Buffett/Berkshire - general news

[bookie71]

In the local news

https://www.ktuu.com/content/news/Drivers-theres-a-decades-old-Alaska-insurance-law-you-should-know-about-567785281.html

[DooDiligence]

In the local news

https://www.ktuu.com/content/news/Drivers-theres-a-decades-old-Alaska-insurance-law-you-should-know-about-567785281.html

 

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]

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.

[petec]

I’m predicting some big pref+warrant deals with the proceeds used for buybacks. Win-win-win!

[thefatbaboon]

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]

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.

 

---

 

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

 

---

 

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

[gfp]

Wells is the transfer agent for Berkshire's common stock.  Wells also handles a lot of the cash management type stuff for billions of dollars worth of cash and cash equivalents.  Wells is an underwriter (part of a group) on most Berkshire and Berkshire subsidiary bond offerings.

 

https://www.berkshirehathaway.com/2001ar/commonstock.html

[Dynamic]

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!

 

I'd guess we're probably talking something like $80 billion +/- $2 billion in 2019 GAAP earnings for Berkshire (now including unrealized gains after deferred taxes). This would beat Apple's 2018 best but probably lag Fannie Mae's 2013 best according to this list:

https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses

where Saudi Aramco and Vodafone have the top 2 spots at over $100bn in CPI-adjusted dollars.

 

Something in the $29-33 billion range in 2019Q4 would easily put Berkshire at No.2 in the quarterly records list on the same article, beating $22.2bn for Apple in 2020Q1 but well behind Fannie Mae's $58.7 in 2013Q1, pushing Berkshire's $21.7bn 2019Q1 down to 4th place.

[thefatbaboon]

Thing is though how much of running bond issues or acting as stock transfer agent or partnering on rail car deals ends up as actual revenue on WFC books?  WFC had approx $80bn revenue last year so the relevant levels are $8bn, $4bn and $1.6bn. 

 

Also, what happens if it is a one-off?  Say most years its just fee income and commissions for some deal flow, debt issuance and general banking services and these (guessing) are less than $1.6bn of actual Wells revenue.  But every so often Berkshire buys something where Wells is principal owner in something like the Homeservices lending jv mentioned which say Wells is principal owner and therefore all sale amount counts and revenue goes over the $1.6 level.  Do you have to modulate down for one year and then can buy back the next year??

 

 

[alwaysinvert]

When was Buffett's last televised interview? Googling tells me he was on CNBC on May 3 but I can't find anything after that and I don't remember anything after the annual meeting rounds. Has he ever stayed out of the media for that long in the last 10 years or so?

[Munger_Disciple]

Wells is the transfer agent for Berkshire's common stock.  Wells also handles a lot of the cash management type stuff for billions of dollars worth of cash and cash equivalents.  Wells is an underwriter (part of a group) on most Berkshire and Berkshire subsidiary bond offerings.

 

https://www.berkshirehathaway.com/2001ar/commonstock.html

 

gfp,

 

Wells Fargo sold the transfer agency business to Equiniti. As a result, EQ Shareowner Services is now the transfer agent and registrar for Berkshire common stock.

 

https://www.berkshirehathaway.com/2018ar/2018ar.pdf  (page A-3)

 

-MD

[John Hjorth]

When was Buffett's last televised interview? Googling tells me he was on CNBC on May 3 but I can't find anything after that and I don't remember anything after the annual meeting rounds. Has he ever stayed out of the media for that long in the last 10 years or so?

 

Agreed, and somewhat striking.

[ValueMaven]

really horrible write-up on Berkshire in Barrons this weekend as a cover story.  Basically calling for a breakup and a dividend...one of the worst piece I've seen on Buffett and Berkshire for sometime. 

 

What did others thing who read it?

[alwaysinvert]

really horrible write-up on Berkshire in Barrons this weekend as a cover story.  Basically calling for a breakup and a dividend...one of the worst piece I've seen on Buffett and Berkshire for sometime. 

 

What did others thing who read it?

