Buffett/Berkshire - general news

[John Hjorth]

@Dynamic,

 

Thank you very much for your posts above and all the detailed information in them, - much, much better to read your stuff above than reading any transcript , or whatever. Christ, what a soap rant it must have been to experience.

 

Lunatics, perhaps even with personality disorders, are about everywhere.

 

- - - o 0 o - - -

 

I hope you have enjoyed your stay in USA with your wife so far.

Edited May 7, 2023 by John Hjorth

[Luke]

31 minutes ago, Dynamic said:

Yeah, but the questioner called them Gene Therapy, which is not factual, a red flag that he was a pseudoscientific antivax proponent. Anyway Charlie immediately said he completely stood by his previous remark and in seconds moved on to the next serious question from Becky.

 

Suffice to say, many conspiratorial talking points that the Gates Foundation evilly indoctrinates Kids with Critical Race Theory and other idea on the evil "Woke Agenda" (with scare quotes), the defamatory accusation that having met Epstein at some times in the past means Bill is an evil something or other. Don't think he went full David Icke and accused him of being a shape shifting lizard person, but perhaps with another minute at the microphone he might have. I'm doubtless being unfair but extrapolating what he might have said next, which is deliberate and simply a way to show my frustration at the idiotic and defamatory rant he embarked on before being rightfully cut off.

Yeah pretty crazy wow, would have liked to see it haha...good that they managed him though.

[Dynamic]

34 minutes ago, John Hjorth said:

@Dynamic,

 

Thank you very much for your post above and all the detailed information in it, - much, much better to read your stuff above than reading any transscript , or whatever. Christ, what a soap rant it must have been to experience.

 

- - - o 0 o - - -

 

I hope you have enjoyed your stay in USA with your wife so far.

 

You're welcome. The soapbox rant went obvious from his opening introduction but as someone stunned to red flags and spotting conspiratorial thinking and pseudoscience, I quickly got past the idea that he was just politically tribal and realised he was going into a Bill Gates conspiracy rant.

 

Yes, glad to get a lie-in this morning after yesterday in particular.

 

We have half a day's driving today then a full day tomorrow and an early rise and a 3.5 hour drive to return the hire car to where we hired it and fly back to Europe.

 

Got to enjoy some great places in the US on our road trip, including Bryce Canyon National Park, Zion National Park and Monument Valley which were great ways to spend the first few days. Will try to take my in laws to Bryce and Monument next time we're visiting if at all possible, as they don't need to go on a full hike and it's not too far for them to travel.

 

Also appreciated having a bit of time in Denver on the way to Omaha which we really enjoyed, including a really good meal there (and also at Gorat's, where I can recommend the Porterhouse T-bone steak with hash browns, though the Whisky Glazed Ribeye with loaded jacket potato was amazing too. We didn't eat much all day aside from Dilly Bars to leave room for that meal.

 

Enjoyed the whole Berkshire weekend of course, and glad to have done it at least once.

[sleepydragon]

amazing Munger is still so sharp. He doesn't miss a single word and his voice is very strong. Still very healthy.

I am going to buy some sea's candy. 

[dealraker]

1 hour ago, John Hjorth said:

@Dynamic,

 

Thank you very much for your posts above and all the detailed information in them, - much, much better to read your stuff above than reading any transcript , or whatever. Christ, what a soap rant it must have been to experience.

 

Lunatics, perhaps even with personality disorders, are about everywhere.

 

- - - o 0 o - - -

 

I hope you have enjoyed your stay in USA with your wife so far.

+1

[John Hjorth]

45 minutes ago, sleepydragon said:

amazing Munger is still so sharp. He doesn't miss a single word and his voice is very strong. Still very healthy.

I am going to buy some sea's candy. 

 

@sleepydragon,

 

This! And it goes goes for both geriatric gents! It's amazing to experience. Last year, Mr. Buffett seemed a bit slow / tired [?] while starting out, then later got warmed up. This year : Full throttle from first minute!

 

Inspired by what has been posted above about Mr. Buffett : A career of rolling! ... spanning from *rolling* cigarbutts to *rolling* billions of T-bills.

Edited May 7, 2023 by John Hjorth

[LC]

5 hours ago, Dynamic said:

 

 

Also appreciated having a bit of time in Denver on the way to Omaha which we really enjoyed, including a really good meal there (and also at Gorat's, where I can recommend the Porterhouse T-bone steak with hash browns, though the Whisky Glazed Ribeye with loaded jacket potato was amazing too. We didn't eat much all day aside from Dilly Bars to leave room for that meal.

