Dynamic

I answered +15%-<+20% on a USD basis (+18.02% return) - which is the currency I focus on, but I was +13.59% in home currency GBP terms (which has been a rollercoaster currency since mid 2016!). Probably paying the price for coming into 2019 on the back of a sharp uptick in the last week of 2018 that helped me outperform the market that year. Also, a concentrated portfolio is a double-edged sword! Biggest error of omission in 2019 - setting my AAPL buy price around $135 (with a target of about 25% portfolio exposure) in January and thus missing the ride from $142 to $292 (though I thought I had a better alternative prospect, unless the price reached about $135, which didn't pan out as well). I have ample indirect exposure via Berkshire anyway, which will eventually be reflected in Berkshire's price. I lagged the SP500TR by -13.46% overall in 2019. Did very nicely on BAC position around 10% of portfolio over whole year plus some covered put/call writing, but otherwise lagged the market mainly due to BRK.B coming into 2019 fairly high after a strong 2018 and coming out fairly low after KHC write-downs and general pessimism and down-rating of its multiple despite what looks like a pretty strong year fundamentally, especially Q4 by my estimations. 4 years of more active management: 2019: +18.02% USD / +13.59% GBP / -13.46% vs SP500TR 2018: +25.30% USD / +32.95% GBP / +29.69% vs SP500TR 2017: +24.83% USD / +14.14% GBP / +2.99% vs SP500TR 2016: +24.16% USD / +54.19% GBP / +12.20% vs SP500TR 4-yr cagr: +23.35% USD / +27.45% GBP / +8.92% vs SP500TR Prior to 2016, was much more passively managed with little cash added since 2003 and very few trades made. Overall estimated IRR since 2003-ish weighted according to timings of added cashflows ~= XIRR: +13.17% USD / +14.47% GBP / +2.22% vs SP500TR. XIRR includes all frictional costs including witholding tax on US dividends, but not capital gains tax, though a small capital gains tax bill will soon be due on 6 Apr 2018 -5 Apr 2019 tax year's unsheltered gains, which exceeded the combined generous UK CGT allowances of myself and my spouse for the first time but is only taxed at 10% of gains above that, or 20% maximum if we gain enough to put us into the top tax bracket. Most of portfolio had previously been tax-sheltered in ISA and unsheltered gains within CGT limits. XIRR also based on approximate reconstructed valuations in early 2003, some historical prices not being available to me due to old investments being taken private. If I include 1999-2003, I had losses before I really understood GARP/value investing that would reduce my outperformance modestly. Notional SP500TR comparison assumes I bought or sold at total-return index closing price on days when cash was added to or removed from brokerage accounts (but not when transferred between them) and assuming no frictional costs such as tax on dividend distributions.

https://acquirersmultiple.com/2018/03/todd-combs-the-billionaire-whisperer/ The above article from early 2018 is worth reading again in light of Todd Combs being hired as GEICO CEO. I get the strong impression he thinks very seriously about downside risk, as I mentioned earlier. Despite having a financial focused fund prior to joining Berkshire, it fell less than 6% in 2008 compared to 37% for the S&P500 index, which included much more than banks. An excerpt:

I think the criteria used when hiring Combs and Weschler as investment managers were rather revealing of their characteristics. One criterion was that they demonstrate a good understand of tail risk which is rather crucial to sustaining Berkshire's fortress like balance sheet, and I think Combs' experience in the nitty gritty detail of banks and insurance and he has probably demonstrated to Jain and Buffett that he really gets it and will be sure to eliminate the slightest chance that GEICO gets wiped out by black swan events. I'm quite glad to see that Roberts is staying on until this time next year which should help smooth the transition.

One has to be extraordinarily cautious in overusing options for leverage because you need the timing to be adequate and a lot of value stocks can get even cheaper over even 2 year LEAPS durations. You must avoid a blow up at all costs to remain in the game. They have advantages too, in that if you're long an option it cannot go below zero so long as you don't exercise when it's out of the money and the effective loan, while relatively expensive, is not callable. But the allure of an early success can easily suck you into taking too much risk when you don't have enough conviction over both price and timing. Temperament and thinking through the worst case scenario are vitally important. On the flip side I do really like writing short durations puts as a way of entering long term positions at the right price so long as I'm adequately cash covered (as boilermaker does) and the effective entry price and return to expiry are sufficiently high. Or if I want to exit a stock position because of fairly full valuation, selling covered calls can either give me extra yield while I wait for my price or enhance my sell price if I'm called. They can be useful tools if used with extreme caution.

