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Perfect boring, well run company for Berkshire to buy. Maybe someday..

Adding to Berkshire again this morning. Approximately $470 Billion market cap. Could see some opportunities if we really do enter a protracted bear

Thanks aws. It could be a bit worse than those numbers, of course, as we would presume that Warren continued buying certain financial stocks after quarter end. The big quarterly mark passing through the income statement will be announced when the annual report comes out - which tends to obscure focus on the 4th quarter alone. In any event, it will be a long time before that comes out. Berkshire is seen as decently defensive and that is probably why it outperformed some stocks during the recent market decline. I think Warren & Charlie pay a lot more attention to the valuation disconnect caused by their insurance and operating companies than the quarterly fluctuations in the stock prices of investees (most of whom are engaged in very large repurchase programs themselves). Here's hoping Berkshire can find a wholly owned subsidiary to add to the collection with this recent fade in enthusiasm and uptick in financing costs for leveraged buyers. I happened across a private company in Chicago called Reyes Holdings. What a gem - would fit perfectly into BRK but why would they ever sell...

This trading day disclosure (which is not required so it's curious that Warren is telegraphing this information) is how we arrive at the theory that there is a cap price and what their average daily purchase volume is on days they are in the market. I should add that a lot of what I post is my opinion, but it's not a totally uninformed opinion. Earlier there were a lot of folks saying Berkshire was going to be buying hand over fist and that just didn't jibe with what Warren has said and done over the years. If he gets some big block trades presented to him and he's not in a blackout period, he can act aggressively on those outside of this trading plan. He probably knows where potential big blocks of stock are - but someone has to want to part with it. If he can average $10 Billion of repurchases annually under this plan it is not going to make much of a difference, but it's better than nothing. We used to get excited when Berkshire announced a $10 Billion cash acquisition! Personally, if we stay below 200/b share I would love to see the company take in a ton of stock, but it would surprise me. Painting the tape into the end of the year is much more of a Biglari thing than a Buffett thing.

They don't have to set an absolute price. It can be a pretty involved formula or something as long as it is laid out ahead of time and not changed later. They can change their size up to a point. I just don't think they are so far. We'll see So for the 10b5-1 plan, they have to set an absolute price (what you call "cap") at or below which to buy and the size? And they cannot do anything fancy like relative price? And they cannot change the size either?

Yes, the amendment to the plan (removing the 1.2x rule) went into effect after the 2nd quarter earnings were released. The first trade was actually on Tuesday, so they waited an additional day to start - for whatever reason. But that was a one time delay. They didn't want to look like they had material nonpublic information (which of course they always have, but they are trying their best to be "fair") Going forward there are no blackout periods except the final few minutes of the trading day. So far this quarter, they might have repurchased something like $1.7-1.9 Billion of stock. If they moved the cap up to 218 or something like that, it would be a higher number because they would have been active on additional trading days. If BRK stays below whatever the cap is for the rest of December, the 1.7-1.9 billion number will continue to go up by approximately $66 million per day. That is my guess. We'll figure out more over time. Thanks for pointing that out for me, globalfinancepartners, But for 2018Q3 we discussed some time ago, that the new buyback scheme would not get effective untill a certain date in 2018Q3. Am I right that this date was the release date of 2018Q2 10-Q?

They were unusually specific about this: "Under the amendment adopted by the Board of Directors, share repurchases can be made at any time that both Warren Buffett, Berkshire’s Chairman and CEO, and Charlie Munger, a Berkshire Vice Chairman, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined." http://www.berkshirehathaway.com/news/jul1718.pdf Also - because it is a 10b5-1 plan, there is nothing but set a cap for Ted or Todd to do. The trading decisions have to be made by the broker without interference or they lose the safe harbor of the plan.

Just to be clear, there wouldn't be any blackout periods since they are purchasing under a 10b5-1 plan. And we know they are using that type of 'safe harbor' plan because they made repurchases subsequent to quarter end but before filing their 10Q with the SEC.

I would guess that they are repurchasing around $66 million per trading day that the price is below their cap. What we don't know is what the current cap price on the plan is, which means we can't estimate how many trading days they were in the market purchasing shares. We know they purchased some subsequent to quarter end and we know they continued purchasing shares when prices came back down. It is possible that the price cap on their repurchase plan stayed the same, at around 208 per share B share equivalent, in which case they would be active in the market only on days the B shares traded under 208. Or it could be that the cap is as high as 218 per B share or thereabouts (if it is based on a simple multiple of last reported book value), in which case they would have been active buying shares for more trading days and would have repurchased more shares. I do not think they are varying the buying under the plan with the price at 195 vs 207 per B-share. I think it is a target percentage of average daily volume with a price cap, executed as a 10b5-1 plan by a brokerage firm. Over time, we should be able to figure out if they based their cap on a simple multiple of last reported book value by looking at the number of days they were active in the market and the corresponding market prices on those days.

