gfp
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This list shows the gist of how much the Gates foundation sells on a daily basis, for those who are curious -
https://www.sec.gov/Archives/edgar/data/902012/000110465918046338/a18-17436_1ex99d1.htm
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Can you give us the link to the proper place to answer questions about Berkshire’s weighting in the S&P 500 please? Seems fairly general but if it must be in a dedicated thread so be it
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I don't know the answer to your question - since most of the shares end up sitting in the Gates foundation for quite a while they might not consider them to be much of an increase in free float right away. Over time, though, Berkshire will get higher and higher weighting in the index. It already is a big contributor to most days' price moves since many BRK shares outside of indices just sit there with capital gains nobody wants to realize.
You do have to appreciate what the timing of the two announcements says about Warren, though... He could have easily made the announcements in the reverse order. His charitable gifts would have been larger. But he would never do that and it doesn't really matter. He can't use the deductions anyway
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I found this post from Geoff Gannon in 2010 that summarizes S&P's methodology -
"According to S&P Float Adjustment Methodology:
In cases where holdings in a group exceed 10% of the outstanding shares of a
company, the holdings of that group will be excluded from the float-adjusted count of
shares to be used in index calculations.
The "groups" they are talking about include current and former officers and directors as well as Foundations. As I understand it - and I may be wrong here - this means shares given by Buffett to the Gates Foundation wouldn't change float in S&P's eyes until Gates Foundation sells shares.
You can read the whole document if you google "S&P Float Adjustment Methodology" and click on the PDF."
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Rational thinkers they are, what would have lead them to pull the trigger on buybacks right now? Can think of a couple of things,
1. For every deal that comes across their desk, they found BRK stock a better deal. With what is “knowable “
2. Their intent to buy in shares has been denied by the market. They may never be able to, with pre-announced thresholds.
3. They like single block purchases and with a number of estates to be settled over the coming decade, the threshold is an obstacle to making rapid decisions when such deals present themselves.
Seems like Charlie wanted to do this for a while. They are also likely to report a pretty big headline number for consolidated cash balances in the next report, with more criticism of "swing you bum."
One upside of having a board of directors full of experienced investors who personally own material amounts of stock is that they prefer this route (growing per share intrinsic value, even if it means "shrinking" the company) to growing the empire at all costs.
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Yeah, Bizaro had it right - a flexible plan is the only way they actually get a meaningful repurchase done. Sadly, they won't be buying until August (if the price stays low) -
"Berkshire will not initiate any share repurchases under the amended program until it publicly releases its second quarter earnings, currently scheduled after the close of the markets on Friday, August 3, 2018."
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I think Kerrisdale manages a lot more money than you are assuming.
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Since Wattles was from Omaha it is likely that Warren's Father was aware of his career and stories, as well as being members of civic groups and clubs for prominent Omahans - even if they were not contemporaries. Also, his career would have been covered in the local newspapers.
My Sister-in-Law had her wedding at the Wattles Mansion in Los Angeles. I was trying to remember why that name sounded familiar and I suppose it is from the Snowball mention.
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Bolt on of unknown size (likely small) at TTI ->
https://www.electronicsweekly.com/news/business/532037-2018-07/
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Clayton Properties picked up another traditional homebuilder. This one in Indianapolis ->
http://www.insideindianabusiness.com/story/38565239/tennessee-company-adds-major-hoosier-homebuilder
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Correct, wiggles in KHC share price will not effect our carrying value unless they do another deal that involves BRK's ownership percentage changing. BRK had to mark up their carrying value for KHC in connection with the Kraft merger because for GAAP purposes when your ownership goes from 52% to 26% or whatever the net result was, they treat it as if you sold a proportional piece of your position at the merger price (not for tax purposes obviously).
Wiggles in other stocks in the portfolio will now pass through the income statement, and always were reflected in carrying value (net of their deferred tax liability).
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You have the gist right on KHC. It is not consolidated technically, it is accounted for under the equity method. The effect is the same for your purposes though. Berkshire's share of the earnings are already included without the need to 'look-through.'
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It took me quite a few years of reading before I finally started buying BRK (began watching i
I've shifted my philosophy from trying to find upside (a dubious endeavor for me), to Howard Marks "downside protection", and in this respect, Berkshire is the only company I understand well enough to feel comfortable with.
+1
I came to that conclusion as well between 2009 and 11. After messing around with lesser names and ideas. Downside protection for the really long term is rare. My conclusion is that they simply don’t exist elsewhere. Not just that I cannot find them. The secret is to have lower expectations while taking the downside protection.
You have a huge leg up on me in that you’re doing this as a student. Mine happened in my middle years and the messing around cost me. No big regrets, pleased that I learned that then, not now or later.
Good luck to us.
Students come in all ages. DooDiligence is in his mid 50's or something like that
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longinvestor,
So you mean rinse and repeat yearly for all those A-shares earmarked for the Gates Foundation to be converted to B, donated to Gates Foundation and then sold back to Berkshire for Berkshire cash?
So the Gates Foundation owns about 58 million B shares today. Warren converts his A-shares to B-shares before he gives them away. Over time there will be fewer and fewer A shares, as designed.