Or as someone pointed out the other day, you can use call buying to limit downside risk if you buy what you can afford to exercise at the strike price instead of buying the stock. Scenario A For example if WFC were at $53 and you had $5410 cash and could buy one $45 strike call for $9 before earnings, you'd lay out $900 + $10 commission up front and have $4500 left to exercise the call to receive 100 shares WFC. Your breakeven price is $54.10 instead of $53.10 unless you earn a little interest on the $4500 cash until expiry so you lose out by $100. But if WFC falls below $45 at expiry, you don't exercise and limit your loss to the $910 you laid out up front, keeping the $4500 in cash you had retained to cover the exercise. Scenario B The extreme alternative approach is to spend all $5410 on 6 contracts at $900 each and get 5-6x leverage and increase your potential loss to 100% after a 17% drop in WFC price to $45 while increasing any gains. If you want to cash out at any time up to expiry you may choose to sell the calls to someone else or to exercise them and sell the stock, reducing commission and spread costs slightly. Or you go somewhere between these extremes by buying between 2 and 5 contracts to get some leverage and some downside protection. My guess is that it's most likely being used as uncallable leverage over a certain time frame to amplify the upside. But on occasions where the probability distribution of outcomes includes a substantial downside swing it can provide built in protection at a known cost. Sometimes this may have features superior to alternatives like stop losses which are path dependent and might not actually exit the position at the price you set of the fall is fast enough.

Not exactly news but Berkshire and its main portfolio constituents are up sharply today and Berkshire Class B has broken above $225 for the first time yet it doesn't seem priced for too much optimism unlike perhaps 9th October 2018 when it peaked at $223.64 or so.

Wrote some FIT puts at $6.50 strike expiring 3,10,17,24 days out, replacing and adding to some that expired on Friday last week. I had also written some BRK.B $217.50 strike puts last week expiring this Friday.

Interesting that 37% of the portfolio was in Berkshire (Class A plus Class B) and the rest has considerably smaller position sizes. Nice quality of names in there, and good for further research. Having said that, Berkshire itself is internally diverse and Bloomstran understands it extremely well. It might have hurt Semper's market value gain on a Year-to-Date price performance basis as BRK.A/B finished 2018 strongly and has been flattish while the market has risen strongly, but it may well be that the coming year will be a great time to have an excess of Berkshire Hathaway if the intrinsic value and book value growth force the market price to break free of its previous highs eventually. I expect his 2020 letter will again have a lot of Berkshire content because again it's looking seriously mispriced despite greatly increasing its value in ways and extent that don't seem to be widely appreciated yet, and somehow I don't see that being likely to change by January or February when he writes his letter. His investors deserve to feel very positive about the future prospects, downside protection and buying opportunities afforded by the discount to IV and the growth in IV even if their portfolio may have lagged the price performance of the soaring index in 2019.

Or if not an all time high, within a hair's breadth. I think it peaked higher and closed higher on 9th October 2018 but only by about 0.5%. I think there's a strong chance that today's price will look pretty unusually cheap after the 10-K comes out by any of the usual measures.

