SRG - Seritage Growth Properties

[vince]

Any recent good valuation write-ups on this one that someone would like to share? Even a brief conservative back of envelope one that anyone would like to share?

[BTShine]

Any recent good valuation write-ups on this one that someone would like to share? Even a brief conservative back of envelope one that anyone would like to share?

Yes.  How does one value this company?  That’s what I’d like to discuss.

[SlowAppreciation]

http://ir.seritage.com/file/Index?KeyFile=394491185

[Mephistopheles]

Guys we are thinking way too much into this. Was Buffett's personal investment into SRG a conflict because he deprived BRK shareholders of this opportunity? What about the venture into Korean stocks? Shouldn't BRK shareholders get first dibs? If you think no because it is "immaterial", then fine. But then also you should agree that Buffett's stake in SRG is "immaterial" to his net worth and thus this isn't a conflict either.

If we are going to be strict fundamentalists, then you should be bothered by the Korean stocks and any other personal Buffett investment.

Buffett owns WFC, Charlie owns COST, conflicts? It's all in the same boat. Let's give the old man a pass shall we.

[LongTermView]

Guys we are thinking way too much into this.

Agreed, Mephistopheles.

Back to the numbers, the 2Q18 8-K has some encouraging figures. Including SNO, we now have $127.4 million in 3P annual rent.

[Parsad]

Guys we are thinking way too much into this. Was Buffett's personal investment into SRG a conflict because he deprived BRK shareholders of this opportunity? What about the venture into Korean stocks? Shouldn't BRK shareholders get first dibs? If you think no because it is "immaterial", then fine. But then also you should agree that Buffett's stake in SRG is "immaterial" to his net worth and thus this isn't a conflict either.

If we are going to be strict fundamentalists, then you should be bothered by the Korean stocks and any other personal Buffett investment.

Buffett owns WFC, Charlie owns COST, conflicts? It's all in the same boat. Let's give the old man a pass shall we.

It's not about Berkshire shareholders being deprived...that would be the other side of a potential conflict, but not in this case.  The conflict in this case is that the value of SRG stock in Buffett's personal portfolio went up in value because of a loan Berkshire made to SRG...essentially front-running similar to Sokol's investment in Lubrizol.  In this case, Buffett had the ultimate decision, whereas in the Lubrizol case, Sokol's gain was predicated on Buffett approving a Lubrizol deal.

The transgression, as minor as it seems, is best exemplified say if Buffett bought a handful of securities in his personal account, and then acquired those companies at a higher price through Berkshire...or even influenced their prices in some other way, such as a financing deal.  Trivial in the grand scheme of things and probably common place, but unusual for Buffett.  Cheers!

[Spekulatius]

^ I agree with Parsads logic here. It is common practice that pot. conflicts of interests are disclosed if you work for a company and that if such a conflict arises, somebody else or a committed would have to make decision on a transaction. I recall some cases, where a company takes over a company, where the CEO has a personal stake in and the board or a omitted needed to decide.

The deal looks proper to me, the disclosure was fair and the price of the transaction does not indicate any favorites, but it would be interesting how BRK internally deals with these conflicts of interests. It would be good to get some disclosure in thr SEC filings on that matter. This is particularly important because WEB will pass on the batton in a few years.

[longinvestor]

Buffett was asked about conflicts just like this one at the annual meeting. His answer was that he’s actively taking his personal wealth to zero but not that of the Berkshire shareholder. There’s no personal gain typical of such conflicts and Buffett has singularly wrapped up his ego with the success of his painting.

[Gregmal]

I think it's crazy the extent to which people are blowing this up. If I owned a network of businesses I would certainly use them to help each other and myself. This is more common sense than controversial.

He is from what I know, one of the largest owners of SRG as well. If he plundered one company to benefit the other, sure, but this is a total non event.

[Parsad]

I think it's crazy the extent to which people are blowing this up. If I owned a network of businesses I would certainly use them to help each other and myself. This is more common sense than controversial.

He is from what I know, one of the largest owners of SRG as well. If he plundered one company to benefit the other, sure, but this is a total non event.

Greg think of it from a different perspective.  What if Buffett did not own SRG in his portfolio but his son or daughter did?  And Berkshire does the financing for SRG which boosts SRG's stock price...there has been a beneficial increase due to his action...and an obvious conflict there. 

Naturally, we know Buffett would never do that, but that has what has occurred.  Now there is probably a simple answer my small mind can't think of regarding what happened that Buffett already thought through...I'm just waiting for that explanation, because this is unusual for him.  Cheers!