Dynamic

Kraft Heinz (KHC) has now filed its 10-K for year ended 29th Dec 2018 with the SEC. In various stories such as this from Reuters we hear that KHC has completed its internal investigation into accounting practices, and the results are much in line with the 8-K filed in early May. They say the amounts of prior year misstatements were immaterial from a quantitative perspective but qualitatively the misconduct is material and lasted some time. A regulatory probe is still ongoing. This seems to differ from some of the interpretations in the KHC thread on Investment Ideas. Berkshire's 26.7% share of the original annual results including the write-downs, were incorporated into Berkshire's Annual Report and 2018 earnings and book value under Equity Method Accounting and it appears that the differences will be largely immaterial to Berkshire's results presentation, though they will probably make minor adjustments to some of the figures reported next quarter and potentially restate some items for current and prior years in the 2019 10-K next February, even if the changes are minor. The KHC 10-Q for the first quarter is still awaited, and only after that is released can Berkshire incorporate its share of those earnings. My guess back in early May was that a typical Q1 for KHC would contribute about 200-230 million USD to Berkshire's earnings adding about $0.09 of Book Value per BRK.B share (around $130 of BV per BRK.A share). The dividends to Berkshire of 130 million USD per quarter at $0.40 per share would have been reflected in cash in hand already but also deducted from the carrying value of KHC in book value already under Equity Method Accounting, so their share of KHC's Q1 net earnings should add directly to BV when known, if I understand correctly.

I haven't looked at KO for a while. With a P/E in the 30s and over 3% yield, it pays out almost all of its earnings but is priced as a virtually indestructible consumer brand with pricing power to keep pace with general price inflation and possibly a bit higher, such as wage inflation. My guess is that it's seen by Mr Market as a defensive stock in case of economic declines, having worldwide earnings, little need for additional capital and products priced low enough that most people wouldn't switch to the cheaper alternatives that don't quite have that taste or those mental associations. Perhaps it has been seen as a 'safe' place for investors nervous of tariff wars or potential recessions. Some of the bottlers have occasionally been available at potentially attractive prices over the years. Short of seeing some qualitative growth drivers, though, that are hard to envisage now it already has worldwide distribution, it seems that is pretty much fully priced to me. I'm fairly sure Berkshire wouldn't be interested at these prices unless there's some hidden value I haven't noticed, but it looks like a perfect fit for Berkshire at the right price at some point - lots of cash being thrown off which could be rationally allocated to other things and would provide consistent cash inflows to rapidly replenish any large insurance losses.

If you follow the link and don't have a FT subscription you will be left at the sign-up page, but you can search for "Financial Times Behind The Money" in podcast apps like Podcast Addict and either subscribe to the podcast for free or freely download/play individual episodes from there without a paid subscription to the FT. Episode link https://media.acast.com/behindthemoney/warrenbuffettscashdilemma/media.mp3

No, highly trained military and law-enforcement personnel are almost certainly prone to the exact same heuristics and mental shortcuts in their vision systems and methods of laying down and reinforcing memories as the majority of homo sapiens. Pilots are selected on very few visual defects - I know that colorblindness prevents people from becoming professional pilots, for example - but the way the brain interprets visual information and where it focuses its attention is only slightly different due to training, mostly in training for flying in cloud and trusting instruments like the artificial horizon more than the flawed perception of their senses. But other than that, pilots are trained to be observant to the environment all around them rather than on tunnel vision of what right in front of them perhaps better than typical car drivers, but not regarding interpretation of what they perceive. If any class of professionals has a small edge on seeing the world as it is, and occasionally avoiding visual misperception, it's magicians, who have discovered and shared numerous and diverse ways of diverting human attention and can sometimes spot these if they can guess what to look for when practised by fellow practitioners of their art.

