alpha Posted October 10 Posted October 10 Looks like Warren is still bullish on Japan https://www.reuters.com/markets/us/berkshire-hathaway-raises-19-bln-bond-deal-term-sheet-shows-2024-10-10/
Eldad Posted October 10 Posted October 10 On 10/8/2024 at 2:52 PM, xboojum said: I think you're misreading the statement, which says "relative to". So if their margins were five points better than Norfolk's and now they're four points better, that's relative slipping. Yes that is correct. But considering that Norfolk Southern has slipped relative to itself since BRK bought BNSF it is a very ugly picture. In the years before the GFC Norfolk was running at about 25% and BNSF was around 22-23. Also, BNSF has a tremendous inherent advantage over Norfolk by being in the wide open West where it can run much longer trains and it is still lagging.
Munger_Disciple Posted October 10 Posted October 10 (edited) One thing that bothers me about BHE is that it took BHE management almost 3.5 years to recognize and reserve adequately for the legal problems resulting from 2020 wild fires. I find it strange that the equity value of BHE was $89 Billion in Q3-2022, when Abel cashed out his stock almost 2 years after the wildfires. And now after 2 more years, we find that BHE equity was marked down by 45% from 2022. It seems to me that BHE was very late in recognizing the problems. It looks like Pacificorp hired a new CEO in 2023; probably a result of the above issues. Edited October 10 by Munger_Disciple
Munger_Disciple Posted October 10 Posted October 10 (edited) BAC holding now below 10%, so no more reporting outside 13-F. I won't be surprised to see it be gone by the end of 2024. https://www.cnbc.com/2024/10/10/berkshire-slashes-bank-of-america-stake-to-under-10percent.html Edited October 10 by Munger_Disciple
villainx Posted October 11 Posted October 11 1 hour ago, Munger_Disciple said: One thing that bothers me about BHE is that it took BHE management almost 3.5 years to recognize and reserve adequately for the legal problems resulting from 2020 wild fires. I find it strange that the equity value of BHE was $89 Billion in Q3-2022, when Abel cashed out his stock almost 2 years after the wildfires. And now after 2 more years, we find that BHE equity was marked down by 45% from 2022. It seems to me that BHE was very late in recognizing the problems. It looks like Pacificorp hired a new CEO in 2023; probably a result of the above issues. I'm trying to get a sense whether the issues at Geico, BHE, BNSF and or others are viewed as systemic problems that will lead to big decline or perhaps serious problems that can or should be corrected. Is it correct to say that this is a bad as Berkshire has been in a long time, and the failure to address things earlier is surely a sign of deep problems. Or it's normal course of business to hit on dry spells, and it's bad coincidence that the problems are hitting kind of all at once.
crs223 Posted October 11 Posted October 11 On 10/1/2024 at 9:39 AM, KPO said: Yeah, Greg’s timing has me a little less concerned about his investing chops. Whatever the case, I hope reinvesting in BHE drops to maintenance capex levels until the industry and the government arrive at a sustainable solution for wildfire liabilities. If that doesn’t happen I think Buffett and Abel need to reconsider this business altogether. And he waiting until Sep 28, 2022 to buy his BRK -- nailed the bottom @ $270/B-share! (I'm proud to say I bought some that same day)
Eldad Posted October 11 Posted October 11 12 hours ago, villainx said: I'm trying to get a sense whether the issues at Geico, BHE, BNSF and or others are viewed as systemic problems that will lead to big decline or perhaps serious problems that can or should be corrected. Is it correct to say that this is a bad as Berkshire has been in a long time, and the failure to address things earlier is surely a sign of deep problems. Or it's normal course of business to hit on dry spells, and it's bad coincidence that the problems are hitting kind of all at once. It’s a decentralized model so every company is pretty close to stand alone so I don’t think you can say there are deep BRK problems. It would have to be coincidental in that respect. You could say putting Todd in charge of Geico was a mistake and a deviation from the decentralized model. I would think the decentralized model has a higher risk of letting bad managers or lazy managers stay on too long. Like WB backing BNSF management for this long even though they were underperforming for over a decade. But I think that is the BRK way and decentralized is good. The bigger longterm risk in my mind is Greg and post WB BRK try to be more centralized and top down. I get that feeling from Greg but I could be wrong.
Hektor Posted October 11 Posted October 11 12 minutes ago, Eldad said: The bigger longterm risk in my mind is Greg and post WB BRK try to be more centralized and top down. +1
MarioP Posted October 11 Posted October 11 One of the problem might be attracting top talent at the subs. If I was a rising star in insurance where would I prefer to work? The sub in a conglomerate or Progressive? If my goal is to be CEO I would prefer a S&P500 insurance over Berkshire. So as the all star managers retires we perhaps have a succession problem as top talent choose to work elsewhere than a conglomerate where mandatory retirement age is 105.
