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fareastwarriors

By fareastwarriors
in Berkshire Hathaway

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John Hjorth Grand Master

John Hjorth

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Personally, I'll second redskin's question whole-hearted. I can't remember the sources any longer, and I've got no time to dig them up [perhaps it was actually posted by a fellow CoBF on here], but if I remember correctly, Berkshire has asked for permission not to reduce its position in BAC below 10 percent, while it continues to reduce its position in WFC.

 

Please correct me if I'm wrong, and if I'm not wrong [i may be], what do you get out that? I mean, perhaps, with regard to the forced WFC selling at Berkshire, it may be considered at Berkshire's convenience in the situation. [No kick-a** one-liners from Mr. Buffett nor Mr. Munger for years about WFC being a "good bank" - perhaps for a reason.]

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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

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woodstove Explorer

woodstove

Posted
Posted

Thanks for that link to a summary of the proposed rule.  It seems to me that there is costly risk exposure, due to discretion of regulators in applying rule, interpretation, etc.  Realistic low-risk behaviour will be to not go over 10 percent, I think.  So be it.  Still lots of fish in barrel.

Sleepwell Apprentice

Sleepwell

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Warren E. Buffett, Berkshire Hathaway’s Chairman and CEO, said, “My partner Charlie Munger and I have known and admired the Lee organization for over 40 years. They have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in digital market share and revenue. We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges. No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee. I am confident that our newspapers will be in the right hands going forward and I also am pleased to be deepening our long-term relationship with Lee through the financing agreement.”

DooDiligence Grand Master

DooDiligence

Posted
Posted

Warren E. Buffett, Berkshire Hathaway’s Chairman and CEO, said, “My partner Charlie Munger and I have known and admired the Lee organization for over 40 years. They have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in digital market share and revenue. We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges. No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee. I am confident that our newspapers will be in the right hands going forward and I also am pleased to be deepening our long-term relationship with Lee through the financing agreement.”

 

Apparently Warren & Charlie don't have enough faith in Lee to simply cough up some pocket change to buy them & put the papers in their charge.

gfp Grand Master

gfp

Posted
Posted

I don't blame warren for preferring $576 million of long term financing at 9%.  Lee was already running the papers

  • 2 weeks later...
redskin Apprentice

redskin

Posted
Posted

 

Personally, I'll second redskin's question whole-hearted. I can't remember the sources any longer, and I've got no time to dig them up [perhaps it was actually posted by a fellow CoBF on here], but if I remember correctly, Berkshire has asked for permission not to reduce its position in BAC below 10 percent, while it continues to reduce its position in WFC.

 

Please correct me if I'm wrong, and if I'm not wrong [i may be], what do you get out that? I mean, perhaps, with regard to the forced WFC selling at Berkshire, it may be considered at Berkshire's convenience in the situation. [No kick-a** one-liners from Mr. Buffett nor Mr. Munger for years about WFC being a "good bank" - perhaps for a reason.]

 

Looks like they finalized the rule change.  It is effective April 30th.

https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200130a.htm

Dynamic Enthusiast

Dynamic

Posted
Posted

So in summary it appears that 25% ownership is to become permissible without becoming a bank holding company unless you seek to exercise any control or influence beyond your normal voting rights. Potentially non voting shares might permit more ownership still.

 

For Berkshire the accelerated disclosure rules for owning over 10% of any US traded company enforced by SEC still apply so Berkshire would have to disclose new purchases within 5 days once they exceed 10%. Large additional stakes bought in the open market are unlikely but negotiated block purchases might be conceivable.

 

I'd imagine that Bank of America and Wells Fargo stakes will remain roughly constant from now on in share count but will gradually grow as a percentage through the investee buybacks. Berkshire will still need to monitor the investee filings to ensure they file form 13D or 13G within 3-5 days when a new outstanding share count is published.

Guest longinvestor

Guest longinvestor

Posted
Posted

Over at the TMFools forum, one post caught my eye; Given that investment gains are to be reported as income, we’re likely to see a monster headline number when earnings come out from Omaha. Buffett has been warning against this very headline focus but it would still be nice to see. I went back to see what other companies reported big earnings and AAPL figures 3 or 4 times in the past decade. And FNM! Berkshire has been in the top 3 a couple of times. Based on the new reporting requirements and the large Apple holdings, we’re rather likely to keep the pole position for the next decade!

CorpRaider Mentor

CorpRaider

Posted
Posted

So in summary it appears that 25% ownership is to become permissible without becoming a bank holding company unless you seek to exercise any control or influence beyond your normal voting rights. Potentially non voting shares might permit more ownership still.