A small factual correction - the best evidence we have now is that life developed very soon after the Earth cooled enough to form a crust and oceans, so something closer to 3.5 billion years ago. Quite a long time later multicellular life and mytochondria came along and later still, sexual reproduction being added to the mix alongside mutation gave rise to more rapid speciation and testing of various potential evolutionary paths. But we also know that all life we find on Earth today has a common ancestor and a single form of DNA/RNA for protein generation and replication rather than any successful alternative replicating molecule being successful enough to last alongside. Nonetheless you point stands about Earth having had only a short window (so far) where complex multicellular life has existed and an extremely short window where an intelligent species has existed, and a truly minute window when they have approached the technology to detect distant planets, communicate beyond their planet and explore anywhere outside their planet's own atmosphere. Lets invert the question and consider detecting life on Earth from another star. An alien species with technology a little better than ours, but possibly within 100 years of today's, looking at earth remotely perhaps as it transits the Sun, might detect certain chemical signatures of life, such as molecular oxygen and carbon dioxide in the atmosphere if their distance is within a few hundred million light years of Earth. That radius takes in just a few nearby galaxies but excludes much of the known observable universe and other galaxy clusters. We're close to having the ability to detect such atmospheric signatures on exoplanets for the first time, so that is plausible first with relatively close stars, then with more distant ones as technology improves. They would have to be within a few thousand light years to detect human changes to the planet and perhaps gases released from early metal smelting etc within the last few thousand years as civilizations emerged. That radius is well within our own galaxy, the Milky Way, meaning they couldn't detect us outside our galaxy until a long time in the future. They would have to be within the order of 100 light years to detect radio waves from human communications, a little more to detect signs of the Industrial Revolution. That's a small corner of our neighbourhood at the edge of the Milky Way, containing only a relatively modest number of stars and planets. The nearest stars are about 4 light years away, and there are about 13600 stars within 100 light years, mostly red dwarfs. The orders of magnitude to detect our modern space-going world-wide communicating civilisation really shrink dramatically when you consider how few stars are within say 50 light years. Inverting again, we might have the technology to be able to make certain remote atmospheric gas detections (via spectroscopy of transiting exoplanets) that strongly imply life, on exoplanets perhaps 10-100 light years away, within the next decade or two, probably easily by the end of this century, and perhaps by 2100 we'd be able to detect them on the far side of our own galaxy (about 50,000 light years away, and these signs of life having left those planets 50,000 years ago). I think we probably will have the technology to find one or two independent lines of compelling evidence for simple life existing on exoplanets within this century. It's far less likely we'll be able to detect signs of a technologically advanced industrial age species so soon, mainly because they ought to be less far likely to exist at the same time we'd be around to observe them, within the radius where we're capable of observing their presence. That detection would gradually become more likely as we improve sensitivity of detection to increase the detectable radius, but I wouldn't be surprised if we detected none within 100 light years of the Sun.

This! Good point. They would rather have an idealogically pure party than have any dilution of their idealogy that would allow them to win a majority and actually implement some of their preferred policies. It seems quite a odd contrast to some really good policy programmes such as the use of the Nudge Unit to test policies for their actual effects and try to use behavioural approaches to improve outcomes without removing citizen choice. Hopefully, those things often implemented with the help of the civil service will continue to make incremental improvements regardless of the chaotic party politics raging around them.

Nice analysis. I think that on reading it, I was at times a little unsure whether high was good or low was good, and indeed they could both be good. For example, say you buy XYZ Corp with $5 owner earnings per share per year, and you pay $70 thinking it's 30% undervalued and has an IV of $100 in 2019. In year 2021, maybe it has distributed $3 a year in dividends and grown owner earnings to $6 a year, a 20% increase and you now think its IV is $120 in 2021 (a 20% increase). This is a good performance having retained less than half of owner earnings to reinvest in the business. Scenario 1: If its price is $77 in 2021 it is going to be more undervalued (having risen 10% versus a 20% increase in IV), is your metric of convergence of price and value going to be positive or negative. My instinct says negative. In this scenario a value investor could use the opportunity of widening gap between price and IV to add more capital to the position. Scenario 2: If its price has risen to $96 in 2021 (a 37% rise versus a 20% rise in IV), it's then only 20% undervalued so price and value have converged. My instinct says convergence should be positive. In this scenario a value investor could optionally take advantage of the narrowing gap to IV to selling the company to buy something else that is more deeply undervalued, or she could stick to this company despite the narrowing gap because it has grown owner earnings by 20% in 2 years despite paying out over 50% of owner earnings as a dividend, demonstrating a good return on incremental invested capital at least over that short period.

Very true, the simplest solution meaning the one with the fewest low probability assumptions, not just the simplest to state such as "god did it" or "it's all a simulation"

