Buffett/Berkshire - general news

[maxthetrade]

32 minutes ago, adesigar said:

Hope part of it is Buffett doing a large buyback.

 

I certainly hope he's not buying at these prices!

[CassiusKing1]

Lot of folks using BRK as a cash alternative.  It'll most likely trickle back down in price to the 420 range.

 

 

[boilermaker75]

17 hours ago, gfp said:

 

Definitely seems to be a rotation out of the recent mega cap winners and into everything else.  This is just how Berkshire's stock moves though.  Flat for a long time and then it rips to the upside and then it's back to flat for a long time.  My theory for years was that people sold covered calls against their BRK position and when those strikes start getting violated they buy the calls back in rather than pay the tax on getting their stock called.

 

Guilty, but with this pop I am tempted to do it again.

Edited July 18, 2024 by boilermaker75

[thepupil]

17 hours ago, gfp said:

 

Definitely seems to be a rotation out of the recent mega cap winners and into everything else.  This is just how Berkshire's stock moves though.  Flat for a long time and then it rips to the upside and then it's back to flat for a long time.  My theory for years was that people sold covered calls against their BRK position and when those strikes start getting violated they buy the calls back in rather than pay the tax on getting their stock called.

another factor is XLF flows. When Berkshire has a short term run-up (or down) it's often in tandem w/ XLF (driven by big banks, asset managers, payments, etc)

[UK]

16 hours ago, thepupil said:

another factor is XLF flows. When Berkshire has a short term run-up (or down) it's often in tandem w/ XLF (driven by big banks, asset managers, payments, etc)

 

+1

 

https://www.barrons.com/articles/berkshire-hathaway-stock-1-trillion-market-value-f0050c98

 

"Berkshire stock has been strong this month, gaining about 9% as both value stocks and financials have done well. Berkshire is the largest component of both the Russell 1000 value index and the S&P 500 financial sector."

 

Despite being almost 1T CAP, BRKB is trading like some small cap in the last 5 days:). I like this rotation/unwind from M7/Trump or whatever trade of the last 5 days:)

 

Edited July 19, 2024 by UK

[Charlie]

Berkshire´s stock tends to be strong around earnings time. 

The nature of a great business model is that it tends to have great earnings. 

Apple´s stock price rise probably helps too.

Edited July 19, 2024 by Charlie

[WFF]

Crowdstrike outage, got me thinking if Berkshire write insurance to protect against these of things.   Or whether there would be reinsurance losses due to this. 

[Whensthepaintdry?]

Berkshire doesn’t, but I believe Markel does. 

[Whensthepaintdry?]

Times like this make me appreciate Ajit so much more. 

[gfp]

2 hours ago, Whensthepaintdry? said:

Berkshire doesn’t, but I believe Markel does. 

 

Berkshire is very careful about not taking on very much cyber risk but they do write the policies.  Just the other day there was a hiring announcement out of TransRe -https://www.insurancebusinessmag.com/asia/news/reinsurance/transre-bolsters-cyber-division-with-key-promotions-497566.aspx

 

BHSI also offers these coverages as do several other subsidiaries.

 

[Whensthepaintdry?]

Thank you for the clarification. 

[gfp]

Look at Warren!

https://www.sec.gov/Archives/edgar/data/70858/000095017024085022/xslF345X05/ownership.xml

[charlieruane]

Wowee! Any thoughts on the sale, @gfp?

[UK]

So this is from SA from a few month ago. It does not cover everything and omits some important positives (e.g. recent total operating results, because of very strong insurance performance, or together with other omissions them not buying long term bonds in ZIRP period etc). And author seems to be expecting some perfection after all:), despite stating the opposite. But I think some of his critique and analysis is quite interesting and not that bad/stupid?

 

For what it is worth: https://seekingalpha.com/article/4693091-berkshire-15-years-of-disappointing-acquisitions

 

Please do not shoot the messenger:). Still own some BRKB, but this year/recently reduced allocation to a "core minimum", mainly because of the valuation, although I admit, that WB's warning on utilities earlier this year also scared me a little. Also I am a bit worried, that the way the possible management transition on the horizon is expected to occur at BRK is the best way to do this or one I would prefer.

 

Personally, from a current valuation, I still expect BRK will provide a reasonable buy and hold return in the next 10 years of 6-8 per cent or even more, but doubt it could be >10 per cent, without some major luck. And probability is also very high they will finally have to deal with a management transition in this period (and this again could be an opportunity). Now, this 6-8-10 is nothing tragic at all and price/valuation could overshoot even more (probably ~1.8 BV would be a level for me to get out completely), but I think now it is already out of the exciting territory, at least for more active approach. I get and respect this "do not sell a single share" approach, but not so sure if this is a reasonable thing to do in BRK case this time, especially if your expectations are higher, than mentioned above. And with recent AAPL (wonderful, but probably to expensive) and BAC (probably expensive enough for average at best and not anti fragile business) sales, it seems even Buffett himself is showing this is the the way to go:)?

