Buffett/Berkshire - general news

[Spekulatius]

10 minutes ago, Gregmal said:

Am I misremembering or was Howard speculated to be part of some horseback riding border patrol group a few years back? Vaguely remember reading something about a wealthy guy and his buddies roaming around with night vision goggles and guns in Arizona or something like that. 

Yep, Howie likes to play Sheriff. Will be great seeing how he guards the culture at Berkshire:

[LC]

 

[fareastwarriors]

12 minutes ago, LC said:

 

At least they look trained! Never have your finger on the trigger unless you're ready to shoot!

[Gregmal]

Lifestyles of the rich and famous eh? Could be worse. How many stories do we have to hear of these billionaire finance guys who abuse or beat the shit out of hookers in penthouse dungeons or secret mansions? Howie likes to play cops and robbers…to each their own lol 

[Spekulatius]

10 minutes ago, fareastwarriors said:

At least they look trained! Never have your finger on the trigger unless you're ready to shoot!

Looks like a new season of Westworld. Guest stars Howie Buffett and Kyle Rittenhouse play a father/ son team of iron willed farm boys taking back the park all by themselves. 

[fareastwarriors]

We all need some hobbies.

 

[JGBRK]

The true test of character is what a person does when no one is looking.  Howie dipped into petty cash and donated land and money and shortly thereafter received a certificate that takes months of training to receive.  Don't get me wrong, Howie most likely possesses the skills to be in law enforcement but he should put away the checkbook and conduct the training.  When you're dealing with an individual's civil rights you better be trained.  The real question is; are there other ethical, integrity or character lapses with Howie.  Most likely not, but on the other hand we weren't looking.

[boilermaker75]

10 hours ago, Gregmal said:

Am I misremembering or was Howard speculated to be part of some horseback riding border patrol group a few years back? Vaguely remember reading something about a wealthy guy and his buddies roaming around with night vision goggles and guns in Arizona or something like that. 

 

Yes, https://www.phoenixnewtimes.com/news/howard-buffetts-warren-buffet-son-border-war-cochise-county-11103225

[Dynamic]

Charlie Munger (along with Tim Harford, Undercover Economist and author) are in discussion with Stephen Pinker in the latest episode of the new BBC Radio 4 podcast Think With Pinker (direct MP3 link, 28MB) entitled Methinks It Is A Weasel.

[VersaillesinNY]

This link works:

https://www.bbc.co.uk/programmes/p0b4hdtb

Skip first 2 min

Steven Pinker, Tim Harford, Charlie Munger

Edited November 30, 2021 by VersaillesinNY

[ValueMaven]

https://www.barrons.com/articles/apple-stock-berkshire-hathaway-51638371498?mod=hp_DAY_7

[fareastwarriors]

https://www.bloomberg.com/news/articles/2021-12-03/berkshire-s-munger-says-now-is-even-crazier-than-dotcom-bust?srnd=premium

 

Berkshire’s Munger Says Now Is ‘Even Crazier’ Than Dotcom Bust

[RadMan24]

AFR https://www.afr.com/markets/equity-markets/fund-managers-target-unloved-tech-shares-20211203-p59el0

 

Mr Munger did not provide a stock pick, but did reiterate his support for Costco, the low-cost retailer, which he believes could rival Amazon in online shopping.

 

“I think Costco will eventually be a huge internet player,” he said. “People trust it, they have enormous purchasing power to reduce prices, they’re into very efficient forms of distribution.”

Costco’s ability to pass on rising costs to consumers would also insulate the business from sharply rising inflation, which in the US touched the highest level in three decades in October.

“The best you can hope for is that the inflation will be slow,” he said. “It makes investment very difficult.”

[ValueMaven]

Apple hitting another ATH right now at $171 vs. Berkshire's cost of ~$35 or so just 4 years ago.  This is becoming a very high quality problem for Warren

[yesman182]

23 minutes ago, ValueMaven said:

Apple hitting another ATH right now at $171 vs. Berkshire's cost of ~$35 or so just 4 years ago.  This is becoming a very high quality problem for Warren

Problem? You think he cares if 50% of his portfolio is in Apple? 

[Munger_Disciple]

30 minutes ago, yesman182 said:

Problem? You think he cares if 50% of his portfolio is in Apple? 

 

I believe Warren looks at any holding as a % of total asset base of Berkshire including wholly owned businesses (2021 AM), not as a % of marketable security portfolio.  