I agree that this is all very confusing. At the moment, fringe parties and independents are enjoying unusually large shares of votes in local council elections and European Parliament Elections, mainly on their Brexit stance and voting against the big two - Conservative and Labour. I guess the chances of Brexit happening in some form are still probably hovering around 50% (+/-30%) - very hard to judge, especially from so close. The biggest problem with the idea of Brexit is that everyone wants a different flavour or vision of a post-EU Britain for different reasons and some of these are completely incompatible with each other. CGP Grey's video about Brexit on YouTube demonstrates these incompatibilities very well. Thus any deal or no-deal option presented to the people or to parliament will probably fail to please enough of the pro-Brexit people or parliamentarians to be approved. It may take someone riding roughshod over the competing factions to actually push it through. The pro-Brexit parties cleverly refused to define precisely what they wanted, allowing people to conjure up whatever image of post-Brexit Britain they hoped for and vote for that. Nigel Farage's new Brexit Party even refused to provide any policies in advance of elections. They know that they get a free pass to whatever each member of their potential voters imagines the perfect Brexit to be. With Remain you know what you're getting, and enough people had enough gripes with that to turn out and vote against it in the original Referendum. Then again, more voters signed the petition or a second referendum than voted for the Brexit parties in the recent EU elections, and pro-Remain parties got more votes (albeit split among many parties, which is OK given that those elections have a relatively proportional representation) yet the Brexit Party had the highest single proportion of votes for any party. So even the voting picture is unclear. The only thing that is clear is that of those who bother to vote, the nation is deeply divided, and the main political parties are tending to become more extreme in an attempt to manage infighting and internal factions, while become ever less appealing to centrist moderate voters. The compassionate Conservatives or business-friendly New Labour of a decade or two ago seem very far removed from the current make-up of the parties. I'm sure their staunch supporters are happy to see the right wing and left wing more polarise further, but they don't offer much appeal to many voters without tribal affiliations who favour pragmatism, and I suspect that their best hope in the next General Election is low turn-out from the disaffected majority while their more tribal supporters turn out as always. Otherwise, alternative parties could certainly take a fair share of the vote, if not the seats, and yet another coalition will be required to form a government. I really think that a centrist, pragmatic leader of either main party could attract a lot of public support and votes, but that both major parties are unlikely to vote in such a leader as they pursue their internal agendas. It's also possible that the new media landscape will encourage such factionalisation and division.

I've discovered a few errors over the last 5 sets of 13F-HR filings which, for completeness, I'll list below. I think I should be able to automatically read in the 13F data into a spreadsheet in future and reduce or avoid the human error involved in doing so manually, and in testing that these human errors were found. I'll then copy and paste it into these Google Sheets. It should save me from reading the wrong column or mis-typing numbers most of the time! 4,840,500 missing USB shares in 14th Feb 2019 and 14th Nov 2018 Berkshire filings (didn't include that new row in the filing). This increase did not happen in Q1 2019, so I'll modify my post of 16th May 2019. 600 missing JNJ shares in 14th Aug 2018 New England Asset Management filing (mis-typed figure) 44,110 missing USB shares in 14th Aug 2018 New England Asset Management filing (figure from wrong column) 107,575 extra GHC shares in 14th Aug 2018 and 15th May 2018 Berkshire filings, which had already been sold (didn't adequately check for absent items) 300,000 missing LBTYA shares in 15th May 2018 filing (mis-typed figure) I believe I made some other errors that were picked up by other forum members and corrected before now. As always, these Google Sheets are provided on an as-is, best-effort basis and should not be relied upon to make important decisions, and the publicly editable version is potentially open to corruption by any person on the internet.

Actually, in addition to my tax free ISA where leverage is not available, but cash can be stored, I do have a taxable account with a significant opportunity to withdraw cash up to say 50% of the market price of my stocks. Of course, if market prices fell further, my percentage margin loan would increase so I'd want to be very cautious in how much I'd borrow against my stocks. I would expect to be able to sit through a very long bear market without a cut to income drawdown by gradually drawing on margin as cash is needed. Maybe by the time I get there UK customers will be able to obtain debit cards against their brokerage accounts like US customers of Interactive Brokers making spending from account resources very simple. If I don't use margin normally, a very modest margin loan would give me flexibility obtain spending money without selling stock at low points in the cycle when prospective returns would be highest. I could also raise a little premium income by writing calls at a strike prices where I'd be happy to sell stocks. Either the price would rise and I'd get exercises at a price where I'm willing to sell or I'd get to keep the premium income of prices remained depressed.

Yes, self-select ISAs are a real boon. Even £7,000 each in the early years was a real boost compared to PEPs and TESSAs, but the £20,000 each really makes financial independence goals very achievable. The only tax I've had to pay via my ISAs is a little to the US IRS on US dividend withholding tax. Self-Invested Personal Pensions are also pretty attractive, though the restrictions on the pension age and the lump sum withdrawals are a downside. The UK Capital Gains Tax exemptions outside the ISAs are also very attractive - well over £11,000 of gains per person before a penny must be paid, then it's either 10% or 20% tax rate depending on your income tax bracket - about half the marginal rate of income tax, and it's quite easy to manage splitting the gains between spouses.

