Author Topic: Capital Allocation: The Financials of a New England Textile Mill 1955-1985  (Read 2056 times)

gfp

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Thanks for the recommendation - just getting started on this book today.  First thing that I noticed is that Berkshire has essentially the same number of shares in 2020 as it did in 1960 - 60 years of net-zero issuance (thankfully for that 1961 share repurchase of 18,139 A-shares: worth $5.3 Billion today)


Jurgis

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Thanks for the recommendation - just getting started on this book today.  First thing that I noticed is that Berkshire has essentially the same number of shares in 2020 as it did in 1960 - 60 years of net-zero issuance (thankfully for that 1961 share repurchase of 18,139 A-shares: worth $5.3 Billion today)

So BRK issuance of shares for acquisitions was totally covered by 1961 repurchase?
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gfp

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Thanks for the recommendation - just getting started on this book today.  First thing that I noticed is that Berkshire has essentially the same number of shares in 2020 as it did in 1960 - 60 years of net-zero issuance (thankfully for that 1961 share repurchase of 18,139 A-shares: worth $5.3 Billion today)

So BRK issuance of shares for acquisitions was totally covered by 1961 repurchase?

I'm only on the first chapter!

But yes - basically the 1961 repurchase of 18,139 shares (which would be called A-shares today) and the 44,351 A-share equivalents that have been repurchased since 2018 or whenever he started this modern repurchase activity.  Not bad Warren.  You can tell this is a guy who remembers what the share count was when he started this endeavor.

** edit - plus the shares bought since 2012, which didn't show up on my free ycharts graph.  He started with that $1.2 B deal from the estate of the guy who sold him flight safety or one of those acquisitions.  Its the dexter folks that really made out though...

So I guess the high for share count was about 1.651 million A-share equivalents in 2011 and since then he has brought it down to 1.6006 million A-share equivalents.  Or maybe a bit less if he has continued purchasing
« Last Edit: July 29, 2020, 12:32:27 PM by gfp »

Morgan

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Thank you for the recommendation. I ordered it, read it, and enjoyed it.

If you have read other Buffett books and letters, you've read about all these investments before. That's ok though. This provided a different angle. That being said, all of the detailed financial info was very fun to review.

It was interesting to read about the problems he had trying to expand the insurance businesses (Home State).

Overall, a good book for Buffett junkies!

wabuffo

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If y'all are enjoying this book and are financial data geeks like me, I have found just the thing that will complement your enjoyment. I know old letters of the Buffett Partnership Ltd/BRK annual reports from the 1960s and 70s have been floating around the internet for awhile now.  But what about the donut hole in the middle?  It's been impossible to find annual reports/10Ks from Blue Chip Stamps (ok, there's been some BCS letters but not detailed financials) or Diversified Retailing.... until now!

https://theoraclesclassroom.com/archives/

I found this site (The Oracle's Classroom) after reading the book and trying once again to use my google-fu to find something, ...anything on Blue Chip Stamps financials.  And then I found this site.  (I hope the COB&F moderator is ok with a link to another website - but it is Berkshire-related)

Now, I don't know if the author of the book co-ordinated with the owner of this website, but almost every footnote in the book referencing an old annual report, 10-K or even Moody's report from the old Berkshire network (Blue Chip, Diversified, etc) is available on this site.  Plus many more - I mean, old Scott Fetzer annual reports! Need I say more?

I am really enjoying reading (and analyzing) these old reports.  And I'm finding some new insights.

For example, I've always assumed that Buffett/Munger used the float of Blue Chip Stamps (via their investment assets in bonds, etc) and liquidated those assets to buy Sees Candy, Buffalo News, etc.  But instead, it appears they treated the stamp liability as pseudo-equity (instead of "debt") and leveraged up the balance sheet to buy Sees Candy using 100% debt (because the BCS capital structure had more 'equity' due to the stamp liability than GAAP portrayed).  Then they used the additional cash flows to pay down the debt quickly.  Its a subtle nuance, but I found it helpful in understanding how Buffett thinks about float and he operationalizes the use of it.

