Buffett/Berkshire - general news

[Munger_Disciple]

13 minutes ago, Mephistopheles said:

 

Thanks for posting this!

 

Can someone explain to me what this means exactly:

 

(If the business requires additional working capital to maintain its competitive position and unit volume, the incremental spending should also be included in section (c). However, businesses following the LIFO inventory method usually do not require additional working capital if unit volume does not change. LIFO would give the appearance of an additional need for working capital because inventory is held at a cost less than average, and, or FIFO. Buffet is saying not to confuse that with a working capital need.)

 

If you are using LIFO accounting during inflationary times (reported profits are lower, taxes are lower), it looks like your working capital is going up even if unit volume stays flat. Buffett is saying you need to adjust for the effects of LIFO in that situation and not confuse with increase in working capital not related to LIFO. I think he is referring to a high turnover business where you hold the inventory for a relatively short period of time such as See's Candies or Costco?

Edited November 8, 2022 by Munger_Disciple

[Libs]

2 hours ago, Munger_Disciple said:

 

If you are using LIFO accounting during inflationary times (reported profits are lower, taxes are lower), it looks like your working capital is going up even if unit volume stays flat. Buffett is saying you need to adjust for the effects of LIFO in that situation and not confuse with increase in working capital not related to LIFO. I think he is referring to a high turnover business where you hold the inventory for a relatively short period of time such as See's Candies or Costco?

<The goal of investing is to have intellectual purity. >

 

No wonder Buffett likes Combs so much.

[Mephistopheles]

5 hours ago, Munger_Disciple said:

 

If you are using LIFO accounting during inflationary times (reported profits are lower, taxes are lower), it looks like your working capital is going up even if unit volume stays flat. Buffett is saying you need to adjust for the effects of LIFO in that situation and not confuse with increase in working capital not related to LIFO. I think he is referring to a high turnover business where you hold the inventory for a relatively short period of time such as See's Candies or Costco?

 Thanks for this. It makes sense 

[LearningMachine]

On 11/7/2022 at 9:21 AM, Ulti said:

https://investmentmanagementinsights.substack.com/p/graham-and-dodd-annual-breakfast

Good synopsis featuring Todd Combs

 

Thank you @Ulti for sharing.

 

Awesome principles:

• "Founder led businesses outperform because the founders are the fiduciary, and they have a longer time horizon."
• Focus on "sticky customers and how that affects valuation."
  • "Figure out CAC and LTV...When you slice the data, there are really big pockets where the LTV is negative, and that is where the potential is to improve margins.”
  • So consistent with Buffett's feedback to American Express CEO in the middle of the pandemic that their affluent customer base was their best asset!  They must have also calculated LTV of Apple's customers was much higher as you could make more money from customers in the top x% of income distribution vs. those in the bottom x%.
• "Focus your attention on the unit economics."
• "The worst business grows and needs infinite capital with declining returns. The best business grows exponentially with no capital. "

 

Is anyone else surprised to hear Todd say they are right on maybe 1/10 predictions?  Maybe he meant something else and it didn't get transcribed correctly in the article?

Edited November 9, 2022 by LearningMachine

[competitive-advantage]

3 hours ago, LearningMachine said:

Is anyone else surprised to hear Todd say they are right on maybe 1/10 predictions?  Maybe he meant something else and it didn't get transcribed correctly in the article?

“The nature of the world is that things are constantly changing, and Todd says they are right on maybe 1/10 predictions. “

…
“He reiterated that they don’t do macro, and they don’t predict the future at all. What they do instead is take the world they’ve been given in the present, without having to understand the future.”

 

He’s talking about macro and arguing against trying to predict macroeconomic dynamics.