To give a simple answer, at the lower bound a typical market value of around $750K USD might cut it for a frugal couple with no kids living in the UK in a modest apartment wanting a fun life and a fair amount of travel. I first started seriously projecting possible retirement dates since about 2015. I began with various assumptions and ended up with quite a simple way of projecting our retirement year and seeing whether that projection shifted much over time. Assume Inflation Protection - quality companies I'd own should be able to increase prices with inflation, so their look-through earnings should increase with inflation over time and I was a little concerned that possible inflation was being stored up by Quantitative Easing since 2008-9. Thus, use of Real Terms returns is feasible and it makes the calculation far easier. Studies like the Barclays Equity-Gilt Study and UK government mandated retirement projection calculations published by the FSA also express things in real terms, so I can sanity check against those. Interest rates rising a lot would lower the market value of the portfolio to generate comparable future returns, so best not to be too incautious. Assumed Real Terms Returns. The UK FSA's guidelines for use over 10-15 year time horizons were then 5% above inflation for equities, less any fees and costs such as commissions and UK stamp duty on purchases (a range of 4.5-6.0% was given). The guidelines are based on market levels at the time (a little depressed, but by no means a bear market), so may be revised down a little as markets get more frothy. And they're supposed to be over a whole cycle including bear markets and recessions. Also assumed negligible tax due to tax-sheltered accounts. The actual return is likely to differ materially, and judging by previous returns, it may well exceed the projection in the long run, though it might well be lumpier than market return. I'd also assume I'm virtually fully-invested at all times. Assumed Savings Rate before retirement. We made a target figure, and decided to save about 40%-50% of our joint incomes, which ought to rise with inflation too. Having no kids, inexpensive tastes and a modest apartment bought during the crisis helps. It's possible that the shift from RPI to CPI as official UK Government Inflation Statistic understates inflation by as much as 1.0% per year, however. I settled on CPIH excluding tobacco to fairly well reflect our costs including housing as the measure by which we inflate. Assumed Income required during Retirement. We initially chose a figure based on our mortgage being paid off, assuming no pension income, and having a good standard of living. Being UK-based, for now at least, we don't have to worry unduly about healthcare costs until old age, when we might need to pay for carers, so it lowers the bar. We have just recently reviewed our spending over 5 years in the app we use to track it, and decided to increase our target income by around 20-25% to allow for additional spending that is a little sporadic in nature and slightly more in the way of big trips and fancy dining, and for the fact that we're very likely to retire long before our mortgage is paid off. Dividends and Drawdown. I don't intend to use a traditional bond-equity mix during retirement, though we might keep 1-3 years' living expenses out of equities. Looking at total return I don't seek to differentiate between dividends and drawdown as a source of income. Assumed capital needed to retire. As everything is in real terms, during retirement the portfolio can be assumed to maintain the same real value, keeping track with inflation (with variations in market price superimposed on this) if I draw-down income at the real rate of return (3.5-5.0% depending on how conservative or optimistic my calculation is). For example assuming 3.5% real return during retirement, the capital required to retire is a simple capitalisation calculation: RetirementIncome / 0.035 = 28.6 x RetirementIncome. Assuming 5.0% real return, it's RetirementIncome / 0.05 = 20.0 x RetirementIncome. For example, a £25,000 GBP income in today's money would require as much as £714,000 GBP ($850K USD today) or as little as £500,000 GBP ($600K USD today) which isn't an enormous stretch. To be a little more market-neutral and conservative, I estimate a crude "Low Value" low-ball price for my positions to keep me more focused on growing Intrinsic Value of my portfolio and its defensiveness. Low Value for cash is just the full value of cash held (I should probably lower this to about 80-85% to account for the fact I'm likely to invest it soon so my retirement projection is more consistent if I'm temporarily cash-heavy), but for many GARP stocks I capitalise an estimate of normal/recent EPS or Free Cash Flow at about 8.5% yield (P/E or P/FCF = 11.76), and sometimes I use an alternative such as pegging Berkshire Hathaway's Low Value at 1.2x Book Value where it rarely trades. I track the Low Value of my portfolio as well as the Market Value, and have managed to grow Low Value at a comparable rate to market value, with some variations. So to model this I keep a fairly simple spreadsheet. I scale up the required Retirement Income by the change in CPIH inflation measure (using the high-water-mark). Here's a hypothetical example: Starting LoVal in May 2019: £ 100,000 Pre-retirement Real Growth rate: 7.00% (0.070) Post-retirement Real Growth rate: 4.50% (0.045) Retirement Drawdown (Nov 2015): £ -23,369 Inflation adjustment factor = 107.3/100.3 = 1.069791 (based on CPIH excl tobacco Apr 2019 versus Nov 2015) Real Drawdown (May 2019 money): £ -25,000 Real Capital to Retire = £25,000 / 0.045 = £555,554 Savings Rate pre-retirement = £ 20,000 per year (May 2019 money) In the current year (here, 2019), I scale down the savings and growth rate to the fraction of the year remaining. Being late May, there are over 7 months out of 12 left. Each year I apply the pre-retirement growth rate and assume we invest the pre-retirement savings amount. However, if the Starting LoVal is at least equal to the Real Capital to Retire, then I instead apply the post-retirement growth rate and the post-retirement drawdown amount (negative). It's a simple IF statement in a spreadsheet to choose which value to look up for each. I add the savings or deduct the drawdown at the end of the year in question. I can see the projected retirement year by when the amount Savings(Drawdown) becomes negative, indicating drawdown has begun. Year | Starting LoVal | RealGrowth% | Grown LoVal | Savings/(Drawdown) | Year-end LoVal 2019 | £ 100,000 | 4.28% | £ 104,277 | +£12,219 | £ 116,496 2020 | £ 116,496 | 7.00% | £ 124,651 | +£20,000 | £ 144,651 2021 | £ 144,651 | 7.00% | £ 154,776 | +£20,000 | £ 174,776 ... ...deleted years... ... 2030 | £ 505,494 | 7.00% | £ 540,879 | +£20,000 | £ 560,879 2031 | £ 560,879 | 4.50% | £ 586,118 | -£25,000 | £ 561,118 2032 | £ 561,118 | 4.50% | £ 586,369 | -£25,000 | £ 561,369 Here, you'll see that this hypothetical person could probably retire in 2031 on this projection. You'll notice that after retirement, the LoVal stabilises, as it has just exceeded the amount required to withdraw 4.5% and keep it constant. As the months and years roll by, both the Savings rate and the drawdown rate will increase along with inflation. I typically run this type of projection from time to time, and make a note of the date, my starting LoVal, the annual amount to save and the annual amount of retirement income, then I try a few scenarios with the pre-retirement and post-retirement returns. I started by estimating the retirement year using two scenarios but now occasionally try out the following pre/post -retirement rates: Very Conservative: 3.5%/3.5% Conservative: 4.5%/4.5% Median Likely: 7.0%/4.5% (as above, perhaps assuming I beat the market modestly pre-retirement) Optimistic: 11.0%/5.0% (beating the market quite significantly pre-retirement) Over-Optimistic: 18.0%/5.0% (shooting the lights out until retirement) This method (particularly using LoVal instead of Market Value) has generally produced quite consistent results even as markets rise and fall, varying only modestly over time, and gradually bringing in the projected retirement dates as I have had a few very good years of beating the markets significantly in terms of both market value and LoValue growth. It didn't even go too crazy despite the massive fluctuations since the Brexit vote in 2016. Obviously, the Optimistic and Over-Optimistic scenarios are more sensitive to initial conditions and are rather likely to get pushed out later as time moves on unless I continue to get pretty lucky, but even they don't move very much over time because I decouple my LoVal from Market Price. It would probably vary more if the pre-retirement savings rate were not so close to the drawdown income, as retirement would be further away and a longer time to retirement would vary by more years for the same percentage change in starting value etc. Using LoValue also helps me keep mentally focused on fundamental values rather than market price, and I'm happy to have built the LoValue and Market Value at index-beating rates in recent years, even if I'm lagging behind slightly in recent months, as I will from time to time.

