Buffett/Berkshire - general news

[Viking]

2 hours ago, Maverick47 said:

@Viking  As a small holder of Markel, I also was surprised at the recent news of a business review prompted by activist investors.  This is something Buffett has been concerned about for Berkshire for several decades now.  I think Berkshire is likely to prove to be different from Markel for several reasons:
 

First, Buffett does still have significant voting control through his ownership of A shares with 1500 times the voting rights of the B shares.  And though he gives some shares  away each year, he still controls, if memory serves, more than 30% of the voting rights of Berkshire.  
 

Secondly, he has promised that his will’s instructions require his executor to continue to hold all Berkshire stock he owns at death and to only distribute these shares over time to the charities he designates.  He has stated that he believes it will take at least 10 to 15 years after his death before this is accomplished.  
 

His son Howard will be chair of the board after his death, and will be charged with maintaining the culture of Berkshire.

 

All current board members own Berkshire stock they have purchased individually, are independently wealthy and do not require any directors fees from Berkshire to maintain their standard of living.  In many cases they have known Buffett for years and are well aware of the culture that he expects them to maintain after his death.  As long as they are physically and mentally able, I expect many of them would consider it an honor to continue to serve on the board after Buffett passes away as a means to ensure his legacy continues.

 

I personally think there will be at least five and more likely 10 years past Buffett’s death before any sort of voting challenge to management that might come from outside of the board of directors might even be remotely possible.  Given the longevity that Buffett and Munger had to set the initial course and culture of the company, I think that is also a difference from what Markel is experiencing.

 

Fairfax has a similar voting stock structure to Berkshire and Prem appears to be setting up a similar set of expectations that family board members will maintain Fairfax’s culture after he passes on. 

 

I think Markel had some second or third generation Markel family members who had been involved in the business, but not as executives for a number of years now.  Voting control among that family had also dissipated over the years, and the next generation of non family executive managers had an illogical multiple CEO structure for a number of years that never made any sense to me.  Leadership by committee, which is what that essentially meant, led to some confusion among investors as to what defined the company and its strategy. Gaynor was seen as the Investment CEO, and Markel Ventures was his pet project.  Now that he is sole CEO, I’ll be surprised if the business review results in spinning those companies off, but if it does, that might signal some diminution of his influence on the strategy of the company and his subsequent retirement might then not be much further off.  It’s an open question what this would mean for the future of the company.  I suspect that the new inclusion of a measure of intrinsic value over time was something he hopes will encourage market value of the stock to more closely follow his opinion of intrinsic value.  If he stays on, and the stock responds well, and the Ventures companies are retained, then he might be able to point to the “improved management disclosures” as being at least partly responsible for the market response, justifying his continued leadership.  Might be a 50/50 bet on that at the present time, and if he leaves, no way of knowing what to expect from a new leader and a new corporate strategy.

Bottom line — I think that Sanjeev showed significant prescience years ago in naming this site the Corner of Berkshire and Fairfax and not including Markel in the name….

 

@Maverick47, I learned lots from your post... As I am sure you can appreciate/recognize, sometimes I like to stir the pot. I get an idea / develop a thesis that I think might make sense and I throw it onto the wall at CofBF to see if it might stick. Feedback from other posters, like you, is much appreciated. It is great to be able to discuss important ideas/themes with smart people like you. 

Edited February 9 by Viking

[Ulti]

https://podcasts.apple.com/us/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000689802509
 

Interview with Lawrence Cunningham on 

the value of trust base cultures and organizations and how Buffett has used this over the years…touches on Constellation organization and briefly on Berkshires 300 billion $

[Munger_Disciple]

11 hours ago, Maverick47 said:

@Viking  As a small holder of Markel, I also was surprised at the recent news of a business review prompted by activist investors.  This is something Buffett has been concerned about for Berkshire for several decades now.  I think Berkshire is likely to prove to be different from Markel for several reasons:
 

First, Buffett does still have significant voting control through his ownership of A shares with 1,500 times the economic rights and 10,000 times the voting rights of the B shares.  And though he gives some shares  away each year, he still controls, if memory serves, more than 30% of the voting rights of Berkshire.  
 