 

Enjoyed the whole Berkshire weekend of course, and glad to have done it at least once.

Where’d you eat in Denver? I may have to add it to my restaurant list! 

[Dynamic]

The Wyndkoop Brewery in Downtown Denver close to Union Station. Really amazing 7 beers and 1 cider we chose between our 2 flights. A microbrewery who knows how to give the flavours they describe without overpowering the flavour or bitterness of the hops and they have won awards for many of them. The one with Anaheim Chile and smoked ancho Chile really had the taste of each and we ordered a pint after our flights. As for food we had a za'atar crusted salmon with giant couscous and sumac labneh which was amazing and a rustic chicken salad which was fabulous especially thanks to the sun-dried tomato relish and roasted red peppers. Worth the price for good beer and good food. I really liked Denver's vibe too.

Edited May 7, 2023 by Dynamic

[ValueMaven]

One thing being overlooked here is how strong Berkshire insurance leadership is.  You have the following employed: Ajit, Joe Brandon (Alleghany), Todd Combs (GEICO), Kara Raiguel (GenRe - who Ajit has praised several times), Pete Eastwood (BH Specialty) ... just to name a few.  Plus Warren of course!  This is the best diversified insurance leadership the company has had in its history.

[gfp]

15 minutes ago, ValueMaven said:

One thing being overlooked here is how strong Berkshire insurance leadership is.  You have the following employed: Ajit, Joe Brandon (Alleghany), Todd Combs (GEICO), Kara Raiguel (GenRe - who Ajit has praised several times), Pete Eastwood (BH Specialty) ... just to name a few.  Plus Warren of course!  This is the best diversified insurance leadership the company has had in its history.

 

I agree those are all huge assets to Berkshire, although I don't know if we are overlooking that fact here on this forum.  I have heard quite a few people here and elsewhere refer to Todd Combs as "a joke" which I found amusing but everyone is entitled to their opinion.  If you think Todd is "a joke" at least listen to his NFM podcast interview to introduce yourself to the guy.

 

Berkshire is absolutely filled with extremely talented people at headquarters.  Marc Hamburg's team (and Marc himself) are very very good.  

 

What struck me at the annual meeting was Warren coming right out and saying that if something were to happen to Greg (like Warren and Greg go down in a plane), there is no next in line identified and the board would be in a tough place.  Greg is that good and it isn't super easy to identify the next person.  I am comforted that Ted Weschler, Ajit, and Todd would be there and the home office team can run the place just fine but maybe "swim to Greg" is the new "swim to Ajit."

[ValueMaven]

GEICO has 500 or 600 legacy IT infrastructure systems that dont talk to each other ... and that need to be ripped out and replaced.  Ouch

[tede02]

I found Buffett's comments about declining earnings across their businesses as very likely this year notable. The subsidaries touch so many different industries. It really provides insight into the broader economy. 

 

I also found the disagreement between Buffett and Munger with respect to investing opportunities intriguing. Basically Munger said (and has been saying this for a number of years), that investing is a lot harder now because there's so much more competition scouring over everything. But Buffett disagreed a bit and said he still thinks there are plenty of opportunities especially in smaller stuff. 

 

I also enjoyed their comments on the banking system and all the insurance businesses that have started and failed over the last decade or so. The commentary around these issues were striking to me. Buffett and Munger must be unmatched in terms of managing risk considering the length of their investing careers. After the AGM, my respect for Buffett's depth of business knowledge always increases. It's probably not a stretch to say there isn't anyone better and may never be. 

Edited May 8, 2023 by tede02

[yesman182]

2 hours ago, ValueMaven said:

GEICO has 500 or 600 legacy IT infrastructure systems that dont talk to each other ... and that need to be ripped out and replaced.  Ouch

I think it was 50-60 not 500-600. But I too cringed when I heard that. At some point they had one system, then 2…… I don’t understand how places just keep adding disjointed systems on top of each other, especially at a place like Berkshire. Really disappointing. In my past life I would come across so many SAP systems that had all these weird layers of software cobbles together half talking with either other. 

[dealraker]

Munger saying Ben Graham made half his money on one stock, Geico, was quite special to hear.