An informative thread turning into quite a funny thread. AIM 1. I think financial independence for me and my wife, essentially in perpetuity, is the main aim and we're almost there now, so I would feel no great pressure if I should find myself out of work. I'd be very happy to do what Charlie Munger did, and overshoot that aim rather significantly! After reviewing our spending over the last few years to account for those odd and unexpected extras from time to time, we recently increased our target retirement income by 22% to make sure we are very comfortable to go on living a good life. We are projecting a lower rate of return in retirement in case we become more conservative or passive in our investments or hit some setbacks in the crucial first 5-10 years of retirement. Nonetheless, something from 2-5 years more investing and compounding depending on how the actual compounding turns out is very likely to see us reach this aim. AIM 2. I also want to continue to really enjoy life with my wife in the here and now - partly because it adds joy and colour to our lives and partly because you never know how long you have on this world, as loved ones have found out in the past. We do live well now, and it doesn't have to be terribly expensive (right now we live on little more than one or our two modest salaries and have a great time), and while we've travelled extensively and continue to do so for around 5-6 weeks a year plus small weekend trips, I'd love to travel even more with her and really experience even more of the world. We don't need a ton of expensive luxuries or a big house, and we're both fine with deferred gratification and retaining things to look forward to, but I don't want to defer everything until I'm too decrepit to fully enjoy it. AIM 3. Be generous to family and friends, tip well for good service and donate money to highly effective charities doing great and rational things for the world, especially if they lack broad funding constituencies (thanks Warren, Bill and Melinda). Also pass on the benefits of being smart with money and living below your means to people I care about who might be receptive. AIM 4. Self-improvement and enjoying the game. Improving as an investor and a human being, lifelong learning. I enjoy the pursuit of investing and knowledge and self-improvement and I'd love to keep finding opportunities to outperform where possible. I have fun just continuing to learn and reading and thinking plenty. STRETCH AIM 5. Giving something back to the world. I'd love to find a niche where I can contribute or help talented people to contribute to the betterment of humanity in a substantial field or an important niche without taking such a risk that I could lose our financial independence or generate stress in our lives. I don't know what it will be, though it might involve an element of my applied physics and engineering background if the right idea comes along, but if we can generate a lot of surplus wealth we can afford to try risky things with potentially high returns and be a little entrepreneurial in the pursuit of worthwhile progress if it looks fun and fulfilling and not financially ruinous. I have no illusions of being a James Dyson or Gwynne Shotwell and revolutionising industries and humanity's capabilities through great engineering, but there might be something where I can contribute myself or recognise and fund others who can contribute something of value. It might even be that the best return comes from encouraging others to value intellectual, rational pursuits for the betterment of their lives and humanity. AIM 6. To change any and all of the above aims as the whim takes me and to change my mind if I decide I was wrong about something! That's what financial freedom and intellectual independence allows. I also hope I can retain optimism while maintaining healthy rational skepticism and that I don't descend into cynicism or start disparaging the 'youth of today' or the state of the world. I like the approach of Steven Pinker and the late Hans Rosling - realist optimists who see the bigger picture of how the world has been improving greatly for so many people in so many ways.