 

Can't read it, but at what point does it become anything but "horrible" to call for some action? $200b in cash? $300b? $400b? Obviously he will do whatever he wants but the option value of the next billion at this point is probably pretty close to 0.

[Charlie]

"really horrible write-up on Berkshire in Barrons this weekend as a cover story.  Basically calling for a breakup and a dividend...one of the worst piece I've seen on Buffett and Berkshire for sometime."

 

+1

 

He should have read Buffetts´ comments on the topics....

That doesn't stop him to congratulate himself: "We like to think that Barron’s provides the best coverage of Berkshire anywhere."    ;)

 

[ValueMaven]

Extremely poor analysis.  I read it again (waste of my time) ... nothing was mentioned on the quality of management, the diversification of businesses, or frankly WEB's homerun in apple recently.  I get it - there is a limited amount of space to write...however this was a poor article.  Omitted large portions of BRK's overall valuation as well ... the funniest was on the margin side -- ie: GEICO's margins stick vs PGR -- not mentioning the huge market share growth b/c of advertising etc. 

 

'We like to think that Barron’s provides the best coverage of Berkshire anywhere.' --- LOL

[Xerxes]

When was Buffett's last televised interview? Googling tells me he was on CNBC on May 3 but I can't find anything after that and I don't remember anything after the annual meeting rounds. Has he ever stayed out of the media for that long in the last 10 years or so?

 

From what i have seen, his pattern has been on 'media-off' from fall till Q4 results. Then a frenzy of discussion and interviews till next fall.

[IceCreamMan]

When was Buffett's last televised interview? Googling tells me he was on CNBC on May 3 but I can't find anything after that and I don't remember anything after the annual meeting rounds. Has he ever stayed out of the media for that long in the last 10 years or so?

 

From what i have seen, his pattern has been on 'media-off' from fall till Q4 results. Then a frenzy of discussion and interviews till next fall.

 

It seems like he often does an interview with Becky Quick on his birthday, but not this year. Maybe there was a scheduling conflict for one of them.

[bizaro86]

When was Buffett's last televised interview? Googling tells me he was on CNBC on May 3 but I can't find anything after that and I don't remember anything after the annual meeting rounds. Has he ever stayed out of the media for that long in the last 10 years or so?

 

From what i have seen, his pattern has been on 'media-off' from fall till Q4 results. Then a frenzy of discussion and interviews till next fall.

 

It seems like he often does an interview with Becky Quick on his birthday, but not this year. Maybe there was a scheduling conflict for one of them.

 

It seems likely to me that if he wanted to do it she would have made time.

[Dynamic]

For those interested, on the Look-Through Portfolio and Earnings thread, I've commented on changes in the 13F portfolio. Most new buys look like Ted and Todd, but here are selected highlights from that thread that might warrant discussion.

 

Where I refer to EP or EPs, that means Employee Pension funds and their holdings.

 

New holdings - Biogen Inc, Kroger Co., SPY and VOO index funds, all small positions likely Ted and Todd.

 

Changes noted: - where I mention the valuation of the position 'now' or 'today', I'm basically referring to Friday 14th Feb 2020 closing prices.

 

AAL - American Airlines reduced to stay below 10% voting control. N.B. Employee pensions account for almost half of Berkshire's holding, but EP count did not change. Some EP holdings will disappear when the newspapers are acquired by Lee. $635mn valuation of shareholder's stake.

 

AAPL - Apple reduced by 1.4%, probably Ted or Todd needing to sell something fairly full-valued to invest elsewhere, I guess. Still a vast position at $81,519mn today.

 

BAC - Bank of America reduced by 0.2% since 2019-09-30 due to divesting Applied Underwriters which held 0.2% of Berkshire's BAC shares, as already disclosed in Oct 2019 filing. Percentage stake now 10.7% thanks to buybacks. $33,029mn valuation today.

 

BIIB - NEW STAKE - Biogen Inc., worth $216m today. Almost certainly Ted or Todd.