On the subject of banks, I think they could provide an outlet for around a hundred billion of dollars more of sensible capital allocation for Berkshire if the bank holding company rules are relaxed in the next year or two and Berkshire is granted confidential treatment by the SEC, the second condition being rather unlikely. Already, Berkshire has passively come to own slightly over 10% of Bank of America (BAC) thanks to their buybacks, yet has actively avoided exceeding 10% ownership of Wells Fargo (WFC) with whom I believe Berkshire has a closer business relationship. At the prices they apparently paid, I'd say that these represent 10%+ return opportunities with decent dividends and with buybacks to further improve returns by increasing ownership percentage over time. Right now, with the 10% rule in place but 25% being considered as a new threshold for being deemed to be a Bank Holding Company, Berkshire has banks as 33.7% of its total equity portfolio (excluding Kraft-Heinz but including the OXY preferred), with the following holding weightings in Financials, based on my quick perusal of the list at 3rd Dec 2019 closing prices: BAC 13.24% Bank of America WFC 8.97% Wells Fargo AXP 7.52% American Express (not a bank) USB 3.75% US Bancorp JPM 3.32% JP Morgan Chase MCO 2.36% Moodys Corp (not a bank) BK 1.73% Bank of New York Mellon GS 1.70% Goldman Sachs (investment bank) V 0.82% Visa (not a bank) PNC 0.62% PNC Financial (regional bank) MA 0.60% Mastercard (not a bank) MTB 0.37% M&T Bank TRV 0.34% Travelers Corp (not a bank P&C Insurance) SYF 0.33% Synchrony Financial (not a bank) GL 0.27% GlobeLife (was Torchmark - insurance) BIT:CASS 0.05% Societa Cattolica di Assicurazione - Societa Cooperativa (not a bank Insurance) Total Financials 45.63% ($107.2bn) Banks only total 33.70% ($79.2bn) With an increase to 25% bank holding company rule, there's at least scope for bank investments valued at $200 billion at current prices at about the current ratios of the existing 10% or less holdings, meaning that if purchased at current prices, $120 billion of cash could be used on purchasing stock in banks. There is one stumbling block, however, separate from the Fed's bank holding company rules. SEC rules require companies to report trades within 5 days if they own more than 10% of a company and these would be made public unless a confidential treatment order is granted (which is exceptionally rare these days, it seems). I could imagine Berkshire as a committed non-bank-holding-company and an entirely passive owner, might be considered for confidential treatment, but this is far from certain and perhaps is considerably lower than a 50% probability. BAC's volume of around 57 million shares per day at $33 gives about $1.9bn traded value per day. So in 62 trading days a quarter, buying 10% of volume, Berkshire could conceivably add $12 bn or so (360 million shares) to its BAC position of almost 950 million shares in a quarter. Perhaps double that at 20% of daily volume would be around 720 million shares, $24bn. WFC might be around $5-10bn per quarter as a ball park and the other banks combined might account for another $10 bn or so. It is probably possible at the upper bound of fairly aggressive buying for Berkshire to deploy about $40-50bn a quarter into banks, if they can do so under SEC confidential treatment provisions. It's very hard to guess what the effect on prices would be if they had to report within 5 days, but they might perhaps deploy a few billion dollars (e.g. $1-5 bn but probably not much more) before their trades were disclosed publicly.

I would agree with scorpioncapital. I've usually had the impression that Buffett prices his purchases to achieve an adequate margin of safety and enhance forward returns, but that gives the illusion of unusually good timing. Pricing the market often looks like timing the market. On a few occasions, I've been lucky enough to notice the same effect with my own portfolio - setting the price to buy or sell has seen me buy within a hair of the bottom tick immediately prior to a major run up or on one occasion to sell a large position based on risk/reward balance the day before last year's mini bear market started (which helps offset my index-lagging portfolio market value performance this calendar year). It also caused me to miss opportunities, for example in Apple, this January, by insisting on a margin of safety that never quite came, thus not buying around $145 (and it's now $264). If I had got in at around $135, however, my return would have been greater, so it's a fine balancing act. A deal like BNSF was probably based on seeing something about the long term future profitability of the railroad business including the west coast tailwind from Chinese trade and from low cost debt unsecured by Berkshire that the market didn't fully recognise or price in. Berkshire was derided for over-paying in many quarters at the time. I am sure it was helped by the post GFC market conditions and the temporarily depressed railroad earnings in 2009 that Berkshire could offer an acquisition premium and still end up with something around 18% IRR over 10 years or so, as a great blog post this January mentioned. Essentially, the whole purchase price has already been returned in dividends to Berkshire (juiced a little by adding debt) and in addition the railroad would be worth about 3 times the purchase cost (with 1.5x the revenues in 2009), giving more than a 4-fold return in 9-10 years. I think there can still be opportunities to identify large businesses with untapped pricing power, recovery trends or secular tailwinds, that can therefore return a lot of value to their owners over time, but there will be fewer such opportunities in relatively bullish markets where very cheap debt is in abundance and competitors for acquisitions are paying relatively full prices. So I'd still expect some acquisitions to occur in buoyant market conditions on a very sporadic basis (statistically), but for more of them to occur in depressed conditions simply on the basis that Berkshire consistently prices its purchases for a good long term return regardless of market conditions and that this only rarely puts them among the top payers in the market who tend to most of the acquisitions unless the market is depressed and many competitors are lacking funds. I don't think it's timing, but it's unwavering pricing discipline.

It makes me wonder if Buffett chose to tell Becky Quick and reveal the timeline of events in order to remind investment bankers that Berkshire is in the market for cash acquisition opportunities but not for auctions and can give a very quick decision and make a deal very fast with little due diligence if a company has a brief shop around window. It makes me wonder, as always, how many substantial potential deals come across the desk of Buffett and his deputies. We know of one failed acquisition in Q4 2018 and this one in Q4 2019 plus the successful OXY funding deal secured in Q2 and closed in Q3 this year. I doubt it's anywhere near as low as three, and if one includes speculative approaches that don't remotely meet the acquisition criteria there could be 50+.