Yes, I would agree, John, that the SEC's FAQ seems quite explicit that the two classes are treated separately for calculating ADTV, and it's over the previous 4 weeks that ADTV is calculated (whatever precisely the previous 4 weeks means). But in any case, Berkshire isn't necessarily doing anything wrong if it exceeds 25% of ADTV on any class, especially if it makes a single block purchase on a trading day and no other purchases and thereby complies with Safe Harbor. Or if it engages in trading of a type that is clearly not possible to be construed as stock price manipulation it can happily venture beyond the Safe Harbor provisions anyway providing it complies with all the other rules about disclosure.

They only need to follow Rule 10b-18 if they want to obtain the Safe Harbor protections that come with it, but it's voluntary and you can deviate from those guidelines if you don't need the safe harbor protections. That link isn't fully comprehensive regarding what to do in the event of having two classes of shares, but the SEC's 10b-18 FAQ says that each class of shares must be treated separately. It also states that just because you exceed the trade outside of the safe harbor provisions, they will not assume that you are acting in a fraudulent or manipulating manner. In the amended 10b-18 rules they state: They detail the suggested amendments and the results of the consultation process, then outline the amendments they actually adopted: There had been a suggestion about allowing 500 share block trades even if they exceeded 25% of ADTV but I don't think this was adopted. So, first the average volume (ADTV) is over 4 weeks preceding the purchase (or possibly preceding the Monday of the week in which the purchase took place - you'd have to dig into the references to be sure). I think Berkshire will be careful not to be manipulating its own stock and to have evidence they are not in case of an investigation, even if they chose to deviate from 10b-18 provisions. They would be careful not to be deviate from rule 10b-18 safe harbor provisions if they're ever involved in any potential acquisition bids where they would pay partly in Berkshire stock and could be accused of inflating their stock to make their bid look more attractive. There are also amendments allowing a certain amount of repurchasing during Off Hours Trading at lower of the primary market's closing price and the lowest bid in the Off Hours trading provided they don't make the first OHT purchase after the close. There is scope to read the whole thing from the SEC, but I think we're clarifying the general picture and realising that Berkshire is quite at liberty to repurchase outside the scope of Rule 10b-18 so long as they do not act in any fashion that could be deemed to be stock manipulation or fraudulent activity if investigated by the SEC (in particular, activity aimed at artificially boosting the stock price above the fair value that would be arrived at by independent market participants. I'd imagine that buying at or below the independent bid and avoiding trading to near the open or close, would probably satisfy that.

It turns out that I had missed a line of USB (US Bancorp) last quarter, so in fact the position is unchanged this time

Thanks to a comment below a Seeking Alpha article about Berkshire's portfolio by Bower-Ranger I have now added Lanxess AG a German Chemical producer held via General Re AG at about a 5% stake since December 2017. As a non-US holding it won't ever be on the 13-F filings, but it's valued just over $250 million USD at recent prices, so it's worth including.

When I read this years Semper Augustus letter, I was again very impressed. That guy dives deep into the minutiae of the accounts and comes back up with some real nuggets of clarity. Well worth re-reading the last three annual letters, actually for Berkshire insights alone.

