Buffett/Berkshire - general news

[Munger_Disciple]

1 hour ago, gfp said:

 

That's not exactly what he said.  But, yes - Greg will have final say on capital allocation and that includes everything.  Warren does firmly believe that there needs to be one person in charge, not a committee.  The board of directors can fire that one person, but unless they do the buck stops with Greg.

 

I came away with the understanding that Greg's responsibilities will mirror Warren's when he takes over and that makes sense. Only the CEO in-charge will be able to compare different capital allocation alternatives which include internal reinvestment, acquisition of 100% of businesses, minority ownership of marketable securities and buybacks; and determine the best option for retained earnings. 

Edited January 13, 2025 by Munger_Disciple

[Munger_Disciple]

@gfp Here is what Buffett actually said during 2024 annual meeting on this topic:

 

BECKY QUICK: All right, the next question comes from Slavin Vucelbrot. As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing, or will this function be exercised by Mr. Combs and Mr. Weschler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions, such as large acquisitions, be separated from the common stock selection process?

 

WARREN BUFFETT: Yeah, I would say that decision actually will be made when I’m not around, and I may try and come back and haunt them if they do it differently. But I’m not sure the Ouija board will get that job done. So that job, I’ll never know the answer on whether it [will] get covered, but I feel very comfortable about the fact that it will be made by a board, that they’ve got loads of brainpower, they’ve got a dedication to an unusual institution, and they will figure things out.

 

But I would say that if I were on that board and were making the decision, I would probably, knowing Greg, I would just leave… I would leave the capital allocation to Greg. And he understands businesses extremely well. And if you understand businesses, you understand… you understand common stocks. I mean, if you really know how business works, you are, you are an investment manager. How much you manage, maybe just your own funds or maybe other people’s [funds]. And if you really are primarily interested in getting assets under management, which is where the money is, you know, you don’t really have to understand that sort of thing.

 

But that’s not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely with Greg. The responsibility has been with me, and I farmed out some of it. And I used to think differently about how that would be handled, but I think the responsibility should be that of the CEO. And whatever that CEO decides may be helpful in effectuating that responsibility. That’s up to [him or her] to decide at the time they’re running the money.

So I would say that my thinking on that has developed to some extent as the sums have grown so large at Berkshire, and we do not want to try and have 200 people around that are managing a billion each. [It] just doesn’t work. And I think that when you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things, and I think Greg [is] capable of doing that. I think I’ve missed a lot of stuff in the past, so I’m actually wiser about doing that now. But I, you know, I would do it better this time around in 2008 and 2009 if something akin to that happened. But it won’t be exactly like 2008 or [2009], you can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly… Maybe it will be once every five years, probably [more like] once every ten years or something. But as the world gets more sophisticated, complicated, and intertwined, more can go wrong. And there’s no sense going through here exploring the possibilities of the different things that could happen.

 

But you do want to be able to act when [something] happens. And I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn’t that people didn’t have money in 2008. It’s that they were paralyzed. And we did have the advantage of having some capital and eagerness to act, and a government that, in effect, looked at us as an asset instead of a liability.

 

And I think that all of those qualities will be even more important as our capital pile grows. So I think Greg may have even more fun than I had in a period when extraordinary things were happening, and we were the logical place to go. You never know whether it’ll be next week, next year, [or the] next decade, but you [know], it won’t be a century from now, that is for sure. [The more] intertwined and sophisticated the world financial situation gets, the more vulnerable it gets in a certain sense. It solves a lot of small problems, but it leaves [the system] more vulnerable to large problems.

[Blake Hampton]

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

[Castanza]

9 minutes ago, Blake Hampton said:

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

Now look up their cost basis and how much they get paid in dividends every year. 
 

It was also Berkshires largest “publicly traded” position at close to 40%. If you account for the privately owned businesses Apple was only ever like ~11% of Berkshires IV. 

Edited January 14, 2025 by Castanza

[73 Reds]

8 minutes ago, Blake Hampton said:

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

Can you imagine what they are working on for the future?  That's part of what you get.  PEs and earnings growth only tell a story of the immediate past. 

[thepupil]

34 minutes ago, Blake Hampton said:

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

 

he's sold at least 2/3 of his peak shares. wouldn't be surprised if he's sold more come 13-F day. 

