Jump to content

Buffett/Berkshire - general news

fareastwarriors

By fareastwarriors
in Berkshire Hathaway

 Share

Recommended Posts

  • Replies 4.8k
  • Created
  • Last Reply

Top Posters In This Topic

Popular Days

Top Posters In This Topic

Popular Days

Popular Posts

Krapdivad
Krapdivad

There was a pre-Berkshire meeting by Yahoo Finance today with Laurence Cunningham, Robert Hagstrom, Carol Loomis, and Tom Gayner.    Took a few notes if anyone was interested:   La

fareastwarriors
fareastwarriors

$tsm 👀     

nwoodman
nwoodman

Fascinating purchase by Berkshire.  A couple of thoughts.  1. Is this a cheap way to ride the Apple juggernaut?  2. Is this more Munger than Buffett?  Charlie being interviewed tomorrow on CNBC - coin

Posted Images

BG2008 Mentor

BG2008

Posted
Posted

 

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire". 

 

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?

Link to comment
Share on other sites
Cigarbutt Community Regular

Cigarbutt

Posted
Posted

Mr. Buffett is revered for his good decisions leading to good results.

The Lubrizol loss is significant.

However, despite the amazingly large size of BRK, these types of losses occur at a relatively very low frequency and, when they occur, are embedded in a sea of black ink.

Another aspect of his accomplishments is the unbelievably low rate of bad decisions leading to bad results.

But nobody's perfect.

Thanks for the link.

Link to comment
Share on other sites
rolling Explorer

rolling

Posted
Posted

 

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire". 

 

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?

It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.

 

This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

Link to comment
Share on other sites
Guest longinvestor

Guest longinvestor

Posted
Posted

 

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire". 

 

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?

It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.

 

This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

 

The whole subject of tuck in acquisitions and capital allocation at subsidiaries is a very important topic for the future. From the outside looking in, we can see some very aquisitive subs. Marmon, PCP, Midamerican etc. Would be a great question at the AGM. Understanding the parameters under which deals are allowed/made, how to determine the per share impact at the BRK level etc. It's not comforting to find out later.

Link to comment
Share on other sites
Guest longinvestor

Guest longinvestor

Posted
Posted

This is unrelated to any ongoing thread, but an interesting divertissement: http://www.reuters.com/article/us-sec-kraft-heinz-idUSKBN16M2UI.

 

Security guard (or something else if he reviews emails for his boss) did some small inside trades.

 

Yep, security guards and Martha Stewart get all the press and punishment but never Wall Streeters. Just yesterday, WSJ reported on the "possible" evidence that inside trading happens before release of public information, GDP, jobs report etc. Let's see what happens in Lower Manhattan post-Bharara.

Link to comment
Share on other sites
gfp Grand Master

gfp

Posted
Posted

Small update on Ajit's reorganization of General Re (from Insurance Insider):

-----------------------

Gen Re shakes up international P&C leadership

Adam McNestrie and Catrin Shi

Gen Re has appointed new regional heads for its international P&C operations as part of a wider revamp of the reinsurer initiated by Berkshire Hathaway's Ajit Jain, The Insurance Insider understands.

 

Gen Re had previously divided its P&C reinsurance business into treaty and facultative arms, as well as underwriting and marketing operations, creating a plethora of senior roles in each region. The P&C business in each region will now have a single leader.

 

Achim Bosch, previously regional treaty marketing head, has been made P&C head for Germany, Central and Eastern Europe, and Benelux - which together form the largest part of Gen Re's international operations.

 

It is further understood that Gen Re's Spanish and Portuguese P&C operations will be headed by Adolfo Martinez, who was previously chief underwriter for treaty in the region.

 

Emmanuel Brouquier, regional manager for Europe excluding the UK and Germany, has taken on the role of P&C head for France, Scandinavia and the Middle East.

 

Andrew Flitcroft, previously treaty marketing head for Asia Pacific outside of Japan, is now P&C head for Australia and New Zealand. Rainer Schurmann, formerly treaty marketing head for Asia, has become P&C head for Asia, excluding Japan.

 

It is understood that a small number of senior staff have chosen to retire as part of the restructure, although most have remained in place under different roles, suggesting there may be further streamlining of management to come from Gen Re.

 

The restructure has only affected the P&C operations, with Gen Re's international life management structure remaining the same.

 

Berkshire Hathaway reinsurance chief Jain has set about restructuring Gen Re since the carrier fell under his remit when CEO Tad Montross retired last year.

