Buffett/Berkshire - general news

[gfp]

6 minutes ago, janusdr said:

And secondly I don't think Ajit is a guy who buys trophy houses or jets for half his net worth at 73 years old, after not having done that for 40 years.

 

Your points are all good and I don't disagree at all but I will mention that Ajit has spent a lot of money on real estate over the years.  Not half his net worth but a couple $15 million apartments (NYC and Florida), the NYC apt next door for $8.3m back in 2009, plus wherever he actually lives most of the time near Connecticut - I believe it is still a waterfront house in Rye, NY he has owned since the mid 90's (which was very inexpensive when he purchased it).

 

But he has a $20m annual salary so I don't think a need for spending cash is behind his sale.  He is in a very high tax bracket, could be in a class of people targeted by future tax increases, and Berkshire became pretty pricey.

[janusdr]

59 minutes ago, gfp said:

But he has a $20m annual salary so I don't think a need for spending cash is behind his sale.  

He is in a very high tax bracket, could be in a class of people targeted by future tax increases, and Berkshire became pretty pricey.

Indeed, his real estate purchases were all less than his annual salary. Would be strange to splurge half his net worth now, without a word. (A Bloomberg journalist got him on the phone, but he refused to give an explanation.)

 

Not a US tax specialist, but with regards to the taxes, it is for sure a federal long term capital gain, so taxed at 20% max. Which Harris wants to put at 28%.

Not to sniff at 8%, but I don't think these decade long Berkshire holders would time their stock transactions around a (potential) 8% extra tax?

It seems to me that a big overvaluation is the most important reason.

 

But since Buffett was still buying at 420 in recent quarters (before he stopped in the beginning of June), that means that 465 was around intrinsic value at that time.

Something must have happened that Buffett stopped buying afterwards (even at 400-405), and Ajit is even a major seller now at 463.

Maybe his realtime reports of some of the subsidiaries foreshadow trouble incoming for the economy.

 

Don't forget he is the master market timer
1969 closure of his fund, 1974 oversexed man in a whorehouse, 1987 fully in bonds just before the crash, 1999 november Fortune warning, 2008 october 'buy American', etc.

Now stopped to buy Berkshire while he bought it higher before; selling his top 2 positions Apple and Bank of America like a maniac; No more Oxy buys while he bought until last june at higher prices; Ajit selling a major stake.

I think Berkshire could be at more than 50% cash in the public portfolio by now. That is a really a lot by Berkshire standards.

 

All this does feel... signally.

 

Edited September 12, 2024 by janusdr

[villainx]

Sounds more like need money to invest in project for himself or his family.

[janusdr]

No idea why the Bloomstran guy on twitter is talking about a gift.

 

On all previous small stock gifts, this was specifically mentioned in the sec form.

Now it says explicitly that it's a sale on 1 date at a specific average stock price.

[Munger_Disciple]

1 hour ago, janusdr said:

No idea why the Bloomstran guy on twitter is talking about a gift.

 

He tends to shoot first and ask questions later. You are correct of course, Jain would have disclosed if he gifted the shares. Not only that it wasn't a gift, but Bloomstran got the sale price wrong. 

[UK]

4 hours ago, janusdr said:

But even then it is strange, because neither Buffett nor Abel have sold a substantial amount of Berkshire shares, not now and not in the past when it was fully valued. But Buffett is the personification of Berkshire, and Abel is the next CEO so for them it is probably not done to start market timing their own stock.
Ajit may have less of a problem in that respect. He is also a lot less rich. (didn't have the MidAmerican stake).

 

Buffett did this signaling once with a B share IPO. Not sure the stock was so ahead of itself this time though. But if a price is near fair value and both of them see this, why would it be a problem for Ajit to sell some, without any explanation? Valuation is at the highest level of the last 15 year (and not adjusted for size) and high probability of negative tax changes seems more than enough to explain this action? I personally doubt this is some kind if statement about economy or its future.

 

Edited September 13, 2024 by UK

[UK]

3 hours ago, janusdr said:

Don't forget he is the master market timer
1969 closure of his fund, 1974 oversexed man in a whorehouse, 1987 fully in bonds just before the crash, 1999 november Fortune warning, 2008 october 'buy American', etc.

Now stopped to buy Berkshire while he bought it higher before; selling his top 2 positions Apple and Bank of America like a maniac; No more Oxy buys while he bought until last june at higher prices; Ajit selling a major stake.

I think Berkshire could be at more than 50% cash in the public portfolio by now. That is a really a lot by Berkshire standards.

 

All this does feel... signally.

 

Not sure if I feel this way, but obviously recently there were many action (and non action) somewhat supporting such hyphothesis of yours. Now, would not be it ironic for most (but perhaps especially M7 type investors) being catched sleeping at the wheel again big time, just to find out that Warren at 84 was driving smartly with his eyes wide open:)))

 

Edited September 13, 2024 by UK

[Eldad]

5 hours ago, janusdr said:

Indeed, his real estate purchases were all less than his annual salary. Would be strange to splurge half his net worth now, without a word. (A Bloomberg journalist got him on the phone, but he refused to give an explanation.)