The Gates Foundation will continue to receive a shrinking number of shares, but very possibly not a shrinking dollar amount, annually, continuing a decade or so after Warren's death and they will at some point after his death receive the balance of his public bequest to them.
I don't think Berkshire and the Gates foundation will do a block transaction even though I can't personally find an ethical problem with it. It is very possibly not what is best for the foundation, which has special permission to dispose of BRK.B shares much more slowly than they are technically required to by law. So their special dispensation allows them to hold $11 Billion and growing of BRK.B shares, which is probably a pretty great asset for a foundation like theirs.
But never say never. Anyone with a material sized block of stock should phone Omaha if they want to sell to the mothership on the cheap
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One of the key points is that all of these re-powering deals (NextEra is doing a lot of them as well) are gaining eligibility to re-start the production tax credits with today's date. It's a substantial enough rebuild/replacement that it basically counts as a new wind farm after you're getting closer to the end of your original production tax credit period for the old equipment. Also, of course, the new equipment is much larger and generates more power on land you already have control of, infrastructure already built, etc..
- and because of the phase down of tax credits, 2018 is the year you will see the equipment ordered for almost all of the next several years of projects
Repowering order from PacifiCorp to Vestas Wind Systems.
Quite amazing that it's optimal to scrap nacelles and blades after only approx. 11 years of operation, to get better performance. It says a lot about how the technology in this industry is advancing over time. [Mentioned by Uccmal before here on CoBF.]
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Eurobank US pink sheet shares traded down to .45-.46 this morning on higher than usual volume. Picked up shares at .455 and .46
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I'm sure Warren would love to have places to put money that would soak up the excess capital and force some long-held stock position sale decisions, but most of the time the question is - if I sell AXP or KO, then what? Sell them to do what with the capital?
AXP and KO might sound like pieces of shit to some folks, but last time I checked they both consistently earned 20-30% return on equity, and the longer you are in a business the more that basic figure matters to your outcome. How much does this company earn on the actual capital tied up in running the thing, and how sustainable is that.
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Just to address the question of BRK’s Kraft Heinz cost basis, it is $9.8 Billion. Not 17. See annual report
$4.25 Billion for original Heinz equity, $5.26 Billion for Kraft deal [this is $9.51 but has been reduced by cash dividends I assume]
$8 Billion Heinz pref, paying $720 million per year for 3 years, $300 million redemption premium in 2016.
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Have you decided there is a 4% return here? Or is that based on some arithmetic? I don't own American Express stock, except I suppose indirectly through my Berkshire shares. My wife and I use a Chase Sapphire Reserve Visa as our primary card, and I am happy with them. But with a quick look I see a stock trading a few bucks shy of an all-time high, at $96.96 per share, which will earn about $7.10 per share in net eps this year. 13.6x earnings at an all time high with a bit of a brand and market position with high spending card users, an established share repurchase program. Doesn't seem egregious but I don't own it so what do I know? If I had a block with a huge deferred tax liability and my percent ownership of the company kept marching upward I don't think I would be stressing about 13x earnings at an all time high market price.
Does AXP have a "truly egregious valuation" ?
Not if you are happy owning a company with 0 revenue growth and a 4% return. Not going to get rich owning stocks like AXP. Maybe you stay rich, maybe not. People view AXP as no risk and are valuing the equity like a bond. Well, owning perpetual bonds in a rising interest world is a great way to destroy purchasing power. As interest rates go up, that 4% return looks worse and worse and will be re-priced.
If that's your idea of a good investment, then enjoy your returns. I'd rather earn 2% in a savings account than own AXP. It's the opposite of what I want in a stock: limited upside and big downside if the price falls or earnings falter. AXP has been complacent for years because it just kept cashing the checks each month. Now they have a luxury product that is losing appeal and facing increasing competition, at the same time that growth has stalled out for years.
Where's the margin of safety? Just that the checks are rolling in each month? I seriously can't believe how many investors are happy with 4%! 4% is a horrible return!
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Does AXP have a "truly egregious valuation" ?
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Must be some kind of compound interest nonsense
Not sure why so many people are buying brk.b - at this point brk is an S&P hugger and they both have the same 1 and 5 year returns. Plus, there's probably downside if WB kicks it.
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It was run thorough Fetcheimer Brothers. They may have just decided to shut it down.
Anyone know why its website is done?
Will it ever get back up?
Maybe it’s not generating the 15% ROE hurdle rate required by Buffett? :)
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You made $21/ hour pretax as an attorney??! Yikes!
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WSJ is running a good article on NextEra Energy, in case people have missed it the last couple days -
https://www.wsj.com/articles/how-a-florida-utility-became-the-global-king-of-green-power-1529331001
Re: Promoting a blog that I follow
in General Discussion
Posted
All these bird shots are awesome - thanks guys. Boiler, your shot reminds me of my Son's story from his first couple days in Alaska (he gets back Tuesday from 3 months in the Aleutian islands & Bering Sea). My kid had never seen a bald eagle in person before (he grew up in Oaxaca Mexico). He was pole fishing off the dock his first couple days up there this Summer and caught a bunch of rockfish. He pulls his first big rockfish out and right as he gets it off the hook a huge bald eagle comes in a steals it right off the ground inches from him and flies away with the huge fish still wiggling in the eagles mouth. It was definitely a 'welcome to alaska' moment for him...