Buffett/Berkshire - general news

[John Hjorth]

Jeff,

 

You're a Southern US citizen, so it happens - from time to time - that I'm at a loss, to really get what you're posting.

 

With regard to "grok", I've found this :

 

... 'Grok' means all of these. It means 'fear,' it means 'love,' it means 'hate'—proper hate, for by the Martian 'map' you cannot hate anything unless you grok it, understand it so thoroughly that you merge with it and it merges with you—then you can hate it. By hating yourself. ..

 

Is this OK with you? [i'm cracking up now!]

[LearningMachine]

BNSF was a brilliant acquisition.  period.

 

I remember watching it in slow motion.  BNSF was cash-flowing well its rights to scarce physical pathways across U.S. 

 

After learning about Bill Gates' railroad purchase, I had started following it before Berkshire bought it.  I started paying more attention as Berkshire started buying shares.  As the # of shares purchased kept on going up, I remember realizing that Berkshire is probably looking to purchase it outright.

 

My memory is a little faint, but I think Buffett tried to hide the purchase of shares on that also a little bit.  During the big recession, I remember when price was around $70 per share, I was waiting for it to fall further, and then Berkshire snapped up the remaining shares at $100 per share.

 

Now, I see VZ with its cash-flowing rights to scarce spectrum across U.S. in similar situation and wonder if it might be too big to swallow, or if there is a probability that it might be a way to pick up BRK shares for cheap.  In inflationary times, VZ's rights also don't need as much higher maintenance as would BNSF's rolling stock.

 

Wonder how the ratio of VZ's Market Cap of $230B to Cashflow from operations of $41.8B compares to BNSF's valuation in Buffett's mind.  That $41.8B annual cashflow from operations ideally belongs in Buffett's hands to invest further as he will likely be able to make better investments with it than arguably VZ has been.

 

I remember writing a lot of puts on BNI, from around 60-strike all the way up to 90-strike in 2008-2009. It was like an ATM spitting out cash.

 

I've written some 55- and 56-strike puts on VZ, but at an order of magnitude smaller volume for now than I was doing with BNI.

 

Way to go!

 

If I remember correctly, Berkshire also picked up some BNI shares by writing puts perhaps in an attempt buy shares without raising the price.

 

Did your puts end up getting exercised?  In hindsight, did you make more money by selling puts than you would have made by buying BNI shares at the time to get BRK shares for cheap?

 

Just so that I understand, is your volume with writing VZ puts lower than it was for BNI because you like to be more diversified now or because you're not as sure yet if BRK will acquire VZ as you were with BNI?  If the April 13F shows a lot more VZ share purchases, would that change your mind?

 

I responded yesterday, but now I don’t see my response. So, I’ll try again!

 

I did get put to on BNI and I would turn around and sell covered calls. I never looked at whether I would have been better off just purchasing BNI and waiting for the deal to close. I like writing puts to play these risk arbitrage situations because I set the date for the close rather than buying the stock and not knowing when, or if, the deal will close. Also, I was writing so many puts on BNI I would have been heavily on margin if I had just bought the stock. Yes, I could have gotten heavily on margin if I was put to on everything, but I was staggering in price and time throughout 2009.

 

The best thing about the BRK’s purchase of BNI was the introduction of the B shares. As soon as there were B shares, I started writing puts and accumulating BRKB by being put to. I have gotten to 80% of my portfolio being BRKB, so I am really concentrated.

 

I am keeping my volume of VZ puts low because I am essentially fully invested and don’t want to end up on margin.

 

I was already interested in BNI pre-Buffett. So, I was confident ramping up my put volume. VZ only came on my radar because of BRK’s purchases so I am being more cautious.

 

Thanks boilermaker for sharing.  Feels like comrades sharing stories from the trenches :-). 

 

Hopefully, we'll get to tell the VZ story some day :-).

[DooDiligence]

Jeff,

 

You're a Southern US citizen, so it happens - from time to time - that I'm at a loss, to really get what you're posting.

 

With regard to "grok", I've found this :

 

... 'Grok' means all of these. It means 'fear,' it means 'love,' it means 'hate'—proper hate, for by the Martian 'map' you cannot hate anything unless you grok it, understand it so thoroughly that you merge with it and it merges with you—then you can hate it. By hating yourself. ..

 

Is this OK with you? [i'm cracking up now!]

 

It's from Robert Heinleins' "Stranger in a Strange Land",

 

In Heinlein's invented Martian language "grok" literally means "to drink" and figuratively means "to comprehend", "to love", and "to be one with". The word rapidly became common parlance among science fiction fans, hippies, and later computer programmers and hackers, and has since entered the Oxford English Dictionary.

 

I still cling to the idea of impermanence but grok the present capital structure of BRKs insurance operations, nonetheless.

 

;)

[John Hjorth]

Thank you for educating me, Jeff ! [ : - ) ]

[ValueMaven]

A shares traded 2,000 shares today.  Something has been going on for the past several weeks.  I really wonder who the mystery buyer is...

[Gregmal]

Maybe people are just finally coming to their senses. Big Daddy Buff has told us $240 or lower and we're getting 6-10% a year run rate on the buybacks, maybe more. Inflation protected- check. Downturn protected - cough, laugh, check. Real, relevant, systematically important businesses trading at stupid cheap valuations? check. What more do folks want? A rerating here is inevitable. There arent many scenarios where 2% 10 yr treasuries, 30x on the S&P, and a Berkshire at its current price make sense enough to last very long.

[kh812000]

Volume in Brk/A is certainly quite active recently....hmm.
Maybe Buffett finally got religion on buybacks of his stock or does he know something??