 

Not a US tax specialist, but with regards to the taxes, it is for sure a federal long term capital gain, so taxed at 20% max. Which Harris wants to put at 28%.

Not to sniff at 8%, but I don't think these decade long Berkshire holders would time their stock transactions around a (potential) 8% extra tax?

It seems to me that a big overvaluation is the most important reason.

 

But since Buffett was still buying at 420 in recent quarters (before he stopped in the beginning of June), that means that 465 was around intrinsic value at that time.

Something must have happened that Buffett stopped buying afterwards (even at 400-405), and Ajit is even a major seller now at 463.

Maybe his realtime reports of some of the subsidiaries foreshadow trouble incoming for the economy.

 

Don't forget he is the master market timer
1969 closure of his fund, 1974 oversexed man in a whorehouse, 1987 fully in bonds just before the crash, 1999 november Fortune warning, 2008 october 'buy American', etc.

Now stopped to buy Berkshire while he bought it higher before; selling his top 2 positions Apple and Bank of America like a maniac; No more Oxy buys while he bought until last june at higher prices; Ajit selling a major stake.

I think Berkshire could be at more than 50% cash in the public portfolio by now. That is a really a lot by Berkshire standards.

 

All this does feel... signally.

 

Plus since he is the best odds maker in the world he would know that the GOP are almost guaranteed to win the senate this year (70+% odds) with Tester of MT finally getting the boot and Joe Manchin WV seat going GOP. So tax hikes are not happening.
 

WB tax talk on Aapl was BS, let’s be honest. 

[ander]

Is Ajit selling really a concern given that he's had a long history of selling / gifting? It is of course not a positive signal, and I understand it is a large proportion of what is remaining, but I do not believe it is necessarily a suggestion of impending doom at Berkshire (remember if there is impending doom in the broader market, that is where Berkshire often does the best so one would not want to be a seller of shares right into it).

[73 Reds]

7 hours ago, Eldad said:

Plus since he is the best odds maker in the world he would know that the GOP are almost guaranteed to win the senate this year (70+% odds) with Tester of MT finally getting the boot and Joe Manchin WV seat going GOP. So tax hikes are not happening.
 

WB tax talk on Aapl was BS, let’s be honest. 

Agreed.  Not sure why so many folks pay so little attention to the legislative branch when it comes to new tax legislation.  Odds are slim to none unless one party sweeps Executive and Legislative branches of Congress.  And it really doesn't take the geniuses on this board to recognize that Berkshire is trading at a price above its historical valuation.  So what?  Ajit Jain sold a block of Berkshire - capital gains taxes and all - that represents a significant portion of his net worth for one or more purposes that he chooses to remain private.  Personally, I believe that this does have something to do with estate planning, i.e., ultimately reducing the size of his taxable estate but otherwise, it really doesn't matter and it says nothing whatsoever about the long term prospects of Berkshire going forward.   

 

 

[73 Reds]

9 minutes ago, ander said:

Is Ajit selling really a concern given that he's had a long history of selling / gifting? It is of course not a positive signal, and I understand it is a large proportion of what is remaining, but I do not believe it is necessarily a suggestion of impending doom at Berkshire (remember if there is impending doom in the broader market, that is where Berkshire often does the best so one would not want to be a seller of shares right into it).

The far more interesting question would be if Berkshire was the buyer of Ajit's shares.

[John Hjorth]

1 minute ago, ander said:

Is Ajit selling really a concern given that he's had a long history of selling / gifting? It is of course not a positive signal, and I understand it is a large proportion of what is remaining, but I do not believe it is necessarily a suggestion of impending doom at Berkshire (remember if there is impending doom in the broader market, that is where Berkshire often does the best so one would not want to be a seller of shares right into it).

 

@ander,

 

I with with you on this.

 

But this is CoBF, the place for all kinds of Berkshire enthusiasts and nerds, likely due to overdoing things at times [, but certainly not always, nor on avarage].

 

If it was Greg [ @Gregmal ] posting about it like you , I personally think he would be calling it something like a bit more more than a 'nothing burger', perhaps meaning a 'nothing Big Mac'. 

[gfp]

2 minutes ago, 73 Reds said:

The far more interesting question would be if Berkshire was the buyer of Ajit's shares.

 

I think that's a "no" but we'll probably be able to tell in the next 10Q.  There are several clues, including that it was an average price over multiple transactions on the same day, the high price, the optics of buying shares directly from a reporting insider/vice chairman of the board, and whatever the legal complications Greg references when mentioning that JOE can't buy Bruce's shares directly.  Prem and Fairfax did it, of course, but that may be a Canada thing.

 

BRK never directly bought stock blocks from the Gates Foundation, even though they were known to be a large daily seller of B-shares (and still are).

 

Now, why didn't Ajit convert the A-shares into B-shares before selling?  I'm sure Warren would have preferred that.