[gfp]

Looks like USB was one of the big financial stock sales 

https://www.sec.gov/Archives/edgar/data/36104/000119312522282565/d302279dsc13ga.htm

 

they also filed in HK with another 14.285 million share sale of BYD

https://di.hkex.com.hk/di/NSAllFormList.aspx?sa2=an&sid=2508&corpn=BYD+Co.+Ltd.++-+H+Shares&sd=11/11/2021&ed=11/11/2022&cid=2&sa1=cl&scsd=11%2f11%2f2021&sced=11%2f11%2f2022&sc=1211&src=MAIN&lang=EN&g_lang=en&

Edited November 11, 2022 by gfp

[Ulti]

Nice refresher:

https://www.morningstar.com/articles/1122817/12-lessons-on-money-and-more-from-warren-buffett-and-charlie-munger

[Spekulatius]

Buffet is selling out USB. He used to own ~8.5% and is now down to ~3.6%. he is probably going to sell down his entire position. Now that I bought USB....

https://www.sec.gov/Archives/edgar/data/36104/000119312522282565/d302279dsc13ga.htm

 

I see our resident expert @gfp beat me to it.

Edited November 11, 2022 by Spekulatius

[fareastwarriors]

$tsm  

 

 

[Luke]

Very exiciting, i think its a great addition!!

[nwoodman]

Fascinating purchase by Berkshire.  A couple of thoughts.  1. Is this a cheap way to ride the Apple juggernaut?  2. Is this more Munger than Buffett?  Charlie being interviewed tomorrow on CNBC - coincidence? 3.  TSMC were down another 10% from the end of Q3 so perhaps this position is closer to $5-6bn (taken into account the bounce and Buffett pop).  4.  Would the recent discussions of 3nm manufacture in the USA figure at all i.e. more USA exposure less China risk.  

Edited November 14, 2022 by nwoodman

[UK]

4 hours ago, nwoodman said:

Fascinating purchase by Berkshire.  A couple of thoughts.  1. Is this a cheap way to ride the Apple juggernaut?  2. Is this more Munger than Buffett?  Charlie being interviewed tomorrow on CNBC - coincidence? 3.  TSMC were down another 10% from the end of Q3 so perhaps this position is closer to $5-6bn (taken into account the bounce and Buffett pop).  4.  Would the recent discussions of 3nm manufacture in the USA figure at all i.e. more USA exposure less China risk.  

 

Re 2. Or is still not to large to be for T or T? Interesting pick nevertheless. Some really deep tech:)?

 

At what time or where do you see information on Charlies interview?

[nwoodman]

11 minutes ago, UK said:

 

Re 2. Or is still not to large to be for T or T? Interesting pick nevertheless. Some really deep tech:)?

 

At what time or where do you see information on Charlies interview?

 

 

[UK]

4 minutes ago, nwoodman said:

 

 

 

Thanks!

[CorpRaider]

For all the OXY ink, good lord that CVX position is Buffett, is yuge, and he's still buying.  Interesting to see him sell some $BK. Wonder if Paramount is WEB or Ted.  Up to 15% of the class.  $LPX is kind of interesting given the history with building materials, johns manville, and unforeseen liabilities.  Super cheap cyclical, maybe it's Ted.

Edited November 15, 2022 by CorpRaider

[UK]

Yes, oil bet is big and definately Buffett's. PARA I would guess is not his bet. Also it is possible, that USB was bought by WB and also later by one of T. If TSM was bought by WB himself, it would be quite a surprise, but it is almost to large for T or T, but maybe their allocations of BRK portfolio were increased?

[DooDiligence]

3 hours ago, UK said:

Yes, oil bet is big and definately Buffett's. PARA I would guess is not his bet. Also it is possible, that USB was bought by WB and also later by one of T. If TSM was bought by WB himself, it would be quite a surprise, but it is almost to large for T or T, but maybe their allocations of BRK portfolio were increased?

 

PARA (nice set of properties), but no DIS 

[Spekulatius]

13 hours ago, UK said:

Yes, oil bet is big and definately Buffett's. PARA I would guess is not his bet. Also it is possible, that USB was bought by WB and also later by one of T. If TSM was bought by WB himself, it would be quite a surprise, but it is almost to large for T or T, but maybe their allocations of BRK portfolio were increased?

I think TSM is  a WEB buy not T&T. I think he dumped USB and swapped it for TSM basically (seeling USB is still in progress  I think).

 

TSM is probably for WEB an "inevitable" company/business and he may have learned how important they are through Apple / Tim Cook.

 

I hope he is right about buying TSM and wrong about selling USB , since I bought both recently.

