Buffett/Berkshire - general news

[gfp]

5 hours ago, adventurer said:

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...

 

Have Federal Reserve rate cutting campaigns resulted in higher multiples in the past?  I haven't had that experience in my (admittedly short) 24-year career.  I'm fine with being surprised to the upside.

[Malmqky]

5 hours ago, adventurer said:

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...

I don’t think a single 50 point cut is going to do much in terms of valuation. 
 

I know in the past 5% treasuries have been something WEB likes, seems like less than that and they aren’t attractive to him…

[yesman182]

23 hours ago, Malmqky said:

I don’t think a single 50 point cut is going to do much in terms of valuation. 
 

I know in the past 5% treasuries have been something WEB likes, seems like less than that and they aren’t attractive to him…

I'm not sure how you define the term "like". He would rather invest the money in an elephant sized private business purchase. He second preference would be a large bite out of a publicly traded company.  Third he would like to buy back shares of BRK at attractive prices. I don't think he ever likes having 100's of billions parked in treasuries. Yes, he does "like" when rates are above 5% if he can't deploy the capital in buybacks and acquisitions. But he said at the annual meeting earlier this year he would have just as much money in treasuries even if they yielded less than 1%. I think the only time he has said government bonds were a good buy was when the 30 year bonds yielded like 18% in the 80's.

[Milu]

I'd say Buffett is more than happy to sit it out in t-bills for the rest of his life (possibly another 5 years). One of his greatest strengths was never being compelled to do something. If the market crashes and some good deals come available then I'm sure he'll be delighted to snap them up, and if it doesn't he'll just receive his 4 or 5% (or lower) in t-bills.

[Spekulatius]

10 hours ago, Milu said:

I'd say Buffett is more than happy to sit it out in t-bills for the rest of his life (possibly another 5 years). One of his greatest strengths was never being compelled to do something. If the market crashes and some good deals come available then I'm sure he'll be delighted to snap them up, and if it doesn't he'll just receive his 4 or 5% (or lower) in t-bills.

Uhg. Now like sounds like Berkshire is a target day retirement fund.

[DooDiligence]

3 hours ago, Spekulatius said:

Uhg. Now like sounds like Berkshire is a target day retirement fund.

 

You should start a new BRK topic.

 

"Is Berkshire just a target date retirement fund?"

 

 it'll be fun!

[RunPacoRun]

. . . with the target date being infinity.

Edited September 21, 2024 by RunPacoRun

[DooDiligence]

11 hours ago, RunPacoRun said:

. . . with the target date being infinity.

 

= anticipated holding period 

[UK]

https://calgaryherald.com/opinion/columnists/varcoe-greg-abel-credits-alberta-roots-global-business-forum-honour

 

“Right out of the gate, he’s super Canadian, highly likable and as honest as the day is long, and as authentic and as real as any person you’re ever going to get,” Farrell said this week.

 

“He knows where the right deal is, and what the price is, and how you need to work on it. And he’s a man of his word. So if he says, ‘OK, we’ve settled now, let’s get this done,’ we get it done.”

 

Edited September 27, 2024 by UK

[UK]

https://stansberryresearch.com/articles/the-short-case-for-berkshire-hathaway

 

 

[DooDiligence]

15 hours ago, UK said:

https://stansberryresearch.com/articles/the-short-case-for-berkshire-hathaway

 

 

 

I like the pushback. GEICO's issues are well known here. I haven't paid attention to BNSF much and just assumed they were whipping the crap out of the competition. But short BRK? Nah. Looking forward to part 2. I'm assuming he'll dis BHE and the cash pile. I hope he tears into OXY.

Edited September 28, 2024 by DooDiligence

[Spekulatius]

On 9/27/2024 at 11:47 PM, UK said:

https://stansberryresearch.com/articles/the-short-case-for-berkshire-hathaway

 

 

The article or VIC thesis makes some good points. You can also add Lubrizol and PCP to the list of subsidies that seem to have fallen behind. I think the recently higher multiple in combination with Berkshire subs underperforming peers is a recipe for the stock underperform the index going forward.

Edited September 29, 2024 by Spekulatius

[John Hjorth]

On 9/28/2024 at 5:47 AM, UK said:

https://stansberryresearch.com/articles/the-short-case-for-berkshire-hathaway

 

I personally think the way to assess this overall situation [lack of performance at certain subsidiaries for the time being], is - at least to some extent - overestimating the role of Mr. Buffett here and understimating the roles of Mr. Abel and Mr. Jain.

