Author Topic: BRK cash - for buy back?  (Read 10734 times)

Munger_Disciple

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Re: BRK cash - for buy back?
« Reply #20 on: January 31, 2017, 11:05:47 AM »
I am kind of bummed that Buffett may have loaded up on airlines. God, I wish he bought back $12B of Berkshire instead....

I know it won't happen but I can dream.


rb

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Re: BRK cash - for buy back?
« Reply #21 on: January 31, 2017, 11:08:00 AM »
I am kind of bummed that Buffett may have loaded up on airlines. God, I wish he bought back $12B of Berkshire instead....

I know it won't happen but I can dream.
Correct! I can't imagine the airlines being a bigger value proposition than Berkshire right now.

NeverLoseMoney

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Re: BRK cash - for buy back?
« Reply #22 on: January 31, 2017, 11:21:17 AM »
$12 billion net is a big a big number. Maybe he's including DOW in that. He tends to be sneaky like that when giving out numbers. Otherwise either:

1. He got the waiver from the FED to increase WFC stake.
2. They have a new core position.
3. .... Let's hope it's not an airline
I think #3.

From the Bloomberg article:

Quote
In November, Berkshire disclosed that it held in American Airlines Group Inc., Delta Air Lines Inc., and United Continental Holdings Inc. at the end of the third quarter. The billionaire said that month that Berkshire also bought a stake in Southwest Airlines Co. since Sept. 30.

Buffett told Rose he wouldn’t get into why Berkshire bought the shares, but said that it was “in large part” his decision.
So the investment in the airlines is "in large part" Buffett's decision. The Sept. 30 filings showed relatively small investments in the airlines. I therefore thought they were Ted or Todd picks, but we now know it is mainly Buffett's decision to invest in them. Looking at Dataroma, the airlines were around 1% of the portfolio at the time. Buffett wouldn't have bothered if the amounts invested would remain this modest. I think they bought a lot more of the airlines.

james22

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Re: BRK cash - for buy back?
« Reply #23 on: February 02, 2017, 11:10:56 PM »
The Utility of Cash

In a world where cash and most liquid assets that are easily convertible to cash earn a zero return, the utility of cash would seem to be zero. But we would argue that cash is becoming increasingly valuable, given that we are nearly eight years into a bull market, and the fixed income markets are near highs.

This is because cash becomes extremely valuable in one circumstance in particular: when financial accidents happen. It certainly feels like we are closer to the place where cash will be more valuable than we have been for eight years. Because of all this, we have continued to liquify our balance sheets, sell assets, pay down bank lines and start to accumulate cash.

As a result, at the margin, we will experience lower growth in our operating results in the short term than if we were putting this cash to work productively. But over the longer term, we believe the advantage of having liquid assets when the market turns will far outweigh any drag on short-term cash flows that may otherwise occur. It is during market downturns that very special assets can be acquired. That we are now one of the largest asset managers globally is largely the result of our patience and staying power. Having liquidity at the right times is a big part of this.

During periods of illiquidity in the past, we did two things: we protected our franchise, and we acquired many of our greatest initial stakes in assets. Most of these assets would never have otherwise been available at reasonable prices. Our Olympia & York New York office portfolio, our General Growth U.S. mall portfolio, our Canary Wharf London property portfolio, our Babcock & Brown Australian infrastructure portfolio, our Reliant Energy northeast U.S. power portfolio and more recently, investments in emerging markets, namely Brazil, India, Colombia, Peru and China, are all examples of this in action.

This does not mean that we have stopped investing. It merely means that around the edges we are becoming more conservative today than we have been over the past eight years. In 2009/2010, we had many attractive opportunities to invest the capital at hand because there were so many deep value opportunities generated by the financial crisis. Today we are being much more selective. And, while we have deployed $20 billion in the last 12 months, our cash resources have also been building over this period of time.

Bottom line: cash only matters when it matters. And when it matters, it really, really matters.


https://bam.brookfield.com/en/reports-and-filings/financial-reports/q3-2016-letter-to-shareholders
BRK, BAM l SV, EM l Energy l Fannie Mae, Freddie Mac l Stable Value, Cash Value of Pension

Jurgis

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Re: BRK cash - for buy back?
« Reply #24 on: February 03, 2017, 07:16:23 AM »
Cash? Nah, I think the way to go is to buy airlines. :P
"Human civilization? It might be a good idea." - Not Gandhi
"Before you can be rich, you must be poor." - Nef Anyo
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Williams406

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Re: BRK cash - for buy back?
« Reply #25 on: February 03, 2017, 08:36:36 AM »
If having too much cash is a problem, buying airline stocks has historically been a pretty good solution. No opinion on the current environment.

John Hjorth

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Re: BRK cash - for buy back?
« Reply #26 on: February 03, 2017, 10:06:53 AM »
If having too much cash is a problem, buying airline stocks has historically been a pretty good solution. ...

It's pretty good humor, Williams406! I think I'll start babling to the Lady of the House that we really need some airline stocks now - earlier I have told her, if I ever start babling about buying airlines stocks, she has to stop me! - And to be very persistent  with regard to suggestion for alternatives! - Oslo, Stockholm, Paris, Berlin, or perhaps even Hawaii, - here we come!

[I call it an "inverted Garfield" - after the Cartoon Cat Garfield]

- - o 0 o - - -

James, thank you for sharing BAM's remarks on cash. I have read it before a few months ago, but forgot about it. It's certainly worth a print.
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-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

mbreject

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Re: BRK cash - for buy back?
« Reply #27 on: February 03, 2017, 01:32:20 PM »
thanks for posting BAM's letter, James!