 

Jain appointed Kara Raiguel as CEO, and has moved to simplify the complicated management structure of Gen Re in a bid to take out layers and speed up decision-making.

 

An initial reorganisation of the UK and Italian leadership in October last year, as revealed by this publication at the time, saw Faraday CEO Pietro Toffanello named P&C head for both countries.

 

Steve Michael, previously CEO of one of Berkshire Hathaway's legacy units,‎ then moved across to lead Gen Re's Lloyd's arm Faraday.

 

Gen Re did not respond to a request for comment.

Link to comment
Share on other sites
  • 2 weeks later...
netnet Newbie

netnet

Posted
Posted

Is it just me or does WEB look a little Chinese on the can?

It is most certainly not you.  It is interesting. It's CPG so undoubtedly it was a design choice. 

 

That said, other cultures and ethnic group will put their stamp on a figure or image from another culture or ethnicity. Images of Alexander the Great for example.  In a more modern context, see for example, the statue of Martin Luther King by a Chinese sculptor, on the mall in DC. The statue makes him look like he is about to lead the cultural revolution by posture and with, shall I say, eyes not as 'round' as they obviously were!

Link to comment
Share on other sites
John Hjorth Veteran

John Hjorth

Posted
Posted

Berkshire starts selling WFC shares, to keep position on 10 per cent, or just below.

 

Edit:

 

What's next with regard to Berkshire and bank stocks long term? Building a position in JPM? Or a merger between WFC and JPM? If this continues long term, Berkshire will own about 10 per cent of the whole US banking system, without even being a bank holding company - I'm just speculating and kidding here.

Link to comment
Share on other sites
fareastwarriors Mentor

fareastwarriors

Posted
  • Author
Posted

They can buy more UAL with proceeds.  8)

 

Jurgis,

 

I just hope that the extra proceeds from the enormous Berkshire position in WFC ends up in something that has the capacity to suffer - something antifragile ... not airlines! - Time will tell.

 

Maybe if United falls, Delta and American can have a duopoly. Even more pricing power.

Link to comment
Share on other sites
Spekulatius Grand Master

Spekulatius

Posted
Posted

Thanks for posting the transcript.  I was asleep for the first part and it was interesting to hear him describe his shorting DOW common in anticipation of their conversion.  He ended up timing it perfectly, with a net zero position the day after they sent him 72 million shares -

 

----------------------------------------------------------

 

"Quick: The reason I ask-- that question just now is because Dow Chemical preferred shares-- they called those the preferred shares on December 30th. And from what I read it said that it should've translated into about 6 percent of the shares outstanding of the company—

 

Buffett: 70, 72 million shares, yeah.

 

Quick: But I did not notice Dow Chemical on the 13-F in this most recent filing. Would have--

 

Buffett: We timed our sales so that once it got above the conversion price-- we timed our sales-- we tried to time 'em—because 72 million shares would be a lot of shares to get and we did not want to own the common stock we don't own any common stocks of any chemical companies so and as the stock when higher we sold it more aggressively because we wanted to get 72 million shares done by the day which was becoming more probable all the time that they would call it and they called it exactly when we thought they would call it. And I think our last shares were sold the day before, the day after, the same day we timed it to be out of 72 million shares when we received those shares.

 

Quick: So I was going to say you didn't sell 72 million shares on December 30 and 31st

 

Buffett: No we didn't want to be in that position.

 

Quick: but you had been timing those shares all along and preparing for it.

 

Buffett: exactly and it became you were in a very strong market and as Dow kept moving up we would get more aggressive so towards the end we might have been selling a couple million shares a day when it got up to 56 or some price like that. We were hoping to get out of it, out of the common by the time they sold the common and like I said it worked out to the day we were kind of lucky on that we could have ended up with 10 million shares but we were going to quit obviously when we got to the amount that was going to be handed to us.

 

Quick: Why don't you like Dow or the other chemical shares?

 

Buffett: We've never owned chemical shares. We own a specialty chemical company Ebersol a chemical common stock we own we bought the preferred stock of Dow because we wanted a preferred position and we held it. It was kind of interesting we bought that stock in July of 2008, the preferred and they were going to acquire, Dow was going to acquire Rohm & Haas and they needed money for it and then the world fell apart in the fall and Dow wanted to get out of the contract, they sued Rohm & Haas to get out of the contract but it was held that they had to stick with it. So we closed the deal to buy the preferred stock in April of 2009 by which time the market had totally disintegrated the time we closed that we bought $3 billion worth it probably wasn't worth tops more than

60 cents on the dollar so we showed up with $3 billion for something that was worth $1.8 billion at the time which is one reason why people offer us deals they know we will be around at the closing. We showed up for the Wrigley closing too that was on October 4 or something but during that whole period we had commitments and that kept me from doing some other things we might have done at that time. The fact that we had this $3 billion going out the door

 

Quick: What did you ultimately end up making on Dow Chemical shares.

