Buffett/Berkshire - general news

[Masterofnone]

Perhaps, but would you sell or hold? What if it was a $30/per share dividend?

Just food for thought.

[Hektor]

Also, invest in China and India.

[DooDiligence]

52 minutes ago, Masterofnone said:

Perhaps, but would you sell or hold? What if it was a $30/per share dividend?

Just food for thought.

 

You had me at $20.

[UK]

2 hours ago, Hektor said:

e.g., buy tech, initiate a regular dividend. Buy bitcoin? 

 

Hostile takovers:))

[Blugolds]

I def would NOT want a dividend, primarily for tax purposes, and I feel like Warren understands that as do most BRK shareholders, its been voted on several times and it resulted in a pretty resounding NO THANKS. 

 

Return of capital would be more beneficial to shareholders while avoiding the tax man, personally it would present additional challenges of finding a new place to deploy, but I'd be fine with it, better I figure out what to do with the $$ rather than Uncle Sam. 

[Hektor]

9 hours ago, UK said:

Hostile takovers:))

I thought about this. However, are there needle moving targets for hostile takeover worthy of management investing time?

[Jaygo]

I wouldn't really want the dividend either. The reason I would sell is strictly due to valuation and the opportunities I see elsewhere. Greg is already in charge and is likely pushing the subs harder than WB.

 

The business idea of float, investments and constant reinvestment is still in place, they are just struggling to find places for reinvestment. It likely a low single digits above inflation return from here with changes. Not bad but not great.

 

They could have bought MMM but were likely scared of lawsuits, they could buy FAST, GGG, SHW, TORO even SBUX and a whole bunch of great businesses that they understand but they dont. I think the system is hitting its limits on size so an exceptional buyback, return of capital or dividend is needed.

 

 

[73 Reds]

13 minutes ago, Jaygo said:

I wouldn't really want the dividend either. The reason I would sell is strictly due to valuation and the opportunities I see elsewhere. Greg is already in charge and is likely pushing the subs harder than WB.

 

The business idea of float, investments and constant reinvestment is still in place, they are just struggling to find places for reinvestment. It likely a low single digits above inflation return from here with changes. Not bad but not great.

 

They could have bought MMM but were likely scared of lawsuits, they could buy FAST, GGG, SHW, TORO even SBUX and a whole bunch of great businesses that they understand but they dont. I think the system is hitting its limits on size so an exceptional buyback, return of capital or dividend is needed.

 

 

Respectfully disagree.  Who is to say that Post-Buffett they don't, or can't understand just about anything?  

[villainx]

The thing is who will take over for Greg Abel.  62 isn't old but it's more likely that Abel reign will be less than 10 years than over.

[Jaygo]

2 minutes ago, 73 Reds said:

Respectfully disagree.  Who is to say that Post-Buffett they don't, or can't understand just about anything?  

They very well could. I just feel that the size of the conglomerate has likely become an obstacle. Yes there is an incredible amount of money coming in so they have many options but is another totally different business being added to the fold going to be easy to manage.

 

I highlighted the above companies because I feel they fit the culture of BRK. All the above have had pretty big downswings in the past few years and they didn't buy into them or buy them outright. This tells me they may be stretched as is.

[John Hjorth]

12 hours ago, Masterofnone said:

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?

 

@Masterofnone,

 

If you look at the Berkshire financials, have you then ckecked if this [a USD 20 per B share dividend] is even a feasible action? I mean where are all the money?

[73 Reds]

42 minutes ago, Jaygo said:

They very well could. I just feel that the size of the conglomerate has likely become an obstacle. Yes there is an incredible amount of money coming in so they have many options but is another totally different business being added to the fold going to be easy to manage.

 

I highlighted the above companies because I feel they fit the culture of BRK. All the above have had pretty big downswings in the past few years and they didn't buy into them or buy them outright. This tells me they may be stretched as is.

I've never understood the argument that Berkshire is too big.  There are several trillion-dollar market cap companies that only do one or a few things worthy of my investment dollars.  Berkshire can invest in literally anything, anywhere.  They may not have the necessary talent now but there is nothing to prevent them from hiring the right folks for any endeavor.  

[Xerxes]

There was a short CNBC interview with BRK board member back at the AGM, where she made it clear that there will be no regular dividends, but perhaps one day special dividend. 

[Hektor]

7 minutes ago, Xerxes said:

There was a short CNBC interview with BRK board member back at the AGM, where she made it clear that there will be no regular dividends, but perhaps one day special dividend. 

I think it was Susan Decker who said that.

[Xerxes]

yes thank you 

 

 

starting minute 5 

 

Re-listening now. funny how i remembered whatever I wanted to remember. She is clearly “no” on both regular and special dividend, just that the latter scores lower on the sin level. 

Edited October 15 by Xerxes

[KPO]

13 minutes ago, Xerxes said:

yes thank you 

 

 

starting minute 5 

Thanks for sharing. I missed this interview originally. The focus on episodic investments like during the GFC is interesting given the role the Federal Reserve played during COVID. I’d like to think Berkshire would have these opportunities every so often, but I’m not sure if it will work out that way in practice. 

[John Hjorth]

Thank you to @Hektor and @Xerxes for digging up that interview again. It's an important one, I think.

[Jaygo]

1 hour ago, 73 Reds said:

I've never understood the argument that Berkshire is too big.  There are several trillion-dollar market cap companies that only do one or a few things worthy of my investment dollars.  Berkshire can invest in literally anything, anywhere.  They may not have the necessary talent now but there is nothing to prevent them from hiring the right folks for any endeavor.  