A new SEC filing reveals a 10.2% stake is now held in LUV, unchanged share count and still exactly the same pension fund holdings as before to deduct for three shareholders stake, so it's due to buybacks. But it would require any future change to be notified within 5 days as I understand it. Probably a sign that this is a potentially near permanent holding in Berkshire's eyes. Here's the share count trend over several years in a chart.

But probably a flock of birds judging by ATC audio - this link to CNN was within the Times of Israel article, which indicates that Washington airspace is tightly controlled and they'd rather overreact to false positives than miss a real threat.

I believe I've now updated both sheets to reflect the current known portfolio. The links in this old post will still work. The sheets are now updated. I made an attempt to account for OXY preferred stock assuming its fair value is 5% above the initial investment of $10bn, i.e. $10.5bn, which would represent the cost for OXY to buy out the preferred. As the 8% yield is counted in Berkshire's bottom line as cash received or owed (an asset) or paid as OXY stock received, this preferred stock has no look through EPS to add to Berkshire's look through earnings. It's possible that the OXY warrants have a value in Berkshire's portfolio that is presumably marked to model, with something along the lines of a Black Scholes approximation which it might be possible to estimate. That might explain why my end of quarter portfolio valuation (excluding KHC) is now about $1.6 billion below Berkshire's equity portfolio, still <1% difference, but is a few times larger than it was at 30th June.

OK, thanks, that's interesting and potentially a reasonable moat of loyalty and lock in and a certain cachet among the less price sensitive clientele. Also potential for riding a growth wave to higher valuations, at first sight. Some of the middle market furniture companies like DFS Furniture in the UK (which has been public then private more than once) also have some attractive working capital characteristics like low inventory, making products to be delivered only after receiving payment or setting up finance, so there could even be interesting angles on that side, enabling them to finance rapid expansion and extensive advertising. I owned some DFS shares for about a year or two since Oct 2001 at about 9% FCF yield and the proceeds went towards my original Berkshire Hathaway stake in July 2003. I got the impression it was a little risky in the event of a recession, especially being somewhat debt levered, so I'd rather hold Berkshire long term but I think private equity took it private since then and I haven't looked at it since except when trying to look up historical prices to reconstruct my past investment ledger. But there's certainly scope for quality compounding in home furnishings in many sections of the market.

I know nothing of RH, but would be interested to hear any opinions about why they might have purchased. Apple was trimmed very slightly, quite possibly by Ted or maybe Todd to buy something else. I'd imagine Warren's share is unchanged As per the other thread, CNBC is slightly off on the Wells Fargo holding and the percentage sale because they omit the Gen Re holding via New England Asset Management's 13F-HR which is about 23 million shares. WFC: Wells Fargo & Co New: -7.27% change 400,949,218 shares held, keeping it safely below 10% which they presumably dare not cross.