The new 13-F showing the portfolio position at 31st March has been published. As always the primary_doc mentions New England Asset Management (NEAM) under heading List of Other Managers Reporting for this Manager and as usual the 13-F for NEAM has a primary_doc which includes: List of Other Included Managers: No. Form 13F File Number Name 1 028-04545 BERKSHIRE HATHAWAY INC 2 028-04922 GENERAL RE CORP But this time, instead of "01 02" in the OTHER MANAGER column of the 13-F, they use "1 2", which is simply a change of formatting. The Berkshire holdings in NEAM's 13-F are not widely reported on. Only one change to their Berkshire holdings - the Berkshire position in VRSK Verisk Analytics is no longer present. Next quarter, we will see that USG is absent after the takeover by Knauf was completed. For now I'm leaving USG in there and have hard-coded the takeover price of $43.50 as the cash proceeds after tax will be invested by Berkshire or will add to their cash balance. Turning to Berkshire's own 13-F: AMZN Amazon is new 483,300 shares - currently worth around $0.9bn having risen about 5.1% since the end of Q1. I'd guess it's Ted Weschler's position, but it could also be Todd Combs, and each manages around $13bn. Warren Buffett says it's not his own. I have assumed it's not invested for the benefit of pension funds until we find out otherwise. CHTR Charter Comms has eliminated the position held for pension funds (was 244,445 shares) and also reduced the position for the benefit of Berkshire shareholders by about a million shares. DAL Delta Air Lines - as we knew when they accidentally went over 10%, they now have about a 10.4% stake. The exact amount was confirmed by this 13-F so I have zeroed-out the adjustment column I used in the mean time. JPM JPMORGAN CHASE & CO - a fairly substantial increase in stake. PNC PNC FINL SVCS GROUP INC - another increase of about 5% PSX PHILLIPS 66 - dropped by more than half. Possibly we'll find out it has all gone by 30th June. RHT Red Hat Inc increased about 20%. My guess is it's Ted, perhaps Todd. I imagine it's a merger arbitrage play and now trades close to the expected closing price to be paid by IBM. LUV Southwest Airls Co reduced slightly, probably to stay below 10% WFC Wells Fargo reduced as usual to stay below 10%. VRZN Verizon - this tiny 928 share position has now vanished. Here's the summary table: AAL_________ American Airlin…Group Inc ____unch _unchanged count AAPL________ Apple Inc._______________ ____unch _unchanged count AMZN________ Amazon Com Inc___________ _**NEW** _________483,300 AXP_________ American Express Co______ ____unch _unchanged count AXTA________ Axalta Coating …stems Ltd ____unch _unchanged count BAC_________ Bank of America…rporation ____unch _unchanged count BIT:CASS____ Società Cattoli…operativa ____unch _unchanged count BK__________ Bank of New Yor…llon Corp ____unch _unchanged count CHTR________ Charter Communi…tions Inc _-18.81% ______-1,322,788 COST________ Costco Wholesale Corp____ ____unch _unchanged count DAL_________ Delta Air Lines, Inc_____ ___8.20% _______5,375,456 DEO_________ Diageo P L C Spon ADR New ____unch _unchanged count DVA_________ DaVita HealthCa…tners Inc ____unch _unchanged count GHC_________ Graham Holdings Co_______ ________ ________________ GM__________ General Motors Co________ ____unch _unchanged count GS__________ Goldman Sachs Group Inc__ ____unch _unchanged count HCG_________ Home Capital Gr… (CANADA) ____unch _unchanged count IBM_________ International B…ines Corp ________ ________________ JNJ_________ Johnson & Johnson________ ____unch _unchanged count JPM_________ JPMorgan Chase & Co______ __18.55% _______9,398,538 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 LILAK_______ Liberty LiLAC Group C____ ____unch _unchanged count LSXMA_______ Liberty Sirius … Series A ____unch _unchanged count LSXMK_______ Liberty Sirius … Series C ____unch _unchanged count LUV_________ Southwest Airls Co_______ __-2.50% ______-1,198,186 MA__________ MasterCard Inc___________ ____unch _unchanged count MCO_________ Moody's Corporation______ ____unch _unchanged count MDLZ________ Mondelez Intern…ional Inc ____unch _unchanged count MON_________ Monsanto Co New__________ ________ ________________ MTB_________ M&T Bank Corp____________ ____unch _unchanged count NASDAQ:LILA_ Liberty LiLAC Group A____ ____unch _unchanged count ORCL________ Oracle Corp______________ ________ ________________ PG__________ Proctor and Gamble_______ ____unch _unchanged count PNC_________ PNC Financial S…Group Inc ___4.36% _________407,992 PSX_________ Phillips 66______________ _-53.32% ______-6,343,127 QSR_________ Restaurant Bran…ional Inc ____unch _unchanged count RHT_________ Red Hat Inc______________ __22.38% _________934,679 SHE:002594__ BYD Company Limited______ ____unch _unchanged count SIRI________ Sirius XM Hldgs Inc______ ____unch _unchanged count SNY_________ Sanofi (incl Eu…v shares) ____unch _unchanged count 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…td (ADR) ____unch _unchanged count TMK_________ Torchmark Corp___________ ____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 [color=green]USB_________ U.S. Bancorp_____________ ____unch _unchanged count (correction)[/color] USG_________ USG Corp_________________ ____unch _unchanged count V___________ Visa Inc_________________ ____unch _unchanged count VRSK________ Verisk Analytics Inc_____ -100.00% ________-241,695 VRSN________ VeriSign Inc_____________ ____unch _unchanged count VZ__________ Verizon Communi…tions Inc -100.00% ____________-928 WFC_________ Wells Fargo & Co_________ __-3.78% _____-16,965,129 WMT_________ Wal-Mart Stores Inc______ ________ ________________ I believe I've now updated both sheets to reflect the current known portfolio. The links in this old post will still work. As always, the holdings entered on the sheets are one-millionth of the total shares in issue as at 25th April, so the valuations and holdings of the company as a whole are expressed in $millions and millions of shares. If you copy the sheet for private use using File/Make A Copy... you can enter your own holdings of Class A and Class B shares and see the look-through exposure of your own Berkshire position. You can also convert it to your preferred currency.

