Corner of Berkshire & Fairfax Message Board
General Category => Berkshire Hathaway => Topic started by: fareastwarriors on July 17, 2014, 09:16:11 AM
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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)
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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
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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)
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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)
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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.
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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.
;)
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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)
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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?
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BRK's $3 Billion preferred shares will accrue a 9% coupon
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BRK's $3 Billion preferred shares will accrue a 9% coupon
Plus something? Sweeteners?
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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?
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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
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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.
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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
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http://www.businessinsider.com/warren-buffett-speaks-on-cnbc-oct-2-2014-10
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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
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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.
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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
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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/)
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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.
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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.
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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
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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)
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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.
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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)
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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)
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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.
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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)
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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
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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
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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.
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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!
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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
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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!
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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...
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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.
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^To be fair, WEB does have a weakness for young, attractive blondes...
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^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.
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^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.
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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.
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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.
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^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.
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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.
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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.
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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.
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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/)
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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)
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Thanks for posting.
Let's not forget that some esteemed value people called the deal very expensive at the time.
;)
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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.
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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.
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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
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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).
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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/
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"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)
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"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.
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"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.
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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/)
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Anybody selling BRK? Looks to have hit 1.5xBV, which seems to be many people's estimate of FV...
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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.
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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.
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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.
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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.
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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?
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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
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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.
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"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."
:)
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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)
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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.
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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?
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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.
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Interesting perspective oddball. +1 :)
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I like KMX but it never gets cheap enough for me. Or it hasn't in a long while.
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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.
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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?
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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....
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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.
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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.
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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.
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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.
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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) :)
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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.
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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)
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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.
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I've been thinking, where are warren buffett's ancestors from? I mean, which european country?
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France, i believe
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that makes sense,
thanks!
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France, i believe
Right, they were eating at a buffet when Marie Antoinette told them to eat cake.
8)
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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.
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Buffett on CNBC today
Buffett's automotive group goes shopping
http://www.cnbc.com/id/102549930 (http://www.cnbc.com/id/102549930)
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"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.
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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.
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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
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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...
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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
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"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? ;)
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^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.
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"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.
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"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.
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"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
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OT.
I completely agree with Petec.
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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.
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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?
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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.
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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! :)
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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,
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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.
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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)
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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)
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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.
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1st Quarter results are out -
http://berkshirehathaway.com/news/MAY0115.pdf
http://berkshirehathaway.com/qtrly/1stqtr15.pdf
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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.
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"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
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Does anyone know offhand where did the share count drop come from? (I might dig later, asking in case someone already did).
Thanks
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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
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Thanks. :)
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Doesn't part of share drop come from gift to Gates Foundation (A shares converted to B shares)?
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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)?
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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
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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.
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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.
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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?
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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!
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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
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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.
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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. :)
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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.
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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.
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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
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http://brooklyninvestor.blogspot.ca/2015/05/the-missing-manual-berkshire-hathaway.html
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"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/
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Buffett's Berkshire adds to favorites IBM, Wells Fargo
http://finance.yahoo.com/news/buffetts-berkshire-adds-biggest-stock-202923678.html
Cheers! :)
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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/
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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.
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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
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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. :)
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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.
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"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!
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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!
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New filing:
http://www.sec.gov/Archives/edgar/data/1637459/000119312515244356/0001193125-15-244356-index.htm
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http://www.bloomberg.com/news/articles/2015-07-07/buffett-scores-cheapest-electricity-rate-with-nevada-solar-farms
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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!
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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! :)
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Warren Buffett letter to Leon Cooperman - Business Insider
http://www.businessinsider.com/warren-buffett-letter-to-leon-cooperman-2015-7
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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."
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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)
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"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. ;)
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Munich Re ups forecast for 2015 on low damage claims:
http://www.reuters.com/article/2015/08/06/munich-re-group-results-idUSL5N10H0Q820150806
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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/
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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.
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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
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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:
“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?
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Jeff Mathews is actually a pretty decent writer, but sometimes he blurts out stupid things like that
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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?
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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.
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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.
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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.
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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?
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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
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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?
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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.
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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.
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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.)
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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.
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Ah.
Thanks, M.
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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
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Didn't they get that when they did the swap with ConocoPhillips a couple of years ago?
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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.
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Right. Thanks for reminding me Jay. :)
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Strikes me as kind of odd. Wasn't PSX around $74 when they disposed of 19 million shares, less than two years ago?
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Maybe he'll swap the stake again for another piece of PSX business... ::)
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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.
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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.
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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?
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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.
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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.
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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.
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http://blogs.wsj.com/moneybeat/2015/09/17/buffett-to-3g-call-me-maybe/?mod=yahoo_hs
Deal in the works?
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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.
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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)
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(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.
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If Attila the Hun was an All-American on the Cornhusker's D-Line, Warren would have something nice to say about him.
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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)
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I would love it if that's the sound of the elephant gun reloading.
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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!
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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....
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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?
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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.
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The 32B he mentioned is the PCP deal.
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Correct, cnbc misreported it
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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.
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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.
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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.
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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
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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)
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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
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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)
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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.”
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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.
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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.
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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)
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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!
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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! :)
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Thanks for sharing. Great stuff.
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Thanks Charlie!
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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)
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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.
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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.
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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).
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I guess just to clarify, yeah don't borrow the put premium.
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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?
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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.
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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
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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 :)
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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).
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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
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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#)
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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
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"The businesses it [BRK] owns is worth more than its [BRK's] market price"
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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.
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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:
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.
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Getting fairly close to Buffett's buyback price!
1.2x book is 7% lower
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would love to see this buyback and how aggresive WEB gets.
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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.
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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.
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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.
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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.
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Personally, I don't expect a rise in the "soft" buy back level anytime soon.
- A lot of liquidity has been earmarked towards the proposed PCP deal.
- A part of the liquidity at group level is abroad US, subject to a tax haircut, if transferred to BRK HQ or other BRK US entity.
However, I would love a positive surprise.
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I bought more today, too.
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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.
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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 $120/share.
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Bulls should note that BRK's main business aren't doing so hot lately:
BNSF - declining revenues and earnings if UP is an guide
Insurance earnings have been weak lately
Industrial demand has been weak and the strong US$ 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 $120/share.
Agree - not super cheap compared to when you could get ~BV before. Interesting but not a slam dunk.
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I'm working on an essay and auxiliary to it, I created a spreadsheet that compares book value, price, and Tilson's IV over time. I thought some might be interested so I'm posting it.
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Bulls should note that BRK's main business aren't doing so hot lately:
BNSF - declining revenues and earnings if UP is an guide
Insurance earnings have been weak lately
Industrial demand has been weak and the strong US$ 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 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
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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.
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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.
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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.
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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.
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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
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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
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Reminds me of the articles being written just before the "tech crash". :)
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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.
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The PCP aquisition expected to close on January 29th 2016 :
www.berkshirehathaway.com/news/JAN2516.pdf (http://www.berkshirehathaway.com/news/JAN2516.pdf) .
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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:
...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.”
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http://www.bloomberg.com/news/articles/2016-01-28/buffett-to-join-ballmer-alba-on-nbc-s-celebrity-apprentice-
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It's the new training ground for becoming POTUS.
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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:
...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.
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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.
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It's the new training ground for becoming POTUS.
Let me guess, ole Warren will pick the blonde.
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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:
...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].
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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/
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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.
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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!
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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.
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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..
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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!
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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!
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Facebook and BRK at the same market cap
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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
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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) .
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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
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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)
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"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)
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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.
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Think Deere might be a candidate in a year or so.
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With 100B he could buy Nike, Starbucks, or 3M.
I mean, wow.
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Base Hit Investing.
http://basehitinvesting.com/berkshire-hathaway-is-safe-and-cheap/
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.
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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.
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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.
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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)
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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
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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.
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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
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http://www.gurufocus.com/news/407278/david-rolfes-lengthy-analysis-of-berkshire-hathaway
Cheers! :)
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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.
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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.
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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)
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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.
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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.
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Here is the complete memo:
http://www.wsj.com//public/resources/documents/GenReCEOsuccession.pdf
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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
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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.
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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
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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.
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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
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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)
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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)?
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They're the only provider.
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They're the only provider.
Obviously not if casinos are switching to other providers.
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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.
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They are the only transmission provider. The casinos will still be transmission customers.
They're the only provider.
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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.
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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.
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OK, thanks.
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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
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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.
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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)
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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.
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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
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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.
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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)
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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.
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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].
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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.
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http://www.bloomberg.com/news/articles/2016-07-18/buffett-buys-1-8-billion-gem-of-a-medical-insurer-in-new-york
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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?
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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
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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.
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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.
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Nothing in that article bothered me. Let the guy be himself - he's earned it.
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Nothing in that article bothered me. Let the guy be himself - he's earned it.
Probably similar to working at a 3G company
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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.
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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.
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Good Buffett interview:
http://www.politico.com/story/2016/08/the-playbook-interview-warren-buffett-226892
Cheers! :)
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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/)
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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.
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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.
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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?
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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.
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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.
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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.
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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 thatit’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 closedin 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
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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 thatit’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 closedin 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.
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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) .
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Combs joining JPM's board
http://www.bloomberg.com/news/articles/2016-09-20/jpmorgan-chase-names-buffett-deputy-combs-to-board-of-directors
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Small acquisition at Marmon -
http://www.chicagobusiness.com/article/20160920/NEWS07/160929978/buffetts-marmon-buys-italys-dominioni-in-pasta-equipment-wager
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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)
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Cash in now north of $70B. Time to bag another elephant! :)
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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.
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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)
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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)
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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)
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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.
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Berkshire Portfolio Manager Explains Apple Investment
http://blogs.wsj.com/moneybeat/2016/10/24/berkshire-portfolio-manager-explains-apple-investment/?mod=WSJBlog
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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.
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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.
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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.
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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. ;)
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Thanks for posting the interview Jurgis
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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.
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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)
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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.
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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 ;)
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Yeah.... That was what? The 50th time that we heard that the old man went senile and lost it?
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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."
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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.
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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.
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Warren Buffett’s Meeting with University of Maryland MBA/MS Students – November 18, 2016
https://blogs.rhsmith.umd.edu/davidkass/
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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.
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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
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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.
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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?
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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
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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/
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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?
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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.
-
Sure, I understood that part, probably reading into it too much. Thanks.
-
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
-
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
-
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)
-
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
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Buffett
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.
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BuffettBut 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?
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It's true that earnings at Mid-American are up a lot. But Berkshire also dropped a lot of capital into Mid-American.
-
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.
-
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.
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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.
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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?
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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.
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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.
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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.
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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.
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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.
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.
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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
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A shares crossed a new threshold, can start stating in millions. All right, in proper fractions thereof.
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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.
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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)
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And so the cash pile grows some more.
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They're converting to common stock, cashless (and taxless) transaction
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The billionaire has previously said that he’s unlikely to keep the common stock.
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Missed that part, you're right
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Any assets at Dow that he could swap the shares for?
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Well dow is huge. They must have a little something BRK can squeeze into Lubrizol.
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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.
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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.
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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.
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New CEO at Lubrizol-
http://www.plasticsnews.com/article/20170103/NEWS/170109987/lubrizol-names-schnur-as-ceo
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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
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https://www.sec.gov/Archives/edgar/data/1067983/000119312517002728/d287902dfwp.htm
When in Rome.
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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!
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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!
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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.
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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.
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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.
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Tiny acquisition -
http://www.businesswire.com/news/home/20170111006145/en/Richline-Group-Acquires-Aaron-Group
http://the-aaron-group.com/#home
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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/)
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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).
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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.
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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
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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
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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?
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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
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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
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Bill Gates and Warren Buffet at Columbia University - 27th Jan 2017
https://www.youtube.com/watch?v=8K9QvPGHug0
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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!
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Recent Buffett and Gates interview with Charlie Rose: https://charlierose.com/videos/29774
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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
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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/
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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
“I’ve taken the view that each of us can be bystanders, or we can be upstanders. I choose upstander.” Seth Klarman
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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)
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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.
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... 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).
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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...)
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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)
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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.
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Buffett mentioned that he would be writing "a lot" about fees charged by active managers in the upcoming annual letter.
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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%....?
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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.
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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).
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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).
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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).
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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.
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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.
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Without putting too much into it: The Unilever dilemma: What comes now? (http://seekingalpha.com/news/3244566-unilever-dilemma-comes-now).
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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.
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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)
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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 -
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"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."
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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.
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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...
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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!
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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)
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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?
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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.
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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.
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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.
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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.
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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.
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Small update on Ajit's reorganization of General Re (from Insurance Insider):
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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.
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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?"
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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
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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!
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Is it just me or does WEB look a little Chinese on the can?
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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!
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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".
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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
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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.
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They can buy more UAL with proceeds. 8)
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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.
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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.
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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 -
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"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.
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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"
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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.
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If they say synergy more than 5 times when touting an acquisition, run the other way...
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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.
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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...
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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
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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)
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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."
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http://www.cnbc.com/2017/05/04/warren-buffett-has-revalued-ibm-downward-cites-big-strong-competitors.html
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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.
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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.
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"Ordinary" AGM Press Release of yesterday, including streaming info (http://berkshirehathaway.com/news/may0417.pdf).
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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
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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?]
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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.
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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.
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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.
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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!
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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...
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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.
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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
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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
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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
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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.
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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?
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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.
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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)
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"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.
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BRK buys a stake in Lanxess
https://www.bloomberg.com//news/articles/2017-05-29/buffett-buys-stake-in-german-specialty-chemicals-maker-lanxess
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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. :-)
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https://www.nytimes.com/2017/05/12/business/dealbook/a-little-known-accounting-change-could-have-a-big-impact.html?_r=0
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Testing Mattresses with Warren Buffett
https://www.youtube.com/watch?v=6XFwlNVRD5M&sns=em
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"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 ?
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Just to give some perspective to the post by WneverLOOSE. From the 2015Q1 interim report :
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.
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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.
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Just to give some perspective to the post by WneverLOOSE. From the 2015Q1 interim report :
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.
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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?
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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...
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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...
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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.
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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.
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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.
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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.
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I read this board every day, thus I learn something every day!
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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)
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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.
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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 ;-)
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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
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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.
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NICO has invested USD 377 M in Store Capital (http://ir.storecapital.com/Cache/389226355.pdf?IID=4553160&FID=389226355&O=3&OSID=9).
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NICO has invested USD 377 M in Store Capital (http://ir.storecapital.com/Cache/389226355.pdf?IID=4553160&FID=389226355&O=3&OSID=9).
Thx for this
Why is Store Capital diluting its stock this much? Shares outstanding have been shooting up like clockwork
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NICO has invested USD 377 M in Store Capital (http://ir.storecapital.com/Cache/389226355.pdf?IID=4553160&FID=389226355&O=3&OSID=9).
Thx for this
Why is Store Capital diluting its stock this much? Shares outstanding have shot up like clockwork every quarter. And once again with this deal
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http://www.cnbc.com/2017/06/26/buffetts-berkshire-hathaway-studied-this-stock-for-three-years-before-buying-in.html
Buffett's Berkshire Hathaway studied this stock for three years before buying in
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The real question here is, what is Mr. Buffett actually doing here? I simply don't get it. Any kind of sharing thoughts with my fellow board members about this investment in this topic would be much appreciated - thank you in advance.
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I don't do macro, but it feels like 1999.
Buffett is making mediocre investments since market is too high and nothing else is available.
Alternative explanation for this and HCG might be that it's all Ted's ideas and Warren just signs off without much supervision. That's also not very believable, but just throwing it out there. I base this on the size of the positions which are really small for Warren.
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The real question here is, what is Mr. Buffett actually doing here? I simply don't get it. Any kind of sharing thoughts with my fellow board members about this investment in this topic would be much appreciated - thank you in advance.
Is it big enough to assume it is Buffett? I haven't looked at STOR but there is some cheapish stuff (real cheap relatively speaking) in the area.
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It looks like this is a Ted Weschler pick.
https://www.bloomberg.com/news/articles/2017-06-26/buffett-s-bet-on-store-shows-not-all-retail-real-estate-is-equal
Store Capital Chief Executive Officer Christopher Volk said on Monday that Berkshire had been studying the REIT since 2014, occasionally holding conversations with management. Ten days ago, Buffett’s deputy investment manager Ted Weschler called the company to suggest a deal because the price had fallen to an attractive level, Volk said.
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Alternative explanation for this and HCG might be that it's all Ted's ideas and Warren just signs off without much supervision. That's also not very believable, but just throwing it out there. I base this on the size of the positions which are really small for Warren.
I'm pretty sure that Todd and Ted both invest without supervision, at least in 'their' accounts.
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Alternative explanation for this and HCG might be that it's all Ted's ideas and Warren just signs off without much supervision. That's also not very believable, but just throwing it out there. I base this on the size of the positions which are really small for Warren.
I'm pretty sure that Todd and Ted both invest without supervision, at least in 'their' accounts.
Right. What I was saying is that maybe Warren was involved in HCG (and maybe Store) just for the weight of his name even though it was Ted's position/idea. I have no clue if "supervision" is bigger in such case.
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http://www.pbs.org/newshour/bb/america-stand-just-wealth-says-warren-buffett/
Buffett on PBS discussing the economy and inequality. Not too much new there.
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It looks like this is a Ted Weschler pick.
https://www.bloomberg.com/news/articles/2017-06-26/buffett-s-bet-on-store-shows-not-all-retail-real-estate-is-equal
Store Capital Chief Executive Officer Christopher Volk said on Monday that Berkshire had been studying the REIT since 2014, occasionally holding conversations with management. Ten days ago, Buffett’s deputy investment manager Ted Weschler called the company to suggest a deal because the price had fallen to an attractive level, Volk said.
Thanks for sharing, Ballinvarosig Investors,
Now it makes quite more sense to me after reading the article. STO must have had a project pipeline with good prospects that it could not lift because of lack of capital, or it could speed up on execution on the project pipeline. Buy and build.
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http://www.pbs.org/newshour/bb/america-stand-just-wealth-says-warren-buffett/
Buffett on PBS discussing the economy and inequality. Not too much new there.
Part 2
http://www.pbs.org/video/3002306670
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Looks like the BAC position will be converted very soon.
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How Warren Buffett’s $16-Billion Bet on Bank of America May Change With Fed Stress Test
Stockpicker’s Berkshire Hathaway could become the U.S. bank’s largest shareholder through a share swap
https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203 (https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203)
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How Warren Buffett’s $16-Billion Bet on Bank of America May Change With Fed Stress Test
Stockpicker’s Berkshire Hathaway could become the U.S. bank’s largest shareholder through a share swap
https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203 (https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203)
Here we go https://finance.yahoo.com/m/0ff6af95-a46f-3db2-8b04-3a45d1a4b074/%5B%24%24%5D-berkshire-hathaway-to.html
Who's next? We have what you need! All you need to do is get in trouble.
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How Warren Buffett’s $16-Billion Bet on Bank of America May Change With Fed Stress Test
Stockpicker’s Berkshire Hathaway could become the U.S. bank’s largest shareholder through a share swap
https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203 (https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203)
Here we go https://finance.yahoo.com/m/0ff6af95-a46f-3db2-8b04-3a45d1a4b074/%5B%24%24%5D-berkshire-hathaway-to.html
Who's next? We have what you need! All you need to do is get in trouble.
Well, somehow, I'll have to raise the hand. Are you worried about BRK pouring yet another USD 5 B into major US banks? - Or have I plain simply misunderstood your last post in some way? Or are your thoughts about two US major banks in a terrible adverse scenario, with BRK as an anchor investor, the two banks [WFC and BAC] draining BRK for cash?
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How Warren Buffett’s $16-Billion Bet on Bank of America May Change With Fed Stress Test
Stockpicker’s Berkshire Hathaway could become the U.S. bank’s largest shareholder through a share swap
https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203 (https://www.wsj.com/articles/how-warren-buffetts-16-billion-bet-on-bank-of-america-may-change-with-fed-stress-test-1498642203)
Here we go https://finance.yahoo.com/m/0ff6af95-a46f-3db2-8b04-3a45d1a4b074/%5B%24%24%5D-berkshire-hathaway-to.html
Who's next? We have what you need! All you need to do is get in trouble.
Well, somehow, I'll have to raise the hand. Are you worried about BRK pouring yet another USD 5 B into major US banks? - Or have I plain simply misunderstood your last post in some way? Or are your thoughts about two US major banks in a terrible adverse scenario, with BRK as an anchor investor, the two banks [WFC and BAC] draining BRK for cash?
Latter, BRK as the lender of last resort. For the investee, they get the capital without smartasses who tell them how to run their shop, or attach covenants and such. Of course it's an expensive coupon.It will be interesting to see how such deals come to Berkshire in the future. There will be folly and suffering in the future, that's for sure.
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Thanks, longinvestor,
Absolutely worth to think about - as your posts always are here on CoBF. Yes, it's not near pocket money, what BRK has poured into WFC and BAC now, over time.
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News realase about the BAC preferred swap to BAC common from Berkshire, dated 30th June 2017 (http://berkshirehathaway.com/news/jun3017.pdf).
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Clayton bought another traditional homebuilder- this one in Denver:
http://www.9news.com/mb/money/business/denvers-oakwood-homes-sold-to-berkshire-hathaway-affiliate/454619228
http://www.itbusinessnet.com/article/Colorados-Largest-Private-Homebuilder-Joins-Clayton-Properties-Group-5035290
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News says Berkshire is about to buy Oncor
https://www.wsj.com/articles/warren-buffetts-berkshire-nears-a-deal-to-buy-oncor-1499363036
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Clayton bought another traditional homebuilder- this one in Denver:
http://www.9news.com/mb/money/business/denvers-oakwood-homes-sold-to-berkshire-hathaway-affiliate/454619228
http://www.itbusinessnet.com/article/Colorados-Largest-Private-Homebuilder-Joins-Clayton-Properties-Group-5035290
Interesting display at the Annual meeting this year was a pre-built cabin. Something like a 400 sq ft one. Looked nice inside. Of course they had the usual Clayton home as well.
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News says Berkshire is about to buy Oncor
https://www.wsj.com/articles/warren-buffetts-berkshire-nears-a-deal-to-buy-oncor-1499363036
Berkshire energy grows contiguously, eastward. They are literally stitching the network together that will blanket the USofA in due course. Texas is also the #1 wind potential state.
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http://www.businesswire.com/news/home/20170706006280/en/Oncor-Join-Warren-Buffett’s-Berkshire-Hathaway-Energy
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Didn't they also buy a "stick built" home builder in Colorado? Sort of intriguing to me, given some prior comments he's made about his belief that the housing market will perform this year. Bill Miller is really bullish on homebuilders too, if memory serves.
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Didn't they also buy a "stick built" home builder in Colorado? Sort of intriguing to me, given some prior comments he's made about his belief that the housing market will perform this year. Bill Miller is really bullish on homebuilders too, if memory serves.
Clayton has been buying traditional site built homebuilders pretty steadily for a few years now. Ever since they basically reached their limit as far as market share in manufactured homes goes. Clayton has a very high market share of their industry when you include all the acquired marks. The Colorado deal link is a few posts up I believe. There is a big shortage of skilled carpenters in Colorado and a lot of other markets, which is constraining and slowing the homebuilding business. But that can be a positive. Seems like half the people I know are moving to Colorado these days. Must be nice out there! (or they're all potheads)
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Me too. Two guys I have worked with just moved out there. One is really freaking out about getting into the housing market too. Smells bubbly...but I guess it's a bargain if you're moving from San Fran or TriBeCa.
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Mr. Buffett's total gifts in Berkshire stock now up to USD 27.54 B (http://berkshirehathaway.com/news/jul1017.pdf).
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Didn't they also buy a "stick built" home builder in Colorado? Sort of intriguing to me, given some prior comments he's made about his belief that the housing market will perform this year. Bill Miller is really bullish on homebuilders too, if memory serves.
Clayton has been buying traditional site built homebuilders pretty steadily for a few years now. Ever since they basically reached their limit as far as market share in manufactured homes goes. Clayton has a very high market share of their industry when you include all the acquired marks. The Colorado deal link is a few posts up I believe. There is a big shortage of skilled carpenters in Colorado and a lot of other markets, which is constraining and slowing the homebuilding business. But that can be a positive. Seems like half the people I know are moving to Colorado these days. Must be nice out there! (or they're all potheads)
Here's one more http://www.builderonline.com/builder-100/strategy/alabama-shakes-clayton-buys-birminghams-harris-doyle-homes_o
The Clayton acquisition is the fifth site-build company added to the nation's largest manufactured home builder, whose market share is 50% of the category, which accounts for seven in 10 homes priced below $150,000.
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https://www.wsj.com/articles/sprint-executives-have-engaged-warren-buffett-about-investment-1500055560
Sprint Corp. Chairman Masayoshi Son has engaged Warren Buffett and cable mogul John Malone in discussions about participating in a deal with the wireless company, people familiar with the situation say.
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FT has an article about the power imbalances on the US west coast and Berkshire Energy's membership in the regional marketplace for excess energy in the region -
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=4&cad=rja&uact=8&ved=0ahUKEwjRq9e67ZPVAhVJxoMKHYiTCLYQqQIIKigAMAM&url=https%3A%2F%2Fwww.ft.com%2Fcontent%2F10d2852a-68d0-11e7-9a66-93fb352ba1fe&usg=AFQjCNEN9ToaxtiNilm9fUFeqc-OaHpuuw
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FT has an article about the power imbalances on the US west coast and Berkshire Energy's membership in the regional marketplace for excess energy in the region -
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=4&cad=rja&uact=8&ved=0ahUKEwjRq9e67ZPVAhVJxoMKHYiTCLYQqQIIKigAMAM&url=https%3A%2F%2Fwww.ft.com%2Fcontent%2F10d2852a-68d0-11e7-9a66-93fb352ba1fe&usg=AFQjCNEN9ToaxtiNilm9fUFeqc-OaHpuuw
The Western regional EIM is a pivotal development in the evolution of the utility world from the monopoly days. It's not a coincidence that the vast majority of BHE's assets are there. I read somewhere that the EIM is the face of the deregulation. I've been following the entry of BHE in the west and there's a lot of bickering from the incumbents. There are 38 regional regulators called the Bonneville power administration from the good ol days, plus the state's parochial interests colliding with market forces. Berkshire's billions and keeping rates low are massive disruption.
It would be a great question at the meeting next year. The backdrop of the huge investment in the west and these new developments like the EIM. What's the future etc.
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2017 Q2 is out: http://www.berkshirehathaway.com/news/aug0417.pdf
$99.7 billion in cash by the end of June :o
Berkshire's cash pile represents 5.4% of Corporate America's total cash pile (https://www.ft.com/content/2cbc02d4-e0bf-3ece-9f5d-b9b063561e2b)
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Insurance Insider has a good summary of the insurance results - Gen Re is growing premiums under Ajit's leadership, and a previous note mentioned that the TransRe partnership has produced $350m in new premiums to GenRe.
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AIG deal pushes Berkshire to $22mn underwriting loss
Dan Ascher
Berkshire Hathaway's record-breaking $34bn retroactive reinsurance deal with AIG has pushed the Warren Buffett-led firm's underwriting group to a loss in the second quarter.
The segment, which includes property and casualty as well as life (re)insurance business, swung to a $22mn underwriting loss from a $337mn gain reported for the year-ago period.
Berkshire's collection of underwriting companies, which include personal lines carrier Geico and reinsurer Gen Re, were dragged into the red by a $400mn underwriting loss within Berkshire Hathaway Reinsurance Group, including a $331mn pre-tax retroactive reinsurance deficit.
Berkshire blamed the bulk of that $331mn loss on an unspecified "deferred charge amortization" related to the AIG transaction, as well as another unnamed retro deal written at the end of last year.
The reinsurance group was pushed further into deficit by its life unit which clocked a $121mn loss, primarily due to foreign exchange fluctuations for periodic payment annuity business.
Losses in Berkshire's reinsurance group more than offset gains in all of the financial behemoth's other underwriting units.
Gen Re profits swelled to $25mn from the mere $2mn the direct reinsurer reported this time last year. However the result paled beside the carrier's life and health division which swung to a $39mn profit from a $21mn loss in the second quarter of 2016.
A year ago, Gen Re's property and casualty division put the reinsurer into the black with a $23mn profit. But in the just-ended quarter the unit posted a $14mn loss.
Nevertheless, Gen Re reported a 25 percent uptick in P&C premiums earned for the period, which grew to $777mn driven by more income from direct and broker markets as well as greater participation on renewals.
Meanwhile Buffett's primary underwriting group, which includes National Indemnity Company and Berkshire Hathaway Specialty Insurance, reported a 8.9 percent increase in premiums written, which were $1.8bn for the period just gone.
The group's profitability improved delivering an underwriting gain of $232mn, up by a third on the result posted at this time last year.
Meanwhile, despite a $1bn or 16.7 percent increase in premiums written at Geico, profit fell almost 21 percent to $119mn.
Berkshire said that increases in average Geico policy premiums had failed to offset inflation in claims costs.
The loss produced by the Reinsurance Group's deficit contributed to Berkshire's earnings miss for the quarter, as it posted disappointing net income of $4.262bn, or $2,592 per class A share.
Analysts had expected the company to earn $2,858 a share, according to the average of four estimates collected by MarketWatch.
On an operating basis, the company's profit fell 11 percent to $4.12bn, Reuters reported. The news service said that equated to $2,505 per class A share while analysts had anticipated $2,791.