Latest 13F-HR summary: (not yet adjusted on my public Google Sheets) Two new positions on the 13F-HR filings are OXY (Occidental Petroleum common stock) and RH (Restoration Holdings common stock) AAPL (Apple) and WFC (Wells Fargo) reduced as previewed by 10-Q filing (see above). PSX (Phillips 66) also reduced. RHT (Red Hat) eliminated upon take-over. BAC was unchanged as at 30th September (the 13F date), but was reduced marginally on 15th October on the sale of Applied Underwriters. AAL_________ American Airlin…Group Inc ____unch _unchanged count AAPL________ Apple Inc._______________ __-0.29% _____254,549,679 AMZN________ Amazon Com Inc___________ ____unch _unchanged count AXP_________ American Express Co______ ____unch _unchanged count AXTA________ Axalta Coating …stems Ltd ____unch _unchanged count BAC_________ Bank of America…rporation ____unch _unchanged count BK__________ Bank of New Yor…llon Corp ____unch _unchanged count CASS________ Società Cattoli…operativa ____unch _unchanged count CHTR________ Charter Communi…tions Inc ____unch _unchanged count COST________ Costco Wholesale Corp____ ____unch _unchanged count DAL_________ Delta Air Lines, Inc_____ ____unch _unchanged count DEO_________ Diageo P L C Spon ADR New ____unch _unchanged count DVA_________ DaVita HealthCa…tners Inc ____unch _unchanged count GL__________ Globe Life Inc …ark Corp) ____unch _unchanged count GM__________ General Motors Co________ ____unch _unchanged count GS__________ Goldman Sachs Group Inc__ ____unch _unchanged count HCG_________ Home Capital Gr… (CANADA) ________ ________________ HKG:1211____ BYD Company Lim… Listing) ____unch _unchanged count JNJ_________ Johnson & Johnson________ ____unch _unchanged count JPM_________ JPMorgan Chase & Co______ ____unch _unchanged count KHC_________ Kraft Heinz Co___________ ____unch _unchanged count KO__________ Coca-Cola Co_____________ ____unch _unchanged count LBTYA_______ Liberty Global …c Class A ____unch _unchanged count LBTYK_______ Liberty Global …c Class C ____unch _unchanged count LILA________ Liberty Global …C Class A ____unch _unchanged count LILAK_______ Liberty Global …C Class C ____unch _unchanged count LSXMA_______ Liberty Sirius … Series A ____unch _unchanged count LSXMK_______ Liberty Sirius … Series C ____unch _unchanged count LUV_________ Southwest Airls Co_______ ____unch _unchanged count LXS_________ Lanxess AG_______________ ________ ________________ MA__________ MasterCard Inc___________ ____unch _unchanged count MCO_________ Moody's Corporation______ ____unch _unchanged count MDLZ________ Mondelez Intern…ional Inc ____unch _unchanged count MTB_________ M&T Bank Corp____________ ____unch _unchanged count OXY_________ Occidental Petr…eum Corp. _**NEW** _______7,467,508 OXY.preferre Occidental 8% p…red stock ____unch _unchanged count PG__________ Proctor and Gamble_______ ____unch _unchanged count PNC_________ PNC Financial S…Group Inc ____unch _unchanged count PSX_________ Phillips 66______________ __-6.66% _______5,182,637 QSR_________ Restaurant Bran…ional Inc ____unch _unchanged count RH__________ Restoration Har…ings, Inc _**NEW** _______1,207,844 RHT_________ Red Hat Inc______________ -100.00% ________________ SAN_________ Sanofi Euronext Paris____ ____unch _unchanged count SIRI________ Sirius XM Hldgs Inc______ __-1.19% _____136,275,729 STNE________ StoneCo Ltd._____________ ____unch _unchanged count STOR________ Store Capital Corp_______ ____unch _unchanged count SU__________ Suncor Energy Inc New____ ____unch _unchanged count SYF_________ Synchrony Financial______ ____unch _unchanged count TEVA________ Teva Pharmaceut…Ltd (ADR) ____unch _unchanged count TRV_________ Travelers Companies Inc__ ____unch _unchanged count UAL_________ United Continen…dings Inc ____unch _unchanged count UPS_________ United Parcel S…Inc (UPS) ____unch _unchanged count USB_________ U.S. Bancorp_____________ ____unch _unchanged count V___________ Visa Inc_________________ ____unch _unchanged count VRSN________ VeriSign Inc_____________ ____unch _unchanged count WFC_________ Wells Fargo & Co New_____ __-7.27% _____400,949,218

Berkshire has made two 'Ownership' filings on 12th November: 1. Berkshire has filed Form 3 as it has become a 10% controller of LUV Southwest Airlines stock since 8th November when the 10-Q was filed by LUV indicating Number of shares of Common Stock outstanding as of the close of business on November 6, 2019: 526,276,126 The 53,649,213 shares controlled by Berkshire and various pension funds it controls at 30th June are unchanged, but LUV buybacks have caused it to exceed 10% (approx. 10.19%). The adjustment for the pension funds remains at -6,956,500, leaving the share attributable to Berkshire shareholders at 46,962,713 shares as before, which is now 8.92% economic interest in LUV. I do not need to modify the Look-Through Portfolio sheets in light of this, as I had previously obtained the correct figures and adjustments from a SC 13G/A filing. 2. Berkshire also filed a SC 13D/A report relating to DAVITA INC. (DVA). Over half of Berkshire's position is beneficially owned by subsidiary pension funds and the total contolled shares is unchanged at 38,565,570. The percentage is now 29.7% based on the 10-Q filed on 7th November: As of November 1, 2019, the number of shares of the Registrant’s common stock outstanding was approximately 129.7 million shares.. All of the shares for the benefit of Berkshire shareholders are held via National Indemnity Company, with 18,513,482 shares (14.3%). The rest are held in various pension trusts. R Ted Weschler has some shares too, but they're not included in the Berkshire 13F-HR or the total shares controlled by Berkshire. Again, it's probably just a percentage ownership change that is being notified and I don't need to adjust the look-through spreadsheet.

