gfp
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Posts posted by gfp
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Another article on Howard - this one is a bit more balanced
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Thanks for the rec on Russian Doll - I enjoyed it and never would have checked it out otherwise
I just binged Netflix' Russian Doll. Dang that was far better than I'd expected.
I agree. When I started watching it I was thinking that there was a 80% chance it was going to be stupid and I wouldn't get through 2 episodes. I'm glad I gave it a chance, it was a pretty good show. Like groundhog day only darker with a better story.
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I don't think US GAAP requires amortization of Goodwill since 2001 or so.
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And perhaps c) Reminder that not all decisions/actions of Berkshire are made at Omaha office, now including capital allocation decisions.
Yeah - “Warren Buffett daytrades in and out of Oracle!” “The Oracle of Omaha abandons Oracle!”
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I agree to some extent that it is unusual and unnecessary. If I had to guess I would guess that: a.) He doesn't like the press running with false headlines about him that other, less sophisticated, investors might make investment decisions based on - and b.) He feels some desire to show he supports Tim Cook at Apple, and is not 'pulling a Ginni Ronmety' on him...
Debbie Bosanek confirmed to CNBC that the small amount of AAPL stock that was sold was attributable to Ted or Todd. Could have been pension shares, since that is a big part of what they manage.
https://www.cnbc.com/2019/02/15/berkshire-trimmed-its-apple-stake-but-it-wasnt-buffett.html
It’s concerning to me that Buffett replied to a request for comment, when does he ever do that, especially regarding the stock portfolio?? Is he planning on selling Apple shares and wants to hold the price up? Why wouldn’t he want people to think that he himself is reducing shares? Presumably he’d only benefit if the stock drops due to repurchases or him buying more.
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Yeah we don't know if its a static / manually adjusted price cap on the plan. We'll probably be able to reverse engineer the plan rules after a few more quarterly disclosures. It could very well be that the cap is based on a multiple of last reported BVPS.
Warren would be willing to buy big blocks of shares outside the broker-executed plan when he's not in a restricted period. For the automatic plan, he really doesn't want to affect the trading price of the stock much - or establish any type of "floor."
Upon reading this thread, some points make me raise a few questions:
1) 208 price cap: why would the cap have stayed the same? My guess is he updates the number every quarter, either in an automatic fashion or not. My guess would be a roughly 2% increase every quarter, which would amount to an 8-9% IV increase every year
2) 10% volume cap: why should it be static? It would be much more Buffett like say: 0-10% discount to IV, buy up to 10%, 10-15%, up to 15, 15-20, up to 20%, ovee 20% discount go all in to the 25% limit.
I guess we might soon know some of the answers.
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Good stuff - thanks for posting the entire interview
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Debbie Bosanek confirmed to CNBC that the small amount of AAPL stock that was sold was attributable to Ted or Todd. Could have been pension shares, since that is a big part of what they manage.
https://www.cnbc.com/2019/02/15/berkshire-trimmed-its-apple-stake-but-it-wasnt-buffett.html
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Hey Dynamic - Seems like the totals add up to me. The Berkshire 13F reports 249,589,329 shares and the 13G reports 255,300,329 shares (Berkshire's actual total economic interest). The difference is the same 5.711 million shares in New England Asset Management that Berkshire is the ultimate owner of.
Berkshire's 9.30 quarterly filing shows $57.6 Billion AAPL at a closing price of 225.74, which pencils out to just about the same: 255.16 million shares - discrepancies which could be due to "57.6 Billion" not being an exact number.
No big change in Apple shares that I can see. Could be one of the original T's trimmed their position at near all time highs, or it could be something else.
(No big changes inside General Re NEAM this quarter - a few shares of WFC sold and continued selling off of Verisk, which Buffett never actually "bought" per se)
There were a ton of 13G filings too all as at 31 December 2018 which I've just been through. Very helpful in backing out pension fund holdings and checking my totals before I publish my look through sheet update Also they express the control stake as a percentage of known outstanding stock for each holding that has a 13G
The Apple holding on the 13G is higher than the total of NEAM and Berkshire 13-F filings, whereas for most holdings it is exactly the total. Previously I had assumed a bunch of the holding was pensions as it didn't show up in the annual report total. Now I'm not sure if it's only barely down far less than 1% or whether the holding attributable to shareholders shown in the annual report next week will differ. For now as the Apple 13G at the top of the list of SEC filings doesn't include any pensions I'm assuming it needs an upward adjustment from the 13F totals, keeping the total Berkshire holding almost constant.
