Buffett/Berkshire - general news

[villainx]

Or angel and venture investing in operating level?  I would think some of companies could look into that smartly. 

[73 Reds]

24 minutes ago, gfp said:

 

He mentioned it several times - I scanned that transcript and found one of the "middle" mentions.  They alluded to it before and after this mention:

"

And Martin just wrote in an addendum in the last 40 minutes or so, pointing out that you mentioned Berkshire almost invested $10 billion recently and wanting to know if you could talk more about that.

Warren Buffett: Well, I can give you a good answer to the second part, which is no. But $10 billion wouldn’t have done that much anyway.

"

 

later - as part of Greg's answer:

"

The next opportunity is to acquire businesses in their totality, 100%. There are great times when we can do that. Warren touched on the $10 billion acquisition in the last quarter. But the value relative to the risk have to be right. If it’s right, we want to own it. If it’s not the time, there’ll be another time to own assets like that.

Then there’s the opportunity to own pieces of companies through equity. But as Warren’s always highlighted, though we own a piece of a company, we own a piece of that cash flow, a piece of their balance sheet. It’s not just a share certificate. We’ll approach it with the thought that we’re going to own this company for the long term."

<<But $10 billion wouldn’t have done that much anyway.>>  That is the single, greatest issue facing Greg Abel.  The company is already awash in cash and it is his job to determine how and where it is spent.  Berkshire takes in more than $3 billion every month.  Acquiring operating companies comes with lots of competition and owner/operators will naturally be wary of Greg, as a newcomer CEO.  In the public markets, building a meaningful equity position in any one company can take months or longer, assuming the cumulative buys don't move the price out of range, which is getting more and more difficult as Berkshire's definition of a "meaningful" position grows.   If not now, then certainly soon there will be a need to expand the company's circle of competence.  Cash can buy you almost any talent in existence in almost any field.  IMO next generation Berkshire is going to look a lot different than today.       

[Munger_Disciple]

30 minutes ago, KPO said:

This is a much better answer in my view. I’d hope they’ve moved past the footwear industry after their experience with Dexter and HH Brown. 

I agree. It's far more likely to be related to Greg's wheelhouse, the energy business, so the Canadian company makes a lot more sense. 

[sleepydragon]

16 minutes ago, Munger_Disciple said:

I agree. It's far more likely to be related to Greg's wheelhouse, the energy business, so the Canadian company makes a lot more sense. 

strategically could also make sense because the canadian company makes heavy crude and oxy/american companies only make lighter ones.

[thepupil]

54 minutes ago, 73 Reds said:

<<But $10 billion wouldn’t have done that much anyway.>>  That is the single, greatest issue facing Greg Abel.  The company is already awash in cash and it is his job to determine how and where it is spent.  Berkshire takes in more than $3 billion every month.  Acquiring operating companies comes with lots of competition and owner/operators will naturally be wary of Greg, as a newcomer CEO.  In the public markets, building a meaningful equity position in any one company can take months or longer, assuming the cumulative buys don't move the price out of range, which is getting more and more difficult as Berkshire's definition of a "meaningful" position grows.   If not now, then certainly soon there will be a need to expand the company's circle of competence.  Cash can buy you almost any talent in existence in almost any field.  IMO next generation Berkshire is going to look a lot different than today.       

 

agreed. the reality is there just aren't many needle moving things out there. 

 

Berkshire hasn't had a home run successful large operating company acquisition in 15 years. the below is google AI, and I think misses Alleghany (which was $12B), but I'm going to define large as >5% of Berkshire equity.

 

Today that'd be $30B+, so buying $14B of trading houses is cool and all but doesn't really move things. 

 

I would add to the google below, the two most important "acquisitions" of the last decade:

 

~$40 billion of apple stock....an absolute home run success 

~$78 billion of Berkshire stock...very good investment w/ great timing. 

 

That $120 billion are the last ten years greatest hits...but it's hard for me to say "hey warren is 94 and has an investible universe of ~100-200 stocks that will make a difference, I'm pumped for him to buy $50 billion of _______ on my behalf at 1.7x book). 

 

if the stock went down 20-25%, I'd feel a bit differently as that opens a very straightforward "acquisition opportunity"...

 

I think indexing, large scale tender, or breakup is the long term destiny....happy to change mind/be proven wrong. 

 

to be clear, I 1000% agree with Berkshire's decision to blow out of AAPL at the prices they did and create the "reinvestment problem" that exists right now. 