 

I would also appreciate if anyone could share their thinking or push back on this and maybe also discuss what are his expectation for the next 10 year BRK returns.

 

Edited July 21, 2024 by UK

[gfp]

On 7/20/2024 at 1:15 AM, charlieruane said:

Wowee! Any thoughts on the sale, @gfp?

 

It seems like BAC is earning low returns and is getting squeezed between 5.15% on earning assets and 4.2% cost of funding those.  So the trading and other non interest spread businesses are carrying more and more of the weight.  Deposits aren't going anywhere but the yield spread on earning assets really isn't covering the overhead.  With the stock trading up to a decent premium over book value and returns on that book value stuck in the regulated utility range, it just doesn't look great when you consider that whichever the next industry to blow up ends up being, the one thing we know for sure is that it will also hit their bankers.

 

He can't use expected higher corporate taxes in the future as his excuse for last week's selling LOL

[dealraker]

On 7/20/2024 at 12:44 PM, UK said:

So this is from SA from a few month ago. It does not cover everything and omits some important positives (e.g. recent total operating results, because of very strong insurance performance, or together with other omissions them not buying long term bonds in ZIRP period etc). And author seems to be expecting some perfection after all:), despite stating the opposite. But I think some of his critique and analysis is quite interesting and not that bad/stupid?

 

For what it is worth: https://seekingalpha.com/article/4693091-berkshire-15-years-of-disappointing-acquisitions

 

Please do not shoot the messenger:). Still own some BRKB, but this year/recently reduced allocation to a "core minimum", mainly because of the valuation, although I admit, that WB's warning on utilities earlier this year also scared me a little. Also I am a bit worried, that the way the possible management transition on the horizon is expected to occur at BRK is the best way to do this or one I would prefer.

 

Personally, from a current valuation, I still expect BRK will provide a reasonable buy and hold return in the next 10 years of 6-8 per cent or even more, but doubt it could be >10 per cent, without some major luck. And probability is also very high they will finally have to deal with a management transition in this period (and this again could be an opportunity). Now, this 6-8-10 is nothing tragic at all and price/valuation could overshoot even more (probably ~1.8 BV would be a level for me to get out completely), but I think now it is already out of the exciting territory, at least for more active approach. I get and respect this "do not sell a single share" approach, but not so sure if this is a reasonable thing to do in BRK case this time, especially if your expectations are higher, than mentioned above. And with recent AAPL (wonderful, but probably to expensive) and BAC (probably expensive enough for average at best and not anti fragile business) sales, it seems even Buffett himself is showing this is the the way to go:)?

 

I would also appreciate if anyone could share their thinking or push back on this and maybe also discuss what are his expectation for the next 10 year BRK returns.

 

Decades owner and won't sell in my lifetime.  I easily see the authors point of view and your logical one too UK.  I have no guess as to returns, but I have some strong thoughts on the inevitable journey.  Inevitable...at least in my mind.

Edited July 22, 2024 by dealraker

[dealraker]

On 7/20/2024 at 12:44 PM, UK said:

So this is from SA from a few month ago. It does not cover everything and omits some important positives (e.g. recent total operating results, because of very strong insurance performance, or together with other omissions them not buying long term bonds in ZIRP period etc). And author seems to be expecting some perfection after all:), despite stating the opposite. But I think some of his critique and analysis is quite interesting and not that bad/stupid?

 

For what it is worth: https://seekingalpha.com/article/4693091-berkshire-15-years-of-disappointing-acquisitions

 

Please do not shoot the messenger:). Still own some BRKB, but this year/recently reduced allocation to a "core minimum", mainly because of the valuation, although I admit, that WB's warning on utilities earlier this year also scared me a little. Also I am a bit worried, that the way the possible management transition on the horizon is expected to occur at BRK is the best way to do this or one I would prefer.

 

Personally, from a current valuation, I still expect BRK will provide a reasonable buy and hold return in the next 10 years of 6-8 per cent or even more, but doubt it could be >10 per cent, without some major luck. And probability is also very high they will finally have to deal with a management transition in this period (and this again could be an opportunity). Now, this 6-8-10 is nothing tragic at all and price/valuation could overshoot even more (probably ~1.8 BV would be a level for me to get out completely), but I think now it is already out of the exciting territory, at least for more active approach. I get and respect this "do not sell a single share" approach, but not so sure if this is a reasonable thing to do in BRK case this time, especially if your expectations are higher, than mentioned above. And with recent AAPL (wonderful, but probably to expensive) and BAC (probably expensive enough for average at best and not anti fragile business) sales, it seems even Buffett himself is showing this is the the way to go:)?