I guess with Apple reaching such high valuations in October, its possible a pension scheme decided to sell it and use the proceeds elsewhere, but it's also possible it wasn't sold after all and there's something different about the 13-F filings now.
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Thanks for the spreadsheet dynamic. Looking forward to seeing Berkshire's 13F at the end of the week - I guess Friday evening?
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Thanks for that link DD - a great summary of BHE and it's always nice to relive the "failed" Constellation Energy deal. So BHE can get enormous and so far has accomplished 16% for their owners. Charlie seems happy with it
The history of BHE is interesting.
The fact that they can invest more heavily than dividend paying competitors should make them a powerhouse (pun intended.)
https://berkshirebuffettandbeyond.com/2019/01/28/outsized-returns-in-a-regulated-industry/
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I don't see renewal dates being an issue. It is not uncommon to cancel insurance policies and receive the pro-rated premiums back as a refund. It happens all the time when an asset is sold or you decide to switch providers.
I should also note that 'three page policy' is a marketing / branding thing and the actual legal contract for several types of specific business insurance that passes muster with each state regulator will be pretty standard (and long).
But what they say and market in those three pages can say a lot about the company and how plainly they wish to spell out 'the deal'. Hopefully this marketing message is a hit, as Berkshire has been trying this GEICO-for-small-biz-insurance for a while now and it has remained tiny. First it was "coveryourbusiness.com" - then "biberk.com" - bi for 'business insurance - and now "threeinsure.com" with a cool new Nebraska logo and the prominent Berkshire Hathaway brand.
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Berkshire continues to go after the primary insurance business with the launch of a new product called "THREE" that features a "three page policy" for small businesses covering workers comp, multiple liability coverages, property & auto.
https://www.businesswire.com/news/home/20190211005143/en/Big-News-Small-Business-Berkshire-Hathaway
www.threeinsure.com
- most interesting to me is that this is being launched under the Berkshire Hathaway name, not any of the existing primary companies in this space, like GUARD, BHSI, the various 'home state' companies, etc. This one is all Ajit!
(this is the current offering direct offering - the new one will be a big marketing push to take share in this space)
https://www.reuters.com/article/us-berkshire-biberk-idUSKBN18528N
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These all expired worthless. Was able to get as much as $1.10 on Friday, hours before expiry.
Channelling my inner Boilermaker and selling a few Feb 8th 2019 expiry 200 strike put contracts on BRK.B for fiddy-cent
(cue stock market collapse)
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They are both in the reinsurance industry. I doubt Charlie was buying BRK for any Munich Re look-through. As you mention, BRK may not own any Munich Re anymore. BRK's most recent European insurance investment that I can remember was a major stake in Italy's Cattolica insurance group.
I bought some Berkshire shares. Munich Re reported good reinsurance profits.Charlie,
Berkshire went under the 3 percent threshold on its position in Munich Re on December 16th 2015, and the stub was likely sold shortly afterwards.
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Thanks to all of you - it certainly is easier to find specific bits of information you are trying to remember than it used to be
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Hard to say what is better for shareholders. But Berkshire isn't going to repurchase stock aggressively unless it gets really cheap. The current plan takes in 5-10% of the average daily volume on days the stock is below a cap price. The current plan takes in 10% of ADV as a target, but actually was something like 11% on the B-shares for the 11 actual days they were active. Harder to calculate on the A-shares because they traded at a premium to the B's during the 7/7-7/24 period, and may not have had the same cap. It allows them to be active during what would otherwise be blackout periods and it accomplishes Buffett's goal of not manipulating the share price (much).
If he got some big blocks of stock offered to him he would probably take them. But those seem infrequent, so this slow dribble of - at best - less than $4 Billion per quarter will probably be all we get.
I estimate Q4 repurchases were somewhere between $1.5 Billion and $2.7 Billion $2 Billion and $3.5 Billion, depending on how they figure the cap price. I would expect that they continued share repurchases subsequent to quarter end as well, which we will be able to tell when they file the 10K with a share count as of mid-Feb.
Which one is better for shareholders?
Co buying back aggressively, say $10 B over the past quarter? Then wait for another opportunity to buy aggressive ly?
“A little” like a couple of billion a quarter for 10 years?
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Fairfax has nothing to do with it guys. Here is a primer on unsponsored ADRs
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Channelling my inner Boilermaker and selling a few Feb 8th 2019 expiry 200 strike put contracts on BRK.B for fiddy-cent
(cue stock market collapse)
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Just every time the CEO talks about his exit strategy for his investment, which is practically every earnings conference call, he mentions the comps that he looks at as acquisition candidates are all valued at 3-3.2x net revenues on an enterprise value basis. He convinced Biglari to hold off on forcing the Put deal at $6 until April next year. $6 per share is $45 million. Sardar isn't a charitable guy.