[ValueMaven]

Greg Warren of Morningstar - who I think is one of the best Berkshire analyst has a really compelling write-up from mid-March on Berkshire.  It is a really good read! 

[ValueMaven]

https://berkshirehathaway.com/2021ProxyStmt.pdf

Suggests $5B worth of buybacks in 1Q21.  We are now looking at over $30B returned to shareholders over the TTM.  wow

[fareastwarriors]

The board has to be one of the oldest. There are bunch of 70, 80, 90 year olds... Amazing...

[aws]

We can only hope there will be several 100 year old board members soon enough.

[Charlie]

Get the money when it is cheap:

Buffett’s Berkshire Returns to Yen Market With 4-Part Bond Sale

https://finance.yahoo.com/news/buffett-berkshire-hathaway-returns-yen-002143670.html

 

Cheers!

[Cigarbutt]

7 hours ago, Charlie said:

Get the money when it is cheap:

Buffett’s Berkshire Returns to Yen Market With 4-Part Bond Sale

https://finance.yahoo.com/news/buffett-berkshire-hathaway-returns-yen-002143670.html

Cheers!

From the link:

"Berkshire Hathaway is offering a five-year bond at 17-20 basis points over mid-swaps, which at current market levels is equivalent to a coupon of about 0.2%. The deal also includes 10-year, 15-year and 20-year notes, with expected ratings from Moody’s Investors Service and S&P Global Ratings higher than those given to Japanese sovereign debt."

BRK has a better credit rating than the 3rd largest economy in the world..

In September 2019 when BRK issued yen-denominated debt, their 10-yr yield was at about 0.44% with the 10-yr JGB at -0.25%. Today, the JGB 10-yr yield is at 0.11 (with presumably a lower yield on BRK debt with same duration).

The net position (investments in yen assets vs yen debt) is subject to change but the currency aspect seems to be at least 100% hedged.

[ValueMaven]

still heavy trading vol in the A shares over the past few weeks.  Yesterday at 1,900 shares alone.  We will find out in a few weeks what all of this means...

[backtothebeach]

5 hours ago, ValueMaven said:

still heavy trading vol in the A shares over the past few weeks.  Yesterday at 1,900 shares alone.  We will find out in a few weeks what all of this means...

The volume spike seems a bit much for one institution only, although...maybe a sovereign wealth fund. The Goverment Pension Fund of Norway (Global) has over $1T in assets. They are also trying to become greener, and Berkshire recently mentioned that they would invest billions in renewable energy infrastructure.

[ValueMaven]

That idea does not make much sense.  You are talking about $1B - $1.5B per day over the last several weeks of excess trading vol compared to historical norms.  Today alone it is 1pm EST and BRKA has traded over 1800 shares vs. 15 for trailing 3M average.  Also, there are regulatory requirements when a company buys-back greater then 25% of the daily trading amount.  

The mystery continues... 

[John Hjorth]

ValueMaven & backtothebeach,

No matter what the reality is [we will see soon], the observation by ValueMaven is still interesting. I've been following Statens Petroleum Fond Utland for many years now, but have not looked at it in the last two calendar years. I will take a look at it again in due course, and report back here in this topic.

Here, it's not [related to the management principles for Statens Petroleum Fond Utland] only about Berkshire ESG matters, but also about Berkshire Corporate Governance.

I'm personally really, really tempted here to go fully invested [which I haven't been since the autumn of 2017], in Berkshire, with new additions considered a trading position.

[sleepydragon]

20 minutes ago, ValueMaven said:

That idea does not make much sense.  You are talking about $1B - $1.5B per day over the last several weeks of excess trading vol compared to historical norms.  Today alone it is 1pm EST and BRKA has traded over 1800 shares vs. 15 for trailing 3M average.  Also, there are regulatory requirements when a company buys-back greater then 25% of the daily trading amount.  

The mystery continues... 

gft posted something yesterday, but I think the site crashed later and his and my replies disappeared.

his point is it might be WEB doing buyback after all. Maybe he got a forward contract with one of the banks

[John Hjorth]

gfp & sleepydragon,

Please repost! - Personally, I'm all ears! [please read : "All eyes!"], -thank you in advance! [ : - ) ]

[gfp]

Haha - I thought I had posted something about the possibility of the A-share volume being related to an "Accelerated Share Repurchase" program (essentially a forward contract with an Investment Bank - Apple has used them off and on).

But then today didn't see it and figured it was a figment of my imagination.

[John Hjorth]

Thank you for reposting and sharing anyway, gfp.

[sleepydragon]

The only news I found today is this:

https://news.bloomberglaw.com/employee-benefits/calpers-opposes-berkshire-committee-members-citing-environment

and also form 4 showing Charlie and Aj donated more shares to charity.

[John Hjorth]

Thank you for sharing, sleepydragon.

Edited April 16, 2021 by John Hjorth

[aws]

4 hours ago, ValueMaven said:

That idea does not make much sense.  You are talking about $1B - $1.5B per day over the last several weeks of excess trading vol compared to historical norms.  Today alone it is 1pm EST and BRKA has traded over 1800 shares vs. 15 for trailing 3M average.  Also, there are regulatory requirements when a company buys-back greater then 25% of the daily trading amount.  

The mystery continues... 

The average volume was always a lot more than 15.  I do see that printed as the volume history on yahoo, but it's definitely not correct.

Volume is higher now, but not THAT much higher.  Volume was about 500-1000 shares a day for the last couple of years.

[John Hjorth]

aws,

Please just use the NYSE website directly for BRK.A. It dosen't lie, I suppose, and I think ValueMaven does not exagerate, perhaps more to the contrary [BRK.A is also traded other places than NYSE].