 

I think the AAPL position was 1/3 of equity at one point and is now like 7% (not including its associated DTL so it's actually a little smaller). 

 

Edited January 14, 2025 by thepupil

[Gregmal]

Well, it’s also fair to point out, in light of the ease with which we appeal to authority regarding Buffett, that much like when “Buffett was really bearish” around May 2020….he also sold much of his AAPL….like 20-30% below todays prices. Clearly not a great move if we judge it marked to market. 

[Mephistopheles]

Not to mention his sales of Wells Fargo in the 20s during Covid 

[Blugolds]

Also important to remember that Buffetts #1 priority is to protect the base, protect the shareholders..hindsight is 20/20 now re covid but at the time you’ll remember that there were daily tally’s and updates regarding fatalities, Ackman was crying on MNSBC telling the gov to shutdown to protect his dad, and they were parking Hospital ships in the NY harbor for extra beds..hindsight says that was a crazy overreaction and everyone should have been buying hand over fist…but AT THE TIME it was anybody’s guess as to how bad this would be and what would be the result, and when we would get control of it, the entire world was in chaos, every country.

 

At least to me, it seems reasonable that someone who’s primary objective is to protect the base, shareholders money and remain the “Fortress” that is BRK would come out of the other side looking like they behaved “too conservatively” that is the luxury we have of coming out the other side relatively unscathed, to be able to say hey, the old man goofed…vs he hit it out of the park and made bank, you’ll probably never be able to say that about BRK, hey they took advantage of the opportunity, took the gamble and it paid off, made the intelligent bet when everyone else (the entire world) predicted doom and gloom and are richer for it. BRK goal is respectable returns while mitigating against significant loss of capital so by its very nature it will never ever make the sexy bet/call and as a shareholder you’ve gotta expect that and be Ok with it. 

 

If you’re primary goal is remain the fortress and protect shareholders from extreme loss of capital, it 100% logical that you would behave as Buffett did when the entire world is in chaos, there is no end in sight and it still hasn’t played out as to how bad it will be and how significant the impact will be. He errors on the side of caution and doesn’t swing for the fences if there is even 1% that it will be a detrimental blow to BRK. Didnt know the fed would be as aggressive as it was, it could have also been another GFC or worse and then people would have been saying why was he such a shmuck leaving so much exposure for BRK. 

 

 Just playing devils advocate here, but it’s easy to forget what the viewpoint AT THE TIME was compared to what we know now and its easy to Monday morning QB that today. Do I wish he would have been a little less conservative and taken advantage of opportunities…yes, but I also understand why he didnt and Im ok with it. 

Edited January 15, 2025 by Blugolds

[Blake Hampton]

15 hours ago, Blugolds said:

Didn't know the fed would be as aggressive as it was, it could have also been another GFC or worse and then people would have been saying why was he such a shmuck leaving so much exposure for BRK.

 

The economic circumstances surrounding 2020 were so bad that it gave Jamie Dimon a heart attack that nearly killed him. Most people don't understand just how close to the edge we got.

 

JPMorgan’s Jamie Dimon and His Brush With Death - WSJ

 

Edited January 15, 2025 by Blake Hampton

[Gregmal]

Things were so extreme and emotional in Spring 2020 that there was only one direction we could have gone, and that was up. It was so screamingly obvious then, almost as much as it is in hindsight. I know plenty of people even on this board who murdered it. Was one of those generational setups. 

[coffeecaninvestor]

There are in my view a few factors that none of us have that Buffett has, and I think it’s irrational for anyone to judge someone negatively for having done what he did. 
 

He is the steward of capital for many shareholders, and at his ripe age does not have the same time to recover any losses for them if he were to make a huge error. 
 

He also is one of the largest insurance companies and besides being regulated he needs to be 100% sure he can make good on his promises. 
 

I think there is a large difference in how Buffett would invest his own money and how he runs Berkshire. We can continue to argue how he screwed up, but it’s a waste of time.. sure he might have made a few more percent if he bought versus sold, but Berkshire has done more than fine since the bottom despite the “mistake” (even though both Buffett and Munger admit they make tons of mistakes). 

 

 

[Libs]

Didn't Buffett kind of freeze up when the GFC hit too? Yeah, he cut some nice 10% GS - type deals, but they were small, and he later admitted, IIRC, he used a thimble instead of bucket?