 

 

RED = Bad

Green=Good

Grey= Ancient

Yellow=TBD / no view

 

 

 

 

Edited May 6, 2025 by thepupil

[gfp]

1 hour ago, KPO said:

This is a much better answer in my view. I’d hope they’ve moved past the footwear industry after their experience with Dexter and HH Brown. 

 

It's possible, and I had posted it here previously, but I think it is more likely that they were offered Sketchers.

 

[thepupil]

i'm sure some noise/imperfection in this, but it's pretty stark. cash as a % of equity and assets. 

 

[Spekulatius]

On 5/5/2025 at 10:26 AM, Hektor said:

I feel Berkshire will invest more in India under Greg.

The valuations in India aren’t to their liking, imo I think Abel being Canadian can find something in Canada and then they already did something in Japan where there are still a lot of cheap business that can be bought.

[Spekulatius]

7 hours ago, thepupil said:

 

agreed. the reality is there just aren't many needle moving things out there. 

 

Berkshire hasn't had a home run successful large operating company acquisition in 15 years. the below is google AI, and I think misses Alleghany (which was $12B), but I'm going to define large as >5% of Berkshire equity.

 

Today that'd be $30B+, so buying $14B of trading houses is cool and all but doesn't really move things. 

 

I would add to the google below, the two most important "acquisitions" of the last decade:

 

~$40 billion of apple stock....an absolute home run success 

~$78 billion of Berkshire stock...very good investment w/ great timing. 

 

That $120 billion are the last ten years greatest hits...but it's hard for me to say "hey warren is 94 and has an investible universe of ~100-200 stocks that will make a difference, I'm pumped for him to buy $50 billion of _______ on my behalf at 1.7x book). 

 

if the stock went down 20-25%, I'd feel a bit differently as that opens a very straightforward "acquisition opportunity"...

 

I think indexing, large scale tender, or breakup is the long term destiny....happy to change mind/be proven wrong. 

 

to be clear, I 1000% agree with Berkshire's decision to blow out of AAPL at the prices they did and create the "reinvestment problem" that exists right now. 

 

 

RED = Bad

Green=Good

Grey= Ancient

Yellow=TBD / no view

 

 

 

 

Lubrizol was pretty mediocre if not bad.

[mistakenpoint]

The prices payed on that list of acquisitions are wrong for many of them. For example, McLane was a 1.45 billion acquisition from Walmart. 

[thepupil]

7 hours ago, mistakenpoint said:

The prices payed on that list of acquisitions are wrong for many of them. For example, McLane was a 1.45 billion acquisition from Walmart. 

Yea that’s what I get for using the AI…I wasn’t going to systematically pore through 15+ years of filings to show what I know to be true as a shareholder of 13-14 years…if I’m forgetting some big deal, please correct me. 

 

at least for me, it’s hard not to be pretty down on Berkshire at current price, cash&stock mix.. 
 

Edited May 7, 2025 by thepupil

[73 Reds]

1 hour ago, thepupil said:

Yea that’s what I get for using the AI…I wasn’t going to systematically pore through 15+ years of filings to show what I know to be true as a shareholder of 13-14 years…if I’m forgetting some big deal, please correct me. 

 

at least for me, it’s hard not to be pretty down on Berkshire at current price, cash&stock mix.. 
 

I'd be down on Berkshire if they didn't hold all that cash.  What's the old saying..... the world is their oyster.

[Hektor]

9 hours ago, Spekulatius said:

The valuations in India aren’t to their liking, imo I think Abel being Canadian can find something in Canada and then they already did something in Japan where there are still a lot of cheap business that can be bought.

I doubt that Ajith and other leaders are oblivious to the opportunities in India. In the past, they did invest in PayTm. I think they also had a insurance joint venture for some time. If they go to India, I doubt it will be needle moving.

[oscarazocar]

3 hours ago, thepupil said:

Yea that’s what I get for using the AI…I wasn’t going to systematically pore through 15+ years of filings to show what I know to be true as a shareholder of 13-14 years…if I’m forgetting some big deal, please correct me. 

 

at least for me, it’s hard not to be pretty down on Berkshire at current price, cash&stock mix.. 
 

 

Mclane was such a good deal, the kind that Berkshire used to make more frequently but that have dried up over time.  They paid $1.427 billion in 2003 and it has since produced over $4b in FCF with net income around $480 million in 2024 ($634 million pretax earnings).  The IRR is about 13%, unlevered.