Secondly, he has promised that his will’s instructions require his executor to continue to hold all Berkshire stock he owns at death and to only distribute these shares over time to the charities he designates.  He has stated that he believes it will take at least 10 to 15 years after his death before this is accomplished.  
 

His son Howard will be chair of the board after his death, and will be charged with maintaining the culture of Berkshire.

 

All current board members own Berkshire stock they have purchased individually, are independently wealthy and do not require any directors fees from Berkshire to maintain their standard of living.  In many cases they have known Buffett for years and are well aware of the culture that he expects them to maintain after his death.  As long as they are physically and mentally able, I expect many of them would consider it an honor to continue to serve on the board after Buffett passes away as a means to ensure his legacy continues.

 

I personally think there will be at least five and more likely 10 years past Buffett’s death before any sort of voting challenge to management that might come from outside of the board of directors might even be remotely possible.  Given the longevity that Buffett and Munger had to set the initial course and culture of the company, I think that is also a difference from what Markel is experiencing.

 

Fairfax has a similar voting stock structure to Berkshire and Prem appears to be setting up a similar set of expectations that family board members will maintain Fairfax’s culture after he passes on. 

 

I think Markel had some second or third generation Markel family members who had been involved in the business, but not as executives for a number of years now.  Voting control among that family had also dissipated over the years, and the next generation of non family executive managers had an illogical multiple CEO structure for a number of years that never made any sense to me.  Leadership by committee, which is what that essentially meant, led to some confusion among investors as to what defined the company and its strategy. Gayner was seen as the Investment CEO, and Markel Ventures was his pet project.  Now that he is sole CEO, I’ll be surprised if the business review results in spinning those companies off, but if it does, that might signal some diminution of his influence on the strategy of the company and his subsequent retirement might then not be much further off.  It’s an open question what this would mean for the future of the company.  I suspect that the new inclusion of a measure of intrinsic value over time was something he hopes will encourage market value of the stock to more closely follow his opinion of intrinsic value.  If he stays on, and the stock responds well, and the Ventures companies are retained, then he might be able to point to the “improved management disclosures” as being at least partly responsible for the market response, justifying his continued leadership.  Might be a 50/50 bet on that at the present time, and if he leaves, no way of knowing what to expect from a new leader and a new corporate strategy.

Bottom line — I think that Sanjeev showed significant prescience years ago in naming this site the Corner of Berkshire and Fairfax and not including Markel in the name….

 

 

 

 

Great post! I would just add that Buffett's daughter is also on the board to provide additional security against evil PE barbarians. 

[Spooky]

17 hours ago, Viking said:

But what about Berkshire Hathaway? Is Buffett not giving most of his shares to various charities? Who will be selling chunks every year? 
 

Bottom line, it doesn’t look to me like Berkshire Hathaway will have a controlling shareholder. Especially 5 or 10 years after Buffett is gone. 

 

I don't think this is correct. When Buffett gives shares to charities they convert them from the A shares to the B shares. The Munger family and some other current A share holders will end up with control.

[John Hjorth]

15 minutes ago, Spooky said:

I don't think this is correct. When Buffett gives shares to charities they convert them from the A shares to the B shares. The Munger family and some other current A share holders will end up with control.

 

@Spooky,

 

What is your basis for this statement? Who are those other currrent A shareholders?

Edited February 9 by John Hjorth

[gfp]

I don't think anybody will have voting control.  Nobody has absolute control today.  Warren is deemed to control Berkshire today because nobody is anywhere close to his % of the voting power (Warren has 30% of the votes and declining every year).  The number of A-shares will continue to shrink through conversions and Berkshire's repurchases.  Eventually they will become extremely illiquid and barely trade, which will make them very difficult to transact in for any potential activist.  All of the volume and liquidity will be in the B-shares.

