Graham Holdings

[Ham Hockers]

This is interesting, particularly if it allows Berkshire to avoid the tax bill that would be paid if they sold the stock. From today's 13D:

 

The Issuer is discussing with Berkshire the possibility of Berkshire acquiring an as yet unformed subsidiary of the Issuer, which would own a business and would own certain other assets to be determined but which may include shares of Berkshire common stock owned by the Issuer, in exchange for all of the Reporting Persons’ shares of Class B Stock in a transaction that would be structured to be a tax-free split-off. Berkshire and the Issuer have not agreed on any terms for such a transaction, and may not reach any such agreement. In particular, while Berkshire believes that such a transaction could be viable based on a valuation of Class B Stock and Berkshire’s common stock at prices prevailing on the date of this Amendment No. 8, a change in such prices may cause such a transaction to no longer be viable. Substantial other issues would also need to be resolved to proceed with such a transaction. If Berkshire and the Issuer do determine to enter into such a transaction, Berkshire believes that the transaction and related definitive agreement would be subject to approval by the Issuer’s board of directors, which to Berkshire’s knowledge has not yet considered any such transaction. Berkshire does not expect any transaction to be agreed upon unless the transaction will be of substantial economic benefit to both parties.

 

If a transaction of the sort currently being discussed is not concluded, Berkshire or entities within the Berkshire group of companies may determine to acquire additional shares of Class B Stock, depending upon the performance of the Class B Stock in the market, market and general economic conditions, evaluation of alternative investments, price, availability of funds, and other factors, or may determine from time to time to sell some or all of its Class B Stock, based upon the same set of factors.

 

 

[Ham Hockers]

Sorry, this was a little cryptic. This is from the 13D filed by Berkshire for their holdings of Graham Holdings (FKA The Washington Post)

[valueinvesting101]

Filing Link:

 

https://www.sec.gov/Archives/edgar/data/104889/000119312514048161/d674993dsc13da.htm

[valueinvesting101]

It looks like Graham holding pension plan hold around $228mn of Berkshire stock. Buffett may swap these pension plan assets for stake in Graham holding. It might involve entire portfolio of the pension plan.

 

Here is excerpt from SEC filing of Graham holding.

 

Essentially all of the assets are actively managed by two investment companies. The goal of the investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both of these managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. The investment managers cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway or more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval by the Plan administrator. As of September 30, 2013, the managers can invest no more than 24% of the assets in international stocks at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. None of the assets is managed internally by the Company.

 

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks. 

 

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of September 30, 2013. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At September 30, 2013 and December 31, 2012, the pension plan held common stock in one investment that exceeded 10% of total plan assets. This investment was valued at $389.3 million and $223.1 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 11%, respectively, of total plan assets. Assets also included $228.6 million and $179.9 million of Berkshire Hathaway common stock at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, the pension plan held investments in one foreign country that exceeded 10% of total plan assets. These investments were valued at $406.4 million and $240.4 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 12%, respectively, of total plan assets.

 

Is it saying pension plan held investment which increased from $223mn to $389mn in 9 months? I wonder which one that would be. Mostly some large cap.

 

Also structure of this transaction will point to Buffett's valuation of Berkshire. I think it was good bargain below 109 and still not very far from it.

[Ham Hockers]

 

Is it saying pension plan held investment which increased from $223mn to $389mn in 9 months? I wonder which one that would be. Mostly some large cap.

 

 

Could have added to the position, it's not clear it's all performance gains.

Could be anything. WPO itself increased 67% over that period.

[A_Hamilton]

It looks like Graham holding pension plan hold around $228mn of Berkshire stock. Buffett may swap these pension plan assets for stake in Graham holding. It might involve entire portfolio of the pension plan.

 

Here is excerpt from SEC filing of Graham holding.

 

Essentially all of the assets are actively managed by two investment companies. The goal of the investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both of these managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. The investment managers cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway or more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval by the Plan administrator. As of September 30, 2013, the managers can invest no more than 24% of the assets in international stocks at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. None of the assets is managed internally by the Company.

 

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks. 

 

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of September 30, 2013. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At September 30, 2013 and December 31, 2012, the pension plan held common stock in one investment that exceeded 10% of total plan assets. This investment was valued at $389.3 million and $223.1 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 11%, respectively, of total plan assets. Assets also included $228.6 million and $179.9 million of Berkshire Hathaway common stock at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, the pension plan held investments in one foreign country that exceeded 10% of total plan assets. These investments were valued at $406.4 million and $240.4 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 12%, respectively, of total plan assets.

