Buffett/Berkshire - general news

[Dynamic]

Interesting. I imagine it's possible that some additional small investments are being made in Japan with currency effects largely offset by this cheap debt, but the interest rate is certainly favorable.

 

Last year we did discover the exact holding in Itochu Corp as it came within the top 15 common stock holdings shown on page 7 of the Chairman's Letter portion of the 2020 Annual Report.

 

I suspect this year that Mitsubishi Corp might just make the cut too at around the 14th or 15th largest, while Mitsui & Co Ltd is likely to miss the cut at around 16th-18th largest.

 

Making no assumptions of buys or sells, here's my approximate top 15 list:

Probable Top 15 common stock investments to be shown in 
2021 Annual Report, approx page 7 of Chairman's Letter.

01 Apple, Inc.      $161.2 bn
02 Bank of America   $46.0 bn (not inc pref <$0.1bn)
03 American Express  $24.8 bn
04 Coca Cola         $23.7 bn
05 Moody's Corporatio $9.6 bn
06 Verizon Communicat $8.3 bn
07 U.S. Bancorp       $8.1 bn
08 BYD Corp HKG:1211  $7.7 bn (but ~9.1% owned by minority interest in BHE)
09 Bank of NY Mellon  $3.9 bn
10 Chevron            $3.4 bn
11 Kroger             $2.8 bn
12 Charter Communicat $2.7 bn
13 Itochu Corp        $2.5 bn (see p7 of 2020AR)
14 Mitsubishi Corp   ~$2.4 bn ~ estimated as not in top 15 in 2020
15 General Motors     $2.4 bn
=============================
Likely to be included in Others ***:
16 DaVita             $2.1 bn
17 Mitsui & Co Ltd   ~$2.1 bn ~ estimated. Unlikely to make top 15 in 2021.
18 Snowflake          $2.1 bn
19 Verisign           $2.0 bn
20 Visa               $2.0 bn
21 AbbVie             $1.9 bn

Not including:
Kraft Heinz not inc [$11.7 bn] - not part
of Equity Investments Carried at Market

Occidental 8% pref/warr ~$9.0 bn ~ incl. 
warrants - part of Others *** - this might
be revalued in 2021AR given rise in oil 
prices in 2021.

 

Edited January 14, 2022 by Dynamic
Adjust line breaks in 'table'

[gfp]

New renewable project pitched by BHE:

 

https://www.businesswire.com/news/home/20220119005998/en/MidAmerican-Energy-Proposes-3.9-Billion-“Wind-PRIME”-Renewable-Energy-Project

 

https://www.bloomberg.com/news/articles/2022-01-19/buffett-s-berkshire-proposes-3-9-billion-wind-solar-project

 

Warren Buffett’s Berkshire Hathaway Inc. is proposing to spend $3.9 billion to bring more wind and solar generation to Iowa in a project that could be among the renewable industry’s biggest.

The “Wind Prime” renewable-energy project would bring 2,042 megawatts of wind generation and 50 megawatts of solar power, Berkshire’s MidAmerican Energy Co. said Wednesday in a statement. The firm is also planning to fund studies about technologies that could help with carbon capture, energy storage and smaller nuclear reactors. 

 

The project would bolster Iowa’s already significant wind market. In 2019, the state generated 41% of its total energy needs from wind, up from just 5.1% in 2006, according to the Iowa Utilities Board. Governor Kim Reynolds called the Wind Prime project a “commitment and investment on a whole new level.”

Berkshire, overseen by Buffett as chief executive officer, has been building MidAmerican’s renewable efforts in recent years. MidAmerican estimates that it delivered 88% renewable energy to Iowa customers on an annual basis in 2021.

 

Buffett has said that he expected the utility could achieve “wind self-sufficiency” in Iowa. MidAmerican said Wednesday that the Wind Prime project will help the utility provide renewable energy equal to its Iowa customers’ annual usage. 

 

“As MidAmerican continues to progress toward delivering 100% renewable energy to our customers, we are also preparing to meet an important milestone of net-zero greenhouse gas emissions,” Kelcey Brown, president and CEO of MidAmerican, said in the statement.

Berkshire expects the project to create 1,100 jobs during construction, and another 125 for ongoing efforts. It can generate an average of $24 million a year in local property-tax payments on the turbines and solar equipment, plus more than $21 million in annual landowner-easement payments. Berkshire expects construction to be completed in late 2024 if the project is approved.  

Edited January 20, 2022 by gfp

[Gregmal]

On 1/9/2021 at 4:26 PM, Gregmal said:

Someone should tell Cathy she needs to let the journalists and cameraman have "unprecedented access". One day there will be never before seen footage, and behind the scenes stories to be told via a remarkable, never before seen documentary. This is....The Last Dance.

With all the people looking for “The Top” and wondering when it will be….it was already found. Hopefully that helps with all the confusion. 

[RadMan24]

Post-pandemic performance: 

[gfp]

https://www.nytimes.com/2022/01/25/business/berkshire-hathaway-annual-meeting.html
 

BRK annual meeting in person this year

[Xerxes]

I sent this picture to a few friends, telling them that this is Berkshire Hathaway holding the line in a blinding blizzard of a bear market. (not exactly bearish with 10% down but still cool picture)

 

[ValueMaven]

American Express had a total blow-out quarter.  They are buying back a ton of stock AND raising the dividend aggressively.  If you have to think what this might look like in 5-10 years for Berkshire given the current pace of the buybacks...and that Berkshire owns north of 18% of AXP o/s

[gfp]

1 hour ago, ValueMaven said:

American Express had a total blow-out quarter.  They are buying back a ton of stock AND raising the dividend aggressively.  If you have to think what this might look like in 5-10 years for Berkshire given the current pace of the buybacks...and that Berkshire owns north of 18% of AXP o/s

 

Berkshire has permission to go up to 25% of AXP through repurchases (if I remember correctly - they have upped it several times).  Looks like AXP had 761 million shares left at the end of the year.  They retired 17m shares in Q4.  Berkshire's 151,610,700 shares put them at 19.9% ownership at that time, so BRK could plausibly be passing 20% ownership currently.  When AXP files their 10Q it would have a more precise recent figure.

[CorpRaider]

On 1/26/2022 at 5:39 PM, ValueMaven said:

American Express had a total blow-out quarter.  They are buying back a ton of stock AND raising the dividend aggressively.  If you have to think what this might look like in 5-10 years for Berkshire given the current pace of the buybacks...and that Berkshire owns north of 18% of AXP o/s

Gottdamnit I blew that one.

[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.”