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2017 Q2 is out: http://www.berkshirehathaway.com/news/aug0417.pdf
$99.7 billion in cash by the end of June :o
Berkshire's cash pile represents 5.4% of Corporate America's total cash pile (https://www.ft.com/content/2cbc02d4-e0bf-3ece-9f5d-b9b063561e2b)
Yep at these levels they can afford to do 2-3 elephants over the next couple of years...... should the opportunity arise.
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BV @ $182,816, up 6.2% from YE 2016. At this run rate, if it gets to $195K by YE, we are trading in the 1.4x range. Effectively, it has been this range bound for several years now. I have been irrational in my buying behavior, trying to pick up cheap. Orders did not fill, perhaps won't. I am likely committing the mistake mentioned in Phil Fischer's Common stocks - Uncommon profits and surely will regret it later! The most rational thing for the long term is not overthink this and just buy at these prices. There is the famous The market can behave irrational for longer than you can remain solvent.. Replace the word solvent with patient and you have what's going on with BRK today; it is the opposite, somewhat of a bonanza of being able to accumulate. Well, if you believe so ;) We will see in time, won't we?
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I'm in your camp on this, longinvestor,
Furthermore, - say, you try to pick it up relatively cheap for two years - you are then subject to "the risk" of a large Berkshire aquisition in that period, creating a jump upwards in earnings going forward, which most likely will influence market price upwards, generating a miss out for the forward net Berkshire buyer.
We know the Oncor deal is in the mold right now, but generally we do not know what is going on at Mr. Buffetts desk.
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GMO's James Montier:
All these years I have looked to Warren Buffett as a beacon of hope. Two months ago, he said that equities look cheap, relative to interest rates. It seemed like a dreadful thing to say.
It might be true only if you believed there was absolutely no mean reversion—in that case you’d be looking at a 3% real return from equities, zero from bonds, and, say, minus 1% or 2% from cash. But here was a man who, using his favorite valuation indicator of market cap to gross domestic product, pointed to the tech bubble of 2000 and said it was insane. Using the same indicator, he pointed out when to buy equities in late 2008, early ’09.
Here we are within a hair’s breadth of the levels in 2000, and he is saying equities are cheap. This is an unvaluelike statement, and I don’t think it’s true. There are plenty of reasons why interest rates are not related to performance—very low rates haven’t stopped a 50% decline in Japan.
So I’m sticking to dead heroes now—Ben Graham and John Maynard Keynes.
http://www.barrons.com/articles/coping-with-the-foie-gras-stock-market-1501305385
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Berkshire Shares need Deal Fuel to Fly Any Higher
https://www.bloomberg.com/gadfly/articles/2017-08-07/berkshire-shares-need-buffett-deal-fuel-to-fly-higher (https://www.bloomberg.com/gadfly/articles/2017-08-07/berkshire-shares-need-buffett-deal-fuel-to-fly-higher)
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Berkshire Shares need Deal Fuel to Fly Any Higher
https://www.bloomberg.com/gadfly/articles/2017-08-07/berkshire-shares-need-buffett-deal-fuel-to-fly-higher (https://www.bloomberg.com/gadfly/articles/2017-08-07/berkshire-shares-need-buffett-deal-fuel-to-fly-higher)
Greg Warren of Morningstar, who is quoted here represents the peanut gallery of analysts on the stage@the annual meeting. He sounds like a pompous ass when he opens his mouth. His bone to pick comes from the fact that BRK has blown right past his estimate of FV. Believe he had that at $ 250K for the A.
A couple of years ago, he asked Buffett if there would be a share buyback at the1.2x threshold, between quarterly earnings reports and Buffett clearly said no. That didn't stop Greg from reporting that "Buffett confirmed to us that they would buy shares back before reporting the BV to the public". That's kind of stupid because the exact BV number is in all likelihood unknown to anyone, including the CFO of BRK until just prior to release.
Greg's words are worthless to me. As far as I'm concerned, he wastes my time with the 6 questions he does get to ask at the annual meeting.
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Greg Warren of Morningstar, who is quoted here represents the peanut gallery of analysts on the stage@the annual meeting. He sounds like a pompous ass when he opens his mouth. His bone to pick comes from the fact that BRK has blown right past his estimate of FV. Believe he had that at $ 250K for the A.
A couple of years ago, he asked Buffett if there would be a share buyback at the1.2x threshold, between quarterly earnings reports and Buffett clearly said no. That didn't stop Greg from reporting that "Buffett confirmed to us that they would buy shares back before reporting the BV to the public". That's kind of stupid because the exact BV number is in all likelihood unknown to anyone, including the CFO of BRK until just prior to release.
Greg's words are worthless to me. As far as I'm concerned, he wastes my time with the 6 questions he does get to ask at the annual meeting.
Hilarious. Love it. Made my day. [ : - ) ]
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Warren Buffett Likes Solar, but Not the Price Tag
https://www.bloomberg.com/news/articles/2017-08-08/warren-buffett-likes-solar-but-not-the-price-tag (https://www.bloomberg.com/news/articles/2017-08-08/warren-buffett-likes-solar-but-not-the-price-tag)
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Warren Buffett Likes Solar, but Not the Price Tag
https://www.bloomberg.com/news/articles/2017-08-08/warren-buffett-likes-solar-but-not-the-price-tag (https://www.bloomberg.com/news/articles/2017-08-08/warren-buffett-likes-solar-but-not-the-price-tag)
The headline should instead read " Falling energy prices don't support 2 year payback demands of Wall Street financiers". BHE by passing along cost savings to rate payers is shaking things up in the Utility world. This is why Oncor is wooing BHE versus vulture capital. Also, rooftop financiers walked away from AZ after saddling homeowners with expensive financing. Surely the fine print on rooftop contracts says something about sell back rates are subject to energy market forces and prices used for investment justification may not be realized.
It's easy to hide behind or obfuscate by buying headlines!
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Gen Re did a quota share deal in Australia that will see them take 60% of AMP's retail life business onto their books -
http://www.theaustralian.com.au/business/companies/amp-to-release-capital-after-500-million-reinsurance-deal/news-story/797c94aaac93cc4e5e387255a464d046
It has been interesting to see the moves and growth that have started since Ajit and Kara Raigul took over.
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globalfinancepartners,
During the years, it has come to my attention, that you have a really deep and detailed knowledge, understanding and view of insurance operations of Berkshire [consistently & continuously hard work, to cut it to the bone .... - out of pure interest].
Personally, I would really appreciate, if you would share with me and our fellow board members the temperature of the Berkshire insurance operations, as you perceive them right now.
For my part, it would be really appreciated. We have a separate topic for the 2017Q2 on here, that I hope you will use, instead of this "general news" topic, so that what is on your mind does not "drown".
Thank you in advance, if you're in on it.
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Gen Re did a quota share deal in Australia that will see them take 60% of AMP's retail life business onto their books -
http://www.theaustralian.com.au/business/companies/amp-to-release-capital-after-500-million-reinsurance-deal/news-story/797c94aaac93cc4e5e387255a464d046
It has been interesting to see the moves and growth that have started since Ajit and Kara Raigul took over.
For those without a subscription to the Australian, this synopsis will probably suffice. http://www.intelligentinsurer.com/news/munich-re-gen-re-strike-reinsurance-deal-with-australia-s-12765 (http://www.intelligentinsurer.com/news/munich-re-gen-re-strike-reinsurance-deal-with-australia-s-12765)
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Berkshires latest filing is out:
- Eliminated GE Holdings
- Added to Synchrony
- Trimmed its airline holdings
- Increased positions in Bank of New York Mellon and GM
- Reduced its Wabco Holdings position to almost nothing
- Increased Liberty Media position, decreased Sirius XM Holdings
https://www.reuters.com/article/us-investment-funds-buffett-idUSKCN1AU2B1
https://www.sec.gov/Archives/edgar/data/1067983/000095012317007953/xslForm13F_X01/form13fInfoTable.xml
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Datorama updated: http://www.dataroma.com/m/holdings.php?m=brk
Baupost also bought SYF... did any of these guys talk about what/why they like it?
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Berkshires latest filing is out:
- Increased positions in Bank of New York Mellon and GM
https://www.sec.gov/Archives/edgar/data/1067983/000095012317007953/xslForm13F_X01/form13fInfoTable.xml
A few things I noted when updating my Berkshire Look-Through spreadsheet at https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=2050477249 (https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/edit#gid=2050477249)
Interesting that GM's third and final line on the 13-F went from 1,237,600 to 11,237,600
It almost looks like it could have been a typo, though I'm sure everyone preparing it take a great deal of care. And it still fits with the round-numbers held in total, at exactly 60 million (was 50 million shares)
There still seems to be a typo in the 13-F on MOSANTO CO NEW. Don't think it fits with the need to abbreviate some longer names. Perhaps a simple typo or a way to reduce attention from protesters and adherents of the Organic marketing spin and the Naturalistic Fallacy who refer to it as MONSATAN. (I'll admit I was concerned about GMOs a couple of decades ago, more from a concern over possible side-effects like herbicide resistance getting into weeds, than health or 'messing with nature', but I've changed my opinion having seen the evidence roll in)
For some reason, one line of PHILLIPS 66 appears to be new but shows zero shares under column 7 Other Manager 4,8,11. Perhaps one of the other lines changed the manager code because all the values are as last quarter. That said, I might just not have noticed this zero line last quarter.
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Datorama updated: http://www.dataroma.com/m/holdings.php?m=brk
Baupost also bought SYF... did any of these guys talk about what/why they like it?
Haven't looked into it, but as someone with a card, I assume that they really low costs. I can't talk with anyone no matter what I press. I'm going to close the card after I get redeem my Sam's club certificate.
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This is an entity, that connects economic idiots with people with cash, to make money. These entities run lean, and internet based in most cases. You can complain by leaving - by paying your balance [if you can] and close the card account.
The above is meant in general terms.
I'm not by that calling you an idiot, mbreject, nor even indirectly implying that you are.
In our household we have a few of those cards, too, because of the built in perks. I can't even get automated monthly payment in full of the balance [because the card issuers don't want us to pay monthly balance in full, so that they can charge interest on the balance], so I pay them manually - monthly, and in full, so we get our perks -, without any interest expenses on the card.
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I haven't heard any of them mention Synchrony. Berkshire's position is probably through Todd or Ted. Todd seems to be the financials specialist of the two, but who knows. Synchrony declined during the past quarter and offered an entry point for anyone interested in their business. They have a very very healthy net interest margin despite their growing charge-offs/delinquencies. To me it seems likely that they will be acquired by a larger financial firm with even lower costs on deposits, but maybe I am missing some reason they are unlikely to be acquired.
As for the products, we use two of their products. The one we use most is their Lowes card that can be used only at Lowes. My wife is a real estate developer / landlord, so we put a lot of money through Lowes and Home Depot. The Lowes card gives you 5% off at the register, which is more attractive than some later statement credit - as I can see the price discount right on my receipt. In our town, the sales tax is just about 10%, which means using SYF's card at Lowes gives me half the tax back. Lowes and Home Depot have algorithms to exactly price match identical items they both carry, so the absence of a similar offering from Home Depot often decides which store we drive to for the materials list. The card is paid in full every month through their online portal. They've never made a dollar off of us, but we have saved a couple thousand. Lowes saves the CC processing fee if our purchases had been on Visa/Amex/etc, which helps offset the 5%.
The other card we use is the Amazon Prime Store card. It is one of the several cards amazon offers with discounts. It is not the original one, but a more recent entry. It is set as the default payment method at Amazon and it pays 5% back on anything purchased through amazon or their 3rd party sellers. It pays the 5% in the form of a statement credit on your next bill, so it works differently than the Lowes card but the economic effect is the same. We buy a lot on Amazon and 5% is a better discount than our other cards would offer. There are other 5% cards that partner with Amazon, though, and those other cards can be used at more than just Amazon. Same deal as above - pay it off every month in full and SYF never makes a dollar.
The other product I have seen but not used is their growing "Care Credit" program. My wife's friend used Care Credit to pay for some expensive dental work with a 0% payment plan. She kept to the terms and paid it off at 0%.
All of these products are just hoping that you will pay some interest at some point, and looking at the numbers quite a few people do pay interest to SYF. And when they do, it's a whopper - huge APRs. So the higher charge-offs and delinquencies aren't too surprising because you are talking about people who are willing to owe a balance that compounds against them at rates approaching 30%! These are not the most sophisticated users of credit. I'm sure many could transfer that balance to a competing product with an 18 month 0% offer or something and pay it down without the compounding against them. But they don't.
One thing I have read is that SYF offers customers pretty low credit limits and is quick to ding your credit score if you mess up. Both of those lead to some unhappy (ex)customers.
So who ends up buying them? It's not a squeaky clean reputation business and the relationships - like the Amazon deal - can (and probably will eventually) be lost.
Datorama updated: http://www.dataroma.com/m/holdings.php?m=brk
Baupost also bought SYF... did any of these guys talk about what/why they like it?
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Small deal for Iscar -
http://www.livemint.com/Companies/NrtK1Y34Av0d94opVoXOFJ/Larsen--Toubro-sells-unit-to-IMC-International-for-Rs174-cr.html
http://www.thehindubusinessline.com/companies/berkshire-hathaway-to-buy-lt-arm-for-174-crore/article9820224.ece
Also a news article talking about how BHE / CalEnergy is less enthusiastic about their Salton Sea geothermal business - finally cancelling a planned plant they had delayed and scaled down a few times -
http://www.desertsun.com/story/tech/science/energy/2017/08/16/warren-buffetts-berkshire-hathaway-nixes-salton-sea-geothermal-plant/570131001/
Also - Elliott buying more EFH debt to try and block Berkshire's deal for Oncor..
https://www.wsj.com/articles/elliott-management-buys-slice-of-energy-future-debt-1502919644
Next major court date is August 21st -
http://www.omaha.com/money/buffett/warren-watch-eclipse-day-may-shed-some-light-on-berkshire/article_6c197e3d-0fb2-56b4-95a2-f8b9fcc1aa59.html
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All of these products are just hoping that you will pay some interest at some point, and looking at the numbers quite a few people do pay interest to SYF. And when they do, it's a whopper - huge APRs. So the higher charge-offs and delinquencies aren't too surprising because you are talking about people who are willing to owe a balance that compounds against them at rates approaching 30%! These are not the most sophisticated users of credit. I'm sure many could transfer that balance to a competing product with an 18 month 0% offer or something and pay it down without the compounding against them. But they don't.
They do make a % of everything you buy using the card. So you've probably made them quite a bit of money over the years. Yes they would prefer interest on top of it but it's not a deal breaker.
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This is an entity, that connects economic idiots with people with cash, to make money. These entities run lean, and internet based in most cases. You can complain by leaving - by paying your balance [if you can] and close the card account.
The above is meant in general terms.
I'm not by that calling you an idiot, mbreject, nor even indirectly implying that you are.
In our household we have a few of those cards, too, because of the built in perks. I can't even get automated monthly payment in full of the balance [because the card issuers don't want us to pay monthly balance in full, so that they can charge interest on the balance], so I pay them manually - monthly, and in full, so we get our perks -, without any interest expenses on the card.
I am an idiot for keeping this card for so long. I made a mistake in thinking that having the Sam's Club credit card was the only way to get the cashback or maybe they've changed the T&C's along the way, because it's not like that anymore. I'm just too lazy to drive to my local Sam's, but I have to do it soon before the check expires.
I haven't heard any of them mention Synchrony. Berkshire's position is probably through Todd or Ted. Todd seems to be the financials specialist of the two, but who knows. Synchrony declined during the past quarter and offered an entry point for anyone interested in their business. They have a very very healthy net interest margin despite their growing charge-offs/delinquencies. To me it seems likely that they will be acquired by a larger financial firm with even lower costs on deposits, but maybe I am missing some reason they are unlikely to be acquired.
As for the products, we use two of their products. The one we use most is their Lowes card that can be used only at Lowes. My wife is a real estate developer / landlord, so we put a lot of money through Lowes and Home Depot. The Lowes card gives you 5% off at the register, which is more attractive than some later statement credit - as I can see the price discount right on my receipt. In our town, the sales tax is just about 10%, which means using SYF's card at Lowes gives me half the tax back. Lowes and Home Depot have algorithms to exactly price match identical items they both carry, so the absence of a similar offering from Home Depot often decides which store we drive to for the materials list. The card is paid in full every month through their online portal. They've never made a dollar off of us, but we have saved a couple thousand. Lowes saves the CC processing fee if our purchases had been on Visa/Amex/etc, which helps offset the 5%.
The other card we use is the Amazon Prime Store card. It is one of the several cards amazon offers with discounts. It is not the original one, but a more recent entry. It is set as the default payment method at Amazon and it pays 5% back on anything purchased through amazon or their 3rd party sellers. It pays the 5% in the form of a statement credit on your next bill, so it works differently than the Lowes card but the economic effect is the same. We buy a lot on Amazon and 5% is a better discount than our other cards would offer. There are other 5% cards that partner with Amazon, though, and those other cards can be used at more than just Amazon. Same deal as above - pay it off every month in full and SYF never makes a dollar.
The other product I have seen but not used is their growing "Care Credit" program. My wife's friend used Care Credit to pay for some expensive dental work with a 0% payment plan. She kept to the terms and paid it off at 0%.
All of these products are just hoping that you will pay some interest at some point, and looking at the numbers quite a few people do pay interest to SYF. And when they do, it's a whopper - huge APRs. So the higher charge-offs and delinquencies aren't too surprising because you are talking about people who are willing to owe a balance that compounds against them at rates approaching 30%! These are not the most sophisticated users of credit. I'm sure many could transfer that balance to a competing product with an 18 month 0% offer or something and pay it down without the compounding against them. But they don't.
One thing I have read is that SYF offers customers pretty low credit limits and is quick to ding your credit score if you mess up. Both of those lead to some unhappy (ex)customers.
So who ends up buying them? It's not a squeaky clean reputation business and the relationships - like the Amazon deal - can (and probably will eventually) be lost.
Datorama updated: http://www.dataroma.com/m/holdings.php?m=brk
Baupost also bought SYF... did any of these guys talk about what/why they like it?
My SYF Sam's club credit card has a crazy limit (monthly limit is like ~7x my annual purchase on the card.) It might be because it's a warehouse club card though (my Costco citi card's credit limit is also ridiculously high while my other citi card's limit is frustratingly low.) It's possible that Citi and SYF are doing this in hopes to retain the customers they got from AmEx and Discover, but maybe they're just that damn predatory. Gah. Hearing about the high APR's really make me appreciate AmEx's charge card model a lot more.
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All of these products are just hoping that you will pay some interest at some point, and looking at the numbers quite a few people do pay interest to SYF. And when they do, it's a whopper - huge APRs. So the higher charge-offs and delinquencies aren't too surprising because you are talking about people who are willing to owe a balance that compounds against them at rates approaching 30%! These are not the most sophisticated users of credit. I'm sure many could transfer that balance to a competing product with an 18 month 0% offer or something and pay it down without the compounding against them. But they don't.
They do make a % of everything you buy using the card. So you've probably made them quite a bit of money over the years. Yes they would prefer interest on top of it but it's not a deal breaker.
So I always wondered about this and haven't dug deep enough to answer it for myself. I always assumed that the 5% being paid to me is being split between the merchants (say Lowes) and Synchrony. If that is the case, SYF is not getting a 'swipe fee' like a regular card network card would get. The cards I am describing cannot be used at retailers other than the one on the card and have no Visa, MC, etc affiliation. Someone is covering the 5% to me and I really doubt that SYF is getting a 'swipe fee' net of that 5% - i.e., it would really surprise me if Lowes or Amazon ate the entire 5% and then paid SYF a swipe fee on top of that (even if the swipe fee was below market rate).
Do you know for sure or are you also speculating?
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So I always wondered about this and haven't dug deep enough to answer it for myself. I always assumed that the 5% being paid to me is being split between the merchants (say Lowes) and Synchrony. If that is the case, SYF is not getting a 'swipe fee' like a regular card network card would get. The cards I am describing cannot be used at retailers other than the one on the card and have no Visa, MC, etc affiliation. Someone is covering the 5% to me and I really doubt that SYF is getting a 'swipe fee' net of that 5% - i.e., it would really surprise me if Lowes or Amazon ate the entire 5% and then paid SYF a swipe fee on top of that (even if the swipe fee was below market rate).
Do you know for sure or are you also speculating?
These are all covered by private agreements which are kept secret. From what you're describing the agreement is probably like this: Lowes eats the 5 - that's what they pay to keep you tied to them and jams SYFs card down ur throat. In turn they do pay SYF a swipe fee but likely a heavily discounted one. SYF gets paid some and Lowes benefits cause you use your SYF card and they pay lower swipe fees than they would have if you used you visa instead.
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Buffett's NYT: Berkshire Hathaway Will Not Increase Its Oncor Offer
(https://www.nytimes.com/reuters/2017/08/16/business/16reuters-oncor-m-a-berkshire-hatha.html?partner=IFTTT)
"We're committed to being an exceptional long-term partner in Texas and our simple, straightforward deal is good for Oncor, its customers and the state."
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Who do you think is buying the Bank of New York? Ted or Todd?
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If I had to guess I would guess Todd, but we'll see how big it gets. Sort of surprising that Buffett never added JPM since he is now limited on WFC size. And then JPM put Todd on the board of directors without BRK even owning shares.
Who do you think is buying the Bank of New York? Ted or Todd?
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If I had to guess I would guess Todd, but we'll see how big it gets. Sort of surprising that Buffett never added JPM since he is now limited on WFC size. And then JPM put Todd on the board of directors without BRK even owning shares.
Who do you think is buying the Bank of New York? Ted or Todd?
Buffett said he bought JPM in his personal account and that's because berkshire dont have it so there is no conflicts of interest. So he will not be buying jpm with berkshire money. We wont know his jpm trading in his personal account because there will be no filings..
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I'm not sure I understand your post here, sleepydragon,
What kind of conflict of interest are your referring to here? If I remember correctly [I may not], Mr. Buffett gave an interview at an Allen session/gathering, where he talked about that he considered WFC a better bank than JPM, but he had bought 1 million shares in JPM personally. [Needless to say, that I have since been puzzled about that statement.] I don't have the actual link.
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What kind of conflict of interest are your referring to here?
Suppose that he bought WFC in his personal account rather than JPM. And then, suppose after a couple of years, he decided that, amid WFC's recent scandals, the bank had lost a significant part of its competitive advantage and it was time to sell. He knows that Berkshire selling would likely have a negative effect on price, which would hurt the position in his personal account. So, what does he sell first, Berkshire's stake in WFC or his own? Since his personal account potentially benefits from front-running Berkshire, that's a conflict of interest. By ensuring his personal stockholdings don't intersect with Berkshire's he can avoid this issue.
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Thanks for that elaboration, Richard,
In that light, sleepydragon's post makes sense to slow me, also.
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What kind of conflict of interest are your referring to here?
Suppose that he bought WFC in his personal account rather than JPM. And then, suppose after a couple of years, he decided that, amid WFC's recent scandals, the bank had lost a significant part of its competitive advantage and it was time to sell. He knows that Berkshire selling would likely have a negative effect on price, which would hurt the position in his personal account. So, what does he sell first, Berkshire's stake in WFC or his own? Since his personal account potentially benefits from front-running Berkshire, that's a conflict of interest. By ensuring his personal stockholdings don't intersect with Berkshire's he can avoid this issue.
I know what you're saying, but it's not that simple.
If he buys WFC for BRK and JPM for himself, people can accuse him of conflict of interest because why he bought JPM for himself, is it better than WFC? Why did he not buy WFC for himself, does he not believe it's a good buy? Why did he buy it for BRK then?
I think that's why he said he bought Seritage in personal account, since it would not move needle for BRK, so presumably there's no conflict of interest then. Although you could argue that there is even in that case...
To be clear: I don't care what he bought where much. Just showing that it's not simple to be completely impartial or whatever the word should be.
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He bought for Berkshire Wfc and bac first. Later，he bought Jpm for his personal account because he ran out of banks to buy (interesting he didnt mention citi). CNBC asked him why he didn't buy Jpm earlier for Berkshire, he said Wfc are better..
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First off, he owns WFC in his personal account too, not just JPM. He bought some WFC I think in the 90s and then during the GFC.
He said he bought JPM in his personal account and not WFC for the conflict of interest, but he already has WFC so I don't get it. Maybe he wanted to avoid buying even more WFC and keep what he has.
My guess is that he doesn't buy JPM for Berkshire because it already has what, like close to $40 billion in WFC/BAC? That and I also think he likes the deposit bases of WFC and BAC and their larger focus on bread and butter banking. JPM's investment bank is bigger portion of its assets than BAC's I believe, and also a bigger derivative book. Yea BAC has Merrill but he also got a steal with the warrant/pfd deal. Having said that, JPM it's still well run and he loves Jamie Dimon as a leader, so he bought in his personal account. Just my opinions.
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Anecdote fitting the Oncor acquisition situation:
Despite his cordial demeanor, make no mistake, Buffett is a steely businessman. In just one of hundreds of telling
anecdotes, a trader at Salomon Brothers recounted how Buffett in the early 1970s was in the market for less-thanrobust
bank stocks like Harris Trust. He got a call that a block of Harris stock was available at the market price of
about $49, on which he offered $47. Taken aback, the offering party came back with a bid of $48.50, assuming that
was enough of a discount to the market price to get a deal done, at which point Buffett walked away. As the seller
hit the Street to sell the stock, without any takers, the market price fell, and when it was around $44, he came back
to Buffett offering to sell at that lower price. Buffett's response: "I'll pay $42."
from this week's Barron's article "Warren Buffett's Best Advice" http://www.barrons.com/articles/warren-buffetts-best-advice-and-why-he-doesnt-own-gold-1503115174
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The deposits are the moat, is my (very limited) understanding of his analysis.
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First off, he owns WFC in his personal account too, not just JPM. He bought some WFC I think in the 90s and then during the GFC.
He said he bought JPM in his personal account and not WFC for the conflict of interest, but he already has WFC so I don't get it. Maybe he wanted to avoid buying even more WFC and keep what he has.
My guess is that he doesn't buy JPM for Berkshire because it already has what, like close to $40 billion in WFC/BAC? That and I also think he likes the deposit bases of WFC and BAC and their larger focus on bread and butter banking. JPM's investment bank is bigger portion of its assets than BAC's I believe, and also a bigger derivative book. Yea BAC has Merrill but he also got a steal with the warrant/pfd deal. Having said that, JPM it's still well run and he loves Jamie Dimon as a leader, so he bought in his personal account. Just my opinions.
Why do you think he owns WFC in his personal account?
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First off, he owns WFC in his personal account too, not just JPM. He bought some WFC I think in the 90s and then during the GFC.
He said he bought JPM in his personal account and not WFC for the conflict of interest, but he already has WFC so I don't get it. Maybe he wanted to avoid buying even more WFC and keep what he has.
My guess is that he doesn't buy JPM for Berkshire because it already has what, like close to $40 billion in WFC/BAC? That and I also think he likes the deposit bases of WFC and BAC and their larger focus on bread and butter banking. JPM's investment bank is bigger portion of its assets than BAC's I believe, and also a bigger derivative book. Yea BAC has Merrill but he also got a steal with the warrant/pfd deal. Having said that, JPM it's still well run and he loves Jamie Dimon as a leader, so he bought in his personal account. Just my opinions.
Why do you think he owns WFC in his personal account?
He said so in the meeting this year, it was some bank holding that was subsequently acquired by WFC. Munger has something like this as well, maybe American Express from the 70's or something? Someone asked this same question that insinuated front running. Buffett said that anything Berkshire held or was attractive to BRK was out of bounds for him. He joked that he wants his personal end result to be zero but not that of shareholders.
Every year some small minded questioner asks something like this, insinuating unethical or sleazy behavior. One guy got on the mic and asked him how come he sold his 10 year old cadillac for some $200K? Did he not feel guilty about making money on everything including a used car. Well, it turns out that the money went to a Omaha girls charity. Buffett even told the story of the guy who paid the $200K and on his drive back to NY, was stopped by a trooper for missing number plate and was let go after the driver related the story of the car purchase and showed Warren's signature on the dash.
Too bad the giant screen in the meeting venue only shows the face of the questioner during the question but not after Buffett finishes answering it. I wanted to see the face of guys after such question. Slaps do leave a mark on the cheek but disappears soon, this one should scar grey matter.
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Well I though this was funny.
https://www.reuters.com/article/us-berkshire-hatha-ratings-idUSKCN1B228N
Basically since Berkshire doesn't get to buy oncor S&P wan't cut it's rating. Because 100 billion in your bank account is not enough to keep a AA rating anymore. There's a real pack of geniuses over there at S&P. ::)
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Well I though this was funny.
https://www.reuters.com/article/us-berkshire-hatha-ratings-idUSKCN1B228N
Basically since Berkshire doesn't get to buy oncor S&P wan't cut it's rating. Because 100 billion in your bank account is not enough to keep a AA rating anymore. There's a real pack of geniuses over there at S&P. ::)
;D
yeah, they likely also had Lehman and AIG at AAA in 2007. You can't be right all the time, you know.
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I do think it is amusing to Warren and Charlie that Berkshire isn't able to attain the AAA rating anymore. I remember it being something like, "they hold their cash in treasuries and the USA isn't AAA anymore, so we can't count on the cash being good at the AAA level anymore." Interesting that it looks like Microsoft, JnJ and Exxon Mobil are still triple A? Is that out of date or are those the only non financial AAA issuers these days?