[ValueMaven]

Bottom line is that Buffett is sitting on a massive homerun/pool of liquidity ... think about it - Berkshire is getting $1B a year alone in dividends + Apple's buyback.  I just wonder how big of a position this will grow into.  It's about 45% of the equity portfolio alone.

[ugadawg_98]

17 hours ago, ValueMaven said:

Bottom line is that Buffett is sitting on a massive homerun/pool of liquidity ... think about it - Berkshire is getting $1B a year alone in dividends + Apple's buyback.  I just wonder how big of a position this will grow into.  It's about 45% of the equity portfolio alone.

True. And the triple play of Apple’s buyback plus Apple’s dividend, plus BRK’s buyback just adds rocket fuel to that return.

[Swedish_Compounder]

It is really interesting when thinking about the long term effects of these two layers of buy backs. 

 

Actually, Berkshires three largest stocks (Apple, American Express and Bank of America) seem committed to making large buybacks over time. Also, Berkshire seems to want to buy back 4-5% annually. 

 

I have been looking at the un-distributed earnings from stock component from 2011 to 2021E. I estimate that this component has increased by roughly 13% CAGR per BRK B share during those ten years when BRK simultaneously built a mountain of cash. If BRK had repurchased 4,5% of their shares per year, the figure would be more like 17% CAGR. And then the largest components of the 2011 stock portfolio consisted of IBM, Wells Fargo and Coca Cola, which were no great components. 

 

If Apple, Bank of America and American Express have a good operational performance the coming 10 years and continue buying back stock and BRK get the chance to buy back at 4% or more a year, the un-distributed earnings from investees component could have a much stronger development than it did the last 10 years. It is also not impossible that they get the chance to add another holding which consistently buys back it stock, further improving the new formula for success. 

[ValueMaven]

Well said!! @Swedish_Compounder - I totally agree 

[omagh]

6 hours ago, Swedish_Compounder said:

Actually, Berkshires three largest stocks (Apple, American Express and Bank of America) seem committed to making large buybacks over time. Also, Berkshire seems to want to buy back 4-5% annually. 

 

I have been looking at the un-distributed earnings from stock component from 2011 to 2021E. I estimate that this component has increased by roughly 13% CAGR per BRK B share during those ten years when BRK simultaneously built a mountain of cash. If BRK had repurchased 4,5% of their shares per year, the figure would be more like 17% CAGR. And then the largest components of the 2011 stock portfolio consisted of IBM, Wells Fargo and Coca Cola, which were no great components. 

@Swedish_Compounder Great point that you make here! There are probably a few other factors to consider...

 

https://static.fmgsuite.com/media/documents/2bde00e4-7037-4c39-beb8-9946b2b2dce3.pdf (page 104 onward)

Chris Bloomstran suggested that BRK's cash balances are roughly in line with historical levels (~15% of assets).  It's doubtful that BRK would have allocated 4-5% annually without giving up some other capital allocation choices. 

 

At present, BRK seems to be allocating the remainder of operating earnings less growth capex to share repurchases (per Bloomstran on a podcast if I recall correctly).  So, a dip in operating earnings likely means a dip in buybacks.  As well, any acquisitions would eat into the available capital and may further eat into any share repurchases.  It's very likely that acquisitions would be done in preference to share repurchases.  Let's not forget as well, that BRK has the largest asset base in the SP500 which has come about by a combination of acquisitions and growth capex.

 

I've made the point before that the market is underestimating the compounding story in BRK, so it will be a band of stability and (somewhat) unexpected growth in the portfolio for those who hold.

[gfp]

This isn't news - Berkshire hasn't been rated a triple A credit since 2011, when the United States of America was downgraded - but it still blows my mind that Johnson and Johnson has a higher (AAA) credit rating than Berkshire does.  They literally put a subsidiary through bankruptcy this year to manage potential liabilities and are planning to spin the company into two parts...  Bonkers

https://finance.yahoo.com/news/berkshire-hathaway-finance-corporation-moody-215507873.html

[ValueMaven]

From Lord Bloomstran: Berkshire’s $31B Apple investment is now worth $159B. Wow. With dividends, the position has compounded at 36% a year for ~5.5 years.

[CassiusKing1]

Question:  With Apple being such a large part of Berkshire now, how does everyone feel having such a large piece of BRK tied up in an asset that we have absolutely no control over?  It's becoming more of a partnership than an investment.  

Thoughts?

[ValueMaven]

I'm fine with it for many reasons.  Frankly, it helps balance out the incorrect old-world stigma that has historically plagued Berkshire.  Plus we get $1b a year in dividends, and a fairly aggressive buyback.