 

Is it saying pension plan held investment which increased from $223mn to $389mn in 9 months? I wonder which one that would be. Mostly some large cap.

 

Also structure of this transaction will point to Buffett's valuation of Berkshire. I think it was good bargain below 109 and still not very far from it.

 

Valeant Pharma. Sequoia is one of the two managers of the pension plan and Valeant has been a grand slam home run for them.

[Ham Hockers]

It looks like Graham holding pension plan hold around $228mn of Berkshire stock. Buffett may swap these pension plan assets for stake in Graham holding. It might involve entire portfolio of the pension plan.

 

Here is excerpt from SEC filing of Graham holding.

 

Essentially all of the assets are actively managed by two investment companies. The goal of the investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both of these managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. The investment managers cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway or more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval by the Plan administrator. As of September 30, 2013, the managers can invest no more than 24% of the assets in international stocks at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. None of the assets is managed internally by the Company.

 

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks. 

 

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of September 30, 2013. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At September 30, 2013 and December 31, 2012, the pension plan held common stock in one investment that exceeded 10% of total plan assets. This investment was valued at $389.3 million and $223.1 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 11%, respectively, of total plan assets. Assets also included $228.6 million and $179.9 million of Berkshire Hathaway common stock at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, the pension plan held investments in one foreign country that exceeded 10% of total plan assets. These investments were valued at $406.4 million and $240.4 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 12%, respectively, of total plan assets.

 

Is it saying pension plan held investment which increased from $223mn to $389mn in 9 months? I wonder which one that would be. Mostly some large cap.

 

Also structure of this transaction will point to Buffett's valuation of Berkshire. I think it was good bargain below 109 and still not very far from it.

 

Valeant Pharma. Sequoia is one of the two managers of the pension plan and Valeant has been a grand slam home run for them.

 

That's a good guess. Matches the reported gain.

[A_Hamilton]

It looks like Graham holding pension plan hold around $228mn of Berkshire stock. Buffett may swap these pension plan assets for stake in Graham holding. It might involve entire portfolio of the pension plan.

 

Here is excerpt from SEC filing of Graham holding.

 

Essentially all of the assets are actively managed by two investment companies. The goal of the investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both of these managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. The investment managers cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway or more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval by the Plan administrator. As of September 30, 2013, the managers can invest no more than 24% of the assets in international stocks at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. None of the assets is managed internally by the Company.

 

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks. 

 

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of September 30, 2013. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At September 30, 2013 and December 31, 2012, the pension plan held common stock in one investment that exceeded 10% of total plan assets. This investment was valued at $389.3 million and $223.1 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 11%, respectively, of total plan assets. Assets also included $228.6 million and $179.9 million of Berkshire Hathaway common stock at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, the pension plan held investments in one foreign country that exceeded 10% of total plan assets. These investments were valued at $406.4 million and $240.4 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 12%, respectively, of total plan assets.

 

Is it saying pension plan held investment which increased from $223mn to $389mn in 9 months? I wonder which one that would be. Mostly some large cap.

 

Also structure of this transaction will point to Buffett's valuation of Berkshire. I think it was good bargain below 109 and still not very far from it.

 

Valeant Pharma. Sequoia is one of the two managers of the pension plan and Valeant has been a grand slam home run for them.

 

That's a good guess. Matches the reported gain.

 

Also, I don't think this has anything to do with Buffett having a love affair with any of WPO's assets at this point. Kaplan has been a stain and a strain on the Gates' and his relationship . Melinda Gates resigned from WPO's board, Buffett resigned and I think he just wants to get away from for-profit ed.

[Ham Hockers]

Agreed. I think it's a tax efficient way to get out of the stock, same as what they did with Philips 66 last year.

 

And a good reason to add back some of the deferred tax liability on the balance sheet when looking at Berkshire's book equity.

[gfp]

Graham Holdings' pension fund has the BRK shares you are describing, but don't forget that Graham Holdings directly owns about $423 million (at current price) in additional BRK.A & B shares as an investment.  There is an opportunity for a great stock swap here.

 

 

It looks like Graham holding pension plan hold around $228mn of Berkshire stock. Buffett may swap these pension plan assets for stake in Graham holding. It might involve entire portfolio of the pension plan.

 

Here is excerpt from SEC filing of Graham holding.

