Buffett/Berkshire - general news

[gfp]

Bloomberg canada published an update on Berkshire's investment in Japanese trading houses - no pay wall for me at least:

https://www.bnnbloomberg.ca/buffett-strikes-gold-as-japan-trading-houses-see-record-profits-1.1717712

[Thelilyinvestor]

2 hours ago, gfp said:

Bloomberg canada published an update on Berkshire's investment in Japanese trading houses - no pay wall for me at least:

https://www.bnnbloomberg.ca/buffett-strikes-gold-as-japan-trading-houses-see-record-profits-1.1717712

 

Just sharing a personal experience here, maybe someone can find it interesting: 

 

I had a look at these when the news broke that Buffett had invested in the sogo sosha, and bought Itochu (8001), for the last 24 months net profits have gone up 100%, sits right now at PE 6 and it is a very high quality management.

 

I think they still have plenty of room to grow so they are likely to provide some nice returns for Berkshire in the future.

[ValueMaven]

Looks like a deep freeze might hit Texas.  Does anyone know the status of BHE's $10B CAPEX proposal to the state?

[gfp]

50 minutes ago, ValueMaven said:

Looks like a deep freeze might hit Texas.  Does anyone know the status of BHE's $10B CAPEX proposal to the state?

 

Dead - Texas politicians rejected it.  It did not move forward at all.

[gfp]

Some Berkshire nerds might be interested, this is obviously not material news but its interesting to some:

 

One of Berkshire's representatives on the Kraft Heinz board of directors is resigning (curiously, this Berkshire nominee was Alexandre Van Damme from Interbrew who is usually more connected with the 3G guys/companies than Berkshire).  You can tell Greg Abel was put in charge of nominating a replacement director - he chose Alicia Knapp, CEO of BHE Renewables.  Greg Abel is also on the KHC board of directors.  Tracey Britt Cool used to be a Berkshire nominee on the KHC board before she left Berkshire to strike off on her own.  (the CEO of MedPro Group is also a Berkshire nominee to the board)

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1637459/000163745922000012/khc-20220201.htm 

Edited February 4, 2022 by gfp

[MCR]

Super interesting infographic from Hendrik Bessembinder's research on wealth creation in the stock market. Berkshire Hathaway is one of the top 20 wealth creators from 1926-2017. (It's also now or previously was a co-owner of several others in the group.) For some reason, the CRSP database used in the study dates BRK to November 1976, which is why it labeled as publicly trading for just over 40 years in the infographic.

 

https://wpcarey.asu.edu/sites/default/files/2021-10/do-stocks-outperform-treasury-bills.pdf

[Xerxes]

How surprised or relived people would be if they find out that Buffett had built a large hedge against Apple at this stage, when his letter comes out. 

 

If Apple is a not-to-sell digital industrial pillar of Berkshire, but if there is a liquid market out there that allows you to hedge yourself, wouldn’t this be prudent thing to do for Omaha at this point. 

[ValueMaven]

Apple is cheap - no way he did that.  People still fail to understand the power of the ecosystem and the upgrade cycle.  They are innovating AND giving cash back to shareholders.  

[ValueMaven]

Could anyone see Berkshire acquiring CLX?  The stock has been cut in HALF and is now only ~$17B market cap company.  We know how much Buffett loves brands - and the business throws off a ton of cash.  That said - he has mentioned with regards to Kraft he has been surprised and how quickly the consumers preference for some brands has changed.  

[Xerxes]

4 minutes ago, ValueMaven said:

Apple is cheap - no way he did that.  People still fail to understand the power of the ecosystem and the upgrade cycle.  They are innovating AND giving cash back to shareholders.  

I didn’t mean sell. And hedging nothing to do with buybacks and dividends or their innovation. 

Apple is theirs to keep.
 

I meant if they would hedge Apple via options. Since there is a market for that. There is no such market for BHE or its railroad, the other 3 of the BRK 4 pillars. 

[LearningMachine]

1 hour ago, ValueMaven said:

Could anyone see Berkshire acquiring CLX?  The stock has been cut in HALF and is now only ~$17B market cap company.  We know how much Buffett loves brands - and the business throws off a ton of cash.  That said - he has mentioned with regards to Kraft he has been surprised and how quickly the consumers preference for some brands has changed.  

 It still doesn't look cheap from EV/EBIT or P/E perspective. 

 

One good thing for inflation is that tangible assets needing to be replaced with inflated dollars are not very high compared to EBIT.  So, the earnings are coming more from the brand instead of the tangible assets, but brand is indeed at risk from the monopsony power of Costco, Walmart, and Amazon.

 

Edited February 5, 2022 by LearningMachine

[Gamecock-YT]

On $CLX, their capital allocation strategy is a bit suspect. Given the covid boom they bought back 3% of the company at what is now a pretty expensive price. 

[gfp]

https://www.berkshirehathaway.com/news/feb1422.pdf
 

Tom Murphy resigns from BRK board at 96

[hasilp89]

New positions in NU, activision and formula one

[gfp]

A rare comment on the timing and cost basis of a new stock market investment.  Warren didn't want people to think he was chatting with Bill Gates and front-ran the deal announcement.

 

https://www.wsj.com/articles/berkshire-hathaway-bought-bulk-of-stake-in-activision-blizzard-in-october-11644952482?mod=hp_lista_pos1

 

Berkshire bought the ATVI shares at $66.53 avg cost in October, before the lows.  Ted or Todd position, as expected from the size and nature of the business.