 

For Berkshire the accelerated disclosure rules for owning over 10% of any US traded company enforced by SEC still apply so Berkshire would have to disclose new purchases within 5 days once they exceed 10%. Large additional stakes bought in the open market are unlikely but negotiated block purchases might be conceivable.

 

I'd imagine that Bank of America and Wells Fargo stakes will remain roughly constant from now on in share count but will gradually grow as a percentage through the investee buybacks. Berkshire will still need to monitor the investee filings to ensure they file form 13D or 13G within 3-5 days when a new outstanding share count is published.

 

That was my conclusion.  WRT Wells it seems unlikely they let it tick across the line because of the banking relationship.

villainx Mentor

villainx

Posted
Posted

I'd imagine that Bank of America and Wells Fargo stakes will remain roughly constant from now on in share count but will gradually grow as a percentage through the investee buybacks. Berkshire will still need to monitor the investee filings to ensure they file form 13D or 13G within 3-5 days when a new outstanding share count is published.

 

Isn't it very likely that they'll be adding a bunch of banking stock in the near future?  They have the cash on hand and it seems like the regulations were the main thing holding them back.  Or prices are too high, and BRK will pounce when a reasonable entry presents itself?

 

Likewise, the reg hurdle might have limited some of T&T's purchases?  So they certainly can do something too?

DooDiligence Grand Master

DooDiligence

Posted
Posted

 

Does Alaska waive their $100 license reinstatement fee after a suspension for lapse in coverage?

 

"When you lose your privilege to drive in Alaska for driving without insurance, the state suspends your license or privilege to drive. Your driving record will show that the state has taken action against your license. When you comply with the steps needed to get your license back, you are reinstating your driver’s license or privilege to drive."

 

http://doa.alaska.gov/dmv/akol/fees.htm

 

http://doa.alaska.gov/dmv/reinst/manins.htm

 

Dynamic Enthusiast

Dynamic

Posted
Posted

As I said on the other thread mentioning the 10% to 25% rule change, the SEC rapid reporting of all purchases and sales once you're above 10% will probably stop Berkshire making meaningful open market purchases beyond maybe 11% regardless of the Fed ruling on Bank Holding Companies. With the Delta Air Lines situation in March 2019 they inadvertently exceeded 10% as DAL bought its own stock back then on realising they would have to file a Form 4 added to their position taking it to 10.4% by the time the second Form 4 was filed. https://www.sec.gov/Archives/edgar/data/27904/000120919119018303/xslF345X03/doc4.xml

 

It's possible they could buy a little more without moving the price too much but it might well be slow, and they'd have to report the price paid.

 

Investee buybacks instead will be the more likely gradual method by which Berkshire's stake grows in normal times, making it a very gradual process.

 

Possibly future preferred stock and attached warrant deals like BAC in the past could allow Berkshire to make substantial increases from time to time that they couldn't do in the open market. And they could reach 33.32% ownership if they can obtain non voting stock,. There might even be scope for negotiated block purchases from other holders at times.

 

SEC reporting for non banking stocks is similar and we've seen very little activity over 10% ownership stakes. If they become deeply undervalued it may be possible to add a bit while retaining a margin of safety, but Berkshire's best bet might be an acquisition approach at a modest premium or a financing deal with convertible warrants.

thefatbaboon Apprentice

thefatbaboon

Posted
Posted

What is known, if anything, regarding the "business relationship" between Berkshire and Wells?  The FRB's new rule has restrictions at 5% of revenues or expenses for 10% to 15% shareholders and 2% of revenues or expenses for greater than 15% shareholders. 

DooDiligence Grand Master

DooDiligence

Posted
Posted

What is known, if anything, regarding the "business relationship" between Berkshire and Wells?  The FRB's new rule has restrictions at 5% of revenues or expenses for 10% to 15% shareholders and 2% of revenues or expenses for greater than 15% shareholders.

 

This may qualify.

 

www.railwaygazette.com/business/marmon-and-wells-fargo-buy-ge-capital-rail-businesses/41444.article

 

I don't know how many other deals have been done alongside Wells.

 

If Omaha values deals over ownership of Wells, it seems likely they'd stay under 10% with the new rules giving them MOS against any smell tests.

 

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edit:

 

Here's another deal from 2013

 

www.bloomberg.com/news/articles/2013-07-25/berkshire-home-broker-to-take-wells-fargo-s-stake-in-venture

 

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Then there's comments like this which could be viewed as "managerial"

 

www.bnnbloomberg.ca/munger-says-wells-fargo-ceo-scharf-ought-to-be-in-san-francisco-1.1389484

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