Jurgis on May 23, 2017, 04:07:21 PM
Aside note: Why do you guys have social security offices?

OT.

Why not?
My relative needs to do file a form because their spouse died. They'll probably go to the SS office. It's possible to do via phone, but likely then they would need to send in docs anyway. Which is a hassle and will take ages. Not sure if it can be done over Internetz. I think not especially since spouse died abroad, so good luck getting foreign death cert into Internetz.

Closer to topic: they went through this issue with BAC. It took almost a year of sending paper forms through letters. The positive side is that BAC seems to finally done everything right. I have a friend whose parent died and BAC screwed up the whole thing royally. Not that this would affect investment into BAC... other banks have similar issues regardless of size. Actually sometimes smaller banks screw up even more.

Anyway, we shouldn't hog the thread. Move to general for more discussion if you want.  8)
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on May 23, 2017, 04:13:16 PM
"Aside note: Why do you guys have social security offices?"

Most people are applying to receive benefits, either retirement or disability benefits.  It is a mix of homeless people, disabled people and the elderly.  I was there with an adopted child who obtained U.S. citizenship last week and is required to appear in person to receive a social security number/card for the first time.  Two days in a row, the answer was "no".  Today's gem from the supervisor was, "a US passport is not proof of US citizenship."  Oy.
Title: Re: Buffett/Berkshire - general news
Post by: alpha on May 29, 2017, 06:03:12 AM
BRK buys a stake in Lanxess

https://www.bloomberg.com//news/articles/2017-05-29/buffett-buys-stake-in-german-specialty-chemicals-maker-lanxess
Title: Re: Buffett/Berkshire - general news
Post by: KinAlberta on May 29, 2017, 12:22:13 PM
I noticed something today for the first time while re-reading Berkshire's most recent 10Q (while stuck at the Social Security office waiting room for 2 hours..)

On page 39 of the PDF 10-Q from Berkshire's own website, the company notes that starting in 2018 they will adopt a new accounting standard that will reclassify the net unrealized gains for investments (presently reflected in accumulated other comprehensive income) to retained earnings instead.

The important part of this, as I understand it, is that going forward the changes in both realized AND unrealized gains in equity securities and certain other investments will be included in the periodic Consolidated Statements of Earnings.

Berkshire notes, "We do not expect the adoption of this standard will affect our total consolidated shareholders' equity.  However, it will likely produce a very significant increase in the volatility our periodic net earnings given the magnitude of our existing equity securities portfolio and the inherent volatility of equity securities prices."

So - economically, zero change.  But the headline earnings reporting is going to be a mess some quarters.  Too bad.


Smells like an opportunity generator.  :-)
Title: Re: Buffett/Berkshire - general news
Post by: abcd on May 29, 2017, 07:26:28 PM
https://www.nytimes.com/2017/05/12/business/dealbook/a-little-known-accounting-change-could-have-a-big-impact.html?_r=0
Title: Re: Buffett/Berkshire - general news
Post by: dcollon on June 08, 2017, 05:45:10 AM
Testing Mattresses with Warren Buffett

https://www.youtube.com/watch?v=6XFwlNVRD5M&sns=em
Title: Re: Buffett/Berkshire - general news
Post by: WneverLOSE on June 11, 2017, 02:43:29 AM
"Warren Buffett's 31 Berkshire Hathaway Automotive dealerships in Texas face an uncertain future after the state Legislature failed to take action to make them legal."
http://www.autonews.com/article/20170605/RETAIL07/170609924/1400

not that it will have any needle moving impact on anyone but maybe that's why some due diligence and lawyers may be useful ?
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on June 11, 2017, 05:00:33 AM
Just to give some perspective to the post by WneverLOOSE. From the 2015Q1 interim report :

Quote
In the first quarter of 2015, Berkshire acquired controlling interest of the Van Tuyl Group. The Van Tuyl Group (now named Bekshire Hathaway Automotive) includes 81 automotive dealerships located in 10 states as well as two related insurance businesses, two auto ucations and a manufacturer of automotive fluid maintenance products. In addition to selling new and pre-owned automobiles, the Berkshire Hathaway Automotive group offers repair and other services and products, including extended warranty services and other automotive protection plans.

So, as WneverLoose wrote, this will not move the needle as such for Berkshire, but certainly for the Van Tuyl aquisition, this might be considered something material, that has skipped the attention of the involved parties.

- - - o 0 o - - -

It's beyond my comprehention, why there in Texas is legal protection of car dealerships against competition from car producers trying to compete by selling cars B2C.
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on June 11, 2017, 11:39:24 AM
Just to give some perspective to the post by WneverLOOSE. From the 2015Q1 interim report :

Quote
In the first quarter of 2015, Berkshire acquired controlling interest of the Van Tuyl Group. The Van Tuyl Group (now named Bekshire Hathaway Automotive) includes 81 automotive dealerships located in 10 states as well as two related insurance businesses, two auto ucations and a manufacturer of automotive fluid maintenance products. In addition to selling new and pre-owned automobiles, the Berkshire Hathaway Automotive group offers repair and other services and products, including extended warranty services and other automotive protection plans.

