Author Topic: Buffett/Berkshire - general news  (Read 649714 times)

Gregmal

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Re: Buffett/Berkshire - general news
« Reply #1630 on: May 28, 2020, 09:55:03 AM »
You generally don't hear much from them as they don't have any more money so nobody gives a shit anymore. Do you know how Chuck Prince is doing these days?

Ok but you stated:

"From what I've seen generally the bunch that point that "ABC" has missed the opportunity just because the markets went up tend to correlate well with the bunch that claim that nobody could have seen "XYZ" event coming when asked why they don't have any money anymore."
"

So I was just wondering what examples the correlation was based off.


cherzeca

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Re: Buffett/Berkshire - general news
« Reply #1631 on: May 28, 2020, 02:40:09 PM »
my thoughts on WEB:  I recall he exited muni monoline insurance because he thought local politicians  would care more about public employees than muni bondholders.  dont invest where some political bureaucrat can ruin your model.  I am beginning to think that WEB thinks this whole shutdown is a game that is controlled by these same politicians...I mean if you are invested in a business predominantly in NY, Cuomo is the most important risk factor you have to concern yourself with.  now how do you model Cuomo?...so I can see WEB saying give this time to let this play out and for the politicians to exit stage left, and then reconsider.  I also think Gates scared him.

navmehta

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Re: Buffett/Berkshire - general news
« Reply #1632 on: May 28, 2020, 08:49:40 PM »
I think Buffett will have the last laugh.

He is spot on that some workers won't come back to offices.  Tech companies are already making decisions for the long term which will result in at least 25% reduction in office sqft, retail and even residential real estate in expensive cities.

Folks might be under-estimating how much 25% increase in incremental real estate supply can impact prices drastically in office, retail, and maybe even residential housing in expensive cities.

25% reduction in space needed can result in over 50% drop in prices because prices are based on incremental/marginal supply/demand.  Imagine you own 100,000 sqft of office space, which was all rented pre-Covid and could cover your mortgage payments. Imagine, post-Covid only 75% is rented. What will you do with the remaining 25,000 sqft? Will you sell/rent it for whatever price you could get if you couldn’t cover mortgage payments with the remaining 75%? Does anyone know what percentage of Detroit housing had to be on sale for prices to plummet? My guess is it didn’t even need to be as high as 15%.

50% drop in real estate prices will be deadly for banks and in turn, several industries.

stahleyp

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Re: Buffett/Berkshire - general news
« Reply #1633 on: May 31, 2020, 08:03:26 PM »
I think Buffett will have the last laugh.

He is spot on that some workers won't come back to offices.  Tech companies are already making decisions for the long term which will result in at least 25% reduction in office sqft, retail and even residential real estate in expensive cities.

Folks might be under-estimating how much 25% increase in incremental real estate supply can impact prices drastically in office, retail, and maybe even residential housing in expensive cities.

25% reduction in space needed can result in over 50% drop in prices because prices are based on incremental/marginal supply/demand.  Imagine you own 100,000 sqft of office space, which was all rented pre-Covid and could cover your mortgage payments. Imagine, post-Covid only 75% is rented. What will you do with the remaining 25,000 sqft? Will you sell/rent it for whatever price you could get if you couldn’t cover mortgage payments with the remaining 75%? Does anyone know what percentage of Detroit housing had to be on sale for prices to plummet? My guess is it didn’t even need to be as high as 15%.

50% drop in real estate prices will be deadly for banks and in turn, several industries.

Hmmm...this isn't something I've thought a lot about (how values can drop dramatically even if demand doesn't fluctuate by the same amount). Interesting thought.
Paul

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gfp

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Re: Buffett/Berkshire - general news
« Reply #1635 on: June 02, 2020, 09:31:12 AM »
General comments on 6/1 reinsurance renewal pricing -

https://www.businessinsurance.com/article/20200602/NEWS06/912334892/Reinsurance-rates-jump-as-COVID-19-adds-uncertainty-to-market#

Quote
In addition, retrocessional capacity is entering the market from sources that typically only offer substantial capacity when rates are at historically high levels, Mr. Shields said

“We are hearing repeated references to companies like Berkshire Hathaway and D.E. Shaw playing a role. Their longstanding approach has been to let the market come up to their elevated levels and that’s when they’ll put their capital at risk,” Mr. Shields said.

Cigarbutt

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Re: Buffett/Berkshire - general news
« Reply #1636 on: June 02, 2020, 12:02:46 PM »
General comments on 6/1 reinsurance renewal pricing -
https://www.businessinsurance.com/article/20200602/NEWS06/912334892/Reinsurance-rates-jump-as-COVID-19-adds-uncertainty-to-market#
Quote
In addition, retrocessional capacity is entering the market from sources that typically only offer substantial capacity when rates are at historically high levels, Mr. Shields said
“We are hearing repeated references to companies like Berkshire Hathaway and D.E. Shaw playing a role. Their longstanding approach has been to let the market come up to their elevated levels and that’s when they’ll put their capital at risk,” Mr. Shields said.
More of the same elsewhere:
https://www.reinsurancene.ws/fhcf-will-not-renew-its-private-market-reinsurance-in-2020/
"Kuczwanski notes that since 2015, there’s been ample private market capital and significant risk transfer capacity, which has enabled the FHCF to participate in the private market without lowering the amount of capacity available to direct writers in Florida. However, capital is now less abundant that in prior years..."
The world has changed. The question is unfolding as to whether it's cyclical or secular.

longterminvestor

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Re: Buffett/Berkshire - general news
« Reply #1637 on: June 03, 2020, 12:50:31 PM »
Short term this may look bad, seem bad, but not as bad as it looks/seems.  If rates continue to tick up long term, Berkshire RE will begin to take risk at "their price".  Buffett has been saying for past few years RE insurance biz has not been as good of a business because of over capacity. 

Back in 2008, Buffett got paid $244MM as an option to "lend" $4B @ 6.5% in event of storm (see article below).  Interesting structure because he was dealing with State of Florida Government (FHCF).  FHCF has been running a surplus AND book of business has declined rapidly b/c private markets have taken risk so FHCF's needs for risk reduction has diminished since 2008. 

https://www.heraldtribune.com/article/LK/20080731/News/605231753/SH
« Last Edit: June 04, 2020, 09:50:55 AM by longterminvestor »


DooDiligence

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Re: Buffett/Berkshire - general news
« Reply #1639 on: June 07, 2020, 07:34:38 AM »
Oh boy.

https://www.cnbc.com/2020/06/05/trump-says-warren-buffetts-airline-stock-sale-was-a-mistake.html

Yeah, WEB should have taken total ownership & decked out the planes with cashmere carpet & gold plated toilets.

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