Buffett/Berkshire - general news

[sleepydragon]

16 minutes ago, MCR said:

 

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.

 

not expert in oil, but the way I heard it, I think WEB is saying the shale oil can add pressure to oil price only in the short term, because each well's life is short, but in longer term, the technology is quite sophisticated (drill horizontally etc) to get more oils - so in essence in the longer term it's capital intensive and needs a lot of special technologies for the shale to add more oil to the market in a stable fashion.  

[AlwaysDay1]

@MCR was their implication perhaps that the lack of production (along with the decrease in strategic reserves) may keep oil prices higher for longer, resulting in higher cash returns to shareholders via buybacks/dividends?  

[Spooky]

I made this since I found the juxtaposition of the two events Saturday fascinating. Love how low key and humble these two remain. All hail king Charlie!

 

[Xerxes]

[Xerxes]

40 minutes ago, Spooky said:

I made this since I found the juxtaposition of the two events Saturday fascinating. Love how low key and humble these two remain. All hail king Charlie!

 

 

Charles III is doing his job. His job requires him to wear these things and participate in the pomp and ceremony. That is literally part of his job description, the moment he was born in that family. 
 

These are not comparable, despite Buffett’ attempt at humour. 
 

Compare Munger low-keyless to other business titans and not reigning sovereigns.  

Edited May 9, 2023 by Xerxes

[CanadianMunger]

2 hours ago, MCR said:

 

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.

 

I'm pretty sure Buffett wants to keep on buying Oxy, so it's no surprise he didn't give a straight answer on it. 

 

Also, I'm pretty sure he intentionally telegraphed that Berkshire will not be purchasing Oxy outright to front run the arb's that would come in as the stake goes up.  

 

We'll see what happens.

[Stuart D]

I just re-listened to Buffett discussing OXY. I understand the part about 5mm bbl's going offline supporting the price of oil, but (like other's) I don't understand why that would entice him to invest in the Permian. Perhaps he'll explain the investment in e.g. 5-yrs from now, or perhaps by then the answer will be self-evident. 
 

edit:

The other point I didn’t understand was him “not liking” the preferred’s being redeemed. What’s not to like? In a world of 5.9% T-bills, an 8% pref with zero upside isn’t that appealing. He’s receiving a 10% premium as they’re being redeemed. And most importantly, if he really didn’t like it, I’m sure he could negotiate terms and increase the mandatory pay back threshold from $4/share/yr to say $8/sh/yr.

Edited May 9, 2023 by Stuart D

[Spooky]

https://www.ft.com/content/6289bb84-01dd-4260-8b70-c9c455a159e7

 

Any Berkshire sleuths figure out what Buffett has been selling?

[gfp]

5 minutes ago, Spooky said:

https://www.ft.com/content/6289bb84-01dd-4260-8b70-c9c455a159e7

 

Any Berkshire sleuths figure out what Buffett has been selling?

Well the obvious two are Chevron ($6 Billion) and BYD.  The rest will be disclosed in the 13F and insurance filings.

[xo 1]

45 minutes ago, gfp said:

Well the obvious two are Chevron ($6 Billion) and BYD.  The rest will be disclosed in the 13F and insurance filings.

Chevron is the interesting one to me.  I am puzzled that BRK is jumping in and out of Chevron and TSMC.  Obviously Chevron remains a very, very large holding, but I don't remember BRK churning ideas like this in the past - particularly with little evident change.  

[Jaygo]

These guys should just buy CNQ and forget about shale and exploration all together. I'm sure they have looked at Canada but our government is suspect so I get the hesitation. 

 

Long lived assets, tons of sunk capex and room for more, seems like a pure buffet play.

[Xerxes]

51 minutes ago, xo 1 said:

Chevron is the interesting one to me.  I am puzzled that BRK is jumping in and out of Chevron and TSMC.  Obviously Chevron remains a very, very large holding, but I don't remember BRK churning ideas like this in the past - particularly with little evident change.  

my own unsubstantiated explanation is that the ramp-up in the purchase of Chevron stake around the time of Russian invasion was a temporary plug because it was a liquid stock, just in case he could not get his fill Occidental. Both purchases ramped up heavily as Russian tanks crossed into Ukraine. 
 

my belief is that as Occidental’ stake goes up that of Chevron will go down. A reduced Chevron stake may stay as part of stock portfolio (trade in/out), but a large uncontrolled passive stake in Occidental may become part of the longer term holdings.  