In my opinion they positioned themselves well to be able to ignore calls for them to act now and to ignore people on the sidelines shouting Swing You Bum! The OXY preferred and warrants deal was a decent use of cash, but there's plenty of cash left. In my opinion the float liability offsets the cash balance almost exactly when the market is fairly high like now, so there's no real cash drag, they're just earning the return on their non-cash assets, and I'm happy for them to wait. And when the market falls seriously, maybe it a year or two, and prospective returns improve, there will be opportunities for some greatly value-enhancing deals like the OXY one and possibly even some large acquisitions, which would then be leveraged by the use of float-funded capital. I'm happy for them to keep waiting for the fat pitch and I'm happy for them to limit my downside risk so well while producing something around 10% compound growth in IV. I think many many others simply see the cash as a wasted opportunity, but I'm happy for them to be patient and just drip-feed it into suitable stocks while waiting for the fat pitches. I'm probably in the minority.

The 13-F must be filed 45 days after the quarter end, which means 15th May as April has 30 days (and 14th for all other months - Feb, Aug, Nov as the preceding month has 31 days) That form does not disclose the Berkshire Hathaway share count. The front page of the 10-Q quarterly results is where you'll find the share count as of 25th April, which is the latest known. (723,114 Class A + 1,368,243,498 Class B = 1,635,276.33 Class A equivalent or 2,452,914,498 Class B equivalent, economically). The 10-Q revealed approx 1,635,433 Class A equivalent at 31st March (roughly 2,453,149,500 Class B equiv) which one would use to calculate items such as Book Value Per Share. That's the best guide to recent repurchase activity we have. I hope to edit my thread regarding Look-Through Portfolio fairly promptly, but some of the news outlets will probably report on Berkshire's own 13-F before I get to it. Unlike me, other sources habitually ignore the New England Asset Management 13-F holdings (Other Manager Ref = "01 02" signifies Berkshire/Gen Re holdings there), which I include and they don't adjust for pension holdings or foreign holdings where known. The only holdings I know are going to be different from 31st Dec 2018 are: DAL Delta Air Lines - went over 10% accidentally so filed 13G and then increased to about 10.4%. WFC Wells Fargo - trimmed position to 423-424 million shares, as it is every quarter, to remain below 10% to avoid becoming a Bank Holding Company. Value to nearest $0.1bn was disclosed in 10-Q as $20.9bn at 31st March. The only top-5 position to change share count materially. AMZN Amazon - Buffett disclosed that Todd or Ted has bought some, so it's going to probably be a lot less than $13bn worth, as each of them manages about that amount of capital. My money would be on R. Ted Weschler, who I think was responsible for the initial stake in Apple according to an interview I once saw, but we won't know unless they happen to disclose it later. Also, we won't know for sure if any of this position will be for the benefit of pension fund beneficiaries rather than shareholders. USG - This will presumably show up in the 13-F but the takeover by Knauf completed after the quarter end around 24th April for $43.50 per share in cash in addition to the October 2018 dividend of $0.50.

Note 4 in the 2019Q1 10-Q results indicates that about 16.8 million shares of WFC were sold in the quarter up to 31st March 2019, as usual to ensure that ownership remains below 10%. I've modified the WFC holding accordingly so that the value of the holding at the 31st March closing price matches the reported stake. That is reported to the nearest 0.1 billion USD so I can only estimate to 3 significant figures right now, but better to roughly right than precisely wrong. When the 13-F comes out on 15th May we'll have the accurate shareholding and I'll remove that adjustment. The other major holdings shown in Note 4 of the 10-Q (AXP, AAPL, BAC, KO etc) appear to be unchanged as the quarter-close valuations match my figures when rounded to the nearest $0.1 bn.

Incidentally, I was looking at the Look-Through portfolio yesterday. Assuming the portfolio remains as it was last known (including the small reduction in WFC announced in the Q1 results note 4 to stay below 10%), since 31st March 2019, I think it has risen by +7.3% as of 6th May closing prices, versus +6.1% for BRK.B share price and +3.5% for S&P500 (or +3.6% for SP500TR). If you include KHC, the portfolio is up +6.9% from March 31st - May 6th.

Sorry, I didn't mean to imply criticism. WFC certainly hurt the equity portfolio. KHC hurt the earnings and book value but isn't accounted for as part of the equity portfolio's unrealised performance as it's accounted under the confusingly named Equity Method.