Edited November 16, 2022 by Spekulatius

[UK]

13 minutes ago, Spekulatius said:

I think TSM is  WEB buy not T&T. I think he dumped USB and swapped it for TSM basically (seeling USB is still in prrogress I think).

 

TSM is probably for WEB an "inevitable" company/business and he may have learned how important they are through Apple / Tim Cook.

 

I hope he is right about buying TSM and wrong about selling USB , since I bought both recently.

 

I was just guessing, but also thought that maybe it was T or T, who sold his share of USB and bougth TSM. Now, if WB bought TSM himself it would be a great news, since it is cheap and very strong business, but also it would mean, that his circle of competence has increased quite substantially! To make decisions about all thes extreme ultraviolet things is quite something comparing to water and sugar. So interesting and great news anyway!

[Spekulatius]

10 minutes ago, UK said:

 

I was just guessing, but also thought that maybe it was T or T, who sold his share of USB and bougth TSM. Now, if WB bought TSM himself it would be a great news, since it is cheap and very strong business, but also it would mean, that his circle of competence has increased quite substantially! To make decisions about all thes extreme ultraviolet things is quite something comparing to water and sugar. So interesting and great news anyway!

You don't need to understand EUV tech to invest in TSM. You just need to understand how important this tech is and how hard it would be to duplicate what TSM has done.

 

The financial statements talk for themselves. There is no issue there. the political risk is harder to quantify. I don't think WEB really has an edge there.

[CorpRaider]

I conjecture that he's dumping USB because of the reported bad activity that to me was basically identical to the WFC stuff.  Cockroaches and all that. 

 

All things being equal, I think he would prefer Para over DIS because of capital allocation/ownership alignment.  DIS just had to put out a presser....about forming a committee.....to look at cost cuts in streaming...LOL for fooks sake.  Shari and co tried to sell publishing and sold real estate/HQ and they've also been more rational and less reactionary to wall street wishes about theatre business and arms dealing to Amazon and NFLX imop.  They also blew up Hwang and those guys with the timely prefs issuance.  Financially sharp, he likes all else being similar.  It's also waaaaaaay cheaper and he says a lot of BS but usually he buys stuff pretty damn cheap.  Also, it might be Ted.

Edited November 15, 2022 by CorpRaider

[gfp]

Yeah I doubt PARA is a Warren Buffett pick.  USB was, and he went right up to 10% and kept it just below for years.  When Warren starts to sell he usually sells it all, so it could disappear next quarter.

[CorpRaider]

Oh yeah would be shocked if he's not totally bailing on USB.  Not as shocked as I would be if BAC isn't doing much more horrible stuff on a larger scale at this very moment than USB and WFC, particularly in Merrill, but very shocked.

Edited November 15, 2022 by CorpRaider

[Spekulatius]

20 minutes ago, CorpRaider said:

I conjecture that he's dumping USB because of the reported bad activity that to me was basically identical to the WFC stuff.  Cockroaches and all that. 

 

All things being equal, I think he would prefer Para over DIS because of capital allocation/ownership alignment.  DIS just had to put out a presser....about forming a committee.....to look at cost cuts in streaming...LOL for fooks sake.  Shari and co tried to sell publishing and sold real estate/HQ and they've also been more rational and less reactionary to wall street wishes about theatre business and arms dealing to Amazon and NFLX imop.  They also blew up Hwang and those guys with the timely prefs issuance.  Financially sharp, he likes all else being similar.  It's also waaaaaaay cheaper and he says a lot of BS but usually he buys stuff pretty damn cheap.  Also, it might be Ted.

The problem with PARA is that they assets are subPAR if you compare it with DIS or even WBD, imo. I think if they go it alone, they will destroy the value of their equity. Finding a merger partner that actually can come through regularity hurdles is going to be hard.

 

If they wanted to sell out, they should not have merged CBS with Viacom.

[cubsfan]

3 hours ago, CorpRaider said:

Oh yeah would be shocked if he's not totally bailing on USB.  Not as shocked as I would be if BAC isn't doing much more horrible stuff on a larger scale at this very moment than USB and WFC, particularly in Merrill, but very shocked.

 

^ What's your take on what BAC is doing?  

 

Haven't been following the banks much and certainly was disappointed how it took WFC 

forever to clean themselves up - if they ever did..