[bluedevil]

I was not sure I fully got the point Buffett was hinting at on oil.  He seemed to be saying that oil was not a bad business now because while it was dependent on the market price of oil, the odds were the price of oil would stay reasonably high.  Because if prices dip, then 5m barrels a day of US shale, which has very short lived production, will roll off the market, causing prices to recover.   Did others take away the same point?  

[LearningMachine]

1 hour ago, bluedevil said:

I was not sure I fully got the point Buffett was hinting at on oil.  He seemed to be saying that oil was not a bad business now because while it was dependent on the market price of oil, the odds were the price of oil would stay reasonably high.  Because if prices dip, then 5m barrels a day of US shale, which has very short lived production, will roll off the market, causing prices to recover.   Did others take away the same point?  

 

Yes, that was part of my take-away as well.  You can see the snippet at https://www.cnbc.com/video/2023/05/06/warren-buffett-on-oil-we-like-occidentals-position-in-the-permian-basin.html .

 

Beyond that, Buffett and Munger also said other positive things about oil:

• Shale is a not a long term source of oil.
  • "If you like quick death in your oil wells, we have them for you."
• "Just imagine taking 5 mb/d out of production in the world and then we are also taking down our strategic petroleum reserve"
  • He was making this point to highlight possibility of oil price shooting through the roof after 5 mb/d production from shale runs out. 
• Changing the official target for inflation rate from 0% to 2% is sending a message that you're going to depreciate the currency over time.
• There is lot more oil under Permian if you can figure out how to take it out.

 

Buffett also accepted the risks he is taking with oil price going up or down, but is saying those are acceptable risks. 

 

 

He didn't go into on this talk but Munger has shared recently about the cartel's pricing power being part of their decision making.  Also, even if the oil price doesn't shoot through the roof, if the price of the rights to receive cash from oil at today's price is so low that he is going to get his cash back in some years, he is happy with that and doesn't find the need to explain it to everyone. 

 

When Buffett is giving a muddled message, i.e. talking about both pros and cons, it usually means he has been thinking about it a lot to decide to buy more if he could.   For example, at the 2020 Annual Meeting, when asked about why he was not buying BRK stock when it was trading at about $160 for B-Shares, he gave a similar muddled message that BRK was worth less compared to when he had bought before the pandemic, and ended with something like "we'll see."   Right after saying that, he bought a lot of BRK.

 

 

 

That said, I still find it surprising BRK is not buying oil sands with much higher reserve lives, no exploration costs, and lower cash operating costs than shale. 

 

'

Edited May 8, 2023 by LearningMachine

[John Hjorth]

6 hours ago, yesman182 said:

I think it was 50-60 not 500-600. But I too cringed when I heard that. At some point they had one system, then 2…… I don’t understand how places just keep adding disjointed systems on top of each other, especially at a place like Berkshire. Really disappointing. In my past life I would come across so many SAP systems that had all these weird layers of software cobbles together half talking with either other. 

 

I actually heard the same as what @ValueMaven posted, meaning 500-600, again meaning 10 x dreadful, wich equals totally dreadful.

[John Hjorth]

And by the way : Congrats to my fellow board member who actually managed to get a question pass the quality, relevance and interest filter put in place by Becky Quick and thereby given priority to be asked.

 

That was very well deserved, I would say.

 

For those who may be nosy about it, it was the question about the economic effects for Berkshires about changes in the US tax code, which actually caused Mr. Buffett to elaborate on the matter at length. Just great stuff, triggered by a high quality question. At approx. 6:16:00 of the full CNBC video on Youtube, 7:44:00 long.

[gfp]

https://di.hkex.com.hk/di/NSAllFormList.aspx?sa2=an&sid=2508&corpn=BYD+Co.+Ltd.++-+H+Shares&sd=08/05/2022&ed=08/05/2023&cid=2&sa1=cl&scsd=08%2f05%2f2022&sced=08%2f05%2f2023&sc=1211&src=MAIN&lang=EN&g_lang=en&

 

Berkshire Hathaway Energy sold out another 11.3895 million BYD shares as of May 2nd (around $334 million dollars)

[Gamecock-YT]

8 hours ago, LearningMachine said:

 

Yes, that was part of my take-away as well.  You can see the snippet at https://www.cnbc.com/video/2023/05/06/warren-buffett-on-oil-we-like-occidentals-position-in-the-permian-basin.html .