 

Buffett: we ended up making about a billion dollars and plus we had an 8.5 percent coupon those years.

 

Quick: You made a billion even before the preferred dividend that was paid?

 

Buffett: We had a billion dollar of capital gain very roughly, and then we had $255 million a year dividends during the time we owned it."

 

Looks like WEB really dislikes DOW and hedges his exposure. I think he is onto something,because DOW was snreally to a large extend a commodity chemical company that claims to be a specialty checmical company and that will at some point see a Dramatic reduction in margin. I think it will be a great short at some point. Besides that, even specialty chemicals see large variations in margins, that tend to expand early in the economic cycle and contract in the mature state. There is a lot of petrochemical capacity being build in NA, which I think can lead to oversupply issues.

Link to comment
Share on other sites
Spekulatius Grand Master

Spekulatius

Posted
Posted

 

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire". 

 

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?

It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.

 

 

This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

 

I suspect the acquired business weren't that great and t wasn't just the decline in the price of crude that impaired the,. WFT for example appears to run their business very poorly, or they become poor business while they own them. The executive probably was canned, because that was an unforced error - WEB encourages bold on acquisitions, but does so, because they are supposedly low risk. I think he sees the acquisition price and probably was Ok will what they paid, but if the business owners twelfth is crap, it's on the executive and in my opinion should be dealt with,

From my perspective, the due diligence that a lot is of executives do on these acquisitions is laughable. I have experienced a few as an engineer where I thought that sending a few good engineers and operations people into the to be acquire company for some due diligence would have uncovered issues very quickly, the came later back to haunt. in public companies, failure with acquisitions are rarely acknowledged an much less leads firings, at least not at the executives ve level. It can lead to consequences at a mid r upper management levels, when they can't get a handle on fixing something that supposedly did not need to get fixed to begin with.

 

My favorite quote from the Sopranos applies to the business wowners world as well, maybe even more so than for the Mafia:

 

"Money flows up, shit flows down"

Link to comment
Share on other sites
Guest longinvestor

Guest longinvestor

Posted
Posted

 

It is amazing how Buffet has this public persona where if you went to work for him, you had a job till you die.  But in reality, if you made mistake, you get the boot or as they say "retire". 

 

Despite this, I think Berkshire has some of the best executive/employee retention track record.  Does anyone here know how Berkshire pays its managers and what are the tools to keep them on?

It seems to me he has this low risk culture for subsidiary executives. If they just dividend the money back to him they get paid more; if they risk some money: they better get it right; if they do get it right, then they get to manage a bigger subsidiary and get paid even more; if they get it wrong, they'd have been better off not taking unnecessary risks and letting Buffett manage the money... In other words: they are allowed to shoot fishes inside a dry barrel; if there is still water then they shouldn't risk it.

 

 

This kind of low risk culture is the exact opposite we see in public companies CEOs and seems to me is a big advantage for Berkshire wealth maintenance objective.

 

I suspect the acquired business weren't that great and t wasn't just the decline in the price of crude that impaired the,. WFT for example appears to run their business very poorly, or they become poor business while they own them. The executive probably was canned, because that was an unforced error - WEB encourages bold on acquisitions, but does so, because they are supposedly low risk. I think he sees the acquisition price and probably was Ok will what they paid, but if the business owners twelfth is crap, it's on the executive and in my opinion should be dealt with,

From my perspective, the due diligence that a lot is of executives do on these acquisitions is laughable. I have experienced a few as an engineer where I thought that sending a few good engineers and operations people into the to be acquire company for some due diligence would have uncovered issues very quickly, the came later back to haunt. in public companies, failure with acquisitions are rarely acknowledged an much less leads firings, at least not at the executives ve level. It can lead to consequences at a mid r upper management levels, when they can't get a handle on fixing something that supposedly did not need to get fixed to begin with.

 

My favorite quote from the Sopranos applies to the business wowners world as well, maybe even more so than for the Mafia:

 

"Money flows up, shit flows down"

 

Agreed on the poor due diligence. I've found that short term bonuses drive deals and it's funny that the guy who put the white paper justifying the deal is rarely in position to seethe purported synergies through. Lots of Bullshit happens with acquisitions, shareholder benefits are far from clear.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share
Go to topic listing


×
×
  • Create New...