 

Please note the development in their bonuses :

 

 

Those gents are on the payroll for USD 20 M each with operational responsibilities.

 

Personally I feel quite confident, the man at the top is asking persistently 'what can we do about it, and what are we doing about it?'. If investments are needed to fix issues they will be done, this has always been first priority capital allocation since Berkshire became 'big'.

 

It will certainly be interesting to follow and study going forward.

Edited September 29, 2024 by John Hjorth

[DooDiligence]

5 hours ago, John Hjorth said:

 

Personally I feel quite confident, the man at the top is asking persistently 'what can we do about it, and what are we doing about it?'. If investments are needed to fix issues they will be done, this has always been first priority capital allocation since Berkshire became 'big'.

 

It will certainly be interesting to follow and study going forward.

 

Warren be getting egregious and tapping the till. Old boy needs to pay for his own Hoveround. Time to hit the exits.

Edited September 29, 2024 by DooDiligence

[Hektor]

1 hour ago, TB said:

We recently switched from Geico to Progressive after being a loyal customers with no insurance related issues

I feel it will be interesting to see how the Progressive rates will compare to Geico rates after a couple of renewals.

[DooDiligence]

44 minutes ago, Hektor said:

I feel it will be interesting to see how the Progressive rates will compare to Geico rates after a couple of renewals.

 

I switched from GEICO to Progressive in Jan 2023. It pains me to say that the rates are still great.

[Green King]

Geico is being run like a declining business. Maybe the next few decades are not so rosy for auto insurers. It is better to take out the capital from the business.

The expanse ratio is 8.7% for me it's unheard of in this industry. 

The problem was they hadn't invested enough to get better pricing. 

Edited September 30, 2024 by Green King

[KPO]

Interesting to see WEB use stock to buyout the Walter Scott family BHE interest. I like the move at these levels. 

[Spooky]

9 minutes ago, KPO said:

Interesting to see WEB use stock to buyout the Walter Scott family BHE interest. I like the move at these levels. 

 

Agree, this looks like a no brainer. Happy Berk now owns 100% of the energy division.

[Hektor]

24 minutes ago, KPO said:

Interesting to see WEB use stock to buyout the Walter Scott family BHE interest. I like the move at these levels.

Quote

 

According to a Tuesday regulatory filing, Berkshire Hathaway Energy will acquire 4.42 million shares of its voting common stock and a $100 million bond maturing in 2057, in exchange for the $2.37 billion in cash and a $600 million, one-year note.

 

Scott's family will also receive about 1.6 million Berkshire Class B shares, worth about $737 million as of Monday's close.

 

 

[adesigar]

49 minutes ago, KPO said:

Interesting to see WEB use stock to buyout the Walter Scott family BHE interest. I like the move at these levels. 

 

Didnt BRK pay a much higher price to Greg Abel a couple of years ago? Has the value of BHE dropped in the last 2 years?

Edited October 1, 2024 by adesigar

[KPO]

16 minutes ago, adesigar said:

 

Didnt BRK pay a much higher price to Greg Abel a couple of years ago? Has the value of BHE dropped in the last 2 years?

Yes to both. I suspect part of it is the wildfire lawsuits impacting the valuation. Also, the share issuance is beneficial to the Scott family from a tax perspective, so they may have taken a bit less for the equity portion of the transaction. 

[villainx]

7 minutes ago, KPO said:

Also, the share issuance is beneficial to the Scott family from a tax perspective, so they may have taken a bit less for the equity portion of the transaction. 

 

How beneficial?  Like zero taxes beneficial?

[KPO]

2 minutes ago, villainx said:

 

How beneficial?  Like zero taxes beneficial?

Deferred taxes on any capital gain vs. an all cash buyout. If/when they sell the Berkshire shares they will likely have gains to pay taxes on, although they may get some benefit from a basis step up.

[villainx]

That's interesting.  I assume they got step up around time Abel sold his 1%? So that would have set valuation a little higher than today's sale price.  So it would have been tax neutral, no?  (That's if I'm following the timeline correctly from above posts) But I guess I don't know the internal workings of the Scott trust.

Edited October 1, 2024 by villainx