KPO

Whatever the case I need to give you a huge shoutout for your eBay call. I think I’m up like 60% plus dividends thanks to your raising the idea. It was on my radar previously, but you raised it at the perfect time. RTO is another one that actually wasn’t at all on my radar. Appreciate your posts (and not just the JOE ones)!

Just read the WSJ article with the (no) comment from Mr. Buffett. Congrats on the book. Kind of cool that he seemed aware of it.

As we sit here sub-$9’s, probably exacerbated by tax loss selling, I could see STNE doing okay.

Nestle

Waded into a little JOE for the first time in several years and after selling half my position in July. Thanks to @Gregmal for the consistently outstanding coverage. I need to get down there to see it all myself.

Agreed

Mostly the > 40% discount to the underlying Porsche and VW holdings (plus a solid venture portfolio you get for free), coupled with some common sense messaging recently relative to the EV transition on the Porsche side of the business (i.e. openness to more ICE investment). This is one of those situations where sentiment is so negative for the industry (tariffs, EV/fuel economy mandates, structurally lower cost competitors), and this company in particular (German labor unions, potentially foolish and expensive EV partnerships, etc.), that something has to give. I know we’ve had this conversation before, but I can’t get past looking at the valuation of RACE and thinking the Porsche and Piech families won’t eventually find a way to monetize some of the premium owned brands (Bentley, Lamborghini, Audi, Bugatti, Ducati, etc). In the meantime you get a ~5.5% dividend (after the 26% German tax withholding) while you wait for this to play out. Once the holding company pays down some of the debt taken on to cover the doubling of the P911 stake a few years ago I’d expect to see POAHY buybacks, but this is at least two years out. Not a huge position for me btw, but I’ll add if it drifts lower.

POAHY

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.

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?

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?

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.

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.

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.

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.

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.

Round 2 of RTO & starter in SEB

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.

SIRI. Quick 20%, and just don’t love the business given competition for various types of content.

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.

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.

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.

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.

Yes to both. I suspect part of it is the wildfire lawsuits impacting the valuation. Also, the share issuance is beneficial to the Scott family from a tax perspective, so they may have taken a bit less for the equity portion of the transaction.

Interesting to see WEB use stock to buyout the Walter Scott family BHE interest. I like the move at these levels.