I feel like Berkshire's diversification of income streams makes them less likely to default on their debt than the three above. Maybe no corporates should be rated AAA.
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First off, he owns WFC in his personal account too, not just JPM. He bought some WFC I think in the 90s and then during the GFC.
He said he bought JPM in his personal account and not WFC for the conflict of interest, but he already has WFC so I don't get it. Maybe he wanted to avoid buying even more WFC and keep what he has.
My guess is that he doesn't buy JPM for Berkshire because it already has what, like close to $40 billion in WFC/BAC? That and I also think he likes the deposit bases of WFC and BAC and their larger focus on bread and butter banking. JPM's investment bank is bigger portion of its assets than BAC's I believe, and also a bigger derivative book. Yea BAC has Merrill but he also got a steal with the warrant/pfd deal. Having said that, JPM it's still well run and he loves Jamie Dimon as a leader, so he bought in his personal account. Just my opinions.
Why do you think he owns WFC in his personal account?
I've seen that stated many times. It would probably take some work for me to find any sources as everything I am recalling was some time ago, (5-15 years?).
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It's easy enough to see his direct ownership of WFC. It is 2,009,000 shares
https://www.sec.gov/Archives/edgar/data/72971/000120919117026722/xslF345X03/doc4.xml
First off, he owns WFC in his personal account too, not just JPM. He bought some WFC I think in the 90s and then during the GFC.
He said he bought JPM in his personal account and not WFC for the conflict of interest, but he already has WFC so I don't get it. Maybe he wanted to avoid buying even more WFC and keep what he has.
My guess is that he doesn't buy JPM for Berkshire because it already has what, like close to $40 billion in WFC/BAC? That and I also think he likes the deposit bases of WFC and BAC and their larger focus on bread and butter banking. JPM's investment bank is bigger portion of its assets than BAC's I believe, and also a bigger derivative book. Yea BAC has Merrill but he also got a steal with the warrant/pfd deal. Having said that, JPM it's still well run and he loves Jamie Dimon as a leader, so he bought in his personal account. Just my opinions.
Why do you think he owns WFC in his personal account?
I've seen that stated many times. It would probably take some work for me to find any sources as everything I am recalling was some time ago, (5-15 years?).
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It's easy enough to see his direct ownership of WFC. It is 2,009,000 shares
https://www.sec.gov/Archives/edgar/data/72971/000120919117026722/xslF345X03/doc4.xml
First off, he owns WFC in his personal account too, not just JPM. He bought some WFC I think in the 90s and then during the GFC.
He said he bought JPM in his personal account and not WFC for the conflict of interest, but he already has WFC so I don't get it. Maybe he wanted to avoid buying even more WFC and keep what he has.
My guess is that he doesn't buy JPM for Berkshire because it already has what, like close to $40 billion in WFC/BAC? That and I also think he likes the deposit bases of WFC and BAC and their larger focus on bread and butter banking. JPM's investment bank is bigger portion of its assets than BAC's I believe, and also a bigger derivative book. Yea BAC has Merrill but he also got a steal with the warrant/pfd deal. Having said that, JPM it's still well run and he loves Jamie Dimon as a leader, so he bought in his personal account. Just my opinions.
Why do you think he owns WFC in his personal account?
I've seen that stated many times. It would probably take some work for me to find any sources as everything I am recalling was some time ago, (5-15 years?).
I thought these were Berkshire pension holdings. I remember him addressing this in the past. He said he wasn't sure why it was disclosed that way.
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It's pretty clear in the link:
"1. These securities are owned directly by Warren E. Buffett, who is a reporting person hereunder."
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Not sure what happened to Jurgis's post, but this is from Marc Hamburg:
"The shares referenced in your e-mail below are Warren’s are personal holdings and are not held by Berkshire."
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Not sure what happened to Jurgis's post, but this is from Marc Hamburg:
"The shares referenced in your e-mail below are Warren’s are personal holdings and are not held by Berkshire."
Thanks. 8)
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I don't have a source but in the summer of 2008 when Wells dropped below $20 I can remember word for word him saying "I couldn't help but buy Wells Fargo (in my personal account) below $20"
It was reported on CNBC
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Naturally I don't question information from Mr. Hamburg - I hold him bery high, and admire his work for Berkshire, he is on the professional level in his very own league, in my opinion -, but if you take a look at the 13/Fs, and look specifically on the KO positions in the Berkshire group year end 2016 and try to reconcile the number of KO shares in the Berkshire 2016 Annual Report with the year end 2016 13/F, why is Berkshire then reporting in the Annual Report possesion of 400 M KO Shares, and not [400 M - 800 K] KO shares?
[800 K shares are reported as belonging to Mr. Buffett, while you have to include that position, to get to 400 M KO shares in total in the 13/F.]
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Yeah, I'm not saying that everything with 'manager code 4' in a 13f is warren's personal account. Just that when a form 4 says these securities are owned directly by Warren E Buffett and the CFO confirms as such then we have the answer. Even on Wells the 'code 4' line doesn't match his personal share count.
Naturally I don't question information from Mr. Hamburg - I hold him bery high, and admire his work for Berkshire, he is on the professional level in his very own league, in my opinion -, but if you take a look at the 13/Fs, and look specifically on the KO positions in the Berkshire group year end 2016 and try to reconcile the number of KO shares in the Berkshire 2016 Annual Report with the year end 2016 13/F, why is Berkshire then reporting in the Annual Report possesion of 400 M KO Shares, and not [400 M - 800 K] KO shares?
[800 K shares are reported as belonging to Mr. Buffett, while you have to include that position, to get to 400 M KO shares in total in the 13/F.]
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Thanks, globalfinancepartners,
I'll try to take a look at the WFC positions, too - in the coming days.
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as expected, BRK exchanges preferred and warrants for common in BAC. Wonder if it will have to pass through the income statement for the quarter (no tax due of course)
http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2297215#fbid=XOIEhKq6Vrz
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Happy 87th birthday to W.E.B!
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May he live to 120!
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He's on CNBC right now
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I've lived under 15 presidents and bought stocks under14 of them. I was two under Hoover and hadn't got into stocks yet. But I bought under Eisenhower ;D
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I was two under Hoover and hadn't got into stocks yet.
Disappointing ;)
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Buffett admits he was wrong on IBM
https://www.cnbc.com/video/2017/08/30/buffett-i-was-wrong-in-my-original-ibm-analysis.html
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Does anyone have a link or a suggestion how I could get/watch the whole interview as opposed to snippets that cnbc posts?
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Does anyone have a link or a suggestion how I could get/watch the whole interview as opposed to snippets that cnbc posts?
https://www.cnbc.com/video/3000650022
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Thanks
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A fairly big acquisition for HomeServices -
http://www.loudountimes.com/news/article/berkshire_hathaways_homeservices_acquires_chantilly-based_long_foster
http://www.businesswire.com/news/home/20170907006469/en/HomeServices-America®-Acquires-Long-Foster-Companies
update: recently acquired Long & Foster as made an acquisition of its own 5 days into HomeServices ownership -
https://www.washingtonpost.com/news/where-we-live/wp/2017/09/13/long-foster-acquires-d-c-area-real-estate-brokerage-firm/?utm_term=.e4789c6d99f4
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Nice. Although the financial details are undisclosed this sounds like a typical friendly acquisition, retaining good existing management, and presumably for a reasonable price that would probably return about 9-10% per annum after tax.
I don't have a particularly strong feel for the US market. In the UK I know it's fairly tough on estate agents with internet companies like PurpleBricks.com offering fixed price rather than commission and advertising strongly, though solicitors/conveyancers will still charge a sizeable amount to do the legal work. I've spoken to someone who says it's quite a tough time for estate agents and that these new entrants don't provide what she feels is a proper level of service. However, I think that many people find estate agents bad to deal with very often and would rather have a few thousand pounds more in their pockets than slightly less bad service.
One thing possibly looming is whether or not blockchain technologies could spread into areas like this and replace the layers of companies and registrars who are currently in the trust-but-verify business and who maintain or query ledgers of ownership transactions. Blockchains could eventually provide a distributed trust network for property records and transactions which has the potential to make a lot of these transactions far simpler with far lower frictional costs. If it spreads, it could be a game-changer to certain industries of 'middlemen' and a cost-saver for the rest of us.
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Totally off topic, but for a short time Howie will be the Sheriff in his hometown. (he has been undersheriff for a while)
https://www.bloomberg.com/news/articles/2017-09-15/there-s-a-new-sheriff-in-town-and-he-s-warren-buffett-s-son
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Buffett featuring in a short Forbes article, presumably there'll be a much longer article in the magazine itself when it comes out. Nothing in the web article no one hasn't heard before though.
https://www.forbes.com/sites/randalllane/2017/09/20/warren-buffett-my-greatest-investing-advice-and-the-investments-everyone-should-make/#7e9541d1593e
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Buffett featuring in a short Forbes article, presumably there'll be a much longer article in the magazine itself when it comes out. Nothing in the web article no one hasn't heard before though.
https://www.forbes.com/sites/randalllane/2017/09/20/warren-buffett-my-greatest-investing-advice-and-the-investments-everyone-should-make/#7e9541d1593e
Thanks for sharing. It's very interesting.
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https://www.reuters.com/article/us-buffett-forbes/buffett-calls-pessimists-about-united-states-out-of-their-mind-idUSKCN1BV0A3
Buffett said he expects the Dow Jones Industrial Average to be “over 1 million” in 100 years, up from Tuesday’s close of 22,370.80. He said that’s not unreasonable, given how the index was roughly 81 a century ago.
That's all ? While the raw figure may sound nice it's actually only 3.9% nominal annual return (maybe even negative real returns).
Any thoughts on this ?
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It is what it is, WneverLOSE,
Projections.
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https://finance.yahoo.com/news/berkshire-hathaway-invests-pilot-flying-115500228.html
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This must be fairly big. That flying thing actually has 770 locations.
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It may be 5 or 6 Billion dollars for the entire company. 38% could be $2.25 Billion, the eventual 80% $5 Billion or so. With few other acquisitions this quarter and what I assume to be a quick closing with Byron as the investment banker and one of the sellers, we will probably find out what Berkshire paid in the annual report cash flow statement.
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I found it as No.15 (https://www.forbes.com/companies/pilot-flying-j/) on Forbes list of largest US private companies.
Sales of USD 19.62 B.
Employees: 27,100.
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Could be $8 Billion valuation for the whole thing. Not sure. Sales will be much higher than market cap for a company in that business. It probably makes at least $500 million net each year, but I don't have a source for accurate numbers.
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This must be fairly big. That flying thing actually has 770 locations.
It appears that they have roadside truck services as well. Can see some connections with McLane, Xtra and Geico(?). In somewhat of a related way, DQ, Burger King are surely co-located at some of the 770 locations?
The way it's going, with Berkshire gobbling up pieces of America, how can there not be a connection ;D
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In other news, QBE, the large Australian Insurance company, issued a press release that indicates that Berkshire could see a $900 million payout on a reinsurance contract that Ajit wrote for QBE. QBE exhausted the reinsurance coverage and then some, so BRK could be on the hook for the entire $900 million. Along with the AIG deal amortization and the GEICO numbers, this would almost certainly mean the first full year underwriting loss in quite a while.
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maybe a 3% EBITDA margin business, tops? So possible value of company at 15x (just to throw a very high number there) = 0.45x sales = $9B enterprise value as an upper limit.
Maybe they make more money, but TravelCenters GAAP financials certainly don't indicate that (EBITDA margins are <3% in all years and <1% in many)It's possible (highly likely) Flying J is much better run, but how much better?
In the absence of other info, I think it's fair to say this may be a very small transaction relative to the headline of "one of the largest private co's in America", and doesn't really change the earnings power materially.
More of a varmint than an elephant.
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This must be fairly big. That flying thing actually has 770 locations.
It appears that they have roadside truck services as well. Can see some connections with McLane, Xtra and Geico(?). In somewhat of a related way, DQ, Burger King are surely co-located at some of the 770 locations?
The way it's going, with Berkshire gobbling up pieces of America, how can there not be a connection ;D
You are right, longinvestor. If you click on "locations" top right on main page, then on "all locations", you can actually download the whole thing to Excel. Lots of McDs, Wendies and Dairy Queens are mentioned as Facitilities/Restaurants.
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http://www.knoxnews.com/story/money/business/2017/10/03/haslams-warren-buffett-join-forces-pilot-flying-j-sale/726050001/
Knoxville paper has details on the ownership stake breakdown and who's selling.
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https://finance.yahoo.com/quote/BRK-A/?p=BRK-A
Buffett & Haslam with Betty Q @ CNBC. This is just like many others, being a two-step deal. Interesting comment by Haslam, they are a giant logistics company in that they carry a lot of diesel around to gas stations across 44 states; plus sell over a billion $ in food at their truck centers. $20 B sales; Big opportunity to grow organically and hopefully sock up some of Omaha's billions.
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Hope Byron Trott brings many more such deals. In a sense, the fourth T ;)
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In a world of autonomous trucks, is this business nearly as valuable as it is today? I'm still scratching my head on this one. Trucking is the easiest application of autonomous tech, as the highway system is a very predictable and easily navigable environment. Can't be far off.
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My main thought is that Brookfield (via sub) recently bought some gas station type thing too. There is some magic there or predictability of business or something?
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maybe a 3% EBITDA margin business, tops? So possible value of company at 15x (just to throw a very high number there) = 0.45x sales = $9B enterprise value as an upper limit.
Maybe they make more money, but TravelCenters GAAP financials certainly don't indicate that (EBITDA margins are <3% in all years and <1% in many)It's possible (highly likely) Flying J is much better run, but how much better?
In the absence of other info, I think it's fair to say this may be a very small transaction relative to the headline of "one of the largest private co's in America", and doesn't really change the earnings power materially.
More of a varmint than an elephant.
Operating income was $1.4B in 2015, up from $1.1B the year before. So maybe your numbers are a bit low. Not as big as an elephant, but bigger than varmint - a deer, say, or maybe a moose.
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I'm curious about your data source about the operating income, dartmonkey, and I hope you will share it.
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Yeah, I'd be interested in the source as well. Dartmonkey's numbers indicate an op margin somewhere in the 7% range when their competitors are in the 1%-1.5% range. This would make them insanely profitable. I just don't see the way you get those margins selling diesel.
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Yeah, I'd be interested in the source as well. Dartmonkey's numbers indicate an op margin somewhere in the 7% range when their competitors are in the 1%-1.5% range. This would make them insanely profitable. I just don't see the way you get those margins selling diesel.
Credit?
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Debt doesn't figure into operating margins. If you were to go lower in the P&L debt would lower margins not raise them.
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I hereby suggest a topic split to to here (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/berkshire-aquisition-of-pilot-flying-j-long-term-80-per-cent/msg311199/#msg311199) for discussion of the Berkshire Pilot Flying J aquisition in detail.
It deserves its own topic, I think.
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https://finance.yahoo.com/video/automated-trains-speeding-past-self-171026128.html
Interesting, autonomous train test in western australia. Planes, trains.....yes; automobiles?..no. Unsexy and it's not coming from Silicon Valley ;)
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Debt doesn't figure into operating margins. If you were to go lower in the P&L debt would lower margins not raise them.
I actually meant selling fuel on credit.
Sorry John, future posts will go to the right thread.
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You are forgiven, DooDiligence, [ ; - ) ]
The board members interested in this transaction will get it right anyway, by reading the whole board.
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You are forgiven, DooDiligence, [ ; - ) ]
The board members interested in this transaction will get it right anyway, by reading the whole board.
I deleted a few posts/clogs over on that other thread but had to leave 2 in order to keep myself honest (probably could move those - yea or nay?)
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It's a bit funny to read, DooDiligence, actually,
I have been a bit active - call it just self-appointed couch moderator, absolutely uncalled for - to save some gold here on CoBF with regard to Berkshire stuff, and with the aim to keep the board temperature down, by trying also to avoid annoyance of other board members.
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Trying to be constructive with the use of good mood has a fairly good success rate, if you are among constructive and rational thinking persons, like here on CoBF.
CoBF instantly caught self awareness under the "Big Bang" [it got folded out by Sanjeev at February 1, 2009 - basically out of nothing, except a very good user base pre "Big Bang" on another board [Yahoo?], now gone, I think.
Somehow, it has now gone to the level of getting self moderating, based on cooperative interaction among fellow board members.
Isen't that something very special, in its very own league? - At least to me, it is.
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- Now back to Berkshire General News, & Peace.
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Restaurant Brands International paying Berkshire back $3.3 Billion in December, and BRK loses another high yielding preferred (9%).
Kinda slipped this one in a press release without mentioning Berkshire at all -
http://www.rbi.com/file/Index?KeyFile=390786299
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Berkshire Hathaway: Tax Reform´s Big Winner?
https://www.barrons.com/articles/berkshire-hathaway-tax-reforms-big-winner-1512076594?mod=hp_highlight_1&
Cheers! :)
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Here is a non-subscriber link of this article, but I think some figures are not correct:
https://www.barrons.com/articles/berkshire-hathaway-tax-reforms-big-winner-1512076594?mod=bol-social-fb
The effect of reduced deferred tax is, that we have to add 35 to 40 B to the bookvalue, not just 27B.
Anyone has an opinion on it ?
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Berkshire income taxes end of 2017Q3, balance sheet, liabilities, stated at USD B 86.559, with the text:"Income taxes, principally deferred".
So a rough estimate of effect on Berkshire equity according to the financials would be: [USD B 86.559 * [[35% - 20%]/35%]] = USD 37,097. So the numbers mentioned so far here seem to me to be in right ballpark, and most of all material, even to Berkshire.
This estimate is most likely overstating the accounting effect, the most material part of the overstatement being deferred taxes in subs taxable outside US, who will continue to account for deferred taxes based on actual local/national corporation tax rates.
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All other nitpicking omitted here.
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Isen't Berkshire World Champion in deferring taxes by the way? -I do not recall ever having read any other balance sheet with such a large figure stated for deferred taxes.
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Isen't Berkshire World Champion in deferring taxes by the way? -I do not recall ever having read any other balance sheet with such a large figure stated for deferred taxes.
I haven't seen a company with that big of a deferred tax liability either. Obviously it is a consequence of rarely, if ever, selling anything large and a half century of acquisitions. Even Precision Castparts came with ~$7.5 Billion of "income tax, principally deferred" - so a lot of this liability is never to be realized even if the equity portfolio was completely liquidated.
At the last 10Q there was $82.2 Billion of unrealized appreciation in equity securities and another $1 Billion on the bond portfolio. At 35% that amounts to a $29 Billion deferred tax liability. At 20% it is $16.65 Billion, a savings of over $12 Billion if the tax plan passes and Berkshire gets the 20% rate.
Year end gains look to be higher still, at least so far.
Berkshire's tax rate bounces all over the place between 30% and 20% most of the time. But the tax liability on the unrealized investment gains is usually calculated right at 35%.
I can't speak to the rates used to calculate the rest of that income tax liability. But it isn't nearly as important since it won't be spent. The equities may actually be sold, resulting in a real cash savings. I don't see them selling the land under BNSF's tracks or the property plant and equipment of PCC.
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Oh snap, I was looking at the wrong thread (or rather prolonging the agony for others by discussing there.)
The "there" I speak of is the "What are you buying today" thread.
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No harm done, DooDiligence,
We can just continue the Berkshire tax discussion here (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/tax-change-effects-on-berkshire/msg317059/#new). [ : - ) ]
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After Decades of Hints, Buffett’s Heir May Now Be More Apparent
The pressure to dismantle Berkshire will mount. The bulwark against that impulse is his successor, whose identity is one of the business world’s best-kept secrets.
https://www.bloomberg.com/news/articles/2017-12-07/after-decades-of-hints-buffett-s-heir-may-now-be-more-apparent (https://www.bloomberg.com/news/articles/2017-12-07/after-decades-of-hints-buffett-s-heir-may-now-be-more-apparent)
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SYAC (saved you a click): they mention Jain or Abel.
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SYAC (saved you a click): they mention Jain or Abel.
This is a Biblical choice...
8)
Oh, Jain, not Cain...
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Omaha philanthropist Susan Buffett marries her longtime companion
http://www.omaha.com/money/omaha-philanthropist-susan-buffett-marries-her-longtime-companion/article_baa41052-de30-11e7-8477-1b44ac662c6b.html
(Via Omaha.com)
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mo more mo problems
https://www.bloomberg.com/news/articles/2017-12-11/buffett-s-about-to-get-3-billion-back-from-burger-king-owner (https://www.bloomberg.com/news/articles/2017-12-11/buffett-s-about-to-get-3-billion-back-from-burger-king-owner)
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http://alumni.fsu.edu/vires-magazine/10-questions-todd-combs-bs-93
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http://alumni.fsu.edu/vires-magazine/10-questions-todd-combs-bs-93
Nice.
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THANKS
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Apologies if this already got posted.
https://stocknews.com/news/brk-b-berkshire-hathaway-inc-brk-b-to-get-3-billion-from-burger/
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Apologies if this already got posted.
https://stocknews.com/news/brk-b-berkshire-hathaway-inc-brk-b-to-get-3-billion-from-burger/
i was talking to my father over thanksgiving...and ive own some brk for a while now, since maybe 2010-2011ish....anyways i was taking to my dad about it and as we were talking i saw him come to the realization that he missed out on most of it while hes been alive...one of the most aqkward momemts with my father when he said basically "man i could have owned just that over my life"...i basically just said "yah."
you could see his face change as he said it...and that basically ended the converation.
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stop torturing people that have not owned berkshire shares long enough ;)
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"i was talking to my father over thanksgiving...and ive own some brk for a while now, since maybe 2010-2011ish....anyways i was taking to my dad about it and as we were talking i saw him come to the realization that he missed out on most of it while hes been alive...one of the most aqkward momemts with my father when he said basically "man i could have owned just that over my life"...i basically just said "yah."
you could see his face change as he said it...and that basically ended the converation."
I just finished reading "Where are the Customers Yachts" and my favourite sentence is the last sentence of the introduction:
"Then a long time later it turns out that I should have just bought them, and thereafter I should have just sat on them like a fat, stupid peasant.
A peasant however, who is rich beyond his limited dreams of avarice."
:)
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https://www.wsj.com/articles/u-s-insurers-win-bermuda-loophole-fight-1513441983
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A recent discussion with Mr. Munger
https://www.youtube.com/watch?v=S9HgIGzOENA&feature=youtu.be&utm_medium=Email&utm_source=ExactTarget&utm_campaign=DAR&utm_content=newsletter&utm_term=121917
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Thanks for sharing! i guess Santa came early this year.
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A recent discussion with Mr. Munger
https://www.youtube.com/watch?v=S9HgIGzOENA&feature=youtu.be&utm_medium=Email&utm_source=ExactTarget&utm_campaign=DAR&utm_content=newsletter&utm_term=121917
Thanks for sharing!
A little after 38 minutes:
There's at least $60 billion dollars in Berkshire of net worth that Ajit has created that we would not have created without him.
And the value is way more than $60 billion.
I mean there's that much in extra liquid net worth but the value of the business is way more than $60 billion.
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Thank you! :)
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Brooks Needs Runners Who Hate to Run
The $500 million company has conquered runners. Now it has to figure out everyone else.
https://www.bloomberg.com/news/features/2018-01-03/why-brooks-needs-runners-who-hate-to-run (https://www.bloomberg.com/news/features/2018-01-03/why-brooks-needs-runners-who-hate-to-run)
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Warren wrote something for the current Time magazine issue which is edited by Bill Gates and dedicated to 'the optimists'
http://time.com/5087360/warren-buffett-shares-the-secrets-to-wealth-in-america/
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http://www.omaha.com/money/oriental-trading-ceo-who-turned-company-into-profitable-part-of/article_0832d1d7-b1e6-5160-8329-3a41bcbfe050.html
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http://www.omaha.com/money/oriental-trading-ceo-who-turned-company-into-profitable-part-of/article_0832d1d7-b1e6-5160-8329-3a41bcbfe050.html
Sad. RIP.
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Bloomberg with a reminder that Berkshire's reported earnings are going to include unrealized investment fluctuations going forward ->
https://www.bloomberg.com/news/articles/2018-01-17/buffett-s-nightmare-begins-as-earnings-include-stock-swings
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Bloomberg with a reminder that Berkshire's reported earnings are going to include unrealized investment fluctuations going forward ->
https://www.bloomberg.com/news/articles/2018-01-17/buffett-s-nightmare-begins-as-earnings-include-stock-swings
Great, that will mean buying opportunities and keep more idiots from buying the stock, because higher Beta moves the stock into risky category, ha.
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Ajit Jain reports $109 million Berkshire stake
https://www.reuters.com/article/us-berkshire-hathaway-stakes/possible-buffett-successor-jain-reports-109-million-berkshire-stake-idUSKBN1F806A
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Ajit Jain reports $109 million Berkshire stake
https://www.reuters.com/article/us-berkshire-hathaway-stakes/possible-buffett-successor-jain-reports-109-million-berkshire-stake-idUSKBN1F806A
Management buying stock with their own money, isn't that great? Between Abel and Jain's ownership it is approaching 1B. How much do the heads of the subs own?
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Ajit Jain reports $109 million Berkshire stake
https://www.reuters.com/article/us-berkshire-hathaway-stakes/possible-buffett-successor-jain-reports-109-million-berkshire-stake-idUSKBN1F806A
Isn't that only about 10% of his yearly income?
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Small bolt-on acquisition for Berkshire Homeservices
https://www.reuters.com/article/brief-silverhawk-realty-joins-berkshire/brief-silverhawk-realty-joins-berkshire-hathaway-homeservices-idUSFWN1PI10U
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I think it was Morgan Housel, but someone said that the past 15+ year BRK outperformance could be due to BRK not having the typical hedge fund fee structure. However, I'm assuming a lot of the sub CEO's are fairly compensated, so ...:
1) is that assertion true? if BRK top dogs got typical hedge fees, would performance suffer?
2) more relevant, post Buffet, would compensation impact BRK in a meaningful way? I guess I look at some of the supposed mini BRK, and they have been motoring a long with - I assume - more than fair compensation to management. Just wondering.
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I think you are correct in the assumption that BRK managers are fairly compensated. BRK managers have long tenures. if they aren't compensated properly then why would they stay?
Furthermore the initial assertion/premise is ridiculous. Why would an operating manager get compensated like a hedge fund manager? Does that happen anywhere except the proponent's weird imagination? Does Jamie Dimon get 2% of assets and 20% profit of JP Morgan? It's stupid.
As for number 2, no compensation will not impact BRK in a meaningful way post Buffett.
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Actually, compensation is decided by the manager himself/herself. Buffett asks them when they come to Berkshire and he's seldom changed a word in the agreement. He's addressed this at the meeting. Surely, they work out a properly crafted incentive based on microeconomics of the business. It's quite sound this way. No one is likely to ask for the horseshit hedge fund type deal with Buffett. Or his successor. Buffett called that compensation "merely for breathing".
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From the 2017 AGM proxy, we know the 2016 compensation of Berkshire SVP & CFO Marc Hamburg as USD 1,550,000 [no bonus that year] plus a bit pension. So I suppose we will see the total compensation of Mr. Jain and Mr. Abel in the 2018 AGM proxy, right?
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From the 2017 AGM proxy, we know the 2016 compensation of Berkshire SVP & CFO Marc Hamburg as USD 1,550,000 [no bonus that year] plus a bit pension. So I suppose we will see the total compensation of Mr. Jain and Mr. Abel in the 2018 AGM proxy, right?
That'll be cool to see!
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(http://uglymule.com/images/WEB&CharliesPay.png)
If these figures are accurate, every CEO in America should be ashamed of themselves.
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I believe Abel's previous compensation has been detailed in BHE's filings but I don't have them in front of me. Certainly they did end up disclosing that he holds something like $400 million of BHE shares that can be converted into BRK stock at his option. Much - if not all - of that was transferred from Sokol, so I'm sure there was a loan involved and it slowly vested to him over time. There may still be a loan behind it. And on Doo's chart, Buffett's compensation is mostly security services as he famously takes the same $100k a year as Charlie. Charlie usually reimburses Berkshire something like $50k a year for 'personal use of postage' and other personal stuff like secretarial time.
edit - added graphic showing BHE comp
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And another thing about the compensation regime. Buffett once threatened to come out of the box should anything egregious becomes more prevalent at Berkshire down the road. ;D
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My question/point with regards to compensation is that whoever becomes the new BRK CEO won't be content with $100K. Buffett, I believe, said something along the same line. I don't think BRK future compensation will be so out of line but it would be significant.
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If the new CEO will need to get paid somewhere in the 20-70 million range it would not have a meaningful impact on Berkshire's profitability.
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I have the sense that the next guy likely will not take $100K but he is more likely not to take $20 or $60 or $100 million. It is hard enough to step in those shoes, it is terrible optics to come in after Buffett and take a huge salary like that. That places a great amount of pressure, as if the pressure to deliver shareholder value is not enough in itself. Munger said it best. The real solution to excessive salaries is for the CEO's to voluntarily shun them. I believe that Abel/Jain or whoever steps into Buffett's shoes does just that. They continue the lifestyle they currently have been afforded. ;) Maybe the guy/gal after the next CEO does something else.