sleepydragon Posted October 11 Posted October 11 8 minutes ago, MarioP said: One of the problem might be attracting top talent at the subs. If I was a rising star in insurance where would I prefer to work? The sub in a conglomerate or Progressive? If my goal is to be CEO I would prefer a S&P500 insurance over Berkshire. So as the all star managers retires we perhaps have a succession problem as top talent choose to work elsewhere than a conglomerate where mandatory retirement age is 105. maybe or maybe not. It comes down to how the compensation is calculated, whether it motivates people and fair. I don’t think Brk underpays people
Jaygo Posted October 11 Posted October 11 1 hour ago, MarioP said: One of the problem might be attracting top talent at the subs. If I was a rising star in insurance where would I prefer to work? The sub in a conglomerate or Progressive? If my goal is to be CEO I would prefer a S&P500 insurance over Berkshire. So as the all star managers retires we perhaps have a succession problem as top talent choose to work elsewhere than a conglomerate where mandatory retirement age is 105. Bingo I think this is a really big headwind for the company. Working for or selling out to Warren Buffett of 20 years ago was something to be proud of, something to aspire to. Working for Greg Able is awesome but it does not have the same cache. So even an exceptional company or an all star manager is going to get lost in the weeds of BRK. I think the money as a motivator is really short sighted. Money is great but once you get wealthy are you really going to dedicate your life to something when you know your never going to get any recognition for it? My guess is that's unlikely in most people. Warren has always espoused mid western values, and maybe with midwestern values business fame and recognition are less important to those folks. Better start shopping in Minnesota baby.
villainx Posted October 11 Posted October 11 I really enjoyed it when executives in the subs got shout out in prior annual letters. Seems less prominent these days.
DooDiligence Posted October 11 Posted October 11 (edited) I predict a change on #4. https://www.berkshirehathaway.com/1999ar/acq.html --- and many here don't want to see this but... Edited October 12 by DooDiligence
villainx Posted October 12 Posted October 12 3 hours ago, TB said: Tilson thinks the problems are fixable and let us hope that things will work out and Able, others can put order to chaos. From Tilson. Where is this from?
Spekulatius Posted October 13 Posted October 13 I think we are seeing a lot of data that Berkshire execution is slacked off. BNSF, Geico, PCP all have lost relative to competition. Perhaps Lubrizol as well. We may also have a succession issue with Jain possibly on his way out - he is 73 and has sold quite a bit of stock. He will be very hard to replace. Abel is going to have his hands full and probably will run a tighter ship holding managment or subsidies on a shorter leash if they don’t perform. Things will change at Berkshire very soon, because I don’t think WEB will be in his current role longer than Munger. I could see him ceding all operational responsibilities to Abel. He may have done this already de facto, but it will be easier for Abel to bring the hammer down, if it’s official.
Hektor Posted October 13 Posted October 13 On 10/11/2024 at 2:10 PM, Jaygo said: Working for or selling out to Warren Buffett of 20 years ago was something to be proud of, something to aspire to I suspect most (private?) businesses sold to Warren so that they could cash out (or ward off hostile takeover) and continue running the business they built.
John Hjorth Posted October 13 Posted October 13 16 minutes ago, Hektor said: I suspect most (private?) businesses sold to Warren so that they could cash out (or ward off hostile takeover) and continue running the business they built. And now what would be potential candidates for that, @Hektor ? - to really move the needle for Berkshire?
sholland Posted October 13 Posted October 13 1 hour ago, John Hjorth said: And now what would be potential candidates for that, @Hektor ? - to really move the needle for Berkshire? https://en.wikipedia.org/wiki/List_of_largest_private_non-governmental_companies_by_revenue
Hektor Posted October 14 Posted October 14 3 hours ago, John Hjorth said: And now what would be potential candidates for that, @Hektor ? - to really move the needle for Berkshire? That’s a good question, John. That makes me wonder how often should the needle be moved? Once or twice a decade?
Hektor Posted October 14 Posted October 14 2 hours ago, sholland said: https://en.wikipedia.org/wiki/List_of_largest_private_non-governmental_companies_by_revenue Thanks @sholland
MarioP Posted October 14 Posted October 14 I was already a shareholder of Apple when Steve Jobs died. No doubt that Apple changed under Cook. And it wasn't for the worst. Now Berkshire will change under Abel and it doesn't mean it will be bad. We will see but there is nothing guaranty. At this point I am not confident enough to keep BRK at 20% of my portfolio like it is since 1995. I will probably put it down at 10%. There is a good chance that in the first 2 or 3 years of is tenure Able will be able to pick some low hanging fruits to boost operational earnings.
UK Posted October 14 Posted October 14 (edited) 17 minutes ago, MarioP said: I was already a shareholder of Apple when Steve Jobs died. No doubt that Apple changed under Cook. And it wasn't for the worst. Now Berkshire will change under Abel and it doesn't mean it will be bad. We will see but there is nothing guaranty. At this point I am not confident enough to keep BRK at 20% of my portfolio like it is since 1995. I will probably put it down at 10%. There is a good chance that in the first 2 or 3 years of is tenure Able will be able to pick some low hanging fruits to boost operational earnings. I think this is actually very true. No one will replace WB being WB, but BRK could very well find other/new strenghts/avenues under new management. Edited October 14 by UK
Hektor Posted October 15 Posted October 15 9 hours ago, UK said: BRK could very well find other/new strenghts/avenues under new management. e.g., buy tech, initiate a regular dividend. Buy bitcoin?
Masterofnone Posted October 15 Posted October 15 (edited) It is not unlikely that Berkshire starts paying a dividend when WEB bows out. It is actually an interesting point to ponder. What would you do if tomorrow, WEB announced his retirement and the initiation of a $20 per (B)share dividend? Edited October 15 by Masterofnone
DooDiligence Posted October 15 Posted October 15 12 minutes ago, Masterofnone said: It is not unlikely that Berkshire starts paying a dividend when WEB bows out. It is actually and interesting point to ponder. What would you do if tomorrow, WEB announced his retirement and the initiation of a $20 per (B)share dividend? I get the feeling it would go something like this with many here.
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