 

Found the quote from the 2010 letter:

 

Buffett recalls that last year’s letter called corporate and municipal bonds “ridiculously cheap” compared to U.S. Treasuries.  And we says Berkshire did “back” that view by making some purchases, but “I should have done far more.  Big opportunities come infrequently.”

[Gregmal]

27 minutes ago, coffeecaninvestor said:

There are in my view a few factors that none of us have that Buffett has, and I think it’s irrational for anyone to judge someone negatively for having done what he did. 
 

He is the steward of capital for many shareholders, and at his ripe age does not have the same time to recover any losses for them if he were to make a huge error. 
 

He also is one of the largest insurance companies and besides being regulated he needs to be 100% sure he can make good on his promises. 
 

I think there is a large difference in how Buffett would invest his own money and how he runs Berkshire. We can continue to argue how he screwed up, but it’s a waste of time.. sure he might have made a few more percent if he bought versus sold, but Berkshire has done more than fine since the bottom despite the “mistake” (even though both Buffett and Munger admit they make tons of mistakes). 

 

 

I dont think thats whats going on though. Whats being highlighted is simply to combat the widespread and rampant "this is what Buffett is saying or doing" stuff thats often thrown out as an excuse for taking a position. First rule of investing isnt as Buffett says "dont lose money", its "think for yourself".

[thepupil]

17 hours ago, Blugolds said:

Also important to remember that Buffetts #1 priority is to protect the base, protect the shareholders..hindsight is 20/20 now re covid but at the time you’ll remember that there were daily tally’s and updates regarding fatalities, Ackman was crying on MNSBC telling the gov to shutdown to protect his dad, and they were parking Hospital ships in the NY harbor for extra beds..hindsight says that was a crazy overreaction and everyone should have been buying hand over fist…but AT THE TIME it was anybody’s guess as to how bad this would be and what would be the result, and when we would get control of it, the entire world was in chaos, every country.

 

At least to me, it seems reasonable that someone who’s primary objective is to protect the base, shareholders money and remain the “Fortress” that is BRK would come out of the other side looking like they behaved “too conservatively” that is the luxury we have of coming out the other side relatively unscathed, to be able to say hey, the old man goofed…vs he hit it out of the park and made bank, you’ll probably never be able to say that about BRK, hey they took advantage of the opportunity, took the gamble and it paid off, made the intelligent bet when everyone else (the entire world) predicted doom and gloom and are richer for it. BRK goal is respectable returns while mitigating against significant loss of capital so by its very nature it will never ever make the sexy bet/call and as a shareholder you’ve gotta expect that and be Ok with it. 

 

If you’re primary goal is remain the fortress and protect shareholders from extreme loss of capital, it 100% logical that you would behave as Buffett did when the entire world is in chaos, there is no end in sight and it still hasn’t played out as to how bad it will be and how significant the impact will be. He errors on the side of caution and doesn’t swing for the fences if there is even 1% that it will be a detrimental blow to BRK. Didnt know the fed would be as aggressive as it was, it could have also been another GFC or worse and then people would have been saying why was he such a shmuck leaving so much exposure for BRK. 

 

 Just playing devils advocate here, but it’s easy to forget what the viewpoint AT THE TIME was compared to what we know now and its easy to Monday morning QB that today. Do I wish he would have been a little less conservative and taken advantage of opportunities…yes, but I also understand why he didnt and Im ok with it. 

agree completely. we were but a few days from significant stress in funding markets and further margin calls/deleveragings etc. my fam owns 7 figs of Berkshire. I didn't want or think an insurer should be aggressive at ALL in 2020. there was tons of uncertainty on potential losses as I recall. I certainly didn't have clarity on that. we had no idea how quickly vaccines would be approved, how long it'd take for society to "re-open". honestly, if he was super aggressive, I'd have probably sold the stock.

 

berkshire isn't meant to make one rich. it's meant to keep one rich. the communication on this has been pretty clear for a long time IMO. Lots of people w/ huge concentrations in the stock. it's not some run of the mill company that people have 5% of their net worth in. 

 

I bought PSH who was getting aggressively long in restaurants and hotels and was levered and at a big discount. I understood ackman's aggression and wanted some of that (at a certain size). I did NOT want Berkshire doing that. 