[John Hjorth]

I do not consider myself a Berkshire sleuth, but anyway - here goes for my guess : He has continued to reduce bank positions : C and BK, simply just because Mr. Buffett has been souring on banks as of late.

 

I'm not in any way sure C is Buffett position, I may add. Comments from fellow CoBF members to that part would appreciated for my part, thank you.

 

With gross additions during the first quarter of 2023 of USD 2,873 B and gross sales of USD 12,283, net disposals of USD 9,410, it is to me a bit puzzling.

 

Soon, we'll see.

 

- - - o 0 o - - -

 

Furthermore, I'm puzzled by the comments above about the positions in OXY and Chevron, but stay un-opinionated on the matter, while still thinking "Berkshire in a ressource investment for the long term?" You gents may eventually end up being right.

[John Hjorth]

23 hours ago, Spekulatius said:

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 )

 

Thank you, @Spekulatius! ,

 

As always, based on sincere interest in reading your thoughts and considerations.

 

- - - o 0 o - - -

 

@yesman182 mentioned SAP here, for that sake, it could be an ERP solution provided by Microsoft or some other company. Lots of external software companies making a business out of providing socalled "Add-on modules" for certain specific purposes, paid dearly, containing breaches of database integrity, by providing redundant database tables [, so one can actually run a database query more than one way, and get different results, depending on approach for the query].

 

I have seen this so many times in my earlier life.

 

 

[xo 1]

4 hours ago, Xerxes said:

my own unsubstantiated explanation is that the ramp-up in the purchase of Chevron stake around the time of Russian invasion was a temporary plug because it was a liquid stock, just in case he could not get his fill Occidental. Both purchases ramped up heavily as Russian tanks crossed into Ukraine. 
 

my belief is that as Occidental’ stake goes up that of Chevron will go down. A reduced Chevron stake may stay as part of stock portfolio (trade in/out), but a large uncontrolled passive stake in Occidental may become part of the longer term holdings.  

Interesting thesis.  To put your explanation in my words, Chevron was a liquid option that turned out to be a modest money market (better than costless!) but that hasn't proven to be a windfall, and WEB is ready to unwind (potentially to shift to Oxy, although with some of the preferreds being called, total exposure in oil is currently being lightened)? 

[gfp]

21 minutes ago, xo 1 said:

Interesting thesis.  To put your explanation in my words, Chevron was a liquid option that turned out to be a modest money market (better than costless!) but that hasn't proven to be a windfall, and WEB is ready to unwind (potentially to shift to Oxy, although with some of the preferreds being called, total exposure in oil is currently being lightened)? 

 

Well the preferred shares in OXY isn't really offering "oil exposure" except in a bankruptcy.  If Buffett sells more CVX than he buys in OXY common he will be lightening his exposure to oil.  CVX is very large and liquid.  The price of oil was already lower in Q1 and CVX had a few moments of price strength early in the quarter.  We'll probably be able to tell when and at what price he sold CVX shares at once the NAIC filings are released for Q1.

[Spekulatius]

Oil / energy has been a trade for Buffett. Why should this one be any different, especially when energy prices are weak while the equities remained quite strong? I think he is in Oxy for good, but his CVX stake easily becomes a source of funds especially when risk free short term paper yields more than CVX's dividend.

Also looking at it another way, CVX trades at ~10.5x earnings, which isn't cheap historically speaking.

Edited May 9, 2023 by Spekulatius

[gfp]

On 5/6/2023 at 5:44 PM, gfp said:

I was also surprised how ruthless Buffett was on "Wheels Up," basically implying that people that gave them money for their jet cards ($1 Billion) would basically lose out (unsecured creditors in line at BK)...  He doesn't want to cause bank runs by naming any firm specifically but went straight for the jugular on Wheels Up.  I don't know anything about them but it sounded like a SPAC deal from context.

