Buffett/Berkshire - general news

[backtothebeach]

2 hours ago, hardcorevalue said:

even though it's losing relevance does anyone care to guess what p/b $BRK.b is trading at today? 

 

At today's close I have estimated "realtime" BV at $214.26 and the B shares at a P/BV of 1.24.

[gfp]

1 hour ago, yesman182 said:

I was wondering if WEB would sell his ATVI shares and buy back more BRK shares. At most he stands to make ~25% before taxes with ATVI. But since the ATVI deal isn't certain to close, why "risk it" when you have the buyback as an option.  When they were buying ATVI in Q1 is seems like the BRK shares were near the all time high. It seems to me that the BRK shares are around 20% below intrinsic value and it seems like they are a better buy than ATVI.

 

I doubt he is capital constrained to the point where it's a 'one or the other' situation.  But, yes, that's why arb spreads tend to widen out when stocks are hitting new lows.  People sell what they can to raise funds.

 

Warren has the Alleghany check to write some time soon, then a Pilot Corp. check to write in January and has moved some of the cash into slightly longer dated treasuries.  

[Dynamic]

I hold some ATVI myself in a tax free account and have considered adding to Berkshire or Markel using the proceeds. It has held up pretty nicely against a declining market as merger arbs tend to, but I've been on the fence about whether to switch or not.

 

A central estimate of a Berkshire's 1 year return might well be close to the possible 6-9 month returns offered by ATVI if the merger proceeds but I quite like the market neutrality of the position in case Berkshire gets even a little cheaper and I decide to really load up, to lock in not only the 1 year returns but the subsequent long term compound returns of inflation+7-9% that we might expect after that.

 

I think my hysteresis would like the return of the alternative to be just a little more juicy before I switch.

[nwoodman]

MS with an update on losses

 

“Hurricane Ian makes Florida landfall, marking the first major hurricane to make landfall since Hurricane Ida in 2021. Current industry loss estimates range from $10b-$30b+. We think individual company exposures are manageable. While total insured losses for FY22 should be < $100b, we still expect strong reinsurance pricing into 2023.”

 

 

 

INSURANCE_20220929_0000.pdf

[DooDiligence]

7 hours ago, nwoodman said:

MS with an update on losses

 

“Hurricane Ian makes Florida landfall, marking the first major hurricane to make landfall since Hurricane Ida in 2021. Current industry loss estimates range from $10b-$30b+. We think individual company exposures are manageable. While total insured losses for FY22 should be < $100b, we still expect strong reinsurance pricing into 2023.”

 

 

 

INSURANCE_20220929_0000.pdf 323.33 kB · 7 downloads

 

I'm assuming the "excluding auto" cohort will see the biggest portion of claims?

 

When I switched to GEICO for auto, a few years ago, I tried bundling home and auto but they wouldn't write a homeowners policy. I was very happy to see this.

[Spekulatius]

1 hour ago, DooDiligence said:

 

I'm assuming the "excluding auto" cohort will see the biggest portion of claims?

 

When I switched to GEICO for auto, a few years ago, I tried bundling home and auto but they wouldn't write a homeowners policy. I was very happy to see this.

Did Geico ever write homeowners? They had an affiliation with Travellers to write homeowners when I was with Geico years ago.

 

Auto could take a decent hit,  if there is widespread flooding.

Edited September 29, 2022 by Spekulatius

[longterminvestor]

Auto will be a portion of loss because auto policies include flooding, homeowners does not cover flood.  Flood is backed by US Gov through National Flood Program.  Some private players have started to underwrite flood - mostly Lloyds and have seen some AIG.  

 

GEICO does not write homeowners on GEICO paper, they act as agent - similar model to USAA in Florida.  

 

BoatUS is a Berkshire company and they write boats - will be some claim activity in recreational marine as well.  GEICO also writes boats on GEICO paper.  

[DooDiligence]

Here's a few interesting threads on Reddit:

 

---

 

 

[longterminvestor]

Here is data for insurance companies exposed in Florida.  This does not include Auto and its state wide.  I don't know if its possible to pull data by county - maybe total exposure by county but doubt data is available by carrier by county (for competitive reasons)

 

According to this data, in Florida there is $2.9Trillion of exposure for wind.  Again, does not include auto/marine and other lines.  

