ValueMaven

This is awesome!! Thank you for posting. I realize Munger is in love w/BYD - but wouldnt it be neat if this 95 yr old, sold all of DJCO's BYD (at the top) and was plowing it back into DJCO via buybacks. $80M for DJCO's operating business seems on the cheap side. More interesting for me is how BHE is handling this given that the paper-gain is about ~6M of operating profit at BHE given that BYD did nothing for BERK over a 10Y window.

Interesting comments from Charlie in 2009 on BYD:

At one point BERK was down about -60% in its shares of BYD. WTI was $115 or so at the time. Amazing what a decade does - and how Charlie (first) and Warren (second) were able to keep their respective cools w/BYD. I bet if you told them at the time - 10 years in to the future BERK would be sitting on a $5.5B gain in BYD they likely would not have believed that. Great example of not being shaken out of a position.

Thank you. Very helpful. I didnt know that. Which makes me wonder -- if BHE is really sitting on a $5B gain in BYD, and has this weird real estate brokerage business which is about 10% of the value of BHE - wouldnt it be easier to simplify the businesses for investors?? Sell down BYD position - which is nearly 6 months of operating profit in BHE, and move the real estate brokerage business into MSR unit???

And of course Berkshire Hathaway Energy only owns 8.25% of BYD. Approximately $5.75 Billion worth at current prices. 225 million shares. Where did you see that? That's really interesting actually ...

Stock has gone parabolic recently with the whole EV crazy. Given that Berk owns 25% of the o/s - I thought I'd post a comment

When I think about Berkshire selling Apple, a few things comes to mind: #1 - Compare to KO position in in late 90's #2 - Apple was trimmed in 2019 #3 - Mr. Buffett does not look at Apple as a stock, its his 3rd largest business #4 (and what I think about mostly) - if Mr. Buffett sells Apple....what is he gonna buy? Where does he redeploy $120B in Capital? 1,000% agreed. If you look at how BERK has been built throughout the decades - most of the major businesses are fairly uncorrelated. If point #3 is REALLY how WEB views AAPL - then it fits in extremely nicely given the unique biz of insurance, rails, msr, and BHE. Frankly - we are lacking a large tech investment - and AAPL in my view is it. Plus it offers unique plays on consumer, 5G, tech capital allocation etc - which is lacking at BERK.

For those interested - Chris Bloomstrain had a fantastic recap of Berk's 3Q on the 'This Week In Investing' podcast hosted by MOI. You can find it on iTunes. He gave some really interesting insights into the various operating biz's and his thoughts on the buybacks. Worth listening too. -VM

Correct me if I am wrong but next quarter the D assets will follow into BHE's results correct?

Teledyne also paid a dividend in the year 90s for several years before it broke itself up. I dont think its a fair comp to BERK currently imho.

I’ve been thinking about this a lot recently…and I realize this is extremely simplistic way to think…however there is some validity here imho– but I’d prefer Ohama not reduce its exposure to AAPL. If you think about it: Utilities, Rails are all old-world oriented businesses…again, extremely simplistic thinking. Insurance is its own unique animal – but generally doesn’t get associated with new-world economy stocks. PCP, Lubrizol, etc…old world. That means – as Buffett has repeatedly said – that he views AAPL is their 3rd largest business and NOT as a stock – it really does fit in nicely in Berkshires various groves. Also very interesting points above about BERK and AAPL regarding buybacks and capital allocation. If you figure $1.1 - $1.2B is following into Ohama each month on a NET basis, where does that get us with shares outstanding in 5-10 years?? This might be a compounding machine if the buybacks remain. Also – I was extremely impressed w/insurance results.

Ohama now has less shares outstanding then when it bought BNSF back in 2010. WOW

ACG has been DEAD wrong over the past 18-24 months. I've seen there research. It stinks - they have little insight. Dont forget they were pushing IntelSat very hard as well.

Berk still getting little love. Rails booming, APPL all-time high again (or near it)...insurance extremely profitable - although GEICO is giving money back to customers. Buying back stock, some pipeline deals etc. Very interested to see next Q's earnings.

What does Berkshire 2030 look like? Have we made another major acquisition at this point? Has GEICO overtaken State Farm? Is headquarters paying a dividend? What does the float look like?! Interested in what folks have to say!

Another preferred + warrant transaction for grandpa Warren Berkshire plans to make a $600 million preferred-equity investment in Scripps to help finance the purchase of closely held ION, the people said. Berkshire will also get a warrant to purchase as many as 23.1 million Class A Scripps shares at $13 apiece. Scripps stock closed Wednesday at $10.47.

Interesting. DaVita has been an interesting one for BERK. I'm glad they didnt buy it...

Let me throw this out to the group - how does your valuation of BERK change if 1) They start paying an annual 2% dividend, and/or 2) state that they will be more active on the buyback front. Since Buffett worships at the memory of Singleton, I cant help to think how Teledyne developed throughout the years (no divy for 25yrs and then started paying one, and specials etc before being broken-up). Frankly, I still think the stock is cheap here.

Really interesting to see how not a single comment on the BRK board regarding Llyod's $3.3B loss due to Covid-19 exposure this week. Just think about that --- while insurance was profitable for BRK in the quarter ... granted we are more diversified and GEICO underwriting wont be as profitable going forward (combined ratio at 77%!!) ... but wow - so interesting... thoughts from others??

Why would I want to buy FFH - which has struggled w/underwriting historically for sometime - when I can get BRK which is highly profitable, CHEAP, and has much better insurance exposure & other businesses overall. I wonder on a risk-adjusted basis which is cheaper for the long-term... FFH or BRK ?

yup...my bad. Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion.

toll roll ? how do you figure? I thought these Japanese trading houses had questionable pasts/weak ROEs ?? ie: doing dumb things at dumb times (writing puts on the nikkei, in late 80s, buying US subprime in 06/07 etc) - but who I am to question the great one. Also, imagine what Berk cash pile would be without this $30B investment ... no wonder he has let cash build ....

Warren Buffett’s Berkshire Hathaway has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies. Berkshire acquired the holdings in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. over a roughly 12-month period through regular purchases on the Tokyo Stock Exchange. Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion. Berkshire says it intends to hold the investments for the long term, and that it may increase its holdings in any of the companies up to a maximum of 9.9%, depending on price. https://www.cnbc.com/2020/08/30/warren-buffetts-berkshire-hathaway-buys-stakes-in-japans-five-leading-trading-companies.html Thats a $30B investment ... whoa...

https://omaha.com/business/local/omaha-s-megabillionaire-down-the-street-warren-buffett-set-to-celebrate-his-90th-birthday/article_52ccc925-378c-5094-8a1f-b57b3d3fb8bc.html

Barron's had some really interesting comments on BRK in this weekends paper. I'd suggest you read it. Nothing we already dont know. Said BRK is cheap on a P/BV basis @ below 1.2x; comments on more buybacks from WEB, and an estimated 2% divy yield after WEB is no longer around. Pegged A-share b/v $267,000; which would put the B's @ $178 or so.