 

Fidelity Contrafund will have more A-share voting influence than the Munger descendants.

 

The conversions are one-way and many early shareholders know to convert before donating, convert before selling, or call Mark Millard's number in the annual report to sell to Berkshire.

[John Hjorth]

2 minutes ago, gfp said:

I don't think anybody will have voting control.  Nobody has absolute control today.  Warren is deemed to control Berkshire today because nobody is anywhere close to his % of the voting power (Warren has 30% of the votes and declining every year).  The number of A-shares will continue to shrink through conversions and Berkshire's repurchases.  Eventually they will become extremely illiquid and barely trade, which will make them very difficult to transact in for any potential activist.  All of the volume and liquidity will be in the B-shares.

 

Fidelity Contrafund will have more A-share voting influence than the Munger descendants.

 

The conversions are one-way and many early shareholders know to convert before donating, convert before selling, or call Mark Millard's number in the annual report to sell to Berkshire.

 

 

Exactly, this, @gfp, 

 

I think the same, but I can't really back it up with data.

 

The question is still interesting, though.

 

Here on CofB&F we should really try - in cooperation with each other - to map where the Berkshire A-shares not owned by Mr. Buffett are owned / laying around.

 

Perhaps we should add the B shares to the mapping, too, if we are already at it, to max, full possible perspective.

[Munger_Disciple]

Just the sheer size of BRK makes it almost impossible for activists to agitate for change. Its market cap is $1 trillion now, and is likely to be $2-$3 trillion in about 10 years from now. Add the voting control by A shareholders, we can safely say BRK will remain in its current corporate structure for the foreseeable future.  

 

For instance, MSFT has had no activist issues despite founder shareholders (Gates & Allen) exiting, largely due to its size.

Edited February 9 by Munger_Disciple

[John Hjorth]

8 minutes ago, Munger_Disciple said:

Just the sheer size of BRK makes it almost impossible for activists to agitate. Its market cap is $1 trillion now, and is likely to be $2-$3 trillion in about 10 years from now. Add the voting control by A shareholders, we can safely say BRK will remain in its current corporate structure for the foreseeable future.  

 

For instance, MSFT has had no activist issues despite founder shareholders (Gates & Allen) exiting, largely due to its size.

 

One never really know in advance the outcomes of shareholder votes on shareholder proposals, untill they are done and over with.

 

Don't try to sell the fur of the bear before the bear is shot, or you may end up surprised, unleasantly.

[Munger_Disciple]

2 minutes ago, John Hjorth said:

 

One never really know in advance the outcomes of shareholder votes on shareholder proposals, untill they are done and over with.

 

Don't try to sell the fur of the bear before the bear is shot, or you may end up surprised, unleasantly.

 

 

Of course no one knows for sure what the future holds but I feel pretty confident as a shareholder that BRK will stay in its current form for >10 years.

A humble suggestion: try to be respectful to other posters. No one is selling anything here, we are all discussing potential future outcomes. 

[John Hjorth]

4 minutes ago, Munger_Disciple said:

Of course no one knows for sure what the future holds but I feel pretty confident as a shareholder that BRK will stay in its current form for >10 years.

A humble suggestion: try to be respectful to other posters. No one is selling anything here, we are all discussing potential future outcomes. 

 

You aren't discussing here fact and data driven, @Munger_Disciple,

 

Never mind, now please let it go from here.

[Munger_Disciple]

31 minutes ago, John Hjorth said:

 

You aren't discussing here fact and data driven, @Munger_Disciple,

 

Never mind, now please let it go from here.

 

It's called probabilistic thinking & judging the odds of something happening or not. Anyhow, one can only have "fact or data" about the past, not future. Future is always about "judgment". 

 

But, I agree let's move on. 