Its not the size of the business it is the nature of it. A conglomerate who has a hundred of businesses are complex and tend to have issues surrounding management. Do you think anyone at HQ is looking at ACME Brink to ensure its being run in the best way possible. 

 

Even Benjamin Moore, a company who has an incredible amount of consumer good will has been trounced by is competitors. Go into a store and ask the dealer ( label changes and product name changes for no reason, paint shortages long after competitors corrected their shortages, Insufficient marketing budgets etc, not keeping up with the trends and influencers, Joanna Gains reps Masco paint )

 

BRK could buy a whole host of companies and the earnings at the parent would grow but the earnings at the acquired may not. I dont see a maximum size in business. I see a maximum attention span in business and I believe that BRK is above that threshold right now. Managers must be managed and the bigger the wider the assortment of businesses the tougher this becomes.

 

Maybe Greg turns out to be the saviour who recognises the issues and brings everybody back into shape and earnings from ACME to XTRA start to improve. Only time will tell thus my comment on waiting for clue before making a decision.

 

I still believe that the makeup of the company is excellent. 

[UK]

2 hours ago, 73 Reds said:

I've never understood the argument that Berkshire is too big.  There are several trillion-dollar market cap companies that only do one or a few things worthy of my investment dollars.  Berkshire can invest in literally anything, anywhere.  They may not have the necessary talent now but there is nothing to prevent them from hiring the right folks for any endeavor.  

 

Well they still can do something, but the universe of opportunities to do something big just become very small. Buffett himself constantly remainds this (while talking about 50 percent returns with small money) and the growing amount of cash or no elephant deals in the past 5+ years is quite an evidence of this? The size is no problem to its survivorship or getting decent buy and hold returns, but it is too big for above normal buy and hold returns I think. So unless one is willing to try to improve the situation by paying atention to BRK valuation and taking more active aproach, he should at least adjust his expectations.

 

Edited October 15 by UK

[Masterofnone]

1 hour ago, John Hjorth said:

 

@Masterofnone,

 

If you look at the Berkshire financials, have you then ckecked if this [a USD 20 per B share dividend] is even a feasible action? I mean where are all the money?

You are certainly correct John- operating earnings wouldn't cover half of that $20. (Though investment gains are recurring.) Distributing ~$80 billion per year would certainly alleviate future capital allocation decisions (for better or for worse).

The dividend question has been fully flogged. But when WEB is gone from the picture, things inexorably will be different in some way. Not advocating, just wondering what I or others, would do should Berkshire declare they couldn't find acceptable places to employ new capital.

[73 Reds]

16 minutes ago, UK said:

 

Well they still can do something, but the universe of opportunities to do something big just become very small. Buffett himself constantly remainds this (while talking about 50 percent returns with small money) and the growing amount of cash or no elephant deals in the past 5+ years is quite an evidence of this? The size is no problem to its survivorship or getting decent buy and hold returns, but it is too big for above normal buy and hold returns I think. So unless one is willing to try to improve the situation by paying atention to BRK valuation and taking more active aproach, he should at least adjust his expectations.

 

Almost anything can be done bigger, better and more efficiently with the right people and resources.  Berkshire has, and can retain both.  Slap a "Berkshire Hathaway" brand on nearly any enterprise and get to work.  Then there is every for-profit activity not yet in existence and/or that may be in some stage of development.  To suggest that there is a limit on future growth defies any point in history.  And when all else fails, Berkshire can engage its owners in the same ways as other mature companies by returning capital to shareholders until something better comes along for allocation of excess earnings.    

Edited October 15 by 73 Reds
missing word

[Hektor]

27 minutes ago, Jaygo said:

Do you think anyone at HQ is looking at ACME Brink to ensure its being run in the best way possible.

I would be surprised if WEB is not. He for one most likely would be monitoring the $ flowing from ACME (and every other business) into HQ.

[Jaygo]

4 minutes ago, Hektor said:

I would be surprised if WEB is not. He for one most likely would be monitoring the $ flowing from ACME (and every other business) into HQ.

He's 94 years old. I think it is unlikely. Maybe a quick glance at the numbers on paper but not a real assermentent.

 

 

 

[John Hjorth]

@Masterofnone,

 

Here are some data :

 

Liquid assets at Berkshire holding company level :

 

 

That's USD 21.706 B at YE2023.

 

Then we have dividend restrictions [without prior regulative approval] in the insurance companies [where most of the money is] at about USD 31 B :

 

 

Then we have the shares outstanding at July 21^st 2024 :

 

A shares : 533,234

B shares : 1,325,192,509.

 

A USD 20 dividend per B share thus expropriates USD [[533,234*1,500]+ 1,325,192,509] * 20 = USD 2,125,044,509 * 20 = USD 42,500,870,180  [USD 42.5 B] of cash in the group system.

 

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I'm not ruling anything out here. But I consider it highly unlikely.

 

- - - o 0 o - - -

 

Also, I try - speculatively, yes, - to visualize, inside my head, a meeting between Greg Abel and Ajit Jain, Abel telling Jain, that now is the piggy bank getting slaughtered for the sake of a dividend, so that the underwriting capacity in the insurance companies is getting limited going forward. I think [speculate] that Jain in such scenario would pack his personal stuff, turn in his resignation, leave office, and call it day, after now almost 40 years at Berkshire.

[UK]

https://www.barrons.com/amp/articles/berkshire-apple-stake-sale-buffett-9a672779

 

Yet no mention of possibility of AAPL price increasing because BRK had stopped selling:)