 

I would also appreciate if anyone could share their thinking or push back on this and maybe also discuss what are his expectation for the next 10 year BRK returns.

 

All solid thinking it seem to me UK.  

[UK]

1 hour ago, dealraker said:

All solid thinking it seem to me UK.  

 

Thanks dealraker! I understand and admire your approach as well and am thinking about transitioning, partly or fully, to some similar process, especially sometime in the future. Perhaps not selling out of something that I like and it still works well enough, only because of the valuation, could be a good start. I have earned some serious regrets by not doing so in the past, so thanks for sharing you experience and thinking about all this.

 

Edited July 22, 2024 by UK

[dealraker]

1 hour ago, UK said:

 

Thanks dealraker! I understand and admire your approach as well and am thinking about transitioning, partly or fully, to some similar process, especially sometime in the future. Perhaps not selling out of something that I like and it still works well enough, only because of the valuation, could be a good start. I have earned some serious regrets by not doing so in the past, so thanks for sharing you experience and thinking about all this.

 

When you rid your mind of those using Berk (read Bloomstran) for self-promotion and those who refer to Buffett in uncle and grandpa terms the path and story of the business in its present form are not the extremes expressed by either side.  But the capital outlays and their success/failure - or less polar wording would be preferred if I could think of it - are vividly obvious.  With size Buffett almost inevitably goes into a slew of less-than-ideal things to get in down the road of existence.

 

I'm 99% profit in my Berkshire, I'm not going to sell in my lifetime.  But others can and probably should based on valuation and even more importantly where in the economic/stock/business performance cycle we are.  These cycles by the way, at least to me, and screamingly obvious.

 

That's one of the things barely addressed in online forum posts, that each of us has our own unique place as to lifespan, taxes, estate plan, etc.--- which highly affects our bias as to what to do and when.  But these biases should be the starting point for all discussion.  

[WFF]

https://di.hkex.com.hk/di/NSForm2.aspx?fn=CS20240719E00364&sa2=ns&sid=2508&corpn=BYD+Co.+Ltd.++-+H+Shares&sd=22%2f07%2f2023&ed=22%2f07%2f2024&cid=2&sa1=cl&scsd=22%2f07%2f2023&sced=22%2f07%2f2024&sc=1211&src=MAIN&lang=EN&g_lang=en&
 

Sale of BYD continues…dropping below 5%. 

[Luke]

37 minutes ago, WFF said:

https://di.hkex.com.hk/di/NSForm2.aspx?fn=CS20240719E00364&sa2=ns&sid=2508&corpn=BYD+Co.+Ltd.++-+H+Shares&sd=22%2f07%2f2023&ed=22%2f07%2f2024&cid=2&sa1=cl&scsd=22%2f07%2f2023&sced=22%2f07%2f2024&sc=1211&src=MAIN&lang=EN&g_lang=en&
 

Sale of BYD continues…dropping below 5%. 

Interesting!

[gfp]

So this most recent BYD sale disclosure shows BHE selling about $358 million USD worth of BYD stock since mid June.

 

The remaining position is worth around $1.7 Billion USD.

[gfp]

Thinking more about Warren's recent BAC sales - it's interesting to look at what Warren is buying vs what Warren is selling.  He is buying Chubb, with stable and negative funding costs ( -10% ) and selling BAC with +4.2% funding costs.  

 

[UK]

33 minutes ago, gfp said:

Thinking more about Warren's recent BAC sales - it's interesting to look at what Warren is buying vs what Warren is selling.  He is buying Chubb, with stable and negative funding costs ( -10% ) and selling BAC with +4.2% funding costs.  

 

 

Insurance is also perhaps more resilient / less dependable on the economic cycle? Of course it has its own cycles or different issues, but taking into account the level of expertise BRK posses in the field and their already huge exposure to insurance operationally, it really seems like some kind of telling sign:)

[UK]

2 hours ago, dealraker said:

When you rid your mind of those using Berk (read Bloomstran) for self-promotion and those who refer to Buffett in uncle and grandpa terms the path and story of the business in its present form are not the extremes expressed by either side.  But the capital outlays and their success/failure - or less polar wording would be preferred if I could think of it - are vividly obvious.  With size Buffett almost inevitably goes into a slew of less-than-ideal things to get in down the road of existence.

 

I'm 99% profit in my Berkshire, I'm not going to sell in my lifetime.  But others can and probably should based on valuation and even more importantly where in the economic/stock/business performance cycle we are.  These cycles by the way, at least to me, and screamingly obvious.

 

That's one of the things barely addressed in online forum posts, that each of us has our own unique place as to lifespan, taxes, estate plan, etc.--- which highly affects our bias as to what to do and when.  But these biases should be the starting point for all discussion.  

+1