Greg Abel announcing the new CEO for Marmon. Not a surprise, but nice to see Greg is truly the direct report. https://www.citizentribune.com/news/business/angelo-pantaleo-will-assume-top-post-at-marmon-holdings/article_e648e29c-eff9-5322-b8f8-d27d4aab8115.html

glad y'all found the interview interesting. I definitely got some questions from my fellow jurors in criminal jury duty who were looking over my shoulder wondering why I was reading "RailwayAge" magazine... Last day of Jury Duty is today - unless they keep me on this child sexual abuse case that will last 3 days. Every single case I have been through voir dire on over the two week period has been some dude sexually assaulting a minor girl. Yuck.

good general overview and farewell from Matt Rose - some interesting stuff on the potential or lack thereof for rail mergers, etc --> https://www.railwayage.com/freight/class-i/matt-rose-less-is-not-better/

It seems like he is feeling his age more and more and stepping back quite a bit. Luckily he has created a structure that requires very little minutiae from him personally and he is still all there for the important bits. Charlie’s 50th anniversary letter captures the current situation quite well, although it would have benefited from an editor’s touch - http://www.berkshirehathaway.com/SpecialLetters/CTM%20past%20present%20future%202014.pdf

Various news reports out this morning talking about these potential Berkshire deals - "WARREN BUFFETT BUYS UP MAC INSURANCE BOOK The “Oracle of Omaha”, Warren Buffett, is looking for more business opportunities in South Australia after swooping in to acquire the insurance book of the Motor Accident Commission." - rest of article in The Advertiser is subscriber only, but it sounds like Ajit bought a book of business in South Australia. And also speculation without confirmation that Berkshire could be taking a stake in Kotak Mahindra Bank - https://www.businesstoday.in/current/economy-politics/buffett-berkshire-eyes-stake-in-kotak-mahindra-bank-report/story/298448.html and a denial by the company that there is anything to report: https://www.livemint.com/Money/wQ3oPQcsCilv1XC5HM1bYP/Kotak-Bank-shares-jump-8-on-report-of-Berkshire-investment.html

Ended up getting filled on a couple 200 strike Dec 7th puts for $1.00. 205s got filled at 1.80 and 2.15 Copied your trade but got filled at 1.80. Trying again at 2.15... Incidentally, CA wildfire claims looking like $20billion for the industry this quarter I'm now thinking about the 202.50 strike puts.

Copied your trade but got filled at 1.80. Trying again at 2.15... Incidentally, CA wildfire claims looking like $20billion for the industry this quarter

Clayton bought another traditional homebuilder. This one sounds like it is fairly large compared to some of their other bolt-on deals - https://markets.businessinsider.com/news/stocks/clayton-properties-group-acquires-mungo-homes-1027775617 https://www.builderonline.com/builder-100/berkshire-hathaways-clayton-strikes-again-landing-its-biggest-deal-yet-mungo-homes_o

Thanks - I had missed that

Hey, I'm wondering what happened to cause this company to move 20% in a day. Why did you decide to buy calls?

It was certainly unpleasant to watch! Nobody could catch... Amazing that they actually had a chance to tie the game towards the end before throwing yet another interception. Watching balls go right through Michael Thomas' and Alvin Kamara's hands is not my idea of a fun time

Pilot Flying J did a small deal - https://seekingalpha.com/pr/17344014-pilot-flying-js-pwt-makes-strategic-acquisition-equipment-transport-llc-strengthen-core

https://www.bloomberg.com/news/articles/2018-11-28/ge-s-money-pit-how-a-15-billion-hole-could-get-costlier-to-fix Bloomberg article on Culp's efforts to get rid of GE's toxic Long Term Care and other undesirable insurance liabilities still on GE Capital's books. Berkshire would charge a fortune to take on this business but I'm sure Ajit would be interested - at his price. "GE has also held talks with Warren Buffett’s Berkshire Hathaway Inc. about absorbing its insurance liabilities, two people said. “It’s very difficult to sell” these types of policies, said GB Taglioni, North American leader of Boston Consulting’s insurance practice. He declined to talk about GE’s situation specifically. “There have been a lot of sellers and there have been, up until now, very few buyers.” A GE spokeswoman declined to comment beyond recent filings and public comments, while Athene and Apollo also declined to comment. A Berkshire representative didn’t respond to requests for comment."

ugh. I am seeing this thread after drinking far too much wine last night while entertaining guests at the house. (Sauvignon Blanc, Marlborough region of New Zealand, too many bottles to count)

Seems the best deals will come in the near future. I did take advantage of a very limited time 15% off eBay code that worked until 8pm yesterday. I usually use eBay or the NYC photo stores to buy Mac laptops because sales tax is such a large number on a 2-3 thousand dollar purchase. I was able to buy a 2018 MacBook Pro i9 with 32gb of ram tax free on eBay and apply the 15% off code, which resulted in a very attractive price (the best i’ve seen at least). Friday and Monday should have some good deals, just make sure you know what you are getting. Big box stores will sometimes do a special low cost run of a TV that differs just a little bit to get the price down. To follow the news you would think poor Apple is about to go out of business so please everybody- send some of your holiday dollars their way. Its getting dire in Cupertino

Really good posts guys. Thanks I found it funny re: blackberry that as soon as I read your post about the primary risk being that they do an unwise acquisition, I flipped over to the news wire where they had just announced a $1.4 Billion all cash acquisition. Not saying it's unwise, I haven't the faintest idea. https://www.cnbc.com/2018/11/16/blackberry-to-buy-cybersecurity-firm-cylance.html