Buffett/Berkshire - general news

[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, 2024 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, 2024 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, 2024 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.

 

- - - o 0 o - - -

 

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:)

[woodstove]

On 10/15/2024 at 10:27 AM, 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. 

Lots of talented investors, but how to tell them from lucky coin-flippers (per WEB intro to Ben Graham's Intelligent Investor)?  If you don't know -- and life is uncertain -- I like the discipline of money manager given X capital to work with, "forced" to return about 4 pct of capital to investors.  Can be a variety of ways - special or regular dividends, repurchases to reduce number of shares, spinoffs, etc.  But having to make concrete return annually reduces a bit of the agent-ego risk.  If business is well managed but context is difficult, and cannot return 4 pct of capital annually, well then, let the business shrink.  One can play with the numbers and spreadsheets.  It's the discipline that matters.

[sholland]

23 hours ago, Jaygo said:

Do you think anyone at HQ is looking at ACME Brink to ensure its being run in the best way possible….Managers must be managed and the bigger the wider the assortment of businesses the tougher this becomes.

Buffett gets monthly numbers on all the businesses.

Buffett and Munger believe that have having honest and able managers and getting out of their way (bureaucracy is like a cancer) is the reason that Berkshire works so well.

 

[John Hjorth]

'Delegation verging to abdication'.

[CassiusKing1]

Man do I miss Charlie. 

[Eldad]

Greg Warren downgraded the moat to Narrow at Morningstar. Basically cap allocation brilliance going away. Too big combined with no WB. I agree.

[Hektor]

https://www.bloomberg.com/news/articles/2024-10-23/warren-buffett-says-he-won-t-endorse-any-political-candidates

 

Warren Buffett Says He Won’t Endorse Any Political Candidates

 

Warren Buffett said he won’t back any political candidates, two weeks before US citizens head to the polls to elect the country’s next president. The 94-year-old billionaire’s position was laid out in a statement posted on the website of his conglomerate Berkshire Hathaway Inc.

[Hektor]

From the BRK website

 

https://berkshirehathaway.com/webfraud.pdf

 

Fraudulent Claims Regarding Mr. Buffett’s Endorsements of Investment Products and Political Candidates

 

In light of the increased usage of social media, there have been numerous fraudulent claims regarding Mr. Buffett’s endorsement of investment products as well as his endorsement and support of political candidates. Mr. Buffett does not currently and will not prospectively endorse investment products or endorse and support political candidates.

[Eldad]

3 hours ago, Hektor said:

From the BRK website

 

https://berkshirehathaway.com/webfraud.pdf

 

Fraudulent Claims Regarding Mr. Buffett’s Endorsements of Investment Products and Political Candidates

 

In light of the increased usage of social media, there have been numerous fraudulent claims regarding Mr. Buffett’s endorsement of investment products as well as his endorsement and support of political candidates. Mr. Buffett does not currently and will not prospectively endorse investment products or endorse and support political candidates.

Good decision. Crazy the political difference between Hillary and Kamala in just 8 years. But even if that is not the reason, good decision to keep your mouth shut. 

[Charlie]

Jim Grant says ‘the greatest equity investor’ — Warren Buffett — is trying to warn you about US stocks and is supposedly choosing this 1 asset class over equities. Should you follow suit?

 

https://www.msn.com/en-us/money/savingandinvesting/jim-grant-says-the-greatest-equity-investor-warren-buffett-is-trying-to-warn-you-about-us-stocks-and-is-supposedly-choosing-this-1-asset-class-over-equities-should-you-follow-suit/ar-AA1t7Sx8?ocid=msedgntp&pc=LCTS&cvid=f28e9d8bad8040e39d30bb19615f5ab1&ei=12

 

 

Cheers!

Edited October 29, 2024 by Charlie

[rogermunibond]

Treasury bills

[John Hjorth]

1 hour ago, Charlie said:

Jim Grant says ‘the greatest equity investor’ — Warren Buffett — is trying to warn you about US stocks and is supposedly choosing this 1 asset class over equities. Should you follow suit?

 

https://www.msn.com/en-us/money/savingandinvesting/jim-grant-says-the-greatest-equity-investor-warren-buffett-is-trying-to-warn-you-about-us-stocks-and-is-supposedly-choosing-this-1-asset-class-over-equities-should-you-follow-suit/ar-AA1t7Sx8?ocid=msedgntp&pc=LCTS&cvid=f28e9d8bad8040e39d30bb19615f5ab1&ei=12

 

 

Cheers!

 

8 minutes ago, rogermunibond said:

Treasury bills

 

@Charlie & @rogermunibond,

 

Personally, I think Jim Grant in the above doesn't really hit the disc with this assessment.

 

The calculation for Berkshire is just so different on 'riding and rolling US Treasury Bills' than for almost everyone else, because  - no matter what your view may be on it - a material part of those T-Bills can be argued to be financed by insurance float. Insurance float held by the undisputed world champion in generating, holding and maintaining insurance float.

 

It is a low margin business, yes, so it requires scale.

 

And scale there is, indeed.

[73 Reds]

8 minutes ago, John Hjorth said:

 

 

@Charlie & @rogermunibond,

 

Personally, I think Jim Grant in the above doesn't really hit the disc with this assessment.

 

The calculation for Berkshire is just so different on 'riding and rolling US Treasury Bills' than for almost everyone else, because  - no matter what your view may be on it - a material part of those T-Bills can be argued to be financed by insurance float. Insurance float held by the undisputed world champion in generating, holding and maintaining insurance float.

 

It is a low margin business, yes, so it requires scale.

 

And scale there is, indeed.

Has anyone made money following Jim Grant?  

[whatstheofficerproblem]

https://valueinvestorsclub.com/idea/BERKSHIRE_HATHAWAY/4105781453#description

 

I want what this guy is smoking. The comments pretty much laugh at the write-up. The quality of VIC write-ups has been going downhill for a while.

[Eldad]

Looks like US Taxes are more likely to go down than up.