 

https://floir.com/tools-and-data/residential-market-share-reports

FL - STATEWIDE - BY POLICY TYPE - INCLUDING WIND.pdf FL STATEWIDE - PERSONAL & COMMERCIAL INSURANCE RANKING.pdf

[DooDiligence]

Greg Abel buying A shares.

 

www.sec.gov/Archives/edgar/data/1067983/000108131622000039/xslF345X03/wf-form4_166482914221983.xml

[ValueMaven]

Sizable buy for Greg!  In the A shares as well.  Great purchase price!!

[DooDiligence]

39 minutes ago, ValueMaven said:

Sizable buy for Greg!  In the A shares as well.  Great purchase price!!

 

I'm up to 16.1% BRK.B with half in an IRA (at $195) and half in taxable (at $274).

Seems like a good backstop and I'll likely be adding more in taxable.

[Dynamic]

Looks like Greg's Trust now owns 173 BRK.A shares, 5 shares already, plus 168 shares of new purchases shown in the four Form 4 fillings of October 3, 2022, purchased for around $405,000 to $408,000 per share. Total market value would be about $70 million.

 

This strikes me as a very sound price compared to Intrinsic value. ($270-272 is the equivalent price range for BRK.B shares)

 

I think that price range gives prospects for solid compounding in the medium to long term (say inflation plus 6-9% cagr) plus a likely short term re-rating boost that might well add as much as 15% one-off (not compound) boost to the total returns after the next year or two if more typical market valuations then prevail for Berkshire and it's common stock holdings.

 

If prices then happen to be somewhat depressed at that future time, like today, I'd still expect most of the 6-9% cagr real growth rate to be reflected in the return, and only an extreme low valuation such as in May 2020 is likely to result in the position being underwater at prevailing market prices.

[Xerxes]

13 hours ago, ValueMaven said:

Sizable buy for Greg!  In the A shares as well.  Great purchase price!!

 

Is having the A-share for him is of any major significance ,,, as oppose to the equivalent B-share ?

[Dynamic]

To me it seems there was plenty of liquidity to buy all he wanted in Class A and there's the modest bonus of greater voting rights.

[DooDiligence]

2 minutes ago, Dynamic said:

To me it seems there was plenty of liquidity to buy all he wanted in Class A and there's the modest bonus of greater voting rights.

 

Also seems like a demonstration of commitment.

[crs223]

1 hour ago, Xerxes said:

 

Is having the A-share for him is of any major significance ,,, as oppose to the equivalent B-share ?

 

I work for an employee-owned company and I love my job.  A major part of my satisfaction is being an owner, with voting rights.

 

If the company wants me to do something dumb (sexual harassment training, unclog toilet, etc) I actually want to help.  I’ll never work for a company where I’m not an owner.

 

I cannot imagine what it’s like being Greg, but my guess is the even for him life is better when you’re a voting owner.

[maxthetrade]

KBW believes that Berkshire Hathaway will face the highest level of losses from Hurricane Ian at $1.40 billion, representing 0.2% of the company’s $469.65 billion of common equity.

Behind this was Chubb, which could face $1.02 billion of losses, according to KBW, or 1.6% of its $51.67 billion of common equity.

The third-highest level of losses is faced by Arch Capital Group at $732 million, representing 5.2% of common equity, followed by Progressive with $625 million, or 3.1% of common equity, and Allstate at $578 million, or 2.5%.

Companies that could see the biggest relative impact to their finances include RenaissanceRe, whose $500 million loss – as calculated by KBW – would represent a huge 9.0% of its common equity.

Other firms that could be reporting heavily impacted Q3 results include The Hanover, whose assumed $200 million loss would represent 6.1% of its common equity, and Everest Re, whose $563 million loss would represent 5.6% of its common equity.

[glider3834]

3 hours ago, maxthetrade said:

KBW believes that Berkshire Hathaway will face the highest level of losses from Hurricane Ian at $1.40 billion, representing 0.2% of the company’s $469.65 billion of common equity.