[thepupil]

22 minutes ago, oscarazocar said:

 

Mclane was such a good deal, the kind that Berkshire used to make more frequently but that have dried up over time.  They paid $1.427 billion in 2003 and it has since produced over $4b in FCF with net income around $480 million in 2024 ($634 million pretax earnings).  The IRR is about 13%, unlevered.

 

yea...in today's world that'd be bid to 15%-18% gross highly levered IRR by PE firms. 

 

@73 Reds I like that they showed discipline and sold huge slugs of AAPL after it significantly re-rated. completely resonates with me and hard to do given the giant tax bill involved. I just wish Berkshire's own stock didn't follow suit. After a decade+ or so of being somewhere between moderately and significantly cheap, it just gets much less comfortable to be paying "fair to expensive" when 2/3 of assets / all of equity is in "easy to value"* cash / stocks. We've all read buffett's thoughts on cash as an option on everything else, but if we're paying a 10-20-30-40%** premium to that cash, and that cash is $350 billion, and we lack evidence of successful LARGE scale capital deployment outside of share repo's at Berkshire for a while...it just becomes tough for me...

 

anyways, I'll be the black sheep at the family reunion once my parents see their tax bill...

 

 

*I say this with some humility of course. AAPL was "easy to value" before it went up a shit ton. If there's anything in the public portfolio with similar upside, I certainly don't see it. 

**we're paying a 70% premium to book, but Berkshire worth more than book, so the premium paid to cash is lower. 

[Malmqky]

14 minutes ago, thepupil said:

....

 

After a decade+ or so of being somewhere between moderately and significantly cheap, it just gets much less comfortable to be paying "fair to expensive" when 2/3 of assets / all of equity is in "easy to value"* cash / stocks. We've all read buffett's thoughts on cash as an option on everything else, but if we're paying a 10-20-30-40%** premium to that cash, and that cash is $350 billion, and we lack evidence of successful LARGE scale capital deployment outside of share repo's at Berkshire for a while...it just becomes tough for me...

 

We can hold cash too, and we can invest far more nimbly and opportunistically. And like you said, it's been a long time since Berkshire has gotten the call...

 

It's a tough call. Emotion is clouding my judgement here...

[Pellom]

21 hours ago, sleepydragon said:

 

could it also be Parkland in Canada?

https://www.reuters.com/markets/deals/sunoco-buy-parkland-9-billion-deal-2025-05-05/#:~:text=May 5 (Reuters) - U.S.,Parkland's largest shareholder immediately criticized.

 

When Buffett mentioned the 10b deal, he looked at Greg (who of course is a Canadian)

 

I'll bet this is right. At the 2024 AGM he mentioned the only thing they were looking at at the time was a Canadian company. 

[Masterofnone]

33 minutes ago, thepupil said:

 

yea...in today's world that'd be bid to 15%-18% gross highly levered IRR by PE firms. 

 

@73 Reds I like that they showed discipline and sold huge slugs of AAPL after it significantly re-rated. completely resonates with me and hard to do given the giant tax bill involved. I just wish Berkshire's own stock didn't follow suit. After a decade+ or so of being somewhere between moderately and significantly cheap, it just gets much less comfortable to be paying "fair to expensive" when 2/3 of assets / all of equity is in "easy to value"* cash / stocks. We've all read buffett's thoughts on cash as an option on everything else, but if we're paying a 10-20-30-40%** premium to that cash, and that cash is $350 billion, and we lack evidence of successful LARGE scale capital deployment outside of share repo's at Berkshire for a while...it just becomes tough for me...

 

anyways, I'll be the black sheep at the family reunion once my parents see their tax bill...

 

 

*I say this with some humility of course. AAPL was "easy to value" before it went up a shit ton. If there's anything in the public portfolio with similar upside, I certainly don't see it. 

**we're paying a 70% premium to book, but Berkshire worth more than book, so the premium paid to cash is lower. 

At this valuation it is hard to see how Berkshire can outpace the index. The lack of buybacks reinforces the notion that the stock is not undervalued. But a premium should be applied to downside protection. Cash is a curse or treasure depending on the unknown future. That said, I've sold most of the BRK held in non-taxable accounts even though I don't have any great ideas at the moment.

[oscarazocar]

32 minutes ago, thepupil said:

 

yea...in today's world that'd be bid to 15%-18% gross highly levered IRR by PE firms. 

 

@73 Reds I like that they showed discipline and sold huge slugs of AAPL after it significantly re-rated. completely resonates with me and hard to do given the giant tax bill involved. I just wish Berkshire's own stock didn't follow suit. After a decade+ or so of being somewhere between moderately