Edited February 9 by Munger_Disciple

[WFF]

Grandpa Warren just bought more Occidental.  760k shares @ 46.82
 

https://www.sec.gov/Archives/edgar/data/315090/000095017025018266/xslF345X05/ownership.xml

[gfp]

https://www.sec.gov/Archives/edgar/data/927066/000095017025020189/xslF345X05/ownership.xml

https://www.sec.gov/Archives/edgar/data/927066/000095017025020183/xslSCHEDULE_13D_X01/primary_doc.xml

 

First of the required quarterly sales of DaVita shares by Berkshire entities back to DaVita.  The BRK group isn't allowed to stay above 45% so once each quarter they have to sell stock back to DaVita based on the VWAP that DaVita repurchased stock at in the quarter just passed.  So GEICO sold stock at $156 on a day it traded for $173 but what can ya do...

[ValueMaven]

really interesting thank you @gfp - Ted has a $350M personal position in DVA.  Wild.  

[cubsfan]

14 hours ago, gfp said:

https://www.sec.gov/Archives/edgar/data/927066/000095017025020189/xslF345X05/ownership.xml

https://www.sec.gov/Archives/edgar/data/927066/000095017025020183/xslSCHEDULE_13D_X01/primary_doc.xml

 

First of the required quarterly sales of DaVita shares by Berkshire entities back to DaVita.  The BRK group isn't allowed to stay above 45% so once each quarter they have to sell stock back to DaVita based on the VWAP that DaVita repurchased stock at in the quarter just passed.  So GEICO sold stock at $156 on a day it traded for $173 but what can ya do...

 

Thanks for that explanation @gfp . Looked at the filing last night and didn't really understand how the price was determined. Very helpful.

[gfp]

https://www.dataroma.com/m/holdings.php?m=BRK

 

Goodbye Citi! (mostly) Held on to more BAC than most would have predicted.  Didn't touch that round number AAPL holding.

Edited Friday at 09:08 PM by gfp

[Spooky]

1 hour ago, gfp said:

https://www.dataroma.com/m/holdings.php?m=BRK

 

Goodbye Citi! (mostly) Held on to more BAC than most would have predicted.  Didn't touch that round number AAPL holding.

 

Fairly uneventful.

[DooDiligence]

TFW you front run the master on both DPZ (in) and C (out).

Now if he'd just buy some Nintendo.

[Charlie]

Glad that he sold not much stocks.

 

The U.S. government change could have played a big role in this decision.

Edited Saturday at 06:51 AM by Charlie

[John Hjorth]

And the cash continues gushing in every day at Bershire, a bit below USD 3 B per month.^*) [That's actually ~ USD 100 M - per day ] Has Mr. Buffett stopped taking showers and is now taking baths like Scrooge McDuck in cash and T-Bills?

 

 

^*) USD 25.9 billion for the first 9 months of 2024.

 

[Hektor]

Here we go again.

 

https://www.barrons.com/articles/warren-buffett-berkshire-hathaway-stocks-sales-portfolio-holdings-92567500

 

Warren Buffett Is Out of Step With Markets. Berkshire Hathaway Keeps Selling Stocks.

[gfp]

20 minutes ago, Hektor said:

Here we go again.

 

https://www.barrons.com/articles/warren-buffett-berkshire-hathaway-stocks-sales-portfolio-holdings-92567500

 

Warren Buffett Is Out of Step With Markets. Berkshire Hathaway Keeps Selling Stocks.

 

Well that is probably the first article I have read that correctly adds up the cash for September 30, 2024.  

 

"It’s a good bet that Berkshire’s cash and equivalents, which hit a record $310 billion on Sept. 30, was higher at year-end due in part to the stock sales in the fourth quarter."

[John Hjorth]

Berkshire Hathaway - Press Release [February 18^th 2025] : 2024 Annual Report Release Information.

 

Saturday 22^nd February 2025, at around 8:00 AM eastern time.