Behind this was Chubb, which could face $1.02 billion of losses, according to KBW, or 1.6% of its $51.67 billion of common equity.

The third-highest level of losses is faced by Arch Capital Group at $732 million, representing 5.2% of common equity, followed by Progressive with $625 million, or 3.1% of common equity, and Allstate at $578 million, or 2.5%.

Companies that could see the biggest relative impact to their finances include RenaissanceRe, whose $500 million loss – as calculated by KBW – would represent a huge 9.0% of its common equity.

Other firms that could be reporting heavily impacted Q3 results include The Hanover, whose assumed $200 million loss would represent 6.1% of its common equity, and Everest Re, whose $563 million loss would represent 5.6% of its common equity.

 

also from the same article

 

'Nevertheless, analysts concluded that losses will almost certainly sustain “very significant” property-catastrophe reinsurance rate increases in 2023, despite being subject to change.'

 

https://www.reinsurancene.ws/hurricane-ian-a-very-expensive-earnings-event-says-kbw/

[Dynamic]

A new 8-K was released by Berkshire stating in essence that the Board will be seeking a new independent director to replace David Gottesman.

 

On September 28, 2022, David S. Gottesman, a Berkshire director died. Prior to Mr. Gottesman’s death, the Board of Directors was comprised of eight independent directors and seven non-independent directors. Mr. Gottesman was an independent director and as a result of Mr. Gottesman’s death, the Board of Directors is not currently comprised of a majority of independent directors as required by Section 303A.01 of the NYSE Listed Company Manual.

 

On September 30, 2022, as required by Section 303A.12 of the NYSE Listed Company Manual, Berkshire Hathaway submitted an interim written affirmation to the NYSE as a notice of noncompliance with Section 303A.01 of the NYSE Listed Company Manual. On October 3, 2022, the Company received an official notice of noncompliance from the NYSE. The NYSE notice stated that the Company will need to correct the noncompliance as promptly as practicable. It is the intention of the Berkshire Hathaway Board of Directors to appoint a new independent director as soon as practicable.

[gfp]

Reuters released an article on BHE’s salton sea lithium extraction project -

https://m.investing.com/news/stock-market-news/us-steps-away-from-flagship-lithium-project-with-berkshire-2905340

[maxthetrade]

This is pretty cool: Warren Buffett's stock portfolio is so large that unrealized investment losses in the 2nd-quarter led to a 10% decline in earnings per share for the whole S&P 500

 

https://finance.yahoo.com/news/warren-buffetts-stock-portfolio-large-191144181.html

 

Edited October 6, 2022 by maxthetrade

[John Hjorth]

Greg Abel interviews Walter Scott Jr. at Davis Global Center [2020] .

 

H/T Kevin Carpenter , running the Kingswell substack .

Edited October 8, 2022 by John Hjorth

[John Hjorth]

On 10/5/2022 at 8:08 AM, Dynamic said:

A new 8-K was released by Berkshire stating in essence that the Board will be seeking a new independent director to replace David Gottesman.

 

On September 28, 2022, David S. Gottesman, a Berkshire director died. Prior to Mr. Gottesman’s death, the Board of Directors was comprised of eight independent directors and seven non-independent directors. Mr. Gottesman was an independent director and as a result of Mr. Gottesman’s death, the Board of Directors is not currently comprised of a majority of independent directors as required by Section 303A.01 of the NYSE Listed Company Manual.

 

On September 30, 2022, as required by Section 303A.12 of the NYSE Listed Company Manual, Berkshire Hathaway submitted an interim written affirmation to the NYSE as a notice of noncompliance with Section 303A.01 of the NYSE Listed Company Manual. On October 3, 2022, the Company received an official notice of noncompliance from the NYSE. The NYSE notice stated that the Company will need to correct the noncompliance as promptly as practicable. It is the intention of the Berkshire Hathaway Board of Directors to appoint a new independent director as soon as practicable.

 

This is lack of due diligence by the board - plain and simple.

[ValueMaven]

The Berkshire board has lost three superstars over the last year: Sandy, Gates, and Walter Scott !!