 

BK - Bank of New York Mellon reduced 3.6% to stay below 10% stake, 9.9% stake thanks to buybacks. $3,740mn today.

 

GM - General Motors increased BRK shareholders' stake by 6.0%. EPs own about a third of total stake. $1,669mn today for shareholders.

 

GS - Goldman Sachs reduced 33.8%. Now 5.1% stake in GS. $2,948mn today.

 

KR - NEW STAKE - Kroger Co. worth $535mn today. Almost certainly Ted or Todd.

 

OXY - Occidental Petroleum increased 153.5%. Stake worth $788mn today. The option of paying the $10bn 8% preferred dividend in OXY stock could be responsible for some or all of this position. Might be revealed in the Berkshire or Occidental 10-K soon, or if we could guess the payment dates based on the acquisition of Anadarko, we might be able to reconcile it to the $0.2bn per quarter in preferred dividends and OXY stock issuance. Quite possibly it's a mixture of open market purchases and dividends in stock.

 

PSX - Phillips 66 reduced by 95.6%, and quite possibly eliminated entirely since 31st Dec 2019. $20mn today if still held.

 

RH - RH, formerly Restoration Hardware, increased possibly by as much as 112.6% depending on how much was already owned by the pension in the previous quarter. $225mn stake for BRK shareholders (5.0% of company), plus 4.0% of company for the Precision Castparts Master Trust Employee Pension (EP), giving 9.0% voting stake. Guessing that's about the limit.

 

SPY - NEW STAKE - SPDR S&P 500 ETF Trust, just $13.3mn at today's price. Almost certainly Ted or Todd.

 

SU -Suncor Energy Inc increased 39.6%. Now $447mn.

 

TRV - Travelers Companies Inc decreased 94.8% and quite possibly eliminated entirely since 31st Dec 2019. $43mn today if still held.

 

VOO - NEW STAKE - Vanguard S&P 500 ETF, just $13.3mn at today's price - virtually the same as SPY. Almost certainly Ted or Todd.

 

WFC - Wells Fargo & Co reduced by 13.8%. This is quite a substantial reduction on a giant stake. If still holding as much as at 31st Dec 2019, Berkshire holds $16,669mn at today's price. While they may be required to stay below 10% to avoid becoming a Bank Holding Company due to banking relationships, the stake is now 8.4% so they've either bought themselves a lot of time while selling at reasonably high valuations or they're selling for fundamental reasons. Hard to guess whether they took advantage of some reasonably high prices in the 50s last quarter to lighten up prior to the new CEO potentially making some big bath changes or whether they feel the story has changed for the worse and they should either eliminate the position or they're selling based on valuation.

[sleepydragon]

Berkshire shall seriously consider canceling this year’s annual meeting.

Do the online only version.

We don’t want WEB get infected nor many shareholders who are attending.

There are lots people from China, Middle East, and Europe coming too.

Too risky!!

 

[Gregmal]

https://seekingalpha.com/news/3547839-berkshire-beefs-up-delta-stake

[LC]

Is anyone aware of any analysis done on how zero/negative US interest rates will affect Berkshire? And/or if Buffett has made any comment on this?

 

I would imagine a hit to the large amount of fixed products held at the parent co and the various insurance co's, plus all the bank holdings in the equity portfolio will take a hit. Partly offset by some benefit to the operating companies and rolling over debt.

[undervalued]

Is anyone aware of any analysis done on how zero/negative US interest rates will affect Berkshire? And/or if Buffett has made any comment on this?

 

I would imagine a hit to the large amount of fixed products held at the parent co and the various insurance co's, plus all the bank holdings in the equity portfolio will take a hit. Partly offset by some benefit to the operating companies and rolling over debt.

 

I remember hearing his last interview with CNBC saying banks will be fine with negative interest rates.. Did I misunderstood? Anyone heard it differently?

[LC]

Thanks, I’ll see if I can find a transcript and find those comments.

 

I wonder what his rationale is. In Europe the experience has been exactly the opposite.