 

Essentially all of the assets are actively managed by two investment companies. The goal of the investment managers is to produce moderate long-term growth in the value of these assets, while protecting them against large decreases in value. Both of these managers may invest in a combination of equity and fixed-income securities and cash. The managers are not permitted to invest in securities of the Company or in alternative investments. The investment managers cannot invest more than 20% of the assets at the time of purchase in the stock of Berkshire Hathaway or more than 10% of the assets in the securities of any other single issuer, except for obligations of the U.S. Government, without receiving prior approval by the Plan administrator. As of September 30, 2013, the managers can invest no more than 24% of the assets in international stocks at the time the investment is made, and no less than 10% of the assets could be invested in fixed-income securities. None of the assets is managed internally by the Company.

 

In determining the expected rate of return on plan assets, the Company considers the relative weighting of plan assets, the historical performance of total plan assets and individual asset classes and economic and other indicators of future performance. In addition, the Company may consult with and consider the input of financial and other professionals in developing appropriate return benchmarks. 

 

The Company evaluated its defined benefit pension plan asset portfolio for the existence of significant concentrations (defined as greater than 10% of plan assets) of credit risk as of September 30, 2013. Types of concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country and individual fund. At September 30, 2013 and December 31, 2012, the pension plan held common stock in one investment that exceeded 10% of total plan assets. This investment was valued at $389.3 million and $223.1 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 11%, respectively, of total plan assets. Assets also included $228.6 million and $179.9 million of Berkshire Hathaway common stock at September 30, 2013 and December 31, 2012, respectively. At September 30, 2013 and December 31, 2012, the pension plan held investments in one foreign country that exceeded 10% of total plan assets. These investments were valued at $406.4 million and $240.4 million at September 30, 2013 and December 31, 2012, respectively, or approximately 16% and 12%, respectively, of total plan assets.

 

Is it saying pension plan held investment which increased from $223mn to $389mn in 9 months? I wonder which one that would be. Mostly some large cap.

 

Also structure of this transaction will point to Buffett's valuation of Berkshire. I think it was good bargain below 109 and still not very far from it.

[zarley]

Graham Holdings' pension fund has the BRK shares you are describing, but don't forget that Graham Holdings directly owns about $423 million (at current price) in additional BRK.A & B shares as an investment.  There is an opportunity for a great stock swap here.

 

That was my initial thought too.  It might let Berkshire eliminate the position in Graham Holdings in a tax efficient manner and retire some BRK shares in the process. It's not huge numbers, but a billion here and a billion there . . . pretty soon you're talking real money. :)

 

 

[jay21]

Graham Holdings' pension fund has the BRK shares you are describing, but don't forget that Graham Holdings directly owns about $423 million (at current price) in additional BRK.A & B shares as an investment.  There is an opportunity for a great stock swap here.

 

That was my initial thought too.  It might let Berkshire eliminate the position in Graham Holdings in a tax efficient manner and retire some BRK shares in the process. It's not huge numbers, but a billion here and a billion there . . . pretty soon you're talking real money. :)

 

I'm hoping that he removes the floor due to him failing the capital retention test.

 

I wonder if Tedd was running the show, would he take a page out of Malone's book and get more aggressive with repurchases?

[Guest wellmont]

Graham Holdings' pension fund has the BRK shares you are describing, but don't forget that Graham Holdings directly owns about $423 million (at current price) in additional BRK.A & B shares as an investment.  There is an opportunity for a great stock swap here.

 

That was my initial thought too.  It might let Berkshire eliminate the position in Graham Holdings in a tax efficient manner and retire some BRK shares in the process. It's not huge numbers, but a billion here and a billion there . . . pretty soon you're talking real money. :)

 

this isn't about the pension plan. it's about the stock held outside the pension plan. this might be driven by desire of GHC to slowly liquidate the company, which might involve spinning off Kaplan. I am actually surprised ghc is not up more on this news.

[Guest wellmont]

the fortune article mentioned brk shares in the pension plan. I was not aware that you could dislodge those out of the plans. but if that's the case it could be a way for ghc to "solve" some of the over funding of the plan in a tax efficient manner. I still think the possibility of taking $1b of ghc off the table is unappreciated by the markets right now. a big reason is that ghc is not getting any credit for owning brk shares or the over funded pp. If ghc were to sell it's brk shares it would need to pay a large cap gains tax, albeit a long term one.

[gfp]

http://www.sec.gov/Archives/edgar/data/104889/000119312514094955/d692131dex991.htm

[alwaysinvert]

http://www.washingtonpost.com/business/economy/how-warren-buffett-and-don-graham-are-saving-675-million-in-taxes/2014/04/10/2636dd60-c0ec-11e3-bcec-b71ee10e9bc3_story.html?tid=hpModule_79c38dfc-8691-11e2-9d71-f0feafdd1394