Trailing 10 years: Nov 6th 2009 - Nov 6th 2019 from Yahoo Finance historical prices using their ticker symbols adjusted for split: ^SP500TR 6219.10 in 2019 vs 1756.07 in 2009. Ratio = 3.5415 = 13.48% cagr before tax BRK-B 222.00 in 2019 vs 68.50. Ratio = 3.2409 = 12.48% cagr before tax $242.59 would have matched the index (+12.3% difference) Dec 31st 2009 to Nov 6th 2019: = 9.852 years. ^SP500TR 6219.10 in 2019 vs 1837.50 in 2009. Ratio = 3.3845 = 13.17% cagr before tax BRK-B 222.00 in 2019 vs 65.72 Ratio = 3.3780 = 13.15% cagr before tax $222.43 would have matched the index. 0.19% difference from yesterday's close. For me withholding tax on dividends would have made the S&P500 worse. So we are basically into rounding error on the calendar decade to date and it's quite possible that Berkshire can outpace the index by more than 0.19% by the end of the year, especially if sentiment towards it has changed and the stocks it holds continue to outpace the index By my calculation, since end of Q3 the Berkshire portfolio is up about 7.2% versus 3.4% for SP500 or 3.5% for SP500TR (dividends reinvested) and 6.7% for Berkshire stock, continuing the price outperformance during Q3. The portfolio plus KHC holding market value is up 7.6%, incidentally in those 5 weeks or so. If Apple and the banks keep rerating upwards to the end of the year, and KHC too, that could be reflected in the price of Berkshire by more than 0.19% even if analysts continue to underestimate the Berkshire portfolio gains as they did last quarter. So it's certainly feasible for Berkshire to do marginally better than the index over a 10 calendar year period and a calendar decade coming out of a major systemic shock, where we're told that value has underperformed as a style, and such a period without any more than a brief flirtation with a 20% drop from its peak that would be called a bear market (the index dropped by a fraction more than 20% from last year's September peak to 24th December intraday, I seem to recall, then rebounded, so not being a closing price it's probably not quite classified as a bear market). What will be really interesting is whether Berkshire can significantly exceed the index performance when this bull run comes to an end. By significantly, I probably mean 10-30% in total outperformance over a decade, not much more, though timing of the end points could also make a major difference. Berkshire offers so many advantages to me over an S&P500 index fund (trust, low debt, ability to value it and assess its trading range, sufficient diversification, no dividends to pay tax on), that I'm quite happy to accept roughly market matching performance over a decade or so of buy-and-hold plus occasionally switching some of my portfolio into high conviction ideas, and sleep very well knowing it's being managed honestly and competently for the long term. It remains my default investment for a large portion of my wealth while I'm waiting for the next big idea, or to switch back into when my last big idea reaches rather high valuations that make me nervous about the downside risk, and I cannot foresee it losing its appeal as the major part of my portfolio for at least one or two decades unless I find something even better, even though I may retire within 2-5 years. It should be a very good vehicle to continue safely compounding faster than inflation plus my draw-down rate in retirement. That would leave me room to take sizeable positions in other high conviction ideas to increase my financial security or my spending power.

Yes, Berkshire owned 950,000,000 BAC common stock on 30th June and hasn't bought or sold any since. They only divested 2,240,000 shares on selling Applied Underwriters on 10th October and their known percentage of shares outstanding has gone up when BAC revealed their share share count was under 9 billion shares as you mention. They have to file within 5 days of any activity as they did on 15th October, so I'm sure the 13F-HR filings will show 950,000,000 shares at 30th September overall (927,248,600 on BRK's 13F plus 22,751,400 more on NEAM's 13F). As for WFC, it appears that either their banking relationship is closer, so they're either not permitted to own over 10% by the Fed and keep their banking relationships with Wells Fargo, or they want to retain the flexibility to sell shares without disclosing it within 5 days. I suspect the former is the main reason, though I cannot remember why I formed the impression they work closely with them. Another interesting thing to note is that the market value of the Apple holding now represents almost one eighth of Berkshire's stock price at prices around Friday's closing prices, even if they sold a little AAPL during Q3. The holdings in banks and financials collectively account for about 1/6th of Berkshire's stock price by my reckoning. I've applied my central estimates for the number of shares of AAPL and WFC held in the Look Through portfolio spreadsheet (only the one that the public cannot edit for now) by way of the adjustment column. I can remove those once the 13F-HR is out. I already posted the BAC adjustment announced 15th October. Also, I cancelled out the RHT holding as this was taken over during Q3. The proceeds are probably reinvested somewhere already, as I think this was Ted or Todd's position, but we won't know until the 13F.