 

and as it turns out they had plenty of firepower in the form of their huge AAPL position which made a shit ton and they've monetized/derisked that substantially. Berkshire has slightly beat SPX over the last 5 years and within a hair over last 10 and slighlty above in last 20 and generated a good absolute return over all time horizons. not really sure there's anything to complain about that. 

 

Edited January 15, 2025 by thepupil

[coffeecaninvestor]

14 minutes ago, Gregmal said:

I dont think thats whats going on though. Whats being highlighted is simply to combat the widespread and rampant "this is what Buffett is saying or doing" stuff thats often thrown out as an excuse for taking a position. First rule of investing isnt as Buffett says "dont lose money", its "think for yourself".

Yes, I completely agree. If you can’t think for yourself then just buy an index fund. There’s no shame in that it’s a perfect way to get rich enough to retire. I just think Buffett has different sets of rules,  values, and objectives than the individual investor. I think when you ride coattails you need to understand that, and not take anyone’s actions or words as gospel.  

[LC]

5 hours ago, Gregmal said:

Things were so extreme and emotional in Spring 2020 that there was only one direction we could have gone, and that was up. It was so screamingly obvious then, almost as much as it is in hindsight. I know plenty of people even on this board who murdered it. Was one of those generational setups. 

 

It was - Berkshire (my value market indicator) at what like 170? Such a skewed risk reward.

 

Either the world falls apart or it doesn't. Just bet everything but the house on the world not falling apart. Leaps on everything. Should've bet the house too, not like the bank could've come to repossess it without getting within 6ft

[cubsfan]

6 hours ago, Gregmal said:

Things were so extreme and emotional in Spring 2020 that there was only one direction we could have gone, and that was up. It was so screamingly obvious then, almost as much as it is in hindsight. I know plenty of people even on this board who murdered it. Was one of those generational setups. 

 

It was so true. It took me a few months to come out from under that table. And it ended up being almost as good as 2009. 

 

But I do think @Blugolds is right. Buffett predicament was more difficult considering his safety first promise to shareholders. Berk did fine, when he probably could have really killed it.

[ratiman]

Will BRK after Buffett try to run the conglomerate like a business? For instance BRK has a number of furniture subs, including NFM, Jordan's, Star, CORT, and maybe some others. Why not merge those and try to get scale? I know that is against the BRK religion but it is what any other conglomerate would do. Same goes double for jewelry.

[CassiusKing1]

Buffett's managing on two fronts currently.  One is continuous management at Berkshire, the other is managing for a successor to take over.  Sometimes these two will conflict.  And I think the AAPL sale is one of those.  As a manager would he have kept it, probably.  As someone who is thinking and preparing Greg for succession it was the right move.  It's much easier for Greg to take over management of BRK without an oversized position in AAPL.  Selling AAPL will be much better received by shareholders and the public if WEB does that and not Greg when he takes over. 

The buildup of cash also protects Greg and the future of BRK in that he will have plenty of optionality to do whatever is needed in the wake of Warren no longer being around. He can continue to sit on cash, or use it to buyback BRK shares if it starts to trade around or below 1.2 times if the market reacts to Warren no longer being here.

[alpha]

 

Pilot is closing is oil trading unit:

 

https://www.reuters.com/business/energy/warren-buffetts-pilot-co-shuts-oil-trading-business-sources-say-2025-01-21/

[Gamecock-YT]

Not surprising, that was the unit the Haslem's were using to juke the numbers to get a higher valuation on their shares.

[gfp]

Fortune profile of Greg Abel. I’m stuck in Mexico missing the glorious snow in New Orleans boo hoo

 

https://archive.ph/QcRW2

[73 Reds]

15 minutes ago, gfp said:

Fortune profile of Greg Abel. I’m stuck in Mexico missing the glorious snow in New Orleans boo hoo

 

https://archive.ph/QcRW2

North Florida got some snow too.  Global warming is taking a break this winter, LOL.

[sleepydragon]

“

Berkshire Hathaway Energy did not make Abel available for an interview or comment for this story, though Buffett did respond to an email from Fortune: “I couldn’t feel better about Greg,” he said. “But I’m just not doing interviews anymore. At 94, bridge isn’t the only activity that’s slowed down for me. I’m still having a lot of fun and am able to do a few things reasonably well. But other activities have been eliminated or greatly minimized.”

”

maybe why Brk down today?