[gfp]

20 minutes ago, ander said:

(remember if there is impending doom in the broader market, that is where Berkshire often does the best so one would not want to be a seller of shares right into it).

 

Berkshire the company might prosper in a bear market, but Berkshire the stock goes down a bunch just the same.  Especially if it starts at the high end of its recent valuation range.  Having $300+ billion in t-bills and huge operations in non-economically-sensitive industries (insurance, utilities, etc) will help a lot in a weak period for the global economy / stock market averages / whatever.

[boilermaker75]

20 hours ago, sleepydragon said:

It’s almost exactly $100m after tax. Is there a possiblity that Ajain is buying a huge house?   The most expensive house in CT is around $50m, but there are a lot of big houses in Florida

 

 

With enough left over for a yacht! 

[73 Reds]

26 minutes ago, gfp said:

 

I think that's a "no" but we'll probably be able to tell in the next 10Q.  There are several clues, including that it was an average price over multiple transactions on the same day, the high price, the optics of buying shares directly from a reporting insider/vice chairman of the board, and whatever the legal complications Greg references when mentioning that JOE can't buy Bruce's shares directly.  Prem and Fairfax did it, of course, but that may be a Canada thing.

 

BRK never directly bought stock blocks from the Gates Foundation, even though they were known to be a large daily seller of B-shares (and still are).

 

Now, why didn't Ajit convert the A-shares into B-shares before selling?  I'm sure Warren would have preferred that.

Yep, but an interesting prospect nonetheless.  In any event Ajit certainly advised Buffett of the sale in advance.

[ander]

1 hour ago, gfp said:

 

Berkshire the company might prosper in a bear market, but Berkshire the stock goes down a bunch just the same.  Especially if it starts at the high end of its recent valuation range.  Having $300+ billion in t-bills and huge operations in non-economically-sensitive industries (insurance, utilities, etc) will help a lot in a weak period for the global economy / stock market averages / whatever.

agreed Berkshire stock could go down (which probably not as relevant to Ajit), but intrinsic value likely goes up much more given the position they are in.

[yesman182]

4 hours ago, 73 Reds said:

Yep, but an interesting prospect nonetheless.  In any event Ajit certainly advised Buffett of the sale in advance.

I doubt it. 

[UK]

On 9/13/2024 at 3:46 PM, gfp said:

 

Berkshire the company might prosper in a bear market, but Berkshire the stock goes down a bunch just the same.  Especially if it starts at the high end of its recent valuation range.  Having $300+ billion in t-bills and huge operations in non-economically-sensitive industries (insurance, utilities, etc) will help a lot in a weak period for the global economy / stock market averages / whatever.

 

Gfp, do you also think there is a decent chances all these recent moves by BRK and Co could suggest some kind of preparation for a possible troubles in the economy and/or stock market?

[sleepydragon]

Another possibility: Ajain is going through a divorce, and wife wants cash instead of stocks.

 

this explains why it’s roughly 50% of his holdings.

 

Precedence is Jeff Bezo’s ex wife. Sold all Amazon stocks she got too

[Txvestor]

I think he just wanted to get affairs in order and saw a good valuation opportunity and decided to sell. When BRKb shares were approaching $500 and the market cap touched a trillion, and cap gains taxes are the lowest they'll be in the next 20yrs(or within your lifetime) and almost all your sale proceeds are cap gains, if you're a logical individual you'd want to sell atleast a part of your holdings. 

[gfp]

Here's your chance to buy Walter Scott's fishing yacht - bid early bid often!

https://www.barrons.com/articles/late-billionaire-and-berkshire-hathaway-board-members-yacht-ice-bear-heads-to-auction-e939f521

[John Hjorth]

2 hours ago, gfp said:

Here's your chance to buy Walter Scott's fishing yacht - bid early bid often!

https://www.barrons.com/articles/late-billionaire-and-berkshire-hathaway-board-members-yacht-ice-bear-heads-to-auction-e939f521

 

Caveat emptor!  The creme coloured leather sofa on the aft deck is missing :

 

1. A holder for your phone, so you're able to call your broker, or reply to your spouse, when you're under suspicion for cheating on him or her, while continuing fishing.

2. A holder for your Bloomberg terminal, so you can check and chart your portfolio.

 

Nice barge!

Edited September 18, 2024 by John Hjorth

[Pauly]

2 hours ago, gfp said:

Here's your chance to buy Walter Scott's fishing yacht - bid early bid often!

https://www.barrons.com/articles/late-billionaire-and-berkshire-hathaway-board-members-yacht-ice-bear-heads-to-auction-e939f521

 

Now that's a big yacht i wouldn't mind owning. Crossing the Atlantic with 10 friends and a few fishing rods sounds like a good time.

[adventurer]

Any thoughts about how the rate cuts may impact WEBs decision making in the future? He emphasizes that it is all about valuation and whether price is good or not. But I am a bit worried that valuations will now go up even further due to the rate cuts. Valuations will become even crazier it seems...