KPO
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Posts
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KPO's Achievements
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Agreed. Given their mostly transaction-based business model, STNE is naturally hedged on inflation in similar form to MA & V, but at one quarter of their multiple.
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Added to STNE sub-$10. Solid quarter, good buyback progress, net cash position, favorable gross margin profile, and trading at a single digit P/E. Outside of the obvious risk of currency volatility, what’s not to like here?
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I wouldn’t bother to sell unless insiders start selling in volume, as they seem to still have a lot of levers. That said, what are the odds that they use this as an opportunity to unwind some or all of the total return swaps on the ~2M shares?
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It naturally rolls back to pre-2017 levels after 2025, so the hope is this will get extended along with the lower tax rates, accelerated depreciation and other features of the original act.
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Trump tax policy is somewhat of an offsetting positive for farmers, particularly the higher estate tax exemption under the 2017 tax cut & jobs act. It made transferring family farms possible without raising significant money for the tax bill or outright requiring liquidation to meet the tax bill. Double (and in many cases triple) taxation at its finest.
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Enbridge comes to mind, but that would have made more sense 3-4 years ago. Still own shares and love the business though, so there are certainly worse things they could buy.
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I suppose he could buy the world’s largest packaged food company if he cashed in their L’ Oreal stake, but I suspect he’s just doing some combination of portfolio rebalancing, building a war chest for the next downdraft and setting up his successor.
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Restaurants, sporting goods and bedding retail seems kind of random. I guess if they’re sustainably cash generative and the purchase prices are undemanding there’s no harm, but I always liked the idea of Berkshire buying building products companies, home builders, and auto / furniture retailers that benefit to some extent from some of the claims on insurance they underwrite.
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Round 2 of RTO & starter in SEB
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Thanks for sharing. I missed this interview originally. The focus on episodic investments like during the GFC is interesting given the role the Federal Reserve played during COVID. I’d like to think Berkshire would have these opportunities every so often, but I’m not sure if it will work out that way in practice.
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SIRI. Quick 20%, and just don’t love the business given competition for various types of content.
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Yeah, I’m pretty familiar with regulated utilities. What I’m getting at is BHE should be run for cash or divested if they have frequent unpleasant surprises from wildfires and/or other liabilities ambulance chasing attorneys can make stick.
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Yeah, Greg’s timing has me a little less concerned about his investing chops. Whatever the case, I hope reinvesting in BHE drops to maintenance capex levels until the industry and the government arrive at a sustainable solution for wildfire liabilities. If that doesn’t happen I think Buffett and Abel need to reconsider this business altogether.
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Possibly. I’d have to look at the timeline closer as his passing likely catalyzed a valuation reset, and Abel’s transaction may have reset it again. I don’t have access to the trust details, but if their current valuation was based on the Abel sale mark, I’m curious as to why they took Berkshire equity, particularly near an all time high.
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Deferred taxes on any capital gain vs. an all cash buyout. If/when they sell the Berkshire shares they will likely have gains to pay taxes on, although they may get some benefit from a basis step up.