 

edit: this is mis-reporting by the wall street journal on cost basis.  They simply used the end of year price for ATVI as the cost basis without getting confirmation from Berkshire

 

The WSJ corrected their article to reflect the true cost basis on the ATVI shares that their source at Berkshire provided -

"Berkshire bought the shares at an average price of roughly $77 a share, the person said"

Edited February 16, 2022 by gfp

[Blugolds]

19 minutes ago, gfp said:

A rare comment on the timing and cost basis of a new stock market investment.  Warren didn't want people to think he was chatting with Bill Gates and front-ran the deal announcement.

 

https://www.wsj.com/articles/berkshire-hathaway-bought-bulk-of-stake-in-activision-blizzard-in-october-11644952482?mod=hp_lista_pos1

 

Berkshire bought the ATVI shares at $66.53 avg cost in October, before the lows.  Ted or Todd position, as expected from the size and nature of the business.

 

edit: this is mis-reporting by the wall street journal on cost basis.  They simply used the end of year price for ATVI as the cost basis without getting confirmation from Berkshire

 

 

I can see why he obviously would want to say something, especially with the recent backlash against politicians suspected insider trading and the media having a field day with this...its easy to make it look bad and Warren wants none of that...reminds me of his comments during the Salomon Brothers ordeal,

 

 “If [the employees of Salomon Brothers] follow this test, they need not fear my other message to them,” Buffett said. “Lose money for the firm, and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”

[gfp]

Working on something today I downloaded a few of National Indemnity's recent filings with the National Association of Insurance Commissioners (NAIC) and thought I would upload them here for anyone curious for a more recent "look under the hood" of the Berkshire subsidiary that actually owns many of the other Berkshire subsidiaries.  Hopefully they are attached here as PDF files.  Only the nerdiest would probably be interested in these - fair warning...

 

(file ending ..892 is the most recent quarter, Q3.  The other filings are annual filings from 2020)

file ending ...812 shows many of the actual sales dates and prices of shares sold in 2020, the airlines, wells fargo, costco, apple, oxy dividend shares, etc.  Also shows the acquisitions of the japanese trading company shares with specifics.

 

One undisclosed item I found is that Berkshire (likely Ted or Todd) purchased $646 million worth of Airbus shares in France on 7/30/2021.  Most undisclosed investments are hidden inside "Harney Investment Trust" - the vehicle Berkshire has used to hide investments from public view since 1998.

 

Another data point is that Berkshire OXY warrants currently have a strike price of 59.624  (originally it was 62.50 but Icahn had them do a dilutive deal that adjusted Berkshire's strike per the terms)

 

20087.2020.P.AN.PM.O.A.4100394.pdf 20087.2020.P.AN.PF.O.J.4176868.pdf 20087.2021.P.Q3.P.O.3.4228892.pdf

20087.2020.P.AN.PI.O.M.4067812.pdf

Edited February 23, 2022 by gfp

[alpha]

1 hour ago, gfp said:

Working on something today I downloaded a few of National Indemnity's recent filings with the National Association of Insurance Commissioners (NAIC) and thought I would upload them here for anyone curious for a more recent "look under the hood" of the Berkshire subsidiary that actually owns many of the other Berkshire subsidiaries.  Hopefully they are attached here as PDF files.  Only the nerdiest would probably be interested in these - fair warning...

 

(upper left is the most recent quarter, Q3.  The other filings are annual filings from 2020)

 

One undisclosed item I found is that Berkshire (likely Ted or Todd) purchased $646 million worth of Airbus shares in France on 7/30/2021.  Most undisclosed investments are hidden inside "Harney Investment Trust" - the vehicle Berkshire has used to hide investments from public view since 1998.

 

Another data point is that Berkshire OXY warrants currently have a strike price of 59.624  (originally it was 62.50 but Icahn had them do a dilutive deal that adjusted Berkshire's strike per the terms)

 

20087.2020.P.AN.PM.O.A.4100394.pdf 5.97 MB · 3 downloads 20087.2020.P.AN.PF.O.J.4176868.pdf 3.05 MB · 3 downloads 20087.2021.P.Q3.P.O.3.4228892.pdf 2.27 MB · 9 downloads

 

Thanks for sharing gfp!

[gfp]

Had a couple requests for the 2021 annual NAIC filings from National Indemnity now that they are released.  Posting them here since I can't put attachments on private messages.

 

20087.2021.P.AN.PI.O.M.4259200.pdf20087.2021.P.AN.PK.O.M.4259201.pdf

[gfp]

And the last one, wouldn't fit in first post:

20087.2021.P.AN.PO.O.M.4259202.pdf

[mcliu]

Thanks for sharing!

 

Btw, does anyone know why WB didn't mention DaVita & Verisign as one of the top 15 holdings in his annual letter? Did they sell out?

[ValueMaven]

That is a great point actually.  I highly doubt they sold out given Ted's conviction in the stock - he also personally owns 2M shares.  I've also wondered why DaVita isnt accounted for using the Equity Method given that Berkshire now owns close to 40% of the shares outstanding 

Edited March 2, 2022 by ValueMaven

[gfp]

3 hours ago, ValueMaven said:

That is a great point actually.  I highly doubt they sold out given Ted's conviction in the stock - he also personally owns 2M shares.  I've also wondered why DaVita isnt accounted for using the Equity Method given that Berkshire now owns close to 40% of the shares outstanding 

 

I don't know why it wasn't included but asked Marc Hamburg and will report back if I get an answer.  As for the equity method question, I beleive it has to do with commitments to remain passive shareholders in the agreement between DaVita and Berkshire/Ted.  For the same reason, I would not expect American Express to become an equity method investment this year.

 

 

**edit: I believe at least 17.5 million of Berkshire's DaVita shares are held in pension funds

 

**edit: CFO confirms the above, about half of the DVA position is in pension funds

Edited March 2, 2022 by gfp

[ValueMaven]

Thank you @gfp !!

[Buckeye]

Damn @gfp, contacting the CFO? Nice work.