 

Well that didn't take long...  Founder and CEO steps down as bankruptcy looms

https://www.cnbc.com/2023/05/09/wheels-up-founder-abruptly-steps-down-as-losses-mount-bankruptcy-looms.html

[Xerxes]

2 hours ago, xo 1 said:

Interesting thesis.  To put your explanation in my words, Chevron was a liquid option that turned out to be a modest money market (better than costless!) but that hasn't proven to be a windfall, and WEB is ready to unwind (potentially to shift to Oxy, although with some of the preferreds being called, total exposure in oil is currently being lightened)? 

I would also highlight that the question at the AGM was about the Permian basin and Berkshire holdings in Occidental and Chevron (both), while Buffett’ response was about only Occidental and Vickie H. 
 

Buffett didn’t talk about neither about Chevron nor Michael Wirth (it’s CEO) neither in the AGM nor in Tokyo. 

@gfp

 

Yes, Occidental is not illiquid (Buffett himself indicated in the 2022 AGM, how easily he was buying the shares because of the very high turnover) but could you imagine him to plow +$20 billion additional into Occidental in that very short period of time as war broke out. No matter how liquid Occidental was, it would not be able to absorb that much of inflows. 

 

Chevron was the “shock absorber”. A temporary and a variable plug 

 

CVX was the short term trade to OXY’s long term 

 

 

 

Edited May 9, 2023 by Xerxes

[cubsfan]

47 minutes ago, Spekulatius said:

Oil / energy has been a trade for Buffett. Why should this one be any different, especially when energy prices are weak while the equities remained quite strong? I think he is in Oxy for good, but his CVX stake easily becomes a source of funds especially when risk free short term paper yields more than CVX's dividend.

Also looking at it another way, CVX trades at ~10.5x earnings, which isn't cheap historically speaking.

 

Seems right on. He and Munger know OXY inside out if you listen to their comments. Right in Charlie's backyard - and he's followed oil for years. Maybe you heard the comment Warren made about Munger family still getting royalties from one of his oil partnership unit purchases - still paying 70K per year for something he spent a tiny fraction on.

[longlake95]

1 minute ago, cubsfan said:

 

Seems right on. He and Munger know OXY inside out if you listen to their comments. Right in Charlie's backyard - and he's followed oil for years. Maybe you heard the comment Warren made about Munger family still getting royalties from one of his oil partnership unit purchases - still paying 70K per year for something he spent a tiny fraction on.

 

That royalty that Charlie receives, cost him $1000 back in the day.

[cubsfan]

^^^ There ya' go. I think the point is, Charlie has studied the decline in different oil fields, drilling technology, etc - has plenty of engineering friends and oil contacts. He knows a lot more than people think. Then Warren differs to Charlie on oil - probably tells you a lot. Charlie loves OXY plenty.

[AlwaysDay1]

Do any of the wildcatters on the board know if perhaps it is because Chevron leases more of its Permian land while Oxy owns more of its Permian land and therefore has redevelopment opportunities? And did anyone catch the comment Buffett made on Chevron's advantage from ownership TPLT's minerals? 

[Stuart D]

 

 

53 minutes ago, AlwaysDay1 said:

Do any of the wildcatters on the board know if perhaps it is because Chevron leases more of its Permian land while Oxy owns more of its Permian land and therefore has redevelopment opportunities? And did anyone catch the comment Buffett made on Chevron's advantage from ownership TPLT's minerals? 

 

Yeah, the land angle could make sense. He did keep talking about oxy’s ‘position’ in the Permian.

 

He’s probably also selling CVX to buy some sweet PBR - lol jokes.

[Charlie]

The transcript of the Berkshire annual meeting is available at the Warren Buffett archive site at

https://buffett.cnbc.com/video/2023/05/08/morning-session---2023-meeting.html

https://buffett.cnbc.com/video/2023/05/08/afternoon-session---2023-meeting.html

 

Cheers!