So, as WneverLoose wrote, this will not move the needle as such for Berkshire, but certainly for the Van Tuyl aquisition, this might be considered something material, that has skipped the attention of the involved parties.

- - - o 0 o - - -

It's beyond my comprehention, why there in Texas is legal protection of car dealerships against competition from car producers trying to compete by selling cars B2C.

So a big parent cannot own both a "vehicle" maker and sell other things on wheels? Is this Texas or the Soviet Union?
Title: Re: Buffett/Berkshire - general news
Post by: bizaro86 on June 11, 2017, 07:15:47 PM
That law is obviously asinine, but this popped out at me from the article.
"The Legislature adjourned May 31 without taking further action. It’s not scheduled to reconvene until January 2019" emphasis added by me.

Sounds like being a Texas legislator is nice work if you can get it...
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 11, 2017, 07:50:17 PM
I knew someone who worked for Rick Perry a few years ago in Texas Government.  I was surprised to learn from him that being a Texas legislator is not a full time job.  This article mentions that it is not much of a paying gig either, kind of like serving on the Berkshire board of directors.  I think Berkshire will be fine in Texas - Buffett met with the governor and the Berkshire bill was fast tracked into the legislature, where it just stalled out and disappeared.  I would expect that the investigation will find that Berkshire is not in violation of the Texas law (more of an anti-Tesla model law) because they don't find that manufacturing RVs is an issue for an owner of auto dealers.  If they were going to have an issue with it, they would have taken care of the 'Berkshire bill' that was specifically intended to carve out an exception for Berkshire's situation.  Buffett has a bit of pull in Texas, and he isn't hurting anyone.

https://www.dallasnews.com/news/local-politics/2015/02/16/texas-every-two-year-legislature-isnt-so-part-time

That law is obviously asinine, but this popped out at me from the article.
"The Legislature adjourned May 31 without taking further action. It’s not scheduled to reconvene until January 2019" emphasis added by me.

Sounds like being a Texas legislator is nice work if you can get it...
Title: Re: Buffett/Berkshire - general news
Post by: WneverLOSE on June 13, 2017, 01:28:33 PM
Quote
Berkshire Hathaway Inc.’s auto dealerships and recreational-vehicle manufacturer have violated Texas regulations and should lose their licenses, the enforcement division of the state’s Department of Motor Vehicles concluded.
https://www.wsj.com/articles/berkshire-dealerships-and-rv-maker-broke-texas-law-regulator-says-1497379828?mod=nwsrl_heard_on_the_street

There is no way in hell this will happen but the hole fiasco around it is kind of insane.
nobody wants them to stop selling cars in Texas so why even bother with all the legal stuff ? just mail them "Hi, you broke the law but it ok, here is your permit to do so, have a good day Warren" and finish with it. I really hope Warren will not accept the stupid penalty and tell them he will close those dealerships and layoff 4,200 workers and that Texas will lose 220m a year of taxes. We will see how firm are they on those penalties.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on June 13, 2017, 02:23:31 PM
Quote
Berkshire Hathaway Inc.’s auto dealerships and recreational-vehicle manufacturer have violated Texas regulations and should lose their licenses, the enforcement division of the state’s Department of Motor Vehicles concluded.
https://www.wsj.com/articles/berkshire-dealerships-and-rv-maker-broke-texas-law-regulator-says-1497379828?mod=nwsrl_heard_on_the_street (https://www.wsj.com/articles/berkshire-dealerships-and-rv-maker-broke-texas-law-regulator-says-1497379828?mod=nwsrl_heard_on_the_street)

There is no way in hell this will happen but the hole fiasco around it is kind of insane.
nobody wants them to stop selling cars in Texas so why even bother with all the legal stuff ? just mail them "Hi, you broke the law but it ok, here is your permit to do so, have a good day Warren" and finish with it. I really hope Warren will not accept the stupid penalty and tell them he will close those dealerships and layoff 4,200 workers and that Texas will lose 220m a year of taxes. We will see how firm are they on those penalties.

If it comes to that extreme eventually, Berkshire will just sell those Texas dealerships again, like what happened with about 2 km railroad at BNSF a few years ago.
Title: Re: Buffett/Berkshire - general news
Post by: rb on June 13, 2017, 02:44:55 PM
Quote
Berkshire Hathaway Inc.’s auto dealerships and recreational-vehicle manufacturer have violated Texas regulations and should lose their licenses, the enforcement division of the state’s Department of Motor Vehicles concluded.
https://www.wsj.com/articles/berkshire-dealerships-and-rv-maker-broke-texas-law-regulator-says-1497379828?mod=nwsrl_heard_on_the_street (https://www.wsj.com/articles/berkshire-dealerships-and-rv-maker-broke-texas-law-regulator-says-1497379828?mod=nwsrl_heard_on_the_street)

There is no way in hell this will happen but the hole fiasco around it is kind of insane.
nobody wants them to stop selling cars in Texas so why even bother with all the legal stuff ? just mail them "Hi, you broke the law but it ok, here is your permit to do so, have a good day Warren" and finish with it. I really hope Warren will not accept the stupid penalty and tell them he will close those dealerships and layoff 4,200 workers and that Texas will lose 220m a year of taxes. We will see how firm are they on those penalties.