A big thank you to the owner of "The Oracle's Classroom" website and archives.  The site truly lives up to its name.

wabuffo
« Last Edit: July 31, 2020, 04:07:21 PM by wabuffo »

DooDiligence

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If y'all are enjoying this book and are financial data geeks like me, I have found just the thing that will complement your enjoyment.   I know old letters of the Buffett Partnership Ltd/BRK annual reports from the 1960s and 70s have been floating around the internet for awhile now.  But what about the donut hole in the middle?  It's been impossible to find annual reports/10Ks from Blue Chip Stamps (ok, there's been some BCS letters but not detailed financials) or Diversified Retailing.... until now!

https://theoraclesclassroom.com/archives/

I found this site (The Oracle's Classroom) after reading the book and trying once again to use my google-fu to find something, ...anything on Blue Chip Stamps financials.  And then I found this site.  (I hope the COB&F moderator is ok with a link to another website - but it is Berkshire-related)

Now, I don't know if the author of the book co-ordinated with the owner of this website, but almost every footnote in the book referencing an old annual report, 10-K or even Moody's report from the old Berkshire network (Blue Chip, Diversified, etc) is available on this site.  Plus many more - I mean, old Scott Fetzer annual reports! Need I say more?

I am really enjoying reading (and analyzing) these old reports.  And I'm finding some new insights.

For example, I've always assumed that Buffett/Munger used the float of Blue Chip Stamps (via their investment assets in bonds, etc) and liquidated those assets to buy Sees Candy, Buffalo News, etc.  But instead, it appears they treated the stamp liability as pseudo-equity (instead of "debt") and leveraged up the balance sheet to buy Sees Candy using 100% debt (because the BCS capital structure had more 'equity' due to the stamp liability than GAAP portrayed).  Then they used the additional cash flows to pay down the debt quickly.  Its a subtle nuance, but I found it helpful in understanding how Buffett thinks about float and he operationalizes the use of it.

A big thank you to the owner of "The Oracle's Classroom" website and archives.  The site truly lives up to its name.

wabuffo

Oh my, this is interesting, thanks!
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Morgan

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If y'all are enjoying this book and are financial data geeks like me, I have found just the thing that will complement your enjoyment. I know old letters of the Buffett Partnership Ltd/BRK annual reports from the 1960s and 70s have been floating around the internet for awhile now.  But what about the donut hole in the middle?  It's been impossible to find annual reports/10Ks from Blue Chip Stamps (ok, there's been some BCS letters but not detailed financials) or Diversified Retailing.... until now!

https://theoraclesclassroom.com/archives/

I found this site (The Oracle's Classroom) after reading the book and trying once again to use my google-fu to find something, ...anything on Blue Chip Stamps financials.  And then I found this site.  (I hope the COB&F moderator is ok with a link to another website - but it is Berkshire-related)

Now, I don't know if the author of the book co-ordinated with the owner of this website, but almost every footnote in the book referencing an old annual report, 10-K or even Moody's report from the old Berkshire network (Blue Chip, Diversified, etc) is available on this site.  Plus many more - I mean, old Scott Fetzer annual reports! Need I say more?

I am really enjoying reading (and analyzing) these old reports.  And I'm finding some new insights.

For example, I've always assumed that Buffett/Munger used the float of Blue Chip Stamps (via their investment assets in bonds, etc) and liquidated those assets to buy Sees Candy, Buffalo News, etc.  But instead, it appears they treated the stamp liability as pseudo-equity (instead of "debt") and leveraged up the balance sheet to buy Sees Candy using 100% debt (because the BCS capital structure had more 'equity' due to the stamp liability than GAAP portrayed).  Then they used the additional cash flows to pay down the debt quickly.  Its a subtle nuance, but I found it helpful in understanding how Buffett thinks about float and he operationalizes the use of it.

A big thank you to the owner of "The Oracle's Classroom" website and archives.  The site truly lives up to its name.

wabuffo
u


Excellent link to site. Thanks!

gfp

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Great book and great source material website link - thanks for the heads up on both.

One correction to my earlier posts in this thread about share count - The share count of Berkshire went from 1.6 million down to about 1 million in the early years of Warren's control.  Then there were various mergers to clean up the structure, including Blue Chip, Diversified Retailing, and eventually Wesco much later.

But Warren has returned BRK to the 1961 share count of 1.6 million A share equivalents.  Another 600k A shares to get us back to a million!