I've looked at Note 4 in the Q3 report. This summarises Investments in Equity Securities (excluding KHC and other partial control stakes accounted under the Equity Method). I also compared this to the same note on Q2's report. This category does include the new $10bn investment info Occidental Petroleum preferred on 8th August. The overall cost basis in the portfolio increased from $102,620 million to $112,207 million, implying that $9,587 million of cost basis was added net. The cost basis of Banks, insurance and finance and of Consumer products declined slightly, presumably reflecting sales of WFC shares and perhaps some other, maybe including a slight trimming of the AAPL stakes held by Ted Weschler (or Todd Combs) possibly to invest elsewhere. The cost basis in Commercial, industrial and other increased by $10,769 million, which is $0.769 billion more than the Occidental should account for. I would not think there has been very much net buying of new securities other than the OXY deal and some reinvestment of closed positions like the cash proceeds of the Red Hat merger. Unrealized gains increased from $97,896 to $107,844 million, an increase of $9,948 million. I estimated that an unchanged portfolio since 30th June would have gained 5.1% or $10,181 million (beating the S&P500 by about 3.9%), including realised gains such as those on Red Hat proceeds, so this seems pretty much in line. The total portfolio value increased from $200,516 million to $220,051 million, an increase of $19,535 million. This is $9,354 million more than my estimate of gains on an unchanged portfolio, and less than the $10,000 million of the OXY investment. Now looking at the top 5 positions: AXP and KO positions are essentially permanent and would be disclosed early to SEC if changed as they exceed 10%. They also match my closing-price estimates when rounded to nearest $0.1bn WFC, 432,383,973 shares held at 30th June. $50.44 closing price 30th September per Yahoo Finance and Google Finance. $21,809,447,598 holding at 30th Sep unless shares were sold or purchased. Rounds to $21.8 bn Note 4 reported fair value = $20.2 bn. Clearly some were sold to stay below 10% despite WFC's strong buybacks, hence the reduction in cost basis in the Banks, insurance and finance category. Min holding at 30 Sep $50.44/sh = 399,484,536 shares Max holding at 30 Sep $50.44/sh = 401,467,089 shares Central estimate at $50.44/sh = 400,475,813 shares ± 991,276 It's possible that the closing price of $50.44 is not exactly the one used by Berkshire Hathaway, but my past experience is that Yahoo Finance and Google Finance figures for quarter end closing prices match very well to the nearest $0.1 bn. Verdict: Wells Fargo trimmed fairly substantially to remain below 10%. AAPL, 255,300,329 shares held at 30th June. $223.97 closing price 30th September per Yahoo Finance and Google Finance. $57,179,614,686.13 Note 4 reported fair value = $57.0 bn. Closing price implied if holding unchanged = $223.08 - $223.46 - both would round to $57.0 bn to nearest $0.1bn Min holding at 30 Sep $233.97/sh = 254,275,127 shares Max holding at 30 Sep $233.97/sh = 254,721,614 shares Central estimate at $233.97/sh = 254,498,370 shares ± 223,244 A small amount of selling could account for the cost basis reduction in Consumer products. Verdict: Apple is likely to have seen light trimming possibly for Ted or Todd to reinvest into a more undervalued position. BAC, 950,000,000 shares held at 30th June. $29.17 closing price 30th September per Yahoo Finance and Google Finance. Also known to have held 950,000,000 shares at 9th Oct prior to disposal of Applied Underwriters, per Form 4 filed 15th Oct. $27,711,500,000.00 (rounds to $27.7bn) Note 4 reported fair value = $27.8 bn. Closing price implied if holding unchanged = $29.22 - $29.26 - both would round to $27.8 bn to nearest $0.1bn Berkshire also holds 354 shares of Series T 6% Non-Cumulative Perpetual Preferred Stock in Bank of America Corporation. I believe these are probably worth $37,170,000 as they're redeemable by BAC at $105,000 per share. Even adding in this, I get a figure of $27,748,670,000 for the total investment in BAC. That is very close to the rounding threshold, but not quite there. My guess is that either the closing price of the BAC common stock is different to the Yahoo / Google figures (possibly they use the same data feed) or that the Fair Value of the Preferred has been calculated a little higher based on some other calculation of Fair Value (e.g. based on lower Fed rates) or by comparison to observable prices of comparable BAC securities that are traded in the market. Verdict: Bank of America Corporation holding unchanged at 30th Sep, but possibly adjustment to fair value calculation on their preferred stock.

Enjoy your weekend gfp. I think I could wait til Monday to digest the results if we're out having fun, though my timezone gives me a few extra hours before the market opens. A few quarters lately I've had my first look on my smartphone while out visiting friends, but it's hard to resist taking an early look and calculating a couple of numbers I've been looking for.