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I have the sense that the next guy likely will not take $100K but he is more likely not to take $20 or $60 or $100 million. It is hard enough to step in those shoes, it is terrible optics to come in after Buffett and take a huge salary like that. That places a great amount of pressure, as if the pressure to deliver shareholder value is not enough in itself. Munger said it best. The real solution to excessive salaries is for the CEO's to voluntarily shun them. I believe that Abel/Jain or whoever steps into Buffett's shoes does just that. They continue the lifestyle they currently have been afforded. ;) Maybe the guy/gal after the next CEO does something else.
I thought Buffett already prepared folks for the bad optics by saying the next CEO would be granted some option based compensation. So... it should be - relatively - massive. But shouldn't be such that it would be impactful for shareholders.
I guess also, by the time the next guy/gal after the next CEO, BRK will be very, very different, that's when some of the institutional stuff will wear then.
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... I thought Buffett already prepared folks for the bad optics by saying the next CEO would be granted some option based compensation. ...
What is your source for posting this, villainx?
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https://finance.yahoo.com/news/one-qualification-warren-buffett-like-berkshires-next-ceo-172054448.html
Modest and motivated.
Rare breed.
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https://finance.yahoo.com/news/one-qualification-warren-buffett-like-berkshires-next-ceo-172054448.html
Modest and motivated.
Rare breed.
True dat (the stuff of hero's.)
I'll bet there's a few, right here on COBF (maybe on a slightly different wealth scale, but modest, motivated & skilled, nonetheless.)
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BRK was hammered hard yesterday...down 4% at one point!
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Market was down in general and the wells fargo scandal didn't help
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Market was down in general and the wells fargo scandal didn't help
The wells stuff came out after close.
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Isn't it time when Buffett sends the letter to Loomis for final edit?
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Buffett's Berkshire Hathaway Insurer Enters Dubai With New Hires
https://www.bloomberg.com/news/articles/2018-02-12/buffett-s-berkshire-hathaway-insurer-enters-dubai-with-new-hires (https://www.bloomberg.com/news/articles/2018-02-12/buffett-s-berkshire-hathaway-insurer-enters-dubai-with-new-hires)
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Phillips 66 is going to buy back 3.28 billion worth of shares from BRK for $93.72 per share to keep BRK's holdings under 10%
https://www.reuters.com/article/us-phillips-66-buyback-berkshire/phillips-66-to-buy-back-35-mln-shares-from-berkshire-hathaway-idUSKCN1FX33G
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"This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent,” Buffett said in a statement."
I'm not too clear - this is not a bank stock, does Berkshire have a sub-10% requirement for refinery/oil stocks too? It sounds like in this case regulatory requirements were too onerous - but what would they be? Also, is it correct to understand that *either* Berkshire desires to own <= 10% of this OR it can own 100% (a full buyout) but not anything in-between?
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"This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent,” Buffett said in a statement."
I'm not too clear - this is not a bank stock, does Berkshire have a sub-10% requirement for refinery/oil stocks too? It sounds like in this case regulatory requirements were too onerous - but what would they be? Also, is it correct to understand that *either* Berkshire desires to own <= 10% of this OR it can own 100% (a full buyout) but not anything in-between?
Believe it is the SEC reporting requirement of 3 days versus 3 months.
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If I had to guess it was probably more about FERC and/or DOT regulators that Berkshire Hathaway Energy deals with. It is possible that over 10% they start to consider PSX assets when Berkshire seeks certain approvals.
Another possibility is that it was PSX's idea to buy the block, Warren was OK with it, and they used it as an excuse.
"This transaction was solely motivated by our desire to eliminate the regulatory requirements that come with ownership levels above 10 percent,” Buffett said in a statement."
I'm not too clear - this is not a bank stock, does Berkshire have a sub-10% requirement for refinery/oil stocks too? It sounds like in this case regulatory requirements were too onerous - but what would they be? Also, is it correct to understand that *either* Berkshire desires to own <= 10% of this OR it can own 100% (a full buyout) but not anything in-between?
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Seems Buffett has sold out almost the entire IBM position. Did he find something better than 11x earnings or better prospects and is loading his cash reserves?
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He's been liquidating it for a while now, and mentioned he was still selling in a fairly recent CNBC interview. I'm surprised he sold almost all of it before December 31st, since he had mentioned having high basis and low basis shares and choosing the shares he was selling before and after the new year. I guess he didn't really have many low-basis shares left. I don't think it is about finding something "better" - but rather moving on from a position that did not work out as he originally saw it going. I do like to see the mental flexibility to change his mind, even with the cover of his whole "ideal holding period is forever" and a 4% dividend yield to justify holding. It's amazing how much confidence he has in Apple - that position is getting really big. Far bigger, at cost, than any other stock purchases in his life.
Seems Buffett has sold out almost the entire IBM position. Did he find something better than 11x earnings or better prospects and is loading his cash reserves?
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A pretty negative article on Buffett was recently published. I'm only going to read Market Watch's analysis of said publication. Here is Market Watch's take:
https://www.marketwatch.com/story/why-warren-buffett-is-a-prime-example-of-the-failure-of-american-capitalism-2018-02-15
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"“Companies in Buffett’s portfolio have extorted windfall profits, ripped off taxpayers, and abused customers,” he says, adding that Buffett “makes no secret of his fondness for monopoly. He repeatedly highlights the key to his personal fortune: finding businesses surrounded by a monopoly moat, keeping competitors at bay.”"
Hmmm, same as governments I would say - another side of the coin. Government is the ultimate monopoly.
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Interesting that "moat" is now equal to "monopoly"... Apparently the United States is not supposed to allow any competitive advantage, brand name or otherwise
additionally, the author of the article in "the nation" appears to think Buffett is an investor in TransDigm. News to me....
"Buffett takes full advantage of tax loopholes. He uses Berkshire Hathaway, a valuable tax shelter, for his investments." We should all stash our investments in a C-corp. Way to stick it to the government warren
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The excerpts were full of non sequiturs. But the guy doesn't need sound arguments to sell books. He just has to find an appealing narrative for a receptive niche audience. His moat is in being different not in writing cogent arguments.
Buffett frequently refers to moats like Geico's made from passing on savings by being the low cost operator in a highly competitive industry thereby winning more business and restraining loyal customers.
Likewise BH Energy wins favor from customers and regulators by keeping costs low and investing in infrastructure. In return it is permitted a decent return.
He either hasn't paid attention or has conveniently ignored and misinterpreted the idea of moats.
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ever since Murdoch bought WSJ, I found the articles by WSJ (marketwatch is owned by WSJ) are very biased. Definitely very pro-trump. Sometimes you will see FT and WSj have totally opposite headline on some trump-related news on the front page. I called WSJ and unsubscribed.
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That article was total drivel.
Moat doesn't equal monopoly. Free competition doesn't mean no competitive advantages, it means trying to gain competitive advantages and overcome others' competitive advantages. What does the guy envision, a USA where every product has completely generic packaging, no brand name, and the exact same ingredients and recipe as every other item?
The innovation he wants comes about because people are striving to gain competitive advantages. If you make competitive advantages illegal, you'll also eliminate most of the innovation.
I don't think I've ever seen an investment-related article that's so wrong in so many ways.
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Yea the guy who wrote that article is an idiot. But you drop some names and you get you idiot piece picked up by the likes of Marketwatch and drive traffic.
Some members made some very good points here that competitive advantages are not the same as monopoly power, etc, so I won't delve into those things. The truth is that if there's one thing that Buffett understands is competitive dynamics and he probably understands that better than anyone else. Berkshire invested in companies with monopolistic, near monopolistic, or oligopolistic attributes (I'll call them monopolistic here for short).
But what the idiot writer misses is that Berkshire didn't make money because of these monopolistic dynamics of these companies. Berkshire made money because they've bought them at a discount to intrinsic value. Furthermore they made money because some other idiot agreed to sell it to Berkshire below IV. I don't really understand what the author expected Buffett to do. Some guy comes to him and says I want to sell you this very profitable company with a great competitive position for half of what it's worth. Then Buffett should say no, I don't want that, I want to go out there and buy some piece of shit for a lot of money? That has nothing to do with capitalism, or any other economic system for that matter, it has to do with whether you're smart or stupid.
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That article was total drivel.
Moat doesn't equal monopoly. Free competition doesn't mean no competitive advantages, it means trying to gain competitive advantages and overcome others' competitive advantages. What does the guy envision, a USA where every product has completely generic packaging, no brand name, and the exact same ingredients and recipe as every other item?
The innovation he wants comes about because people are striving to gain competitive advantages. If you make competitive advantages illegal, you'll also eliminate most of the innovation.
I don't think I've ever seen an investment-related article that's so wrong in so many ways.
Exactly! It’s incredible that this kind of article gets so much attention precisely due to the high reputation of the person which the article is clearly trying to damage.
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Exactly! It’s incredible that this kind of article gets so much attention precisely due to the high reputation of the person which the article is clearly trying to damage.
It's the world we live in... where clicks are all that matters. Some members here may hate pretty hard on the article, but they still clicked on it to read it. That's all good in the eyes of the author. Mission accomplished.
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Exactly! It’s incredible that this kind of article gets so much attention precisely due to the high reputation of the person which the article is clearly trying to damage.
It's the world we live in... where clicks are all that matters. Some members here may hate pretty hard on the article, but they still clicked on it to read it. That's all good in the eyes of the author. Mission accomplished.
The funny part is that likely most of the people here (who presumably do the real-value-investing-DD (TM)) did not even bother to click another link to the real (long) article (on thenation website) and just posted their opinion based on Marketwatch summary click bait. ;D
Not that I endorse thenation full article. 8)
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"ever since Murdoch bought WSJ, I found the articles by WSJ (marketwatch is owned by WSJ) are very biased. Definitely very pro-trump. Sometimes you will see FT and WSj have totally opposite headline on some trump-related news on the front page. I called WSJ and unsubscribed."
You should subscribe instead to the Communist News Network. Definitely very anti-Trump.
Cardboard
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The article was in The Nation, and had nothing to do with Rupert Murdoch or the Wall Street Journal / Marketwatch. The article in The Nation was pretty bad. I did not read the other articles summarizing the primary article.
Cardboard, it's OK to be anti-Trump. At least half the nation feels that way. For many Americans, he is a national embarrassment - with potentially dangerous ignorance. It's also OK to be anti-Buffett. Not as many Americans feel that Warren Buffett is a national embarrassment, but he's not perfect - as is well understood by people on a board like this one, who follow his statements quite closely.
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Sure. What is not ok in my view is to not even want to read/know what the other side is thinking. Confirmation bias is that how they call it?
I have noticed a huge change in what ABC, CBS, NBC and CNN present information since Trump. Has not prevented me from listening to what they say and to then form my own opinion.
Cardboard
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Article is BS. Their utility companies have some of the lowest rates and lowest increases in then ountry. Geico has the lowest rates in many states. I am insured with Geico in NY and couldn’t get a competitive quote within 15% of Geicos, even with homeowners discount thrown in by some competitors. It was aneifernde story in CA, but here on thrneast coast, it seems that Geico is hard to beat. In any case, their market share isn’t high enough to exert monopoly power, they growth through lower pricing, which is exactly what should happen in capitalism
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"ever since Murdoch bought WSJ, I found the articles by WSJ (marketwatch is owned by WSJ) are very biased. Definitely very pro-trump. Sometimes you will see FT and WSj have totally opposite headline on some trump-related news on the front page. I called WSJ and unsubscribed."
You should subscribe instead to the Communist News Network. Definitely very anti-Trump. This way you can continue living quietly in your echo chamber.
Cardboard
are you kidding. the Chinese govt (and Russia too!) is actively supporting trump and promote him in their country's official news. Murdoch's ex-wife is a Chinese spy and have close relationship with Trump's daughter. in PA, one of the biggest financial backer behind Chinese churches who supported trump is the owner of a coal mine in Guizhou China. Why? because china want to import their coal to America and they believed Trump will increase coal usage in America.
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Article is BS. Their utility companies have some of the lowest rates and lowest increases in then ountry. Geico has the lowest rates in many states. I am insured with Geico in NY and couldn’t get a competitive quote within 15% of Geicos, even with homeowners discount thrown in by some competitors. It was aneifernde story in CA, but here on thrneast coast, it seems that Geico is hard to beat. In any case, their market share isn’t high enough to exert monopoly power, they growth through lower pricing, which is exactly what should happen in capitalism
I am with Geico for decades now since I graduated from college. I also use Geico for my house insurance (they don't underwrite, just refer and handle billing). I was shopping for house insurance a few months ago and was able to find a lower price else where. But everywhere I asked I couldn't get a lower auto insurance than geico.
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"Why? because china want to import their coal to America and they believed Trump will increase coal usage in America."
LOL! America does not have a clue what to do with its own coal and now they would import some from China!
I find the Left to be a farce since they lost the election. Prior to also but, now it is worst. The arguments simply make zero sense anymore.
I also find this whole "get Trump" on the Russian potential interference to be a total joke. I mean, Russia makes a few posts on Facebook and the world is falling. They are interfering in our election process!
The U.S. on the other hand eliminates head of states. Just a few examples: Panama, Iraq, Libya under both parties. You even have an ex-President who makes a video to support the election of Macron. Do you imagine Putin going on TV and stating that he wants so and so to be elected somewhere?
Cardboard
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I find the Left to be a farce since they lost the election. Prior to also but, now it is worst. The arguments simply make zero sense anymore.
Cardboard
I have never considered myself as "left" or "right". Nor I judged people this way. I go by decency vs. indecency.
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Decency vs indecency is a good metric, but so is logic.
And it would be farcical to expect the US to import coal from China, so the idea that anyone with it enough to become rich would spend money promoting that idea seems pretty unlikely to me.
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..."ever since Murdoch bought WSJ, I found the articles by WSJ (marketwatch is owned by WSJ) are very biased. Definitely very pro-trump. Sometimes you will see FT and WSj have totally opposite headline on some trump-related news on the front page. I called WSJ and unsubscribed."
You should subscribe instead to the Communist News Network. Definitely very anti-Trump.
Cardboard
Sure. What is not ok in my view is to not even want to read/know what the other side is thinking. Confirmation bias is that how they call it?
I have noticed a huge change in what ABC, CBS, NBC and CNN present information since Trump. Has not prevented me from listening to what they say and to then form my own opinion.
Cardboard
Why not just post the second expression first, and then we all get along?
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I hope we can now get back to "Buffett/Berkshire - general news".
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http://www.berkshirehathaway.com/news/feb2218.pdf
OMAHA, NE—Berkshire Hathaway Inc.’s 2017 Annual Report to the shareholders will be posted on the Internet on Saturday, February 24, 2018, at approximately 8:00 a.m. eastern time where it can be accessed at www.berkshirehathaway.com. The Annual Report will include Warren Buffett’s annual letter to shareholders as well as information about Berkshire’s financial position and results of operations. Concurrent with the posting of the Annual Report, Berkshire will also issue an earnings release.
Cheers! :)
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Charlie, Could I request that you post this under a new topic dedicated to the 2017 letter? The General topic is getting bigger and discussion on the letter would get buried. I am happy to start the thread but you started the discussion first.
http://www.berkshirehathaway.com/news/feb2218.pdf
OMAHA, NE—Berkshire Hathaway Inc.’s 2017 Annual Report to the shareholders will be posted on the Internet on Saturday, February 24, 2018, at approximately 8:00 a.m. eastern time where it can be accessed at www.berkshirehathaway.com. The Annual Report will include Warren Buffett’s annual letter to shareholders as well as information about Berkshire’s financial position and results of operations. Concurrent with the posting of the Annual Report, Berkshire will also issue an earnings release.
Cheers! :)
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OK, :)
longinvestor, I hope you bought enough Berkshire shares, the letter could be a catalyst for a stock price movement upward, because of increased earning power etc....
Thank you, Donald. ;)
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Berkshire adds Germany's Rubina, expanding global real estate presence
https://www.yahoo.com/finance/news/berkshire-adds-germanys-rubina-expanding-142350350.html
Cheers! :)
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Here's why Warren Buffett vetoed the original color of the $BRK latest annual report & Realtor Bill Cote disses WEB's CA home saying, “It’s dreadfully overpriced. If you said it was Bette Midler’s house, it might have some cachet.”
Bette Midler, REALLY?
http://www.omaha.com/money/buffett/why-warren-buffett-vetoed-the-color-of-the-cover-for/article_4ce65a51-df34-570f-a672-91910030f7ca.html
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Berkshire proxy filed yesterday. Standard stuff year to year but with the board changes and appointment of Greg Abel and Ajit Jain to the board, there is some additional discussion of their responsibilities. Next year it would show their salaries and bonus as well. Berkshire goes out of their way to be a model for director compensation and Warren and Charlie both continue to reimburse BRK for personal use of taxes and secretaries, $50k each per year.
https://www.sec.gov/Archives/edgar/data/1067983/000119312518086050/d526293ddef14a.htm
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Thank you for sharing, globalfinancepartners,
Like a clockwork, ref. another recent topic here on CoBF in the Berkshire forum.
I particulary found this section of the proxy entertaining - I suppose Mr. Buffett must have been laughing in his car all the way from office to home at the end of the working day after approving this - poor guy, perhaps he needs both free coke and free burgers at office soon:
CEO Pay Ratio
As mandated by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and required under Item 402(u) of Regulation S-K (“Item 402(u)”), we are disclosing the median of the annual total compensation of all employees of Berkshire and its subsidiaries other than Berkshire’s CEO and the annual total compensation of Berkshire’s CEO, Warren E. Buffett. In preparing this disclosure, Berkshire considered the fact that on September 21, 2017, the Securities & Exchange Commission (“SEC”) issued interpretive guidance to assist registrants in complying with the SEC’s Pay Ratio reporting requirements. Among other things, the SEC’s guidance addressed the use of reasonable estimates, assumptions and methodologies.
Berkshire also considered that Mr. Buffett’s annual compensation has been $100,000 for more than the past 25 years and that Mr. Buffett receives no bonus or any form of equity based compensation. Additionally, Berkshire has over 60 separate operating groups, many of whom have multiple separate operating groups. Accordingly, the identification of the median employee’s annual total compensation of the 377,000 Berkshire subsidiary employees is a significant task.
In light of the fact that Mr. Buffett’s total compensation is far less than almost all public company CEO’s, Berkshire believed that the cost/benefit of complying precisely with the requirements of Item 402(u) would provide little, if any, useful information to its shareholders. Therefore, Berkshire used a judgmental sample representing approximately 2/3 of the total employees of Berkshire and its subsidiaries to determine the median employee’s compensation.
The median employee was determined using 2017 W-2 wages for all U.S. employees and equivalent taxable compensation for all non-U.S. employees included in the sample. The median employee determination included all employees within the sample group who were employed at December 31, 2017. The annual total compensation for the median employee was calculated using the same methodology for calculating the total compensation in accordance with Item 402(c)(2)(x) of Regulation S-K.
Based on the information obtained as described above, the ratio of Mr. Buffett’s annual total compensation ($100,000) to the annual total compensation of the median employee ($53,510) was 1.87 to 1.
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Another low risk public bet by Warren comes to a close, all brackets busted for the company pool ->
http://www.omaha.com/sports/ncaa-tournament/winners-will-split-in-warren-buffett-s-ncaa-bracket-challenge/article_7688236e-1074-5c3a-9212-a5732b70d766.html
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Good article in Barrons:
Why Edward Thorp Owns Only Berkshire Hathaway
https://www.barrons.com/articles/why-edward-thorp-only-owns-berkshire-hathaway-1521547200?mod=hp_pop
"Q: What’s in your portfolio now?
A: One good stroke of good fortune was meeting Warren Buffett in 1968. It led me to realize that I needed to invest in Berkshire Hathaway (ticker: BRK.A), although I didn’t do it until 1982. It’s my single investment in the stock market. It’s like a broad value-stocks equity index. I hold it in lieu of VTSAX [the Vanguard Total Stock Market fund]. It does about as well with no current taxes to pay. VTSAX has dividends that are taxed annually. I also have some hedge funds, but I consider them not as good as Berkshire, so I use them to spend and finance other things I do.
Q: Why not go out and find better investments, as you did in the past?
A: When I was 35, I had lots of time and less money, so doing 10% or so better than the index, with little risk, was attractive and fun. At 85, the marginal value of time is higher and the marginal value of money is lower. These are strong disincentives when I can make a long-run 10% or so by doing nothing."
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Good article in Barrons:
Why Edward Thorp Owns Only Berkshire Hathaway
https://www.barrons.com/articles/why-edward-thorp-only-owns-berkshire-hathaway-1521547200?mod=hp_pop
"Q: What’s in your portfolio now?
A: One good stroke of good fortune was meeting Warren Buffett in 1968. It led me to realize that I needed to invest in Berkshire Hathaway (ticker: BRK.A), although I didn’t do it until 1982. It’s my single investment in the stock market. It’s like a broad value-stocks equity index. I hold it in lieu of VTSAX [the Vanguard Total Stock Market fund]. It does about as well with no current taxes to pay. VTSAX has dividends that are taxed annually. I also have some hedge funds, but I consider them not as good as Berkshire, so I use them to spend and finance other things I do.
Q: Why not go out and find better investments, as you did in the past?
A: When I was 35, I had lots of time and less money, so doing 10% or so better than the index, with little risk, was attractive and fun. At 85, the marginal value of time is higher and the marginal value of money is lower. These are strong disincentives when I can make a long-run 10% or so by doing nothing."
+ 1
I would add that 10% is great when the index is likely to do 3-5% over the next decade.
Also can’t wait for 2019 to end because the headline about Berkshire would be ‘over the past decade BRK has returned >15%’
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"Warren Buffett plans to release video archive of past shareholder meetings"
http://www.omaha.com/money/plus/warren-buffett-plans-to-release-video-archive-of-past-shareholder/article_06c5c9f3-6133-523c-a7e9-5d7cdea8d677.html
1,000 hours worth of videos going back to 1994 ! ;D ;D
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Oh yeah! My brain will get a good upgrade :)
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The video does not appear to support the article text. [?]
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wow! That's going to take years to listen, and will come out of my reading quota.
Wonder what's the thought behind this? Coming after a no photography/no recording regimen. Surely it is more than just about openness.
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That is going to be really interesting.
I clicked on the link but is says that I have to be a digital subscriber to the Herald to read the article.
Does it say where the video/audio will be posted?
Thanks.
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I sure hope Munger did the same with the WESCO meetings. Those were gems.
Hope they were recorded too.
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It doesn't say when it will be out or how but it is in the working, the company that did the photography is working on converting all the footage to a digital format.
The newspaper is owned by Berkshire so little doubt about the accuracy of the reporting in my opinion.
Very exciting news, hope they won't be too greedy and charge money for it ::)
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It doesn't say when it will be out or how but it is in the working, the company that did the photography is working on converting all the footage to a digital format.
The newspaper is owned by Berkshire so little doubt about the accuracy of the reporting in my opinion.
Very exciting news, hope they won't be too greedy and charge money for it ::)
Thank you for putting some colour on this for those of us that are non-subscribers, WneverLOOSE,
I speculate and suppose, now that the operational responsibilities for all the Berkshire subs have been delegated, Mr. Buffett somehow feels bored and - perhaps - started to pump subscription sales at OWH. [j/k - ; - D ]
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This is great news! I can't wait to see / hear them.
I'm sure they'll end up on YouTube eventually... my commute is about to get a lot more educational :)
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WOW!! Thanks for sharing
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BTW: I actually bought a little more of the B's right near the close on Friday. In the low $190s, you are basically paying 1.35x BV....not a bad L.T investment at all IMHO
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BTW: I actually bought a little more of the B's right near the close on Friday. In the low $190s, you are basically paying 1.35x BV....not a bad L.T investment at all IMHO
I've written some more 190-strike puts.
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Yea, that is WAY to risky of a trade for me...I dont care what premiums you are getting upfront. I havent written puts on BRK in the low $100s awhile ago, but I feel like where we are in the market - you really have no idea what is going to happen. I think if a big vol induced sell-off occurs, that writing both near-dated, and long-dated puts near 1.1x - 1.x2 BV makes a ton of sense. Back in Jan of 17 one can sell the January 2019 BRK.B Put at $137.5 strike, and collect a premium of $2.20 (bid price). So, unless you see BRK.B falling ~37% in the next two years, and are happy to own Berkshire at much lower prices…this could be an interesting way to add synthetically to an already established long position. Of course if the stock rallies, you collect the premium and nothing more...that trade was obviously a home-run.
Sincerely,
VM
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For boilermakers trades, it's much better to sell puts with duration of 2 months or less, over and over again. It's not riskier than buying shares, assuming you are interested in buying additional shares and size the trade appropriately. If you get put to, you are happy to own the underlying and if you own a bit more than you intended, you start a covered call selling regimen against the excess shares.
If he's the one that got $1.85 for a 3/29 expiry 190 BRK.B put, he's buying BRK.B shares at $188.15 next week - worst case scenario. It's only risky if you don't want to buy BRK.B shares for $188.15 in a few days time.
Selling LEAPS puts two years out on a single company ties up a lot of capital for a long time for a comparatively small upfront premium. Not a great trade.
Yea, that is WAY to risky of a trade for me...I dont care what premiums you are getting upfront. I havent written puts on BRK in the low $100s awhile ago, but I feel like where we are in the market - you really have no idea what is going to happen. I think if a big vol induced sell-off occurs, that writing both near-dated, and long-dated puts near 1.1x - 1.x2 BV makes a ton of sense. Back in Jan of 17 one can sell the January 2019 BRK.B Put at $137.5 strike, and collect a premium of $2.20 (bid price). So, unless you see BRK.B falling ~37% in the next two years, and are happy to own Berkshire at much lower prices…this could be an interesting way to add synthetically to an already established long position. Of course if the stock rallies, you collect the premium and nothing more...that trade was obviously a home-run.
Sincerely,
VM
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For boilermakers trades, it's much better to sell puts with duration of 2 months or less, over and over again. It's not riskier than buying shares, assuming you are interested in buying additional shares and size the trade appropriately. If you get put to, you are happy to own the underlying and if you own a bit more than you intended, you start a covered call selling regimen against the excess shares.
If he's the one that got $1.85 for a 3/29 expiry 190 BRK.B put, he's buying BRK.B shares at $188.15 next week - worst case scenario. It's only risky if you don't want to buy BRK.B shares for $188.15 in a few days time.
Selling LEAPS puts two years out on a single company ties up a lot of capital for a long time for a comparatively small upfront premium. Not a great trade.
Yea, that is WAY to risky of a trade for me...I dont care what premiums you are getting upfront. I havent written puts on BRK in the low $100s awhile ago, but I feel like where we are in the market - you really have no idea what is going to happen. I think if a big vol induced sell-off occurs, that writing both near-dated, and long-dated puts near 1.1x - 1.x2 BV makes a ton of sense. Back in Jan of 17 one can sell the January 2019 BRK.B Put at $137.5 strike, and collect a premium of $2.20 (bid price). So, unless you see BRK.B falling ~37% in the next two years, and are happy to own Berkshire at much lower prices…this could be an interesting way to add synthetically to an already established long position. Of course if the stock rallies, you collect the premium and nothing more...that trade was obviously a home-run.
Sincerely,
VM
It’s a good idea, but given u would have to pay short term capital gain taxes in theses trades (IRA doesn’t allow this), probably not worth it.
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You can sell cash secured puts in an IRA at interactive brokers and others that offer that trading approval. You cannot borrow in an IRA, so you need the cash unencumbered in the account. Which is one reason shorter duration is better. Also the last month or two is when you get the most premium decay or whatever they call it
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You can sell cash secured puts in an IRA at interactive brokers and others that offer that trading approval. You cannot borrow in an IRA, so you need the cash unencumbered in the account. Which is one reason shorter duration is better. Also the last month or two is when you get the most premium decay or whatever they call it
I didn’t know this. Will ask my broker. Thanks!
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You can sell cash secured puts in an IRA at interactive brokers and others that offer that trading approval. You cannot borrow in an IRA, so you need the cash unencumbered in the account. Which is one reason shorter duration is better. Also the last month or two is when you get the most premium decay or whatever they call it
I suspect most, probably all, brokers would allow cash secured put trades in an IRA since it is an equivalent strategy to selling covered calls.
Although I have an IB account, my IRA is with Schwab and I do cash secured put trades in this IRA.
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Berkshire Hathaway Says Knauf Made Offer for USG at $42 a Share (https://www.bloomberg.com/news/articles/2018-03-26/berkshire-hathaway-says-knauf-made-offer-for-usg-at-42-a-share)
Berkshire Hathaway Inc. said Knauf entities earlier this month made a non-binding offer for USG Corp. at $42 a share, and the two held discussions on the proposed transaction.
Berkshire has so far not agreed to support any plan or proposal by Knauf, and there are no agreements between the two parties, according to a filing on Monday. Knauf has not responded to Berkshire’s proposed options on the purchase.
That represents a 25.3% premium to Friday's closing price in a down market. Berkshire's stake at $42 per share would be valued at $1,822,295,160 (versus $1,453,931,209.80 at Friday's closing price).
Berkshire just filed a 13D/A (http://www.rocketfinancial.com/FetchDoc.aspx?fid=6528803) (hat tip to rocketfinancial.com) which seemingly reiterates that it controls 43,387,980 shares of USG common stock (30.8% of class).
This number of shares exactly matches what I got from combining the BRK and New England Asset Management 13-Fs dated 31 Dec 2017 in my BRK Look Through Google Sheet, so does not represent a change. NICO seems to control the BRK 13-F portion of 39,002,016 shares (and parts of it are held via their subsidiaries), while GenRe controls the remaining NEAM portion of 4,385,964 shares. Warren Buffett is deemed to control the whole holding as he has control over NICO and GenRe.