If it comes to that extreme eventually, Berkshire will just sell those Texas dealerships again, like what happened with about 2 km railroad at BNSF a few years ago.
John, I know you've expressed some dismay and confusion at the Taxas law a while back. I didn't have time to respond at that point so I will now and maybe you get a better flavour of what's going on.

Basically these laws are all over America. They are very old. They date to a time when there were hundreds of car manufacturers. The reason they were enacted was for warranty. Basically there was a much greater change for the auto retailer to be in business than the auto manufacturer 3-5 years from purchase. Of course that is not the case anymore and everyone mostly forgot that these laws exists.

However these laws came back to front recently because of Tesla and their direct to consumer model. Auto dealers started putting pressure on governments to enforce the laws against Tesla. A number of states rightly pulled back on those laws but some other notably Texas and New Jersey are holding very firm on those laws in order to bar Tesla.

There is poetic justice in the fact that a law that dealership special interests pushed governments to enforce against Tesla ends up biting dealerships.
Title: Re: Buffett/Berkshire - general news
Post by: John Hjorth on June 13, 2017, 02:59:18 PM
Thank you for sharing your knowledge with a past and present perspective here, rb. It is very much appreciated.

In that perspective, it makes a least some kind of sense.

- - - o 0 o - - -

I read this board every day, thus I learn something every day!
Title: Re: Buffett/Berkshire - general news
Post by: WneverLOSE on June 14, 2017, 03:44:41 AM
Quote
There is poetic justice in the fact that a law that dealership special interests pushed governments to enforce against Tesla ends up biting dealerships.

tbh it benefits dealerships, but Berkshire is suffering. I own a bit of AutoNation, I will be happy to take those dealerships off Warren's hands for a small wholesale discount :)
(by the way those are the best dealerships out there, making more than 120m per location)
Title: Re: Buffett/Berkshire - general news
Post by: CorpRaider on June 14, 2017, 04:41:50 AM
Re: Dealerships I noticed a large (regional?) auto dealer chain advertising a mobility solution last week.  Apparently, you pay ~$1000 to $1,500 and get to select various automobiles that are delivered to you.  I didn't inquire further when I saw the price, but you know on second thought it might not be that steep if you are a person with a constant auto payment, if it includes insurance licensing, service and taxes.  I thought it was interesting.
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 14, 2017, 10:06:57 AM
http://www.businesswire.com/news/home/20170614005701/en/MiTek®-Acquires-Mezzanine-International

MiTek continues to chug along with their second recent acquisition in the mezzanine structure space.  Cubic systems was a domestic operator and this one today is a European leader.

Remember, buy your metal connectors from USP at Lowe's, not that Simpson Strong tie stuff from Home Depot ;-)
Title: Re: Buffett/Berkshire - general news
Post by: globalfinancepartners on June 20, 2017, 06:02:25 AM
Fox Business is running a story that has some interesting detail about Ted Weschler's activity in Germany working with Berkshire's German "scout", the banker that brought them the online motorcycle accessory retailer -

http://www.foxbusiness.com/features/2017/06/20/warren-buffetts-scout-inside-europes-biggest-economy.html

edit:

I see it is actually a wall street journal story, with pictures for those that subscribe -
https://www.wsj.com/articles/warren-buffetts-scout-inside-europes-biggest-economy-1497951001
Title: Re: Buffett/Berkshire - general news
Post by: longinvestor on June 20, 2017, 07:03:09 AM
Fox Business is running a story that has some interesting detail about Ted Weschler's activity in Germany working with Berkshire's German "scout", the banker that brought them the online motorcycle accessory retailer -

http://www.foxbusiness.com/features/2017/06/20/warren-buffetts-scout-inside-europes-biggest-economy.html

edit:

I see it is actually a wall street journal story, with pictures for those that subscribe -
https://www.wsj.com/articles/warren-buffetts-scout-inside-europes-biggest-economy-1497951001
Germany has to be an attractive fishing pond for Berkshire. Private businesses that seek permanent homes is prevalent. I can think of businesses like INA-FAG Bearings being attractive. In the mold of ISCAR. Only needs next-generation kids to enjoy the good life over hard work. One thing is certain, many of the families would rather let the business run into the ground versus selling to FI's, PE etc.  Or for that matter large American conglomerates. Strong distaste.