 

Beyond that, Buffett and Munger also said other positive things about oil:

• Shale is a not a long term source of oil.
  • "If you like quick death in your oil wells, we have them for you."
• "Just imagine taking 5 mb/d out of production in the world and then we are also taking down our strategic petroleum reserve"
  • He was making this point to highlight possibility of oil price shooting through the roof after 5 mb/d production from shale runs out. 
• Changing the official target for inflation rate from 0% to 2% is sending a message that you're going to depreciate the currency over time.
• There is lot more oil under Permian if you can figure out how to take it out.

 

Buffett also accepted the risks he is taking with oil price going up or down, but is saying those are acceptable risks. 

 

 

He didn't go into on this talk but Munger has shared recently about the cartel's pricing power being part of their decision making.  Also, even if the oil price doesn't shoot through the roof, if the price of the rights to receive cash from oil at today's price is so low that he is going to get his cash back in some years, he is happy with that and doesn't find the need to explain it to everyone. 

 

When Buffett is giving a muddled message, i.e. talking about both pros and cons, it usually means he has been thinking about it a lot to decide to buy more if he could.   For example, at the 2020 Annual Meeting, when asked about why he was not buying BRK stock when it was trading at about $160 for B-Shares, he gave a similar muddled message that BRK was worth less compared to when he had bought before the pandemic, and ended with something like "we'll see."   Right after saying that, he bought a lot of BRK.

 

 

 

That said, I still find it surprising BRK is not buying oil sands with much higher reserve lives, no exploration costs, and lower cash operating costs than shale. 

 

'

 

 

2 things that stood out to me was he was kind of hinting at the oil being an inflation hedge and he thought that the SPR was being used as a political tool instead of its intended use

 

 

[ValueMaven]

The more I read and study Alleghany - the more I realize this was an awesome acquisition inside of Berkshire.  Were any questions about Y raised during the AGM?  I cant seem to find any 

[gfp]

2 minutes ago, ValueMaven said:

The more I read and study Alleghany - the more I realize this was an awesome acquisition inside of Berkshire.  Were any questions about Y raised during the AGM?  I cant seem to find any 

 

Ajit mentioned them in passing - that TransRe would be run independently the same way they have been successfully run for many years.  Warren mentioned in passing that Allegheny's subsidiary was building the big chip plants in Arizona for Taiwan Semiconductor (as they did the Sphere and many other large building projects).  There were a bunch of Squishmallows (jazzwares) on the convention floor.  I had personally missed that Berkshire acquired Squishmallows in this deal.

[Spekulatius]

On 5/7/2023 at 9:46 PM, yesman182 said:

I think it was 50-60 not 500-600. But I too cringed when I heard that. At some point they had one system, then 2…… I don’t understand how places just keep adding disjointed systems on top of each other, especially at a place like Berkshire. Really disappointing. In my past life I would come across so many SAP systems that had all these weird layers of software cobbles together half talking with either other. 

Pretty much any company that is a few decades old has ~50 system different IT applications that the company runs on. Most are probably not mission critical, they are just legacy systems that have not been retired, mostly because there is one or two applications somewhere that are not easy to replace.

Other applications are the result of acquisitions but that's probably not the case for GEICO since they never acquired other companies as far as I know.

 

FWIW, the company I work still has Lotus Notes running for some use cases...

 

(Edited per @John Hjorth request )

Edited May 9, 2023 by Spekulatius

[John Hjorth]

@Spekulatius,

 

Please fullfill your post above by editing it, thank you.

[MCR]

18 hours ago, bluedevil said:

I was not sure I fully got the point Buffett was hinting at on oil.  He seemed to be saying that oil was not a bad business now because while it was dependent on the market price of oil, the odds were the price of oil would stay reasonably high.  Because if prices dip, then 5m barrels a day of US shale, which has very short lived production, will roll off the market, causing prices to recover.   Did others take away the same point?  

 

Hi, All. I was the one who submitted the question that Becky Quick asked about OXY, CVX and the Permian. While it was great to sit in the arena on Saturday and hear my question asked, honestly I don't feel like I got a direct answer. The WSJ reported in March that Permian production may have reached its peak. So, as a shareholder it would be helpful to hear the reasoning behind the position. IMO, Buffett and Munger's response to the question didn't entirely line up with this reporting -- either challenging or affirming it. I didn't gain a clearer understanding of what they see or know that others may not see or understand.