There has been no filing from Berkshire about its WFC holding exceeding 10% so far. The most probable two reasons are: 1. WFC isn't deemed to have disclosed its latest share count within the meaning of form 3 - it only gave a count rounded to the nearest 0.1 million shares as of 30th Sept in press release preliminary financials, not an exact statement of shares outstanding as they would produce in their 10-Q. 2. Berkshire has reduced its holding in WFC during Q3 or even in October, prior to the WFC announcement to below 426.91 million shares. It may be that WFC is different to BAC and Berkshire has reasons to stay below 10% - closer banking relationships or keeping options open regarding reporting of share sales. I guess the Berkshire 10-Q is most likely to come out on Sat 2nd Nov, though possibly as late at Sat 9th Nov. The WFC position will be among the top five holdings, so the 'fair value' of the position at 30th Sept's closing price of $50.44 per share would normally be disclosed in Note 4. Investments in equity securities, rounded to the nearest $0.1 billion. From that we can estimate the number of shares held in each of those top 5. 255.3 million AAPL at $223.97 would round to $57.2 billion ($57,179,614,686 rounded up). It's possible but unlikely that this position has changed in Q3. 950.0 million BAC at $29.17 would round to $27.7 billion ($27,711,500,000 rounded down). This is known. We now know that a few of these shares worth about $65 million were divested with the sale of Applied Underwriters, but only after the 30th September quarter-end date. As it's over 10%, any movements must be reported rapidly to the SEC. 400.0 million KO (Coca Cola) shares at $54.44 will have Fair Value of $21.8 billion ($21,776,000,000 rounded up). This is known, as Berkshire has to file any trades as it owns >10% of KO. 151.6 million AXP (American Express) at $118.28 will have Fair Value of $17.9 billion ($17,932,513,596 rounded down). Again, known as they hold >10%. WFC could be maybe $21.0 billion to $21.8 billion, the top end being if they haven't sold any shares in Q3. This is the main unknown at present. A WFC holding remaining at 432,383,973 shares would be reported at $21.8 billion 'fair value' ($21,809,447,598 rounded down), matching KO, and unless Berkshire has sold before WFC reveals their exact share count, we'd then get a Form 3 or Form 4 filing to reveal the 10% holding within about 10 days of Wells Fargo confirming their exact common stock outstanding, presumably in their 10-Q, also likely to be published this week or possibly next. A reduced WFC holding of, say, 426,900,000 shares would be reported at $21.5 billion 'fair value', which would actually cover a possible range from 425,257,732 to 427,240,285 shares, either of which extreme will only just round to $21.5 billion using conventional rounding rules. This range spans the 10% mark, so we'd have to wait to see if there's a further filing or not. If Berkshire has sold to stay below 10% during Q3, I imagine they'd have chosen to err on the safe side and have reduced to perhaps 420 million shares or fewer ($21.2 bn). Berkshire's Fair Value seems to use the widely reported closing price for the last trading day of the quarter every time I've checked (and I've checked the top five positions, like AAPL, BAC, KO, WFC, AXP every quarter for the last 7 or 8 quarters and top 15 every 10-K), and occasional coincidences of rounding break points almost prove they had used the exact closing price I obtained from GoogleFinance and Yahoo Finance. I'd estimate that the total Fair Value of Investments in equity securities, including Others outside the top 5 (and not including KHC of course), would be no less than $210.7 bn, assuming something new was bought for about $1.0bn to replace RHT after its takeover completed, probably a Todd or Ted merger arbitrage trade. It could well be up to $6bn higher if new after-tax earnings during the quarter were also reinvested into equity securities, so probably a portfolio total in the range $210-$217 billion is possible. I think they beat the S&P500 by almost 4% for the quarter, although that period is too short to be very meaningful, and I think they have extended that lead to about 7.5% so far in October, after gains for Apple and the banks, with the portfolio on 29th October being valued at about $221-$228 bn I'd imagine, depending how much of the earnings were invested in stocks. With TTM earnings of about $14.0bn ($5.73 per BRK.B share), I make the trailing P/E ratio of the portfolio about 15.7, and its look through market price around $90.18 per BRK.B share, meaning that at $212.53, you get the operating part of Berkshire for $122.35. If that operating portion brings in a little over $10 per BRK.B share of after tax operating earnings normally, that could be an earnings yield over 8%, or over the whole of BRK.B, fairly conservative look-through earnings (including Berkshire's share of EPS) of say $15.75 per B share (7.4% earnings yield on $212.53). This year, the share of KHC write-downs has depressed reported earnings, but I think over $15.75 per B share is probably a fair normalized figure for look-through earnings.

There IS a very small position in Diageo (DEO), which is alcohol brands, 227 thousand ADRs worth $36 million only at present, but that's not widely known because it's within the part of the Gen Re portfolio held via New England Asset Management's 13F filings.