This made me look up USG on Google Finance/News, and I found the above Bloomberg article, which presumably explains the 13D/A filing.
The juicy part was in the SEC 13D/A filing Notes which include:
Item 4 is hereby amended to add the following:
From time to time, beginning many years ago, executives of Gebr. Knauf Verwaltungsgesellschaft KG (“Gebr. Knauf”) and/or C & G Verwaltungs GmbH (“C & G Verwaltungs” and, together with Gebr. Knauf, the “Knauf Entities”) have contacted Berkshire’s Chief Executive Officer (“CEO”) to describe the Knauf Entities’ potential and conditional interest in a transaction with USG. Most recently, the Knauf Entities furnished Berkshire a copy of a letter from Gebr. Knauf to USG dated March 15, 2018 in which Gebr. Knauf submitted an indicative and non-binding proposal for the acquisition of 100% of the outstanding shares of Common Stock of USG at $42.00 per share.
On March 23, 2018 Berkshire’s CEO and another Berkshire executive held a telephonic discussion with two executives of the Knauf Entities and three representatives of one of the advisors of the Knauf Entities, during which Berkshire proposed to grant to the Knauf Entities an option to purchase all of the Berkshire Entities’ shares of Common Stock of USG, subject to legal review. Such option would be exercisable only in connection with the consummation of a purchase by the Knauf Entities of all of the outstanding shares of Common Stock of USG that the Knauf Entities did not already own, at a price of not less than $42.00 per share, subject to and in accordance with applicable law and contractual restrictions. The option exercise price per share was proposed by Berkshire to be the price per share paid to such other holders of Common Stock of USG by the Knauf Entities, less the option purchase price of $2.00 per share to be paid to the Berkshire Entities upon entering into a definitive option agreement. The option would have a term of approximately 6 months.
The Knauf Entities have not responded to this proposal, and the Reporting Persons do not know whether the Knauf Entities will pursue further discussion with Berkshire of the proposed option or will make an offer to purchase shares of Common Stock of USG. Berkshire has not agreed to support any plan or proposal by the Knauf Entities with respect to the Common Stock of USG, and there are no agreements, written or otherwise, between the Reporting Persons and the Knauf Entities.
Depending upon price, market conditions, availability of funds, evaluation of other investment opportunities, and other factors, the Reporting Persons may at any time and from time to time sell or otherwise dispose of some or all of the shares of Common Stock of USG held by them, either as contemplated by the Registration Rights Agreement or in another manner permitted by applicable law.
Item 5 is hereby amended as follows:
The percentages of outstanding shares reported in this Amendment No. 9 are based on the number of shares of Common Stock disclosed as outstanding on USG’s Form 10-K filed with the Commission on February 14, 2018.
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For boilermakers trades, it's much better to sell puts with duration of 2 months or less, over and over again. It's not riskier than buying shares, assuming you are interested in buying additional shares and size the trade appropriately. If you get put to, you are happy to own the underlying and if you own a bit more than you intended, you start a covered call selling regimen against the excess shares.
If he's the one that got $1.85 for a 3/29 expiry 190 BRK.B put, he's buying BRK.B shares at $188.15 next week - worst case scenario. It's only risky if you don't want to buy BRK.B shares for $188.15 in a few days time.
Selling LEAPS puts two years out on a single company ties up a lot of capital for a long time for a comparatively small upfront premium. Not a great trade.
Yea, that is WAY to risky of a trade for me...I dont care what premiums you are getting upfront. I havent written puts on BRK in the low $100s awhile ago, but I feel like where we are in the market - you really have no idea what is going to happen. I think if a big vol induced sell-off occurs, that writing both near-dated, and long-dated puts near 1.1x - 1.x2 BV makes a ton of sense. Back in Jan of 17 one can sell the January 2019 BRK.B Put at $137.5 strike, and collect a premium of $2.20 (bid price). So, unless you see BRK.B falling ~37% in the next two years, and are happy to own Berkshire at much lower prices…this could be an interesting way to add synthetically to an already established long position. Of course if the stock rallies, you collect the premium and nothing more...that trade was obviously a home-run.
Sincerely,
VM
It’s a good idea, but given u would have to pay short term capital gain taxes in theses trades (IRA doesn’t allow this), probably not worth it.
I will happily pay taxes if I am getting a 1% gain on such a short time frame.
If I am put to I pay no taxes till I sell the position because the put premium comes off the basis.
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Yea, that is WAY to risky of a trade for me...I dont care what premiums you are getting upfront. I havent written puts on BRK in the low $100s awhile ago, but I feel like where we are in the market - you really have no idea what is going to happen. I think if a big vol induced sell-off occurs, that writing both near-dated, and long-dated puts near 1.1x - 1.x2 BV makes a ton of sense. Back in Jan of 17 one can sell the January 2019 BRK.B Put at $137.5 strike, and collect a premium of $2.20 (bid price). So, unless you see BRK.B falling ~37% in the next two years, and are happy to own Berkshire at much lower prices…this could be an interesting way to add synthetically to an already established long position. Of course if the stock rallies, you collect the premium and nothing more...that trade was obviously a home-run.
Sincerely,
VM
As globalfinancepartners has pointed out my strategy is less risky than yours. If I get put to I end up paying less for my BRKB than you just did.
Think of it as selling insurance with a claim not being a bad thing; essentially you are getting your position at a lower price.
I use put writing to enter all my long term hold position. It is like a limit order that pays me while I wait for a better price. The negative is that you might not get your position, but this has rarely happened for me.
When we were coming out of the financial crisis I was fully invested. I still wrote a lot of puts and rarely was put to. And when I was I sold a covered call and was usually quickly off of margin. So it was kind of like being on margin, but never owing any interest.
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That USG filing is great. They're like, "can we get a commitment from you for your block?" And Warren's like, not for free silly!
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That USG filing is great. They're like, "can we get a commitment from you for your block?" And Warren's like, not for free silly!
Yes, pretty entertaining read, actually. One can almost picture the whole thing going on - and picture those Germans chewing on it right now. I love it!
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I'm sure Buffett would much rather receive calls for him to buy large German family owned companies, rather than sell to one. But maybe it helps again to raise his profile a bit in that group.
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The Bloomberg article I quoted earlier (https://www.bloomberg.com/news/articles/2018-03-26/berkshire-hathaway-says-knauf-made-offer-for-usg-at-42-a-share) now includes news of USG's rejection of the takeover under the new title:
"Berkshire-Backed USG Rejects $5.9 Billion Takeover by Knauf"
It also shows a surge in the USG stock price, partly from the easing of trade war fears since Friday, no doubt, and partly from the takeover talk I imagine.
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Todd Combs article in Bloomberg
https://www.bloomberg.com/news/articles/2018-03-27/what-do-bezos-buffett-and-dimon-have-in-common-meet-todd-combs
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Todd Combs article in Bloomberg
https://www.bloomberg.com/news/articles/2018-03-27/what-do-bezos-buffett-and-dimon-have-in-common-meet-todd-combs
Interesting, I’ve wondered if Combs does become CEO. Age is an edge for him, plus with Precision Castparts, he’s made the biggest ever deal at Berkshire. I suppose he has the blueprint of the future tattooed on him.
The article suggests mucho apprehension about who in healthcare is in Combs’s crosshairs. “What’s he going to do” “what’s he going to do”
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https://www.valuewalk.com/2018/04/whitney-tilson-why-the-hell-didnt-i-listen-to-charlie-munger/
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https://www.valuewalk.com/2018/04/whitney-tilson-why-the-hell-didnt-i-listen-to-charlie-munger/
Charlie Munger is on our group. Welcome! This is amazing and impressive. I guess he finally got himself a Thinkpad, or maybe he purchased and Iphone.
:P :P
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https://www.valuewalk.com/2018/04/whitney-tilson-why-the-hell-didnt-i-listen-to-charlie-munger/
Charlie Munger is on our group. Welcome! This is amazing and impressive. I guess he finally got himself a Thinkpad, or maybe he purchased and Iphone.
:P :P
And the divestment of daily journal!
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Another 13D/A filing (http://www.rocketfinancial.com/FetchDoc.aspx?fid=6560084) from Berkshire about Knauf's bid for USG. (Thanks Rocket Financial for the email alert)
Again, no change in Berkshire's holding, but it's the Notes that are amended as follows (emphasis mine):
CUSIP NO. 903293 40 5 SCHEDULE 13D/A PAGE 10 OF 11 PAGES
This Amendment No. 10 to Schedule 13D amends and supplements the information set forth in the Schedule 13D filed by certain of the Reporting Persons with the Securities and Exchange Commission (the “Commission”) on January 31, 2006 (the “13D”), as amended thereafter, with respect to the shares of Common Stock, par value $0.10 per share (“Common Stock”) of USG Corporation (“USG”). Capitalized terms used herein without definition shall have the meaning assigned to such terms in the 13D.
Item 4 is hereby amended to add the following:
On April 10, 2018, Gebr. Knauf filed a preliminary proxy statement and proxy card with the Commission to be used to solicit votes against USG’s four nominees for election to the Board of Directors (the “Board”) at the 2018 annual meeting of stockholders scheduled for May 9, 2018 (the “2018 Annual Meeting”). In addition, on April 10, 2018, Gebr. Knauf issued a press release containing an open letter to the stockholders of USG.
On April 12, 2018, in response to an inquiry from a Bloomberg reporter, a spokesperson for Berkshire stated “Berkshire’s present intention is to vote against the four directors proposed by management.”
Item 5 is hereby amended as follows:
The percentages of outstanding shares reported in this Amendment No. 10 are based on the number of shares of Common Stock disclosed as outstanding on USG’s Schedule 14A filed with the Commission on March 29, 2018.
Interesting!
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Is that the first time BRK has publicly said they are voting against management? I can't think of another...
I guess WEB replaced people at Solomon, but that wasn't quite the same thing.
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My take is that Knauf didn't pay up for option for Berkshire's vote, and leaves open possibility of other suitors.
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Hi Bizaro86, not the first time:
https://www.theguardian.com/business/2010/jan/20/buffett-blasts-cadbury-takeover
Cardboard
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Thanks Cardboard, I coulden't immediately find or remember the situation. Here (http://berkshirehathaway.com/news/jan0510.pdf) is the original Berkshire news announcement from the Berkshire website.
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Yeah - he was already pissed at that point because they did a horrible deal for DiGiorno frozen pizza with Nestle. It was hasty, fully taxed, etc.. That's when he made the TV rounds telling everyone he felt "poorer."
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Thanks Cardboard! It has definitely been rare, so must imply a relatively strong disagreement, imo.
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https://www.bizjournals.com/newyork/news/2018/04/26/ibm-berkshire-want-blockchain-for-jewel-sourcing.html
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Berkshire now sells the Berkshires.
http://www.wlns.com/ap-top-news/barnbrook-realty-joins-berkshire-hathaway-homeservices/1142503557
http://www.barnbrookrealty.com
I can't find anything on how many agents, etc. these guys add.
I'm guessing that Kirby, White and crew are like the Blumkins of RE.
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I could see them making a run at RLGY if their management looks for a buyer. Shares look somewhat cheap and they own some of the best known franchises, although I am not sure how much the franchise name actually counts.
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General news:
This is the 16,001st post in the Berkshire forum - since February 1st 2009. Fairfax is still ahead, with almost 500 more posts! I think the next investment idea to close the door among those on the tribune is SHLD [with almost 9,200 posts] - I suppose it's fair to say, that a majority of them are not created out of attraction!
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https://finance.yahoo.com/news/buffett-backed-usg-open-sale-173605432.html
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Bloomberg: As Warren Buffett's Empire Expands, Many Jobs Disappear
https://www.bloomberg.com/graphics/2018-warren-buffett-job-creator/
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Bloomberg: As Warren Buffett's Empire Expands, Many Jobs Disappear
https://www.bloomberg.com/graphics/2018-warren-buffett-job-creator/
Boy, I am relieved to read this report. With the growing stable of owned businesses, I was worried that some of the subs had country club type work environment. Lifetime employment guarantee for all type of shit. Living in Chicago I had heard of the cushiness at Kraft with layers of management each with mini fridges stocked with free food. That was before 3G.
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Seems the barrage of Berkshire related news items has begun. WSJ did a piece today on HomeServices -
https://www.wsj.com/articles/coming-to-a-yard-sign-near-you-warren-buffetts-berkshire-hathaway-1525339800
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https://www.cnbc.com/2018/05/03/buffetts-berkshire-hathaway-bought-stunning-75-million-apple-shares-in-first-quarter.html
you know, just your average 42.5 billion dollar investment
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... you know, just your average 42.5 billion dollar investment ...
Christ, that's a lot! North of 10 percent of Berkshire equity. I hope this goes well.
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I hope it goes well too, John, as that puts my look-through exposure to this 2-bagger in GBP (or 1.9-bagger in USD) up to at least 33.5% at the close, about 6¼% points coming via our 69.1% BRK.B position. I think it got a little higher at the end of 2016 when our direct AAPL exposure was around 31-32% at market prices, but it's closer to fully-valued now.
I imagine Berkshire bought substantially in the early February dip into the $150s (when a lot of us were busily buying BRK.B in the low $190s on volume around 8 million per day - which for me was cheaper than it is now, thanks to currency swings).
Traded volume was well over 50 million shares a day for all of the 4 or 5 sessions with the lowest prices (and a bit higher than surrounding weeks), so buying about 75 million shares could quite possibly have included a good proportion purchased at some of the lowest prices that quarter, assuming they keep to a modest proportion to avoid causing the price to rise.
I'm pleased to see that large caps with decent volume still provide plenty of opportunities for Berkshire to take meaningful stakes at reasonable valuations.
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https://www.cnbc.com/2018/05/04/warren-buffett-us-economic-growth-is-stronger-than-the-2-percent-or-so-average-since-the-financial-crisis.html
Cheers!
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Thanks for the link to the full interview! Sounds like cash levels will be down slightly due to the equity buying, primarily the 75 million additional Apple shares, more than offsetting the PSX sale. He mentioned that IMC and TTI are up big with the world economy accelerating. Sounded like he hasn't bought any GE at this point.
https://www.cnbc.com/2018/05/04/warren-buffett-us-economic-growth-is-stronger-than-the-2-percent-or-so-average-since-the-financial-crisis.html
Cheers!
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Post by globalfinancepartners in the AAPL topic three days ago:
I wonder if we will find out on Saturday how large BRK's position in Apple has become. I would be surprised if buying did not continue in 2018. It could be enormous by now.
This is just soo cool - a hit exactly in the bulls eye! [ 8 - D ]
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Q1 2018 is out:
press release: http://www.berkshirehathaway.com/news/may0518.pdf
10Q: http://www.berkshirehathaway.com/qtrly/1stqtr18.pdf
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Great opportunities to buy ahead
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Why do you say that? Because you think the market will sell it off based on the Q? I doubt we are that lucky this time, especially after an entire weekend to think it over / have it explained by the boss. But it would be nice if it did happen. I'm not holding my breath...
Great opportunities to buy ahead
On another note - I found this interesting: "Our consolidated effective income tax rates for the first quarter of 2018 and 2017 were 29.7% and 27.2% respectively"
Could have been related to the big AIG policy last year, or some other anomaly. Just wasn't expecting an increase in effective tax rate in the first quarter or the corporate tax cut..
edit: Also, nice to see GEICO appears to be back to underwriting profits. Price increases (less than competitors but still increases) appear to have cycled through the renewals. Revenues at GEICO were up over 15% vs Q1 2017. (while still profitable on an underwriting basis, the bulk of GEICO's Q1 underwriting results appear to be from favorable development of short-tail prior years' loss estimates)
another note on tax rates: last year BNSF earned $1.345 billion pretax and $838 million after taxes in Q1. An effective rate of 37.7%.
This year, BNSF earned $1.5 billion pretax and $1.145 billion after taxes, an effective rate of ~24%.
I was interested to see how the growth at GenRe was developing, since it has really taken off since Ajit was put in charge. Premiums earned were up 49% at GenRe compared with Q1 2017! On a lot fewer employees.
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Buffett is live on yahoo facebook. :)
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https://www.cnbc.com/2018/05/05/berkshire-hathaway-reports-48-point-7-percent-first-quarter-operating-gain-as-shareholders-prepare-to-meet.html
Cheers!
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http://www.morningstar.com/articles/864069/berkshire-results-meet-expectations.html
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I put this link the another thread as well, but it is definitely a new development to have many years' footage of entire annual meetings posted on the internet. I had heard this was going to happen, but assumed yahoo was going to get the footage. Looks like Becky was the winner on this one -
CNBC Berkshire archive - video footage of entire annual meetings from before the yahoo livestream started, plus CNBC interviews, etc:
https://buffett.cnbc.com/annual-meetings/
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Bloomberg: As Warren Buffett's Empire Expands, Many Jobs Disappear
https://www.bloomberg.com/graphics/2018-warren-buffett-job-creator/
Boy, I am relieved to read this report. With the growing stable of owned businesses, I was worried that some of the subs had country club type work environment. Lifetime employment guarantee for all type of shit. Living in Chicago I had heard of the cushiness at Kraft with layers of management each with mini fridges stocked with free food. That was before 3G.
They probably should get the fridges back into the offices. If the 3G guys tried their own food every once in a while, they might be more inclined to make it better.
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Hmmm.... To read this article you would think Berkshire didn't pay much to the tax man?!
https://www.commondreams.org/views/2018/05/14/kindly-87-year-old-man-who-took-all-schoolkids-lunch-money
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Hmmm.... To read this article you would think Berkshire didn't pay much to the tax man?!
Yeah, I find the article bizarre. It seems like he's trying to vilify corporations, alleging that they're doing something wrong, when as far as I can tell, they're simply following the law. What's more, the ethical thing for the corporations to do is to operate in a tax-efficient manner, not paying more than required (and depending on how they paid more than required, I imagine it might actually break the law to pay more than required.)
Really, if the author has a problem, he ought to be complaining about elected officials who create the laws and give in to corporate lobbyists, not the corporations who simply follow the law.
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Hmmm.... To read this article you would think Berkshire didn't pay much to the tax man?!
https://www.commondreams.org/views/2018/05/14/kindly-87-year-old-man-who-took-all-schoolkids-lunch-money
Article is biased and uses incomplete information. And poor choice of words.
I would add that Mr. Buffett has not used off-shore tax havens reinsurance associates when this could have been considered to be a competitive disadvantage not to do so.
From the Supreme Court, Judge Learned Hand (1934): "[a]nyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes.”
The Judge also said: "...taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."
Personal attacks, especially if ill-founded, do not add anything constructive to the debate.
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Windpower Monthly [May 9th 2018]: AWEA 2018: MidAmerican 'hustling' ahead of PTC phase-out (https://www.windpowermonthly.com/article/1464178/awea-2018-midamerican-hustling-ahead-ptc-phase-out).
EnergiWatch, by Ritzau Finans [May 15th 2018]: Vestas key customer sees potential opportunities with only 60 percent PTC (https://energiwatch.dk/Energinyt/Renewables/article10598039.ece).
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Hmmm.... To read this article you would think Berkshire didn't pay much to the tax man?!
https://www.commondreams.org/views/2018/05/14/kindly-87-year-old-man-who-took-all-schoolkids-lunch-money
I'm not a low tax libertarian type, and even I think that article was a bunch of whooey and if you go back and look at the references, it's even worse.
Basically, the articles it is based on say that by buying companies, those (now) subsidiaries' dividend is not taxable ??? it also confuses the deferred taxes on long held investments as taxes 'owed'.
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Whitney Tilsons latest Berkshire analysis:
https://www.tilsonfunds.com/TilsonBRK.pdf
Cheers! :)
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Whitney Tilsons latest Berkshire analysis:
https://www.tilsonfunds.com/TilsonBRK.pdf
Cheers! :)
Anyone wish to opine on Tilson's analysis?
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Anyone wish to opine on Tilson's analysis?
For my part: Yes, it's a miss.
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Anyone wish to opine on Tilson's analysis?
For my part: Yes, it's a miss.
+1
Seen in the backdrop of Semper Augustus’s seminal work, this is weak.
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Anyone wish to opine on Tilson's analysis?
For my part: Yes, it's a miss.
+1
Seen in the backdrop of Semper Augustus’s seminal work, this is weak.
To me, it's so true, what longinvestor is posting here. If you're interested in Berkshire, the Semper Augustus letters should catch your attention. [I have posted about them recently. - The B trading at around ~200, while intrisic value is estimated in the Semper Augustus Letters to be around ~250 for the B.]
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While I think Semper has done some great work on Berkshire, I'd say Tilson has provided a good service of updating this valuation over the years. It makes sense, doesn't require 50 pages of explanation, and is within the range of a reasonable IV. As Buffett says, you don't need a scale to tell if a man is overweight.
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"While I think Semper has done some great work on Berkshire, I'd say Tilson has provided a good service of updating this valuation over the years. It makes sense, doesn't require 50 pages of explanation, and is within the range of a reasonable IV. As Buffett says, you don't need a scale to tell if a man is overweight."
+1
Everybody has their misses: Tilsons hedge fund performance, his $3000 investing seminars and Semper Augustus discussion about
Index Funds. ;)
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For those of us in BRK early, Tilson's updates were excellent. So, yea, Semper writeup is incredible in comparison, but if Tilson helped a lot of people from not selling BRK - he did them a huge favor.
It certainly worked in my case, and with many of my investees.
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"While I think Semper has done some great work on Berkshire, I'd say Tilson has provided a good service of updating this valuation over the years. It makes sense, doesn't require 50 pages of explanation, and is within the range of a reasonable IV. As Buffett says, you don't need a scale to tell if a man is overweight."
+1
Everybody has their misses: Tilsons hedge fund performance, his $3000 investing seminars and Semper Augustus discussion about
Index Funds. ;)
Well said. Semper sounded like the barber talking down the index. Those 50 pages I skipped right past to the 50 on Berkshire. To me, 50 pages of lucid details on Berkshire is alright if seen in the backdrop of MV being marked down relative to IV for year after year. He’s shouting, I can understand, so can others around here.
All that said, my rationale for preferring Semper versus Tilson is that T sounds awfully like a thesis based on price. Not entirely but substantially so.
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"While I think Semper has done some great work on Berkshire, I'd say Tilson has provided a good service of updating this valuation over the years. It makes sense, doesn't require 50 pages of explanation, and is within the range of a reasonable IV. As Buffett says, you don't need a scale to tell if a man is overweight."
+1
Everybody has their misses: Tilsons hedge fund performance, his $3000 investing seminars and Semper Augustus discussion about
Index Funds. ;)
Well said. Semper sounded like the barber talking down the index. Those 50 pages I skipped right past to the 50 on Berkshire. To me, 50 pages of lucid details on Berkshire is alright if seen in the backdrop of MV being marked down relative to IV for year after year. He’s shouting, I can understand, so can others around here.
All that said, my rationale for preferring Semper versus Tilson is that T sounds awfully like a thesis based on price. Not entirely but substantially so.
While I think Semper has done some great work on Berkshire, I'd say Tilson has provided a good service of updating this valuation over the years. It makes sense, doesn't require 50 pages of explanation, and is within the range of a reasonable IV. As Buffett says, you don't need a scale to tell if a man is overweight.
For those of us in BRK early, Tilson's updates were excellent. So, yea, Semper writeup is incredible in comparison, but if Tilson helped a lot of people from not selling BRK - he did them a huge favor.
It certainly worked in my case, and with many of my investees.
Thank you for polite, mild and well reasoned push back. I had no idea that Mr. Tilson's work on Berkshire had this impact on several CoBF members holding Berkshire for the long term. Somehow, I feel embarrassed right now. Going forward, I'll try to be more humble.
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John - don't worry about it. You were civil about the whole thing, and we're all exchanging ideas here.
The Semper piece is fantastic, but in the absence of that, Tilson sharing his free research was commendable
and helpful to those that used it.
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John - don't worry about it. You were civil about the whole thing, and we're all exchanging ideas here. The Semper piece is fantastic, but in the absence of that, Tilson sharing his free research was commendable and helpful to those that used it.
Thank you, cubsfan.
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http://dallas.culturemap.com/news/real-estate/05-22-18-ebby-halliday-sells-berkshire-hathaway-home-services-of-america-warren-buffet/
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Not so flattering picture of BYD buses' performance in the LA area:
http://www.latimes.com/local/lanow/la-me-electric-buses-20180520-story.html
Actual range obtained seems to be about 1/3 rd of the advertised range. Only about 50 miles!
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Not so flattering picture of BYD buses' performance in the LA area:
http://www.latimes.com/local/lanow/la-me-electric-buses-20180520-story.html
Actual range obtained seems to be about 1/3 rd of the advertised range. Only about 50 miles!
It actually reads a bit concerning, Munger_Disciple,
Somehow, tehnical specifications - here understood as "promises" to the BYD client, I suppose must the key here. I suppose everybody knows that there are a lot steep streets in Los Angeles. Isen't what matter actual range [while driving the busses in LA] compared to what a LA bus is actually driving per day? If the existing battery capacity isen't sufficient, isen't it just a matter adding more battery blocks under the floor of the bus, untill the [darn] thing actually can deliver as expected for that particular driving environment? [I'm not an engineer.]
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I don't know what average distance an LA city bus travels per day, but the average range of all the LA city buses (which are predominantly natural gas powered) is 385 miles. So the BYD bus gets 1/8th the range which seems very low to me. I am not a battery/bus expert but I don't think it is as simple as adding more batteries under the bus. A whole host of issues will need to considered: cost, extra weight, clearance, safety, charging times, etc...
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Are busses in LA running around the clock? - I'm just asking here. 385 miles/day reads like a lot.
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Guys,
I hadn't heard the story that Charlie Munger told on the CNBC interview about Warren and Charlie having the opportunity to purchase the french portion/division/interest in Costco many years back. Charlie said that he told Warren to "close his eyes and BUY IT." And Warren DID NOT/WOULD NOT buy it....
Does anyone know how much they would have made/profited had they purchased it? How large was the sin of omission?
Thanks.
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This link is the registration statement for the block of Costco Stock in question (momentarily called "PriceCostco" for a year following the merger with Sol Price's Price Club):
https://www.sec.gov/Archives/edgar/data/909832/0000912057-96-010651.txt
The partner was a subsidiary of Carrefour, the French hypermarket company. Carrefour owned 21.19 million shares, which was 9.7 - 10.8% of Costco around the mid nineties.
The offering ended up being for 19.5 million shares in this registration statement, so you can assume the block that Warren had a chance at was probably the 19.5 million shares.
I'm sure you could find some online calculator to tell you the total return with dividends of 19.5 million costco shares from approximately May 23, 1996 to the present. I assume there have been splits, but am not a Costco shareholder.
Guys,
I hadn't heard the story that Charlie Munger told on the CNBC interview about Warren and Charlie having the opportunity to purchase the french portion/division/interest in Costco many years back. Charlie said that he told Warren to "close his eyes and BUY IT." And Warren DID NOT/WOULD NOT buy it....
Does anyone know how much they would have made/profited had they purchased it? How large was the sin of omission?
Thanks.
edit -- I think it's as simple as 19.5 million shares at a split adjusted 10 bucks per share in May 1996, say 195 million for Berkshire. Without including dividends, the shares would be worth $3.9 Billion at 200/share today, 22 years later
second edit -- well I think the above is not exactly right. The shares were 20.875 / share for the offering, which would have cost Berkshire $407 million bucks for 19.5 million shares. They would now have 39 million shares at 200, so $7.8 Billion. At least I think this is correct...
More or less this attached image ->
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This link is the registration statement for the block of Costco Stock in question (momentarily called "PriceCostco" for a year following the merger with Sol Price's Price Club):
https://www.sec.gov/Archives/edgar/data/909832/0000912057-96-010651.txt
The partner was a subsidiary of Carrefour, the French hypermarket company. Carrefour owned 21.19 million shares, which was 9.7 - 10.8% of Costco around the mid nineties.
The offering ended up being for 19.5 million shares in this registration statement, so you can assume the block that Warren had a chance at was probably the 19.5 million shares.
edit -- I think it's as simple as 19.5 million shares at a split adjusted 10 bucks per share in May 1996, say 195 million for Berkshire. Without including dividends, the shares would be worth $3.9 Billion at 200/share today, 22 years later
second edit -- well I think the above is not exactly right. The shares were 20.875 / share for the offering, which would have cost Berkshire $407 million bucks for 19.5 million shares. They would now have 39 million shares at 200, so $7.8 Billion. At least I think this is correct...
More or less this attached image ->
Wow, that is excellent and exceeds my expectations. Those 2 crack me up. Whats another $7-8 Billion between a couple buds..
Thanks again GlobalFinancialPartners!
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Buffet reportedly offered to invest 3 billion in Uber but deal fell through.
https://www.cnbc.com/2018/05/30/warren-buffett-reportedly-offered-uber-3-billion-investment-but-talks-crumbled.html
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Seriously? :o
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Maybe there's hope for the old GOAT after all.
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I call BS on that report. No freaking way that Buffett tried to invest in Uber.