Here's a recent one, but there are several like this one. Also mentions by the CEO that he's not getting any younger and 'doesn't want to be hanging around this place forever.' He's old, rich, and running this company is no fun. He's going to sell it.
Now, most of these calls, I look a lot at the interim performance as much as I look at the macro issues that affect enterprise value. We continually to look for acquisitions and every time I look or bid or do due diligence, I keep coming back to valuation numbers that is 3 to 3.2 times net sales and we think we’ll end the year at one level and we’ll see how would we -- what we expect the year end net sales. Net sales went up. What we came with let’s see?Stephen Heit
Now, we expect net -- our expectations of net sales for the year, is about approximately $17 million.
Lance Funston
Okay. So if you want to do to math -- if you do the math that 3.2 seems to be the current multiple of $17 million you should use for total enterprise value and that’s well above any stock price we’ll have in the interim. But that gives me a lot of comfort, but may not give you comfort, I feel like I'm in a good investment, I'm happy with it.
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Yeah - who knows why people think it's worth $17 million on an exchange and $13 million over the counter, but I got really interested today. I still think this company gets sold by next April. And I think they sell it for $50 million give or take. I wonder if they will quantify how much they believe SEC reporting is costing them beyond what publishing simple financial statements on their website will cost. SG&A is $2million a quarter so there may be a material savings. I owned some going in to today at $2.20 average cost. But I own a lot more coming out of today.
7.46 million shares outstanding. CEO has a bunch of his family's capital tied up in it and is getting old and tired. Sardar's put extension buys them a bit over a year of time.
Wow..stock was down 25% on delisting news.
CCA Industries, Inc. Announces Plan to Delist from NYSE American and Deregister Its Common Stock $CAW https://seekingalpha.com/pr/17402726
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This announcement from last year discusses Ajit's unsolicited offer to take over MAC's (South Australia's Motor Insurance company) run-off book. The offer was only good on a private, exclusive, no-bid basis. Doesn't say the premium or float asset/liability transfer, but it is over $300 million, since $300m of the insurance premium paid will remain in Australia, $100m will remain for at least 5 years.
https://premier.sa.gov.au/news/warren-buffett’s-berkshire-hathaway-expands-into-south-australia
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If you liked Get Out (as I did) and Lakieith Stanfield (as I do) - he's in 'Get Out' and hilarious in 'Atlanta' - you might enjoy a movie we saw over the holidays called "Sorry to Bother You."
Written and directed by Boots Riley, a first time filmmaker, it is pretty entertaining for a debut. It's not polished like 'Get Out' though.
My Brother-in-law is one of those voting/nominating members for the film awards shows, so our family holidays have become a kind of mini film festival with 20-30 academy screeners to watch over a few weeks time. Really great to see stuff I wouldn't otherwise get to the theater to see.
Movies:
Get Out - Pscyhological Thriller that is so Intelligent - the twist at the end is a neat surprise worth waiting for
Imitation Game - biography of Alan Turing - using math and computers to solve encryption in war time; role of homophobia in recent history
TV Series:
Breaking Bad - Plot of a generally good, very bright individual trying to help his family that crosses a fine line and evolves into another character; great exposure to societal price of illicit drugs and effects on young, old, men and women; good musical score; Worth watching entire series second time
True Detective - Season 1 - Takes about 10 episodes to solve the crime - so not all neatly tied up in 1 hour like a usual TV series. Season 2 is completely different story and not in the same Class. The redeeming feature of Season 2 is the music of Leonard Cohen.
Silicon Valley - Comedy/Drama of life as a start up company in Silicon Valley
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Thanks for the post John. Always interesting to read Mr. Bloomstran's thoughts, even if dated.
Takes me back to the beginning of 2016! A lovely time to be a buyer indeed. I think quite a few of us BRK-nerds were happily buying low-premium in-the-money LEAPs at the time. I guess some of you wild folks were even more aggressive..
It is odd that, even back in 2016, Bloomstran through the railroad wasn't paying out dividends to BRK, and relied on STB filings when BNSF has always filed individually with the SEC.
Annual Letter 2018
in Berkshire Hathaway
Posted
You think he might top out at $10 Billion worth of BRK share repurchases per year because of regulatory limits? Why?