On a different note, does anyone have the full opening message from this?
https://www.marketwatch.com/story/warren-buffett-is-bullish-on-growth-in-american-living-standards-2018-05-30
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I believe it. It was convertible debt, expensive money for uber to gain buffett’s Halo effect. With optionality on the upside for brk. And warren wanted to do far more than 3 billion in size. Dara tried to talk him down to 2 billion. It sounds plausible. I wonder what the interest rate was. 5-8%? I didn’t see the rate on uber ‘s term loan
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ugh...I shouldn't jump to conclusions so quickly. I was thinking it was just regular private market shares or whatever.
I think I'm a little too cynical since the news floated the rumor that Buffett was buying GE a few months ago.
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I believe it. It was convertible debt, expensive money for uber to gain buffett’s Halo effect. With optionality on the upside for brk. And warren wanted to do far more than 3 billion in size. Dara tried to talk him down to 2 billion. It sounds plausible. I wonder what the interest rate was. 5-8%? I didn’t see the rate on uber ‘s term loan
You don't get to have the Halo for 2 billion principal. Halo effects start from $3 billion and up. You take $7 billion and you get to have Buffett show up next to you an CNBC.
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On a different note, does anyone have the full opening message from this?
https://www.marketwatch.com/story/warren-buffett-is-bullish-on-growth-in-american-living-standards-2018-05-30
For the exact wording, may have to check the book itself.
For the gist of the message, the following may be equivalent:
http://time.com/5087360/warren-buffett-shares-the-secrets-to-wealth-in-america/
As always, optimist but a hint at lower expectations and the need to address the Great Gatsby curve.
Mr. Buffett has said before that the equality of opportunity has been, for many, an "empty promise".
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Warren Buffett confirms talks with Uber: 'I'm a great admirer of Dara'
https://www.cnbc.com/2018/05/30/warren-buffett-reportedly-offered-uber-3-billion-investment-but-talks-crumbled.html
Interesting that he confirms the talks, now if he doesn't confirm or comment on other roamers he is basically denying them
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thanks cigar!
As my wife might say with regard to Buffett and Uber... "He's wrong again."
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Buffett must be thinking hard about keeping future dealings under wraps. After all there has to be more and bigger deals coming. If Buffett is an admirer of Dara wil he still be one if the leak came from the other side? Admire from the sidelines Kinda like him admiring Bezos.
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I think he's just a bit uncertain. So he asked for a particular deal price. Probably too conservative. And they said no...Conservatism pays in the next recession if you need funding. If you don't need it, you just don't need it.
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Warren Buffett confirms talks with Uber: 'I'm a great admirer of Dara'
https://www.cnbc.com/2018/05/30/warren-buffett-reportedly-offered-uber-3-billion-investment-but-talks-crumbled.html
Interesting that he confirms the talks, now if he doesn't confirm or comment on other roamers he is basically denying them
Cuz Uber is a big customer of Geico.
And I am sure Web has some insights on Uber through Geico.
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My first reaction was shock.
My second reaction was, well in some of these late stage investors were guaranteed that the IPO price would be above their price, so if you put into a convert debt deal, it could become interesting.
Must be nice have 100 billion burning a hole in your pocket.
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Dallas paper speculating the recent Homeservices deal could have been around $100 million all cash deal -
https://www.dallasnews.com/business/real-estate/2018/06/04/just-warren-buffett-paid-100m-ebby-halliday-realtors
Warren was apparently friendly with the founder and expressed an interest in buying her company for many years.
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29-minute interview with Buffett and Jamie Dimon:
https://www.cnbc.com/video/2018/06/07/warren-buffett-jamie-dimon.html
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End quarterly guidance! Indeed. Let’s see how this plays out.
On this note, is there a place, online where one can go to see which companies are already doing this?
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29-minute interview with Buffett and Jamie Dimon:
https://www.cnbc.com/video/2018/06/07/warren-buffett-jamie-dimon.html
Good interview! No mentor fatigue yet. =P
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Great interview, thanks for posting. :)
Here is the transcript:
https://www.nbcumv.com/news/cnbc-transcript-berkshire-hathaway’s-warren-buffett-and-jpmorgan-chase’s-jamie-dimon-speak-cnbc?division=1&network=33135&show=151339
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looks like the link works if you cut and paste, but you can not click on it
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https://www.gurufocus.com/news/692562/bayer-closes-merger-with-buffetts-monsanto (https://www.gurufocus.com/news/692562/bayer-closes-merger-with-buffetts-monsanto)
A misleading headline - Buffett is the Chairman & CEO of Berkshire, a minority shareholder in Monsanto until the takeover by Bayer - but this apparent Merger Arbitrage appears to have been successful for Berkshire, the takeover closing at $128 per share of Monsanto stock.
Berkshire's holding as of 31st March had been 18,970,134 shares of MON (then trading at $116.69) and worth $2,213,624,936 at that date.
The number of shares had increased 62.0% over 31st December 2017 and I wouldn't be surprised if buying continued since the quarter ended until MON ceased trading on 7th June.
Assuming the same holdings at the close of the transaction, they'd have been worth $2,428,177,152, an increase of 9.7% since quarter end, which compares favourably with S&P500 and the Total Return Index since 31st March.
SP500 +7.6%
SP500TR +8.1%
Weirdly all the Berkshire 13-F filings called it MOSANTO.
Of course, it will be missing from next quarter's 13-F but we might find some disclosure of it in the footnotes of the 10-Q, though there's no specific obligation to report the details.
I'll need to update my Look-Through spreadsheet (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/look-through-portfolio-google-sheets-with-live-prices/) to account for this (which I still haven't updated fully since the May 13-F). Perhaps I'll just enter something like $2.36bn of cash in its place (assuming about 21% tax on gains of very roughly $328mn). The effect of my assumption is fairly immaterial to the whole look-through portfolio.
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A billion here, a billion there, and soon we are talking about a serious amount of money.
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I'll need to update my Look-Through spreadsheet (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/look-through-portfolio-google-sheets-with-live-prices/) to account for this (which I still haven't updated fully since the May 13-F). Perhaps I'll just enter something like $2.36bn of cash in its place (assuming about 21% tax on gains of very roughly $328mn). The effect of my assumption is fairly immaterial to the whole look-through portfolio.
I have now updated my Look Through Spreadsheets, taking account of perhaps $2.44 per share in tax on the gains (all estimated from unknown buy price) to include estimated net cash proceeds resulting from Monsanto of $125.56 per share. That would be about a 9% return after tax if my estimates are correct, which sounds about right for a 6-9 month merger arb.
Google now makes it very easy to copy my look-through spreadsheet into your own private Google Sheet. A single operation File/Make a copy...
I've also made the other updates for the quarter and the sheet now shows crude quarter-to-quarter changes on the Combined Holdings sheet. This is supposed to represent owner-shares and owner-earnings, and excludes pension holdings where I could find them.
In further news Knauf 's takeover of USG is now approved but hasn't closed yet:
Within 6 months, the USG deal for $44 per share acquisition by Knauf will close (https://www.bloomberg.com/news/articles/2018-06-11/buffett-to-exit-usg-investment-as-7-billion-knauf-deal-accepted), too, but for now I'll leave it on the spreadsheet. That deal will be $0.50 per share as a special dividend plus $43.50 per share in cash. For now, I expect the stock price to track an estimated time-value discount to the takeover price plus dividend, remaining close to $43-44 per share.
The look through spreadsheet I'd advise you to Make a copy of for your own use is:
• Berkshire Hathaway Look Through Earnings & Holdings (https://docs.google.com/spreadsheets/d/1Ok3bOO4z_2Itbta6FguKbuFA1HvcQvzisspPBN6IpZY/)
The spreadsheet that is publicly editable by anyone (but anyone can see any edits you make, the edit history, or corrupt the spreadsheet) is:
• Berkshire Look through earnings - Public editing allowed (https://docs.google.com/spreadsheets/d/10gMfyZOFCW1-KrY_P8SGRf3pTstspdAGw_DuKSQxO8s/edit?usp=sharing)
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Berkshire has filed a 13D/A regarding USG. Scrolling to the notes section: Same holdings as before but they have given their proxy to the acquirer, Knauf, to accept the acquisition offer and clarified that their previous offer of a $42-strike call option on all their stock to Knauf at $2 price did not proceed. The $43.50 + 50¢ special dividend offer provides the same $44 return to all shareholders.
Courtesy Rocketfinancial email alerts
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Just to clarify on this, Berkshire was not proposing to receive $2 more than other shareholders in their original option proposal. Their proposal was always going to result in Berkshire receiving the same consideration as other shareholders if a deal was consummated.
Berkshire has filed a 13D/A regarding USG. Scrolling to the notes section: Same holdings as before but they have given their proxy to the acquirer, Knauf, to accept the acquisition offer and clarified that their previous offer of a $42-strike call option on all their stock to Knauf at $2 price did not proceed. The $43.50 + 50¢ special dividend offer provides the same $44 return to all shareholders.
Courtesy Rocketfinancial email alerts
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In thinking about Berkshire's continued buying of AAPL, it seems to me that Berkshire must have stopped buying. Berkshire would be required to report to the SEC if it crossed above ~245.7 million shares, which represented 5% as of the last 10Q. As Apple updates the share count to reflect repurchases, Berkshire will likely cross the 5% threshold and report an updated number for Berkshire ownership, but only following the publication of a new shares outstanding figure by Apple.
Or I could be wrong and a 13d could be filed any day showing Berkshire hitting 5%...
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Thanks, gfp, for clarifying the call option proposal re USG. I obviously had lodged that in my brain incorrectly.
On thinking about your suspicion that Berkshire has stopped buying Apple, I think you're right and that they may potentially have even decided to trim their position by a small amount to stay below the reporting threshold.
Regarding Apple and the 13D requirements, I wasn't aware that 13D reporting came at 5% as I'm fairly new to trawling through all the EDGAR filings, especially since I've started receiving them on email via rocketfinancial and since I start looking at historic 13D filings to calculate the holdings by pensions funds for various Berkshire subsidiary employees to account for these in the Look Through spreadsheet, but here's a decent summary I found in response to gfp's post:
Schedule 13D
From Wikipedia, the free encyclopedia
Schedule 13D is an SEC filing that must be submitted to the US Securities and Exchange Commission within 10 days by anyone who acquires beneficial ownership of more than 5% of any class of publicly traded securities in a public company. A filer must promptly update the Schedule 13D filing to reflect any material change in the facts disclosed, including, among other things, the acquisition or disposition of 1% or more of the class of securities that are the subject of the filing.
I have recently had suspicions that a few more AAPL may have been purchased by Berkshire in the $162-$165 range at the end of April, but the run-up to $183-$194 ballpark since then may have curtailed their buying. Roughly 200 milion shares of AAPL traded in that April low period, so I would not have been shocked to find they've added another 50-60 million shares.
On the latest Apple 10-Q (https://www.rocketfinancial.com/FetchDoc.aspx?fid=6597046) we have the figure:
4,915,138,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of April 20, 2018
, which remains the latest published figure for outstanding shares.
Now it appears that 5% reporting threshold would currently be 245,756,900 shares.
Berkshire's 13-F holdings (Berkshire and New England Asset Management combined) as of 31st March including pension fund holdings are:
245,278,633 (4.990% of last known shares outstanding).
This is remarkably close to a threshold that wouldn't have been precisely known to Berkshire prior to 20th April. Can that be coincidence?
We believe that 2,837,753 shares are owned by pension schemes within Berkshire (per 10-K annual report). (0.058% of AAPL)
From the financial-benefit definition of beneficially owned, Berkshire has 242,440,880 (4.933% of AAPL), excluding the pension scheme holdings that are not for the financial benefit of Berkshire's owners.
But from the voting power definition of beneficially owned, it's the 4.990% known directly from the two 13-F filings that counts.
I assume from the 4.990% being just below 5.000% that it may be the latter that would trigger the 13D and that this threshold is what curtailed Berkshire's buying in the first quarter to avoid reporting responsibilities.
It is even possible, perhaps likely, that Berkshire may engage in slight trimming this quarter at the $180+ range to avoid 13D filing responsibilities that might arise the moment that Apple next makes a filing that discloses a reduced number of shares outstanding.
In this way, Apple, like Wells Fargo, may well then remain at about this size, with Berkshire estimating the extent of Apple buybacks and trimming slightly from quarter to quarter, unless the SEC is willing to grant them an exemption from public filing within 10 days until they hit a higher limit such as 10%. I imagine such an exemption is possible, because I don't recall 13D filings about the 0.4% Wells Fargo position trimming appearing prior to the release of the 13-F this quarter, and this trimming ws to keep Berkshire just below the 10% level to avoid being considered a Bank Holding Company, which is, of course, well above the 5% 13D threshold. If they are allowed exemption from public filing of 13D while they build their position.
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Good discussion there. Berkshire did have to report the Wells share sales within 3 days. Berkshire issued a press release and briefed Becky Quick on it just before the filings hit so people wouldn't freak out - "Berkshire selling Wells Fargo!" which would be seen as a big negative, especially given the headlines surrounding Wells recently..
https://www.sec.gov/Archives/edgar/data/72971/000120919117026722/xslF345X03/doc4.xml
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Aha, I see that to get Form 4 reports on EDGAR search you must select "• Include" next to the filter entitled "Ownership?". I was thus able to find the filing you linked to, gfp, both via Wells Fargo and via Berkshire Hathaway, Inc.
When accessing EDGAR via the SEC filings link at berkshirehathaway.com the 'Include' option does not appear to be selected, so Form 4 filings (e.g. Ajit Jain's disposals when gifting to charity) do not normally show up. I usually see these via my http://www.rocketfinancial.com/ portfolio email alerts, which are set to "All News and Filings".
If you search Berkshire Hathaway, Inc and •Include Ownership, and search prior to date 20170420 you will see the first 4 filing type is the Wells Fargo filing you linked to. The second was a charitable gift of BRK.B stock by Warren Buffett.
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You can also look at just the insider transactions by clicking the red link "Get insider transactions" for this 'issuer' or for this 'reporting owner'
Under this reporting owner, for Berkshire, you get the recent PSX sale, the Liberty Sirius accumulation, PSX purchases, etc..
Under this issuer, you get the insider transactions for BRK stock, which are primarily charity related. But sometimes there is an interesting one like Charlie transferring a huge block of his Berkshire stock near the exact bottom of the financial crisis to his children in exchange for a promissory note. Charlie's no dummy
https://www.sec.gov/Archives/edgar/data/1067983/000118143108063602/xslF345X03/rrd224408.xml
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You can also look at just the insider transactions by clicking the red link "Get insider transactions" for this 'issuer' or for this 'reporting owner'
Under this reporting owner, for Berkshire, you get the recent PSX sale, the Liberty Sirius accumulation, PSX purchases, etc..
Under this issuer, you get the insider transactions for BRK stock, which are primarily charity related. But sometimes there is an interesting one like Charlie transferring a huge block of his Berkshire stock near the exact bottom of the financial crisis to his children in exchange for a promissory note. Charlie's no dummy
https://www.sec.gov/Archives/edgar/data/1067983/000118143108063602/xslF345X03/rrd224408.xml
I'd much rather have Charlie for a father than Warren!
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BNSF oil train derailed in Iowa.
https://www.ctvnews.ca/world/estimated-230-000-gallons-of-oil-spilled-in-derailment-bnsf-1.3986622
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Nasdaq [June 26th 2018]: Lee Enterprises will manage Berkshire Hathaway Newspaper and Digital Operations in 30 Markets (https://www.nasdaq.com/press-release/lee-enterprises-will-manage-berkshire-hathaway-newspaper-and-digital-operations-in-30-markets-20180626-00228).
Edit:
CNBC Warren Buffett Archive [April 5th 2018]: Buffett's complicated relationship with the newspaper business (https://buffett.cnbc.com/2018/04/05/buffetts-complicated-relationship-with-the-newspaper-business.html).
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Repowering order from PacifiCorp to Vestas Wind Systems (https://www.vestas.com/~/media/vestas/media/news%20and%20announcements/news/2018/180629_nr_uk_vame.pdf).
Quite amazing that it's optimal to scrap nacelles and blades after only approx. 11 years of operation, to get better performance. It says a lot about how the technology in this industry is advancing over time. [Mentioned by Uccmal before here on CoBF.]
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One of the key points is that all of these re-powering deals (NextEra is doing a lot of them as well) are gaining eligibility to re-start the production tax credits with today's date. It's a substantial enough rebuild/replacement that it basically counts as a new wind farm after you're getting closer to the end of your original production tax credit period for the old equipment. Also, of course, the new equipment is much larger and generates more power on land you already have control of, infrastructure already built, etc..
- and because of the phase down of tax credits, 2018 is the year you will see the equipment ordered for almost all of the next several years of projects
Repowering order from PacifiCorp to Vestas Wind Systems (https://www.vestas.com/~/media/vestas/media/news%20and%20announcements/news/2018/180629_nr_uk_vame.pdf).
Quite amazing that it's optimal to scrap nacelles and blades after only approx. 11 years of operation, to get better performance. It says a lot about how the technology in this industry is advancing over time. [Mentioned by Uccmal before here on CoBF.]
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One of the key points is that all of these re-powering deals (NextEra is doing a lot of them as well) are gaining eligibility to re-start the production tax credits with today's date. It's a substantial enough rebuild/replacement that it basically counts as a new wind farm after you're getting closer to the end of your original production tax credit period for the old equipment. Also, of course, the new equipment is much larger and generates more power on land you already have control of, infrastructure already built, etc..
- and because of the phase down of tax credits, 2018 is the year you will see the equipment ordered for almost all of the next several years of projects
Repowering order from PacifiCorp to Vestas Wind Systems (https://www.vestas.com/~/media/vestas/media/news%20and%20announcements/news/2018/180629_nr_uk_vame.pdf).
Quite amazing that it's optimal to scrap nacelles and blades after only approx. 11 years of operation, to get better performance. It says a lot about how the technology in this industry is advancing over time. [Mentioned by Uccmal before here on CoBF.]
Yes, technology is evolving (longer blades, more efficient turbines etc) and there is more to come but:
-this is a reminder of the intensity of capital involved
-the decision to repower, like globalfinancepartners explains, in influenced significantly by the tax implications
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-er-useful-lives-and-assets-to-qualify-for-tax-credits.pdf
Don't want to kill the enthusiasm but helpful to remember that the wind energy business, if you compare to learning how to ride a bike, is progressing but the safety wheels are still on.
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https://youtu.be/fjXZbW8ALRA
I didn’t know these. There are a few more actually
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Clayton Properties picked up another traditional homebuilder. This one in Indianapolis ->
http://www.insideindianabusiness.com/story/38565239/tennessee-company-adds-major-hoosier-homebuilder
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https://youtu.be/fjXZbW8ALRA
I didn’t know these. There are a few more actually
compoundvalue,
Here (https://buffett.cnbc.com/) you go, and enjoy! [You'll most likely be occupied a few hours, if your're interested ... [ : - ) ]
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Bolt on of unknown size (likely small) at TTI ->
https://www.electronicsweekly.com/news/business/532037-2018-07/
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Berkshire press release about Mr. Buffett's yearly gifts to the five foundations (http://berkshirehathaway.com/news/jul1618.pdf).
Now ~USD 31 B in total, in this year ~USD 3.4 B, and counting.
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Berkshire press release about Mr. Buffett's yearly gifts to the five foundations (http://berkshirehathaway.com/news/jul1618.pdf).
Now ~USD 31 B in total, in this year ~USD 3.4 B, and counting.
This kind of got lost in the news about the repurchases. Does anyone know how long it takes before the S&P recalculates the free float shares and increases BRK weighting in the index?
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I don't know the answer to your question - since most of the shares end up sitting in the Gates foundation for quite a while they might not consider them to be much of an increase in free float right away. Over time, though, Berkshire will get higher and higher weighting in the index. It already is a big contributor to most days' price moves since many BRK shares outside of indices just sit there with capital gains nobody wants to realize.
You do have to appreciate what the timing of the two announcements says about Warren, though... He could have easily made the announcements in the reverse order. His charitable gifts would have been larger. But he would never do that and it doesn't really matter. He can't use the deductions anyway
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I found this post from Geoff Gannon in 2010 that summarizes S&P's methodology -
"According to S&P Float Adjustment Methodology:
In cases where holdings in a group exceed 10% of the outstanding shares of a
company, the holdings of that group will be excluded from the float-adjusted count of
shares to be used in index calculations.
The "groups" they are talking about include current and former officers and directors as well as Foundations. As I understand it - and I may be wrong here - this means shares given by Buffett to the Gates Foundation wouldn't change float in S&P's eyes until Gates Foundation sells shares.
You can read the whole document if you google "S&P Float Adjustment Methodology" and click on the PDF."
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https://www.bizjournals.com/dallas/news/2018/07/19/bnsf-railway-cio-muru-murugappan.html
Well well well, buzzwords like IOT today are actually 20+ years old at BNSF.
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I don't know the answer to your question - since most of the shares end up sitting in the Gates foundation for quite a while they might not consider them to be much of an increase in free float right away. Over time, though, Berkshire will get higher and higher weighting in the index. It already is a big contributor to most days' price moves since many BRK shares outside of indices just sit there with capital gains nobody wants to realize.
You do have to appreciate what the timing of the two announcements says about Warren, though... He could have easily made the announcements in the reverse order. His charitable gifts would have been larger. But he would never do that and it doesn't really matter. He can't use the deductions anyway
-------------
I found this post from Geoff Gannon in 2010 that summarizes S&P's methodology -
"According to S&P Float Adjustment Methodology:
In cases where holdings in a group exceed 10% of the outstanding shares of a
company, the holdings of that group will be excluded from the float-adjusted count of
shares to be used in index calculations.
The "groups" they are talking about include current and former officers and directors as well as Foundations. As I understand it - and I may be wrong here - this means shares given by Buffett to the Gates Foundation wouldn't change float in S&P's eyes until Gates Foundation sells shares.
You can read the whole document if you google "S&P Float Adjustment Methodology" and click on the PDF."
I wonder if the buyback announcement is related to Gates foundation. Perhaps BRK wants to buyback blocks that Gates foundation plans to sell.
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I don't know the answer to your question - since most of the shares end up sitting in the Gates foundation for quite a while they might not consider them to be much of an increase in free float right away. Over time, though, Berkshire will get higher and higher weighting in the index. It already is a big contributor to most days' price moves since many BRK shares outside of indices just sit there with capital gains nobody wants to realize.
You do have to appreciate what the timing of the two announcements says about Warren, though... He could have easily made the announcements in the reverse order. His charitable gifts would have been larger. But he would never do that and it doesn't really matter. He can't use the deductions anyway
-------------
I found this post from Geoff Gannon in 2010 that summarizes S&P's methodology -
"According to S&P Float Adjustment Methodology:
In cases where holdings in a group exceed 10% of the outstanding shares of a
company, the holdings of that group will be excluded from the float-adjusted count of
shares to be used in index calculations.
The "groups" they are talking about include current and former officers and directors as well as Foundations. As I understand it - and I may be wrong here - this means shares given by Buffett to the Gates Foundation wouldn't change float in S&P's eyes until Gates Foundation sells shares.
You can read the whole document if you google "S&P Float Adjustment Methodology" and click on the PDF."
I wonder if the buyback announcement is related to Gates foundation. Perhaps BRK wants to buyback blocks that Gates foundation plans to sell.
I would bet that would be the cause. A day after anither big charitable contribution they announce the buyback. Seems to me that if you want to do charity you shouldn't make the charities sell too much below intrinsic value. Bill Gates was likely reluctant to sell shares at recent prices.
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We have a separate topic in the Berkshire forum for this discussion, gents.
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Can you give us the link to the proper place to answer questions about Berkshire’s weighting in the S&P 500 please? Seems fairly general but if it must be in a dedicated thread so be it
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globalfinancepartners,
No, I can't. But you and bizaro could create it! - The topic at hand here is certainly worth separate discussion! [ : - ) ]
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John,
This is the nature of message boards and the internet generation that we’re in. The first page (headline) gets all the attention. Page 2 maybe but almost never page 15 or 16. I sometimes dig up past discussions to revive them with current happenings but that’s the exception. We’re dealing with memory recall and impatience. The impatience is with saying what I want to say, no matter in which topic so long as it’s on the top of page 1.
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This list shows the gist of how much the Gates foundation sells on a daily basis, for those who are curious -
https://www.sec.gov/Archives/edgar/data/902012/000110465918046338/a18-17436_1ex99d1.htm
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This list shows the gist of how much the Gates foundation sells on a daily basis, for those who are curious -
https://www.sec.gov/Archives/edgar/data/902012/000110465918046338/a18-17436_1ex99d1.htm
Interesting...I did some mental arithmetic and over 43 trading days, they have sold just over 3 Million shares worth $500 million.
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2B deal with Seritage Growth Properties
https://www.reuters.com/article/us-seritage-growth-termloan-berkshire/buffetts-berkshire-offers-loan-to-owner-of-former-sears-properties-idUSKBN1KL33U
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BERKSHIRE HATHAWAY INC. Information Regarding Second Quarter Earnings Release (https://www.businesswire.com/news/home/20180802005877/en/)
August 02, 2018 04:15 PM Eastern Daylight Time
OMAHA, Neb.--(BUSINESS WIRE)--Berkshire Hathaway Inc. (BRK.A; BRK.B) –
Berkshire Hathaway Inc.’s second quarter earnings release and its quarterly report on Form 10-Q will be posted on the Internet on Saturday, August 4, 2018, at approximately 7:00 a.m. Central time where it can be accessed at http://www.berkshirehathaway.com (http://www.berkshirehathaway.com).[/size]
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Warren Watch (cool little column,)
https://www.omaha.com/money/how-s-warren-buffett-doing-on-twitter/article_556f8125-e6ef-50c9-95f0-00d31174494a.html
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Second Quarter Earnings 2018
http://www.berkshirehathaway.com/news/2018news.html
Operating earnings...................................................... $ 6,893
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https://www.valuewalk.com/2018/08/berkshires-intrinsic-value-results-beat/
Value Walk article..... interesting sum-of-the-parts valuation.....
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Welcome to you here on CoBF, KFS! [ : - ) ]
Just for your information, there is also the last three client letters from Semper Augustus, which can be accessed here (http://www.semperaugustus.com/clientletter), just in case you don't already know them.
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Welcome to you here on CoBF, KFS! [ : - ) ]
Just for your information, there is also the last three client letters from Semper Augustus, which can be accessed here (http://www.semperaugustus.com/clientletter), just in case you don't already know them.
Thank you.... very good material..... I've been a quiet reader of this forum for some time now, just now emerging from the shadows
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On thinking about your suspicion that Berkshire has stopped buying Apple, I think you're right and that they may potentially have even decided to trim their position by a small amount to stay below the reporting threshold.
Regarding Apple and the 13D requirements, I wasn't aware that 13D reporting came at 5% as I'm fairly new to trawling through all the EDGAR filings, especially since I've started receiving them on email via rocketfinancial and since I start looking at historic 13D filings to calculate the holdings by pensions funds for various Berkshire subsidiary employees to account for these in the Look Through spreadsheet, but here's a decent summary I found in response to gfp's post:
Schedule 13D
From Wikipedia, the free encyclopedia
Schedule 13D is an SEC filing that must be submitted to the US Securities and Exchange Commission within 10 days by anyone who acquires beneficial ownership of more than 5% of any class of publicly traded securities in a public company. A filer must promptly update the Schedule 13D filing to reflect any material change in the facts disclosed, including, among other things, the acquisition or disposition of 1% or more of the class of securities that are the subject of the filing.
I have recently had suspicions that a few more AAPL may have been purchased by Berkshire in the $162-$165 range at the end of April, but the run-up to $183-$194 ballpark since then may have curtailed their buying. Roughly 200 milion shares of AAPL traded in that April low period, so I would not have been shocked to find they've added another 50-60 million shares.
On the latest Apple 10-Q (https://www.rocketfinancial.com/FetchDoc.aspx?fid=6597046) we have the figure:
4,915,138,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of April 20, 2018
, which remains the latest published figure for outstanding shares.
Now it appears that 5% reporting threshold would currently be 245,756,900 shares.
Berkshire's 13-F holdings (Berkshire and New England Asset Management combined) as of 31st March including pension fund holdings are:
245,278,633 (4.990% of last known shares outstanding).
This is remarkably close to a threshold that wouldn't have been precisely known to Berkshire prior to 20th April. Can that be coincidence?
We believe that 2,837,753 shares are owned by pension schemes within Berkshire (per 10-K annual report). (0.058% of AAPL)
From the financial-benefit definition of beneficially owned, Berkshire has 242,440,880 (4.933% of AAPL), excluding the pension scheme holdings that are not for the financial benefit of Berkshire's owners.
But from the voting power definition of beneficially owned, it's the 4.990% known directly from the two 13-F filings that counts.
I assume from the 4.990% being just below 5.000% that it may be the latter that would trigger the 13D and that this threshold is what curtailed Berkshire's buying in the first quarter to avoid reporting responsibilities.
It is even possible, perhaps likely, that Berkshire may engage in slight trimming this quarter at the $180+ range to avoid 13D filing responsibilities that might arise the moment that Apple next makes a filing that discloses a reduced number of shares outstanding.
In this way, Apple, like Wells Fargo, may well then remain at about this size, with Berkshire estimating the extent of Apple buybacks and trimming slightly from quarter to quarter, unless the SEC is willing to grant them an exemption from public filing within 10 days until they hit a higher limit such as 10%. I imagine such an exemption is possible, because I don't recall 13D filings about the 0.4% Wells Fargo position trimming appearing prior to the release of the 13-F this quarter, and this trimming ws to keep Berkshire just below the 10% level to avoid being considered a Bank Holding Company, which is, of course, well above the 5% 13D threshold. If they are allowed exemption from public filing of 13D while they build their position.
From the Berkshire 2018Q2 quarterly report, they beneficially hold $47.2bn as of 30th June 2018. The pension scheme holdings wouldn't be included there but will appear in the 13-F later this month.
The lowest number that would round up to that figure is $47.15bn.
The Apple share price at the close on 29th June - the last trading day - was $185.11
So the smallest share count that fits would be 254,713,414 shares of Apple held by Berkshire, an increase of at minimum 9,434,781 shares over 31/03/2018.
As a percentage of Apple's then published 4,915,138,000 shares outstanding (as of their May 10Q), this is 5.18% at a minimum based on the known share count at the time (which has since decreased, increasing Berkshire's percentage ownership of Apple).
So this exceeds the 5% threshold where Berkshire must file a Schedule 13D filing with the SEC.
From this I think we can assume that Berkshire has been granted confidential filing status for Schedule 13D at this point while they continue to add to their position, so their public holdings will only be released in their 13-F filing later this month and there will be less indication of the price range they've bought at than during a 10-day period. Otherwise, had the 13D filing been made public we'd have known within 10 days of any increase above 5% during the quarter, meaning at latest 10th July if they'd bought off market on 30th June. This confidential status seems entirely fair given Berkshire's proprietary view of Apple's valuation which is a competitive advantage. Berkshire clearly doesn't wish to conduct a takeover of Apple or exercise control over it, and the SEC's requirement relates to monitoring of voting power, not publicly disclosing the prices and quantities traded by those they regulate and giving away such proprietary judgement clues to the investment community at large.
Perhaps we can then envisage that Berkshire could continue to buy beyond 5% when Apple is priced attractively, and could probably get close to 10% before hitting the requirements that caused them to trim their Phillips 66 (PSX) stake, even though, like Apple it's not a bank, so wouldn't cause Berkshire to be considered a bank holding company as a 10% holding in Wells Fargo would. Possibly even over 10%, it might be worth whatever those requirements are, given that Apple is one of the few investees that can really move the needle given Berkshire's size.
That potentially could mean that in future, rather than the Apple stake representing about 9-10% of Berkshire's market cap, it could rise a lot further.
I haven't yet updated my public Look Through Google Sheet, as we only have an estimated Apple holding and the share count has only risen by 2% last quarter. It won't be too long until the 13-F is released and I will update it more fully.
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On thinking about your suspicion that Berkshire has stopped buying Apple, I think you're right and that they may potentially have even decided to trim their position by a small amount to stay below the reporting threshold.
Regarding Apple and the 13D requirements, I wasn't aware that 13D reporting came at 5% as I'm fairly new to trawling through all the EDGAR filings, especially since I've started receiving them on email via rocketfinancial and since I start looking at historic 13D filings to calculate the holdings by pensions funds for various Berkshire subsidiary employees to account for these in the Look Through spreadsheet, but here's a decent summary I found in response to gfp's post:
Schedule 13D
From Wikipedia, the free encyclopedia
Schedule 13D is an SEC filing that must be submitted to the US Securities and Exchange Commission within 10 days by anyone who acquires beneficial ownership of more than 5% of any class of publicly traded securities in a public company. A filer must promptly update the Schedule 13D filing to reflect any material change in the facts disclosed, including, among other things, the acquisition or disposition of 1% or more of the class of securities that are the subject of the filing.
I have recently had suspicions that a few more AAPL may have been purchased by Berkshire in the $162-$165 range at the end of April, but the run-up to $183-$194 ballpark since then may have curtailed their buying. Roughly 200 milion shares of AAPL traded in that April low period, so I would not have been shocked to find they've added another 50-60 million shares.
On the latest Apple 10-Q (https://www.rocketfinancial.com/FetchDoc.aspx?fid=6597046) we have the figure:
4,915,138,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of April 20, 2018
, which remains the latest published figure for outstanding shares.
Now it appears that 5% reporting threshold would currently be 245,756,900 shares.
Berkshire's 13-F holdings (Berkshire and New England Asset Management combined) as of 31st March including pension fund holdings are:
245,278,633 (4.990% of last known shares outstanding).
This is remarkably close to a threshold that wouldn't have been precisely known to Berkshire prior to 20th April. Can that be coincidence?
We believe that 2,837,753 shares are owned by pension schemes within Berkshire (per 10-K annual report). (0.058% of AAPL)
From the financial-benefit definition of beneficially owned, Berkshire has 242,440,880 (4.933% of AAPL), excluding the pension scheme holdings that are not for the financial benefit of Berkshire's owners.
But from the voting power definition of beneficially owned, it's the 4.990% known directly from the two 13-F filings that counts.
I assume from the 4.990% being just below 5.000% that it may be the latter that would trigger the 13D and that this threshold is what curtailed Berkshire's buying in the first quarter to avoid reporting responsibilities.
It is even possible, perhaps likely, that Berkshire may engage in slight trimming this quarter at the $180+ range to avoid 13D filing responsibilities that might arise the moment that Apple next makes a filing that discloses a reduced number of shares outstanding.
In this way, Apple, like Wells Fargo, may well then remain at about this size, with Berkshire estimating the extent of Apple buybacks and trimming slightly from quarter to quarter, unless the SEC is willing to grant them an exemption from public filing within 10 days until they hit a higher limit such as 10%. I imagine such an exemption is possible, because I don't recall 13D filings about the 0.4% Wells Fargo position trimming appearing prior to the release of the 13-F this quarter, and this trimming ws to keep Berkshire just below the 10% level to avoid being considered a Bank Holding Company, which is, of course, well above the 5% 13D threshold. If they are allowed exemption from public filing of 13D while they build their position.
From the Berkshire 2018Q2 quarterly report, they beneficially hold $47.2bn as of 30th June 2018. The pension scheme holdings wouldn't be included there but will appear in the 13-F later this month.
The lowest number that would round up to that figure is $47.15bn.
The Apple share price at the close on 29th June - the last trading day - was $185.11
So the smallest share count that fits would be 254,713,414 shares of Apple held by Berkshire, an increase of at minimum 9,434,781 shares over 31/03/2018.
As a percentage of Apple's then published 4,915,138,000 shares outstanding (as of their May 10Q), this is 5.18% at a minimum based on the known share count at the time (which has since decreased, increasing Berkshire's percentage ownership of Apple).
So this exceeds the 5% threshold where Berkshire must file a Schedule 13D filing with the SEC.
From this I think we can assume that Berkshire has been granted confidential filing status for Schedule 13D at this point while they continue to add to their position, so their public holdings will only be released in their 13-F filing later this month and there will be less indication of the price range they've bought at than during a 10-day period. Otherwise, had the 13D filing been made public we'd have known within 10 days of any increase above 5% during the quarter, meaning at latest 10th July if they'd bought off market on 30th June. This confidential status seems entirely fair given Berkshire's proprietary view of Apple's valuation which is a competitive advantage. Berkshire clearly doesn't wish to conduct a takeover of Apple or exercise control over it, and the SEC's requirement relates to monitoring of voting power, not publicly disclosing the prices and quantities traded by those they regulate and giving away such proprietary judgement clues to the investment community at large.
Perhaps we can then envisage that Berkshire could continue to buy beyond 5% when Apple is priced attractively, and could probably get close to 10% before hitting the requirements that caused them to trim their Phillips 66 (PSX) stake, even though, like Apple it's not a bank, so wouldn't cause Berkshire to be considered a bank holding company as a 10% holding in Wells Fargo would. Possibly even over 10%, it might be worth whatever those requirements are, given that Apple is one of the few investees that can really move the needle given Berkshire's size.
That potentially could mean that in future, rather than the Apple stake representing about 9-10% of Berkshire's market cap, it could rise a lot further.
I haven't yet updated my public Look Through Google Sheet, as we only have an estimated Apple holding and the share count has only risen by 2% last quarter. It won't be too long until the 13-F is released and I will update it more fully.
This is extremely interesting to me. Living a couple of thousand miles away and with approximately zero knowledge on US reporting requirements and exceptions, your argument seems to make a lot of sense. Any other takers?
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Thanks @SwedishValue. User @globalfinancepartners has been the member who had explained most of this to me, for which I'm very grateful and give huge credit (and surely owe them a beer or two if we should ever meet!), so I posted this with the thought that any nuance I've misunderstood will be corrected by peer-review and we'll all learn something.
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Thats a lot to read on a phone, but I think you guys got the gist of it. The most recent published share count of Apple (found at the very top of every 10Q) is the number they have to use, not quarter-end or average share counts. Apple published this:
"4,829,926,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of July 20, 2018"
less than 10 business days ago, which I believe is the Berkshire deadline for publishing a "13G" with the SEC. If Berkshire doesn't file within 10 business days of Apple's updated share count, they either made a mistake and will update later with a 'sorry, we should have done this earlier' or they have elected to sell down their stake to stay just under what they project to be the 5% share count - for the sake of privacy one would assume. It's not very important in valuing Berkshire obviously. Hell, Berkshire could even enter into one of those deals like Advance/Newhouse did with Charter where they sell blocks back to the company to maintain their exact same % ownership level over time. Would probably save both parties a little bit on trading costs. But I don't expect that
I will ask Marc Hamburg, but I seriously doubt he will answer me about this question since it involved an individual security Warren might be buying or selling.
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Do you remember this (http://berkshirehathaway.com/news/aug2014.pdf)? I'll bet this will never happen again with Mr. Hamburg as CFO. I haven't studied his 2014 bonus in the AGM 2015 proxy, though! [ : - ) ]
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"4,829,926,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of July 20, 2018"
My point was that they already exceeded 5% by 30th June 2018 even using the April share count published by Apple in early May, so they would have had to publish by 10th July 2018, which has been and gone.
Thus I'm pretty sure they have a confidentiality waiver on the 13D filings, meaning they tell the SEC within 10 days but the SEC doesn't make it public so we can't narrow down too closely what prices they consider cheap.
That's unless they somehow get to use a different Apple mark-to-market price from the closing price I found through Google Finance and Yahoo Finance for 29th June 2018. That would throw out my calculation of the minimum number of shares that would round to 47.2 billion dollars, but I've never noticed such a discrepancy before.
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Ah yes I see your point. If I had to guess I would say they are selling a small number of shares to keep it under the reporting requirements. I don't believe they have any confidential treatment for the 13G and they didn't seek confidential treatment on the 13F. We'll see if Marc gets back to me but I doubt he will be able to answer if they are indeed selling shares.
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Well, the 13F is not long to wait for, then we'll have an actual share count as of 30th June 2018, filed with the SEC, instead of having to back-calculate from dividing the reported Q2 valuation of their Apple stake to the nearest $0.1bn by the presumed closing price they would have used to derive it, which is usually pretty reliable.
Buffett also muttered some comments to Becky Quick in a CNBC interview prior to the Annual Meeting and Q1 financials which seemed in accordance with the current holdings according to what someone mentioned in another thread - though I haven't checked it - and thinking about it, Warren's command of the figures and instant recall is legendary, so an off-the-cuff mumbled remark is probably going to be correct in his case.
I'm thinking they did and still do hold more than 5.0% and would have to tell the SEC every time their holding increases by 1% more, if I understand the rules
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I wonder what you guys think about BRK taking (very close to) 5% position in companies and having to sell down to 5% due to share buybacks. Isn't this very short term investing? I.e. they pretty much know the company will be buying back shares and they know that they will have to sell down within a quarter, so their holding time is a quarter or two for that slice of position. Is it a good investment? (Yeah, if there's bull market in that stock, it is, but Buffett would not buy expecting single quarter bull market, would he?). Why not buy 4.8% or some other number where they would not be forced to sell within short time frame?
Not that this matters a lot, but I just wonder...
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Yeah, that's another reason I think they're over 5%. It's much more speculative if you're a forced seller. The odds may be tilted in your favour if you buy well below IV, but it's still pretty speculative.
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End quarterly guidance! Indeed. Let’s see how this plays out.
Not sure I agree. I don't view quarterly guidance as a measure to price the stock - but rather to "price" management. How accurate are management's estimates? If they're regularly inaccurate, why is that? Is the business very volatile and even management cannot get much clarity? Is management just dumb, or at worse, dishonest?
I think the more communication between management and shareholders, the better - even if it just management's estimate. It's the shareholder's job to manage that information.
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https://www.businesswire.com/news/home/20180813005684/en/
Airlines and banks... no mention of Apple there
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I suspect they're specifically mentioning the banking and airline industries because it's those industries where some positions are close to 10% and they're simultaneously adding to some of the similar banks that are well below 10%.
They know that their 13-F is widely scrutinised to garner insights into the thinking of one of the greatest investors (and two other great investors picked by him), so they're indicating that in the case of banks and airlines, they'll have sold some Wells Fargo, almost certainly, to stay below 10% as they repurchase, but may have added to Bank of America, say, or Bank of New York Mellon or an investment bank. They wish to ensure that investors and reporters do not erroneously attribute such sales to having a preference of giving any endorsement to one bank over another or one airline over another, or cause a panic sell-off in a troubled bank like Wells Fargo based on a misinterpretation, or cause a run-up in a bank being added to, which might even constitute inadvertent market manipulation and work against their self-interest as a current seller/buyer respectively.
In the case of Apple, they're not near the 10% threshold and they're not investing in other similar companies, so no such buying/selling differential will be evident.
I'm not sure I'll do so tomorrow 'afternoon' which is some time in the evening or night here in the UK, but I'll aim to update my public Look Through Google Sheets (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/look-through-portfolio-google-sheets-with-live-prices/50/) with both the Berkshire 13-F and the New England Asset Management 13-F, plus some other recent filings such as the 13G/A on Axalta. Until now, as we only had to wait a week or two since the Q2 financials, I decided not to update the COMBINED HOLDINGS worksheet tab with the information gleaned regarding small changes. As always, my spreadsheet will differ from those published in most places on the internet because I include New England Asset Management (thanks @globalfinancepartners) and make adjustments for some known or assumed foreign holdings that don't get reported on 13-F and also for known holdings within Berkshire's pensions funds that aren't for the benefit of shareholders.
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https://www.businesswire.com/news/home/20180813005684/en/
This reraises the question I had above in the thread. Why not pre-plan and not bump into 5%/10% limits and have to sell? Seems like these guys need some investment planning people or something...
(And as above, yeah, in bull market maybe you leave money on the table by taking position that does not bump into 5/10 limits. But you won't always have gains when selling is forced).
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https://www.dataroma.com/m/holdings.php?m=BRK
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Any idea why BRK sold out of Verisk?
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Valuation?
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BRK has held a stake since before it went public. Was wondering whats changed, thought about valuation but WEB didn't sell KO when it was wildly overpriced so......
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Any idea why BRK sold out of Verisk?
There are still 2,780,136 shares of Verisk held by Berkshire care of New England Asset Management 13-F filing (https://www.sec.gov/Archives/edgar/data/1004244/000108514618002153/xslForm13F_X01/form13fInfoTable.xml) owner code 01 02.
Including both 13-F filings, it appears to have declined by -458,692 shares, or -14.2% of the previous quarter's holding, and it just happens that all of Berkshire's direct holdings were eliminated.
More to come via my Look Through Portfolio thread (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/look-through-portfolio-google-sheets-with-live-prices/50/).
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Any idea why BRK sold out of Verisk?
There are still 2,780,136 shares of Verisk held by Berkshire care of New England Asset Management 13-F filing (https://www.sec.gov/Archives/edgar/data/1004244/000108514618002153/xslForm13F_X01/form13fInfoTable.xml) owner code 01 02.
Including both 13-F filings, it appears to have declined by -458,692 shares, or -14.2% of the previous quarter's holding, and it just happens that all of Berkshire's direct holdings were eliminated.
More to come via my Look Through Portfolio thread (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/look-through-portfolio-google-sheets-with-live-prices/50/).
thanks!!
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The only real surprise for me was that he continued to sell down PSX following last quarter's big sale back to the company. PSX shares continued to rise, in part because of the share retirement Buffett contributed to. He had said in the press release for the big sale back to the company that he intended to remain a large shareholder.
Maybe he just wanted to give them some room to do more big repurchases before he hits 10% again.
The airline and bank moves were telegraphed a couple days ago. I guess the Goldman addition is a bit of a surprise since he hasn't added to the position from net-settling the warrants until now as far as I can remember.
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Perhaps Mr. Buffet needed some cash to hand over more capital to manage by Mr. Combs & Mr. Weshler [and woulden't reduce overall level of cash & T-Bills]? - I'm just speculating here. This "Here are USD X B to manage your own way, but don't buy "my" stocks" can create some odd situations.
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Man, I think they are off base on the airlines (again).
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Conglomerate investing is like starting mingling and merging toes with another person relatively late in life. You have to take the whole package, or pass.
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Another step back from his many activities. He'd been meeting with students from 40 different universities.
https://www.usnews.com/news/best-states/nebraska/articles/2018-08-14/warren-buffett-is-ending-his-meetings-with-college-students
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Not a good sign
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Experienced and Well Informed Brains of COBF,
Instead of BRK purchasing Class B shares on the open market, could BRK contact large holders of B shares and agree to purchase stock from them directly?
Said differently, are these the most likely methods of BRK repurchasing its own shares:
- Buy it on the open market
- Perform a tender offering to all class B shareholders
- Or, can they purchase from single large class B shareholders
- Something else??
I think this would enable them to deploy hundreds of millions fast and efficiently, rather than disturb the daily float? I know that they couldn't give an advantage price to one large share holder over others, but still..
8) ???
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Don’t like this news but it rings inevitable.He’s done enough to educate and energy needs to be conserved some day.
I am predicting a big transition announcement in 2019 to mark 50 years since the last big transition from the partnership.
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Experienced and Well Informed Brains of COBF,
Instead of BRK purchasing Class B shares on the open market, could BRK contact large holders of B shares and agree to purchase stock from them directly?
They can and they did.
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Don’t like this news but it rings inevitable.He’s done enough to educate and energy needs to be conserved some day.
I am predicting a big transition announcement in 2019 to mark 50 years since the last big transition from the partnership.
Sadly, it does feel like the end of an era is drawing near. IMHO what will be surreal is the first AGM without WEB &/or CM. Or will they start cutting the Q & A shorter, bringing Todd & Ted up to answer some of the questions?
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Don’t like this news but it rings inevitable.He’s done enough to educate and energy needs to be conserved some day.
I am predicting a big transition announcement in 2019 to mark 50 years since the last big transition from the partnership.
Sadly, it does feel like the end of an era is drawing near. IMHO what will be surreal is the first AGM without WEB &/or CM. Or will they start cutting the Q & A shorter, bringing Todd & Ted up to answer some of the questions?
I am thinking more of Ajit and Greg sharing the stage soon.
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I'm thinking in line with longinvestor. I think the logical step would be the chairman and the three vice chairmen on the stage next spring. Reduces workload on the two oldest of the four men during the whole day. Still no interviews with Mr. Buffet since July 17th ["Buyback policy change" announcement date]?
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I'm thinking in line with longinvestor. I think the logical step would be the chairman and the three vice chairmen on the stage next spring. Reduces workload on the two oldest of the four men during the whole day. Still no interviews with Mr. Buffet since July 17th ["Buyback policy change" announcement date]?
Yes, that would seem to be the next logical step. I'm thinking it may happen as soon as the next AGM.
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Maybe they are preparing for a big buy back if WEB or CM are about to step down and the market sells down the stock. Not a nice thought that they may be slowing down. :-\
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Don’t like this news but it rings inevitable.He’s done enough to educate and energy needs to be conserved some day.
I am predicting a big transition announcement in 2019 to mark 50 years since the last big transition from the partnership.
Sadly, it does feel like the end of an era is drawing near. IMHO what will be surreal is the first AGM without WEB &/or CM. Or will they start cutting the Q & A shorter, bringing Todd & Ted up to answer some of the questions?
As to the Q&A, it will take way more than two people to answer post current management. Some sort of meeting will happen! They don’t want to give up on all those dilly bar sales!
The biggest challenge to me would be writing that Chairman’s letter. That is a tough act!
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I'm thinking in line with longinvestor. I think the logical step would be the chairman and the three vice chairmen on the stage next spring. Reduces workload on the two oldest of the four men during the whole day. Still no interviews with Mr. Buffet since July 17th ["Buyback policy change" announcement date]?
I don't think he wants PR right now if he's looking to retire stock on the cheap. No upside to it.
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That makes sense, alwaysinvert. Not so long ago, longinvestor posted something along like "The market now has to vote, instead of Omaha setting the price" [after which Omaha will decide to buyback, or not].
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Don’t like this news but it rings inevitable.He’s done enough to educate and energy needs to be conserved some day.
I am predicting a big transition announcement in 2019 to mark 50 years since the last big transition from the partnership.
Sadly, it does feel like the end of an era is drawing near. IMHO what will be surreal is the first AGM without WEB &/or CM. Or will they start cutting the Q & A shorter, bringing Todd & Ted up to answer some of the questions?
As to the Q&A, it will take way more than two people to answer post current management. Some sort of meeting will happen! They don’t want to give up on all those dilly bar sales!
The biggest challenge to me would be writing that Chairman’s letter. That is a tough act!
I'm just thinking the time has come where they will start adding new people, along with WEB & CM, to start preparing us for the inevitable.....
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https://www.wsj.com/articles/buffetts-berkshire-hathaway-eyes-india-mobile-payments-firm-1535372330
https://www.bloomberg.com/news/articles/2018-08-27/warren-buffett-is-said-to-agree-on-backing-india-s-paytm
https://money.cnn.com/2018/08/27/technology/paytm-warren-buffett/index.html
Berkshire taking a stake in an Indian mobile payments company - Todd Combs deal
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https://economictimes.indiatimes.com/markets/expert-view/more-than-money-berkshires-todd-combs-coming-on-paytm-board-is-the-best-outcome-vijay-shekhar-sharma/articleshow/65578696.cms
Interview in the Economic Times, mentions that Todd Combs will join Paytm board. Warren not involved at all, but did know enough about it to tell Masa at Sun Valley. Tiny investment of course, but over time it does help to raise the profile internationally.
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I wonder if this means that post-Buffett BRK future looks more like Softbank or Liberty. 8)
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CNBC Interview of Mr. Buffett by Ms. Quick at Thursday August 30th 2018, 11:00 AM ET [Mr. Buffetts
88 89th birthday] (https://twitter.com/CNBC/status/1034520957711511552).
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CNBC Interview of Mr. Buffett by Ms. Quick at Thursday August 30th 2018, 11:00 AM ET [Mr. Buffetts 88 89th birthday] (https://twitter.com/CNBC/status/1034520957711511552).
88 was right the first time. He's also going to be on Bloomberg at 11:30am tomorrow, pre-taped I guess.
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CNBC Interview of Mr. Buffett by Ms. Quick at Thursday August 30th 2018, 11:00 AM ET [Mr. Buffetts 88 89th birthday] (https://twitter.com/CNBC/status/1034520957711511552).
88 was right the first time. He's also going to be on Bloomberg at 11:30am tomorrow, pre-taped I guess.
aws,
Desk test:
When you have just turned one year old, you have actually had two birthdays: The day of your birth, and the day when you turn the sharp corner of becoming one year old, on your way into the unknown territory of "your next year". - And so on for number of birthdays for every year, implying X+1 birthdays for every X years of age. [ ; - ) ]
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Why would it be pre-taped?
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I consider the guess by aws as qualified, because of the time span between start points in time of disclosure the two separate interviews. Personally, I think it's fair to say, that Mr. Buffett has a preference for being interviewed by Ms. Quick.
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Looks like a new interview with Li Lu and Munger in China (although I am surprised Munger is still flying around the globe!)
Part 1 - https://www.youtube.com/watch?v=mRXS7tByziI
Part 2 - https://www.youtube.com/watch?v=UfW5IfwaIdE
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Thanks for the links. It does seem that the interviews took place in May at the Annual Meeting, or at least that is what she mentioned in her intro.
Looks like a new interview with Li Lu and Munger in China (although I am surprised Munger is still flying around the globe!)
Part 1 - https://www.youtube.com/watch?v=mRXS7tByziI
Part 2 - https://www.youtube.com/watch?v=UfW5IfwaIdE
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CNBC transcript of Becky Quick interview with Mr. Buffett on August 30th 2018 (https://www.cnbc.com/2018/08/30/first-on-cnbc-cnbc-transcript-berkshire-hathaways-warren-buffett-speaks-with-cnbcs-becky-quick-today.html).
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Hadn't noticed that Warren also did the Smith & Wollensky's segment with Liz Claman at FoxBusiness -
http://video.foxbusiness.com/v/5828934109001/?#sp=show-clips
and
http://video.foxbusiness.com/v/5828949631001/?#sp=show-clips
Topics covered include Tesla/Elon Musk "funding secured", ending the meetings with universities, his health, how he's feeling, etc
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there is also one with Bloomberg:
https://www.youtube.com/watch?v=gwTeJvLAuxQ
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there is also one with Bloomberg:
https://www.youtube.com/watch?v=gwTeJvLAuxQ
The interviewer mis spoke about the banks’ reserves but Buffett was very quick correcting him :)
Still a very sharp mind
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off topic, but Kiewitt Plaza is for sale for around $20 million. Berkshire has a very long term lease, but I wonder if they end up purchasing the building. On a side note, Omaha real estate appears not too pricey
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I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.
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I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.
If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it.
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I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.
If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it.
You know, that's a good point - if people are willing to pay $3M to have lunch with Warren, why not buy the building, you might
get to have lunch with him a lot more often!
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WSJ video interview posted today -
https://www.wsj.com/articles/warren-buffett-recounts-his-role-in-2008-financial-crisis-1536314400
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Good stuff guys. Thanks.
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I suspect real estate returns are lower than equity, AAPL or even BRK repurchase at today's prices likely yield higher returns. Guessing they won't be using their capital on this.
If they don't purchase it, it will not be for ROE reasons. $20 million is a drop in the bucket, and the purchase would be more for sentimental reasons kind of like the local newspapers. Having said that I am sure $20 m overvalues the building. Having Berkshire as a tenant means people might be willing to pay up for it.
You know, that's a good point - if people are willing to pay $3M to have lunch with Warren, why not buy the building, you might
get to have lunch with him a lot more often!
Buy the building and install listening devices? Haha
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Interesting to see Berkshire melting up towards an all time high with a major hurricane heading towards North Carolina. Maybe we should start a Hurricane Florence thread...
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Buffett did another video interview for the financial crisis anniversary, this time with Andrew Ross Sorkin as part of a CNBC doc coming out on the 'week that shook the world' ->
https://www.cnbc.com/2018/09/10/warren-buffett-2008-financial-crisis-showed-we-are-all-dominoes.html
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Warren continues to sell down his PSX shares. Now below 5%.
Had 34.73 million shares at last filing, down to 22.186 million shares now.
https://www.sec.gov/Archives/edgar/data/1067983/000119312518270047/d622062dsc13ga.htm
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Warren continues to sell down his PSX shares. Now below 5%.
Had 34.73 million shares at last filing, down to 22.186 million shares now.
https://www.sec.gov/Archives/edgar/data/1067983/000119312518270047/d622062dsc13ga.htm
Has he given any insight into why he's selling?
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He always says he loves the management and assets. So that leaves valuation. But, then again, Warren tends to keep his critical thoughts to himself - at least for a while. If I had to guess, I would guess valuation. Or maybe he wants to be below 5% for some other reason and will stand pat here.
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Another good interview with Warren - funny in that he mentions a top executive for one of the big investment banks called during the summer of '08 offering to sell him 'many many billions of dollars worth' of stock in Freddie Mac...
https://www.cnbc.com/2018/09/12/warren-buffett-on-why-the-next-financial-crisis-is-unavoidable-greed.html
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Some of their assets might be cyclicals at peak earnings. I haven't followed this closely, but their 50% interest in wood river is a big heavy oil refinery in Illinois. It is making money on the spread between canadian heavy (WCS) and WTI. That spread has been at historical highs due to pipeline and rail constraints.
While transmountain may or may not get built, the line 3 expansion probably will, and rail is ramping up. A lower differential will lower their profits at wood river.
I'm not sure how big a piece of their business refining is anymore, but thought I'd mention that.
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Bloomberg piece on Pilot Flying J ->
https://www.bloomberg.com/news/articles/2018-09-12/truck-stop-king-looks-to-corner-crude-hauling-in-chaotic-permian
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https://www.bloomberg.com/news/articles/2018-09-11/buffett-s-bottleneck-on-jet-engine-blades-crimps-boeing-airbus
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Berkshire finally closed this acquisition of a previously mutual medical malpractice liability insurer.
https://insurancenewsnet.com/oarticle/mlmic-insurance-company-new-yorks-top-medical-liability-insurer-joins-berkshire-hathaway-family-of-companies-2#.W7NwmxZOklQ
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Matt Rose stepping down in 2019:
https://www.reuters.com/article/us-bnsf-moves-matthewrose/bnsfs-exec-chairman-matthew-rose-to-step-down-in-2019-idUSKCN1MD1M6
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Do you gents consider this "normal procedure" for Berkshire, not appointing the successor in the same announcement? -Perhaps an external candidate in the binoculars?
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It could also mean that BNSF doesn’t need a replacement for Matt Rose’s post. Carl Ice can work with Greg Abel on strategic initiatives. BNSF needs for capital are modest relative to BHE. Anyone want $5 Billion annually?😀
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That reads likely and makes sense, longinvestor. Thanks.
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Wichita Business Journal [October 11th 2018] : FlightSafety CEO Bruce Whitman dies at 85 (https://www.bizjournals.com/wichita/news/2018/10/11/flightsafety-ceo-bruce-whitman-dies-at-85.html?ana=yahoo&yptr=yahoo).
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https://in.reuters.com/article/stone-ipo-berkshire-hathaway/update-1-brazilian-card-processor-hopes-to-lure-buffett-with-11-bln-nasdaq-ipo-idINL2N1WW0YZ
General news / Berkshire / 3G
update - an article on the company from SA. Obviously more likely a Ted or Todd deal but who knows with the Brazilians involved:
https://seekingalpha.com/article/4212362-buffetts-stock-pick-stoneco-ipo-shows-74-percent-y-y-revenue-growth
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https://www.bizjournals.com/dallas/news/2018/10/24/bnsf-ge-develop-battery-electric-locomotive.html?ana=yahoo&yptr=yahoo
Battery powered locomotive. Wondering if Duracell/BYD are in play? It would be super awesome if somehow solar charging of batteries is in play. Use NV/CA/AZ sun potential to run the entire fleet? Or IA/TX wind charging stations. BNSF spends >$3 Billion on energy. Choo choo train can keep on chugging.
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That would truly be a sight to be seen. That locomotive would have to have a big, huge, giant battery.
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It could be one or several separate battery wagons electrical and pullingwise connected to the pulling [electrical] locomotive. Somewhat like in the first days of the NA railroad, where the first wagon after the steam driven locomotive was a wagon containing and carrying the "fuel" [coal]. Instead of doing a recharging stop somewhere, you "swap batteries" at a charging station, thereby time saved.
I remember somebody here on CoBF years ago called Berkshire "old economy", but innovation sure isen't dead at Berkshire.
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It’s too bad they can’t safely electrify something in the rail. Carrying many tons of batteries around is less than ideal and probably not close to cost effective. More likely that for now these battery locomotives are used to reposition cars locally to cut down on emissions in a local area. Ultimately... the trains are already electric so maybe some type of fuel cell or clever safe electrified rail will work out. I don’t see them adding wires above like i’ve seen in Asia.
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It’s too bad they can’t safely electrify something in the rail. Carrying many tons of batteries around is less than ideal and probably not close to cost effective. More likely that for now these battery locomotives are used to reposition cars locally to cut down on emissions in a local area. Ultimately... the trains are already electric so maybe some type of fuel cell or clever safe electrified rail will work out. I don’t see them adding wires above like i’ve seen in Asia.
Slap solar panels on tops of all these railcars and use the electricity to power the locomotive.
I know this is a bit SciFi, but maybe Musk can do it. 8)
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This article is an update on the ballot item in Nevada to open up NV Energy's regulated monopoly to more choice. Obviously NV Energy would still own the distribution infrastructure. BHE has been spending a lot of money on lobbying / advertising. Some large individual casinos had already won the right to pay a termination fee and buy their power from an independent producer.
https://www.politico.com/story/2018/10/27/adelson-buffett-nevada-890190
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WSJ running an article this morning on Todd's recent investments in early stage Financial Technology firms globally
https://www.wsj.com/articles/warren-buffetts-firm-invests-millions-in-fintech-1540807200?mod=hp_lead_pos5
For reference, StoneCo Ltd trades on the nasdaq under the ticker STNE
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This article is an update on the ballot item in Nevada to open up NV Energy's regulated monopoly to more choice. Obviously NV Energy would still own the distribution infrastructure. BHE has been spending a lot of money on lobbying / advertising. Some large individual casinos had already won the right to pay a termination fee and buy their power from an independent producer.
https://www.politico.com/story/2018/10/27/adelson-buffett-nevada-890190
Thanks for the link.
The question is limited to one state but may represent a larger current.
I live in a place where electricity is essentially a vertically-integrated regulated monopoly (wholesale and retail) with hydro responsible for more than 90% of electricity needs and with policies in place favoring low and uniform prices and in a relatively steady place versus the socio-political sphere. But I really like what has been going on in the US considering the experiments with various deregulation plans. It's noisy and sometimes disruptive and inelegant but it seems like it's the best way to go IMO.
What is happening in Nevada (it seems like the ballot item will pass?) may be part of more to come at the national level and underlines the risks of transition costs and partial recovery of the value of stranded assets and I guess BH can manage transitions but investments in regulated utilities does rely on trust versus potential regulatory harm.
The context in Nevada is fascinating with the recent residential solar issues and the ballot question does not go along traditional political divisions.
I've looked into the issue, from a Nevada perspective, and come to the conclusion that it is very hard to decide what is best on a net basis for "society". In terms of consumer costs, I wonder if the Nevada experience would look more like California or more like Texas. I would tend to vote against the trend and for BH (bias here) because of the traditional reasons that it has used to justify the venture into regulated utilities (efficient operations, low cost of capital, reasonable rates of return, long-term outlook with stable and low retail prices and flexibility for alternative sources of energy and environmental concerns).
Found the following to be useful:
https://guinncenter.org/wp-content/uploads/2018/07/Guinn-Center-Q3-2018.pdf
https://guinncenter.org/wp-content/uploads/2018/07/Guinn-Center-Q3-Voter-Guide-2018.pdf
But this is not simply a story about two billionaires.
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"one that got away" - Bloomberg article on Berkshire's interest in acquiring WPP Group in 2012
https://www.bloombergquint.com/business/buffett-sorrell-chatted-about-potential-wpp-deal-six-years-ago
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Discussion about Health Care and Malpractice
https://www.valuewalk.com/2018/11/malpractice-insurance-warren-buffett/
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dcollon,
Thank you for sharing. Please also repost this interview in this topic (http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/brkjpmamzn-healthcare-tie-up/) - It certainly seems worth it, despite I haven't been listening to the whole thing yet.
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It could be one or several separate battery wagons electrical and pullingwise connected to the pulling [electrical] locomotive. Somewhat like in the first days of the NA railroad, where the first wagon after the steam driven locomotive was a wagon containing and carrying the "fuel" [coal]. Instead of doing a recharging stop somewhere, you "swap batteries" at a charging station, thereby time saved.
I remember somebody here on CoBF years ago called Berkshire "old economy", but innovation sure isen't dead at Berkshire.
I would say that innovation is very dead at BRK. WEB targets industries that don't change. GE makes locomotive engines ... not BNSF.
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It could be one or several separate battery wagons electrical and pullingwise connected to the pulling [electrical] locomotive. Somewhat like in the first days of the NA railroad, where the first wagon after the steam driven locomotive was a wagon containing and carrying the "fuel" [coal]. Instead of doing a recharging stop somewhere, you "swap batteries" at a charging station, thereby time saved.
I remember somebody here on CoBF years ago called Berkshire "old economy", but innovation sure isen't dead at Berkshire.
I would say that innovation is very dead at BRK. WEB targets industries that don't change. GE makes locomotive engines ... not BNSF.
I would let GE do the innovating. At least it’s just innovation that’s dead at Berkshire.
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Is anyone else coming up with numbers that suggest Berkshire added 200 million BAC shares in the quarter? As in, used to own 700 million, now owns 900 million?
That would account for over $6 billion of the $15 Billion increase to cost basis in the category "Banks, insurance and finance." I have long speculated that he would add JPM, but with Todd on the board I would think he would have to file. Still a lot of "Banks Insurance and finance" that he bought during the quarter beyond just the BAC stock I am thinking he added.
I guess the other likely suspects would be USB, BK, and GS.
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Is anyone else coming up with numbers that suggest Berkshire added 200 million BAC shares in the quarter? As in, used to own 700 million, now owns 900 million?
That would account for over $6 billion of the $15 Billion increase to cost basis in the category "Banks, insurance and finance." I have long speculated that he would add JPM, but with Todd on the board I would think he would have to file. Still a lot of "Banks Insurance and finance" that he bought during the quarter beyond just the BAC stock I am thinking he added.
I guess the other likely suspects would be USB, BK, and GS.
My math agrees with yours. I got slightly above 200M BAC shares purchased during Q3 for 6B. They seem to have added a net $15B to financials during Q3 (there were some minor sales of WFC to stay under 10% cap). Pretty big move I think.
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Actually there appears to be sales of approximately 2.85B worth of financials during Q3 and $17.85B of purchases for a net purchases of $15B in the "Banks, insurance and finance" category.
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Great observations about BAC for Berkshire, gents,
The next questions are, as at least partly already mentioned by globalfinancepartners, because it's a lot capital allocated during 2018Q3 to financials etc.:
- ~USD 15 B in financials etc., with ~USD 6 allocated to BAC, what's the rest allocated to? -Personally I speculate that it would at least include an allocation to JPM - alone because of the size of the rest - time will tell [mid this month].
- If ~USD 6 B has been allocated to BAC during 2018Q3, why should continued buying not take place during "Red October", where BAC has tanked some, and daily volume has gone materially up?
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You would hope if he liked something in September he would still like it at much lower prices in October. I have thought he would buy JPM for a long time, but I gave up on that hope when Todd joined the board of directors of JPM. I am unclear if Todd being on the BoD at JPM would require Berkshire Hathaway to file with the SEC, but it might. Which would rule out JPM.
Too bad, because he's going to want a certain allocation to the banking business and its going to get harder for $1 trillion, 2 trillion, etc, Berkshire to do that if they are forced to keep selling most of them above 10%. 9% of JPM would have been a pretty good solution and you know he loves the management, loves the business, etc... Plus JPM was available at great prices for a really long time.
Since he was buying USB, BK and GS before the quarter, it seems logical he continued. But there could be new positions as well.
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Great observations about BAC for Berkshire, gents,
The next questions are, as at least partly already mentioned by globalfinancepartners, because it's a lot capital allocated during 2018Q3 to financials etc.:
- ~USD 15 B in financials etc., with ~USD 6 allocated to BAC, what's the rest allocated to? -Personally I speculate that it would at least include an allocation to JPM - alone because of the size of the rest - time will tell [mid this month].
- If ~USD 6 B has been allocated to BAC during 2018Q3, why should continued buying not take place during "Red October", where BAC has tanked some, and daily volume has gone materially up?
I agree with GFP that it is unlikely that Berkshire bought JPM, given Todd's board position.
With respect to BAC, Berkshire will not go above 10% of BAC's total shares. That means that Berkshire might possibly add almost another 80M shares after Sept 30th, which would bring the total to 980M, about 10% of BAC.
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Bloomberg finally picked up on the BAC purchase. I was surprised that nobody reported it. CNBC would rather tweet about Mark Cuban recommending that you should buy a years' worth of toothpaste at a time..
https://www.bloomberg.com/news/articles/2018-11-03/buffett-s-buying-shows-appetite-for-stocks-including-his-own?srnd=premium
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Bloomberg finally picked up on the BAC purchase. I was surprised that nobody reported it. CNBC would rather tweet about Mark Cuban recommending that you should buy a years' worth of toothpaste at a time..
https://www.bloomberg.com/news/articles/2018-11-03/buffett-s-buying-shows-appetite-for-stocks-including-his-own?srnd=premium
Short squeeze on toothpaste next week ;D
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Great observations about BAC for Berkshire, gents,
The next questions are, as at least partly already mentioned by globalfinancepartners, because it's a lot capital allocated during 2018Q3 to financials etc.:
- ~USD 15 B in financials etc., with ~USD 6 allocated to BAC, what's the rest allocated to? -Personally I speculate that it would at least include an allocation to JPM - alone because of the size of the rest - time will tell [mid this month].
- If ~USD 6 B has been allocated to BAC during 2018Q3, why should continued buying not take place during "Red October", where BAC has tanked some, and daily volume has gone materially up?
I bet it’s BK. He has been buying in previous 13fs
(I am biased because I have some BK)
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BK, USB and GS were all being accumulated the previous quarter and are logiical bets. Maybe something new. It’s funny the headlines saying stuff like this Rolfe quote from the WSJ:
What the buybacks signal, in a very big way, is that [Mr. Buffett’s] short list of putting prospective billions to work, either in private businesses or equities, outside of Apple, are nil,” said David Rolfe, chief investment officer of Wedgewood Partners Inc. in St. Louis, which owns Berkshire shares.
No mention of the huge purchases of equities in the quarter or explanation of why the cash balance is declining and didn’t print $120 billion this quarter like it would have, absent massive buying of investments...
Just look at the equity portfolio’s growth in the past 12 months. They have been buying a lot to keep cash at $100 Billion
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in other news, BNSF continues to roll over debt at extremely attractive rates. Look at this 30 year issuance from Q3 -
BNSF’s borrowings are primarily senior unsecured debentures. In the first nine months of 2018, BNSF issued $1.5 billion of senior unsecured debentures due in 2048, including $750 million in the third quarter. These debentures have a weighted average interest rate of 4.1%.
Seems like all the borrowing lately is 2048-49 stuff -
In August 2018, BHFC issued $2.35 million of 4.2% senior notes due in 2048. Such borrowings are fully and unconditionally guaranteed by Berkshire
In July 2018, BHE issued $1.0 billion of 4.45% senior unsecured debt that matures in 2049. BHE subsidiaries also issued debt in July 2018, aggregating $1.05 billion and due in 2049.
And the entire bond portfolio for a company with $736 Billion in invested assets is $17.8 billion at cost ($18.3 at market). An insurance company with a 2.5% allocation to fixed income.
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^"And the entire bond portfolio for a company with $736 Billion in invested assets is $17.8 billion at cost ($18.3 at market). An insurance company with a 2.5% allocation to fixed income."
And within that fixed income category, 40% is due in less than 1 year and 50% in 1-5 years.
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Any idea does he see crApple as one of the Berkshires permanent investment like Amex/KO/WFC?
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Who knows. I doubt any of the equities are actually thought of as permanent holdings. He's tried to clarify that through updates to the 'owners manual' over the years. It's all available for sale if the business changes or the opportunity outweighs the benefit of the interest free loan from the government on the unrealized gains. The bar would be even lower now under current tax rates
Any idea does he see crApple as one of the Berkshires permanent investment like Amex/KO/WFC?
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Article on coming Q4 Michael loss estimates at BRK:
https://www.reinsurancene.ws/berkshire-hathaway-pegs-hurricane-michael-loss-at-up-to-550m/
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Matt Levine has a very short take on BRK share buybacks which has an interesting quote:
But it feels presumptuous to think that Berkshire’s shareholders would be better stewards of their cash than Buffett is.
Full take is in the middle of his today's Money Stuff column:
https://www.bloomberg.com/opinion/articles/2018-11-05/expensive-stocks-make-for-good-bonds
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This article is an update on the ballot item in Nevada to open up NV Energy's regulated monopoly to more choice. Obviously NV Energy would still own the distribution infrastructure. BHE has been spending a lot of money on lobbying / advertising. Some large individual casinos had already won the right to pay a termination fee and buy their power from an independent producer.
https://www.politico.com/story/2018/10/27/adelson-buffett-nevada-890190
https://www.rgj.com/story/news/politics/2018/11/06/63-million-spent-defeat-nevadas-question-3-worked/1908835002/
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Greg Abel already running the place!
https://www.bloomberg.com/news/articles/2018-11-08/berkshire-s-egan-nabs-a-more-delicious-position-at-see-s-candies
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Don Graham article on the recent accounting changes that result in goofy net income figures at Berkshire:
https://www.wsj.com/articles/i-cant-see-berkshires-bottom-line-1541636012?mod=searchresults&page=1&pos=1
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A new SEC filing of type SC 13G (https://www.sec.gov/Archives/edgar/data/1067983/000119312518323036/d652118dsc13g.htm) has appeared, disclosing an 11.3% stake in StoneCo Ltd. (ticker: STNE) of São Paulo, Brazil (14,166,748 shares of Common Stock)
None of this is attributable to Berkshire's pension funds - all is held via National Indemnity Company.
The IPO came after 30th Sep 2018 so it will not appear in the 13-F filings which are likely to be released in the middle of next week.
The price since IPO on 25th Oct has been between about $27 and $31 per share. At current price of $27.70, the stake is priced at $392 million USD. The IPO price was $24 per share, Berkhire's stake presumably having cost $340,001,952.
The 13G filing (https://en.wikipedia.org/wiki/Schedule_13G) must be made within 10 business days of acquisition of a 5% stake, so it's likely to have been acquired on 25th October at IPO.
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Yeah, Berkshire's involvement was in the IPO prospectus (which doesn't help you get a lower price - wonder why they did that?)
The Walton family VC vehicle Madrone owned a lot and added 2.75m shares in the IPO and management at Madrone told Todd Combs about it and Todd decided to invest. There are some 3G principals invested in it as well - I believe from an earlier round.
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Todd and Ted would (might?) be great if BRK was 10-100 times smaller. At this size it's going to be tough ... for anyone, even Buffett himself.
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Todd and Ted would (might?) be great if BRK was 10-100 times smaller. At this size it's going to be tough ... for anyone, even Buffett himself.
Jurgis, they just have to deliver, according the their signed contract with Berkshire. No soft feelings here from me. They are hired to deliver.
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Nah, they'll be ok. This is how it goes. One Monday Todd walks into the office and goes.... Hey Ted, let's go talk to the old man about buying GE. Done.
See... it's not that hard.
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Nah, they'll be ok. This is how it goes. One Monday Todd walks into the office and goes.... Hey Ted, let's go talk to the old man about buying GE. Done.
See... it's not that hard.
OK, rb. My reply to Jurgis was actually about that I [in general] worry more about myself than Ted & Todd. [ : - ) ]
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Nah, they'll be ok. This is how it goes. One Monday Todd walks into the office and goes.... Hey Ted, let's go talk to the old man about buying GE. Done.
See... it's not that hard.
LOL. 8)
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Berkshire's cost basis in 'Banks, Insurance, Financials' increased by $15 billion in Q3. $5-6 billion can be attributed to the increased stake in BAC. Will be interesting to see the additions he made.
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Probably USB, BK, GS
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Yes, and it seems that the prayers by globalfinancepartners and I have been heard : JPM shares for USD ~4 B. [ : - ) ]
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Look at that.. You CAN buy JPM if Todd's on the board, since it wasn't Todd buying the shares. He's getting his banks after all. Better late than never!
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Extra holdings not captured by dataroma, from General Re New England Asset management -
https://www.sec.gov/Archives/edgar/data/1004244/000108514618002756/xslForm13F_X01/form13fInfoTable.xml
BAC +1.75 million shares
BK +11.063 million shares
JPM +545,000 shares
ORCL +1.287 million shares
PNC +1.1 million shares
TRV +43,000 shares
In addition to the stuff reported at Dataroma from the regular 13F:
https://www.dataroma.com/m/holdings.php?m=BRK
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So, Berkshire owns exactly 900 million shares of BAC, or 9.17%
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Who the hell bought oracle?
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Who the hell bought oracle?
In total it is 42.7 million shares of ORCL. If it keeps getting bigger, I would guess it's Warren. At this size (over $2 Billion), it could technically be any of the 3.
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The exposure to US banks is now enormous - about USD 70 B [getting to USD 67.8 B alone from Dataroma, exclusive New England Asset Management]. It better go well.
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The exposure to US banks is now enormous - about USD 70 B [getting to USD 67.8 B alone from Dataroma, exclusive New England Asset Management]. It better go well.
The big four banks are trading at depressed PE, buying backs stocks each year using 70-80+% of their profits. If it keeps going, they will be no shares left after a decade.
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The exposure to US banks is now enormous - about USD 70 B [getting to USD 67.8 B alone from Dataroma, exclusive New England Asset Management]. It better go well.
The big four banks are trading at depressed PE, buying backs stocks each year using 70-80+% of their profits. If it keeps going, they will be no shares left after a decade.
I cannot wait to sell them their last share in 2028!
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So WEB is going to own 10% of the entire banking industry in USA?
Maybe FEDs shall invite him at their next meeting. Haha
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The exposure to US banks is now enormous - about USD 70 B [getting to USD 67.8 B alone from Dataroma, exclusive New England Asset Management]. It better go well.
I sure hope so! My four largest holdings are
1. BRKB
2. WFC
3. BAC
4. BK
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The exposure to US banks is now enormous - about USD 70 B [getting to USD 67.8 B alone from Dataroma, exclusive New England Asset Management]. It better go well.
I sure hope so! My four largest holdings are
1. BRKB
2. WFC
3. BAC
4. BK
How funny. These are my top 4 holdings too, and at the same order. There only difference is these four are also my Only holdings.
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I'll update my public Look-Through portfolio sheet soon, but for now here's a summary of the moves.
The following figures are for the shares beneficially owned by shareholders, so they exclude known Berkshire pension scheme holdings. They also include stocks held via New England Asset Management for Berkshire but filed in NEAM's 13-F with owner code '01 02'.
AAL -4.2% -1,000,000 shares American Airlines falling to 22,958,000. The other 20,742,000 are in pensions. (buyback related reduction?)
AAPL +0.2% +522,902 shares Apple up to 252,810,459. Another 2,837,753 in pensions.
BAC +28.6% +200,000,000 shares Bank of America Corp up to 900,000,000
BK +42.1% +24,111,850 shares Bank of New York Mellon up to 81,400,977 (plus 7,511,249 assumed in pensions)
CHTR -2.8% -163,200 shares Charter Communications down to 5,640,648. (1,700,337 more in pensions)
DAL +2.9% +1,869,160 shares Delta Airlines up to 65,535,000
DVA - unchanged but own a higher percentage due to DaVita buybacks
GHC - eliminated Graham Holdings position (was 107,575 shares)
GM +2.3% +1,067,800 shares General Motors up to 46,988,558 (5,472,853 more in pensions, assumed)
GS +37.3% +5,099,145 shares Goldman Sachs up to 18,784,698
JNJ -8.0% -28,382 shares Johnson & Johnson down to 327,100
JPM New Position 36,209,767 shares JPMorgan Chase & Co
LUV -0.9% -500,000 Southwest Airlines down to 56,047,399 (buyback related)
ORCL New Position 42,691,791 shares Oracle Corp
PNC New Position 7,187,819 shares PNC Financial Services Group Inc
PSX -55.6% -19,296,490 shares Phillips 66 down to 15,433,024
SNY - Reduced/Eliminated uncertain. -3,701,012 shares in US ADRs eliminated. Euronext Paris stock is not reported on 13-F. May still hold approx 40,433,985 equivalent SNY ADRs based on 2016 10-K via Paris
TRV New Position 3,586,688 shares Travelers Companies Inc
UAL -2.8% -700,000 shares United Continental Holdings Inc down to 24,393,163 (1,591,379 more in pensions) probably buyback related
USB +15.3% +18,203,375 shares U.S. Bancorp up to 137,120,760 (590,275 more in pensions)
VRSK -64.0% -1,779,811 shares Verisk Analytics Inc down to 1,000,325 (all remaining shares in NEAM now)
WFC -2.8% -13,374,425 shares Wells Fargo & Co down to 465,156,000 (buyback related trim)
WMT Eliminated Wal-Mart Stores Inc position (was 1,393,513 shares)
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The exposure to US banks is now enormous - about USD 70 B [getting to USD 67.8 B alone from Dataroma, exclusive New England Asset Management]. It better go well.
I sure hope so! My four largest holdings are
1. BRKB
2. WFC
3. BAC
4. BK
How funny. These are my top 4 holdings too, and at the same order. There only difference is these four are also my Only holdings.
They essentially are my only holdings also. Just a few other rather small positions. BRKB is about 50% of my holdings.
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... BRKB is about 50% of my holdings.
I speculate Mike's more or less constantly selling Berkshire puts is a side gig closely related to Mike's primary occupation: Eternal waiting for the marshmallow #2 (https://www.youtube.com/watch?v=QX_oy9614HQ). [ : - ) ]
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... BRKB is about 50% of my holdings.
I speculate Mike's more or less constantly selling Berkshire puts is a side gig closely related to Mike's primary occupation: Eternal waiting for the marshmallow #2 (https://www.youtube.com/watch?v=QX_oy9614HQ). [ : - ) ]
Charlies' sit on your ass investing
Mischel, W., & Ebbesen, E. B.(1970). Attention in delay of gratification.
Journal of Personality and Social Psychology, 16, 329–337
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Barron's - Andrew Bary - [November 23rd 2018] : Why Warren Buffett Is Big on Big Banks [here outlined] (https://outline.com/8vsbYC).
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https://www.bloomberg.com/news/articles/2018-11-28/ge-s-money-pit-how-a-15-billion-hole-could-get-costlier-to-fix
Bloomberg article on Culp's efforts to get rid of GE's toxic Long Term Care and other undesirable insurance liabilities still on GE Capital's books.
Berkshire would charge a fortune to take on this business but I'm sure Ajit would be interested - at his price.
"GE has also held talks with Warren Buffett’s Berkshire Hathaway Inc. about absorbing its insurance liabilities, two people said.
“It’s very difficult to sell” these types of policies, said GB Taglioni, North American leader of Boston Consulting’s insurance practice. He declined to talk about GE’s situation specifically. “There have been a lot of sellers and there have been, up until now, very few buyers.”
A GE spokeswoman declined to comment beyond recent filings and public comments, while Athene and Apollo also declined to comment. A Berkshire representative didn’t respond to requests for comment."
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A new repowering project at PacifiCorp: Vestas Wind Systems A/S Company News [November 28th 2018] : Vestas secures first multi-brand repowering order from PacifiCorp (https://www.vestas.com/en/media/company-news?n=1852177#!NewsView).
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Pilot Flying J did a small deal -
https://seekingalpha.com/pr/17344014-pilot-flying-js-pwt-makes-strategic-acquisition-equipment-transport-llc-strengthen-core
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Clayton bought another traditional homebuilder. This one sounds like it is fairly large compared to some of their other bolt-on deals -
https://markets.businessinsider.com/news/stocks/clayton-properties-group-acquires-mungo-homes-1027775617
https://www.builderonline.com/builder-100/berkshire-hathaways-clayton-strikes-again-landing-its-biggest-deal-yet-mungo-homes_o
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Clayton bought another traditional homebuilder. This one sounds like it is fairly large compared to some of their other bolt-on deals -
https://markets.businessinsider.com/news/stocks/clayton-properties-group-acquires-mungo-homes-1027775617
https://www.builderonline.com/builder-100/berkshire-hathaways-clayton-strikes-again-landing-its-biggest-deal-yet-mungo-homes_o
Nice!
Growing the housing segment.
I'll bet everything they build gets Benjamin Moore paint jobs as well as other related pieces & parts.
More listings for all those realtors that are getting added to the fold on a regular basis too.
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Various news reports out this morning talking about these potential Berkshire deals -
"WARREN BUFFETT BUYS UP MAC INSURANCE BOOK
The “Oracle of Omaha”, Warren Buffett, is looking for more business opportunities in South Australia after swooping in to acquire the insurance book of the Motor Accident Commission."
- rest of article in The Advertiser is subscriber only, but it sounds like Ajit bought a book of business in South Australia.
And also speculation without confirmation that Berkshire could be taking a stake in Kotak Mahindra Bank -
https://www.businesstoday.in/current/economy-politics/buffett-berkshire-eyes-stake-in-kotak-mahindra-bank-report/story/298448.html
and a denial by the company that there is anything to report:
https://www.livemint.com/Money/wQ3oPQcsCilv1XC5HM1bYP/Kotak-Bank-shares-jump-8-on-report-of-Berkshire-investment.html
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Thank you for sharing, globalfinancepartners,
Empire building cont'd, now chapter <unknown>.
Hasen't Mr. Buffett been silent [cheap with interviews] for a quite long period of time now? - I suppose his actual modus operandi right now is buying.
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It seems like he is feeling his age more and more and stepping back quite a bit. Luckily he has created a structure that requires very little minutiae from him personally and he is still all there for the important bits. Charlie’s 50th anniversary letter captures the current situation quite well, although it would have benefited from an editor’s touch -
http://www.berkshirehathaway.com/SpecialLetters/CTM%20past%20present%20future%202014.pdf
Thank you for sharing, globalfinancepartners,
Empire building cont'd, now chapter <unknown>.
Hasen't Mr. Buffett been silent [cheap with interviews] for a quite long period of time now? - I suppose his actual modus operandi right now is buying.
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good general overview and farewell from Matt Rose - some interesting stuff on the potential or lack thereof for rail mergers, etc -->
https://www.railwayage.com/freight/class-i/matt-rose-less-is-not-better/
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This article is an update on the ballot item in Nevada to open up NV Energy's regulated monopoly to more choice. Obviously NV Energy would still own the distribution infrastructure. BHE has been spending a lot of money on lobbying / advertising. Some large individual casinos had already won the right to pay a termination fee and buy their power from an independent producer.
https://www.politico.com/story/2018/10/27/adelson-buffett-nevada-890190
Thanks for the link.
The question is limited to one state but may represent a larger current.
I live in a place where electricity is essentially a vertically-integrated regulated monopoly (wholesale and retail) with hydro responsible for more than 90% of electricity needs and with policies in place favoring low and uniform prices and in a relatively steady place versus the socio-political sphere. But I really like what has been going on in the US considering the experiments with various deregulation plans. It's noisy and sometimes disruptive and inelegant but it seems like it's the best way to go IMO.
What is happening in Nevada (it seems like the ballot item will pass?) may be part of more to come at the national level and underlines the risks of transition costs and partial recovery of the value of stranded assets and I guess BH can manage transitions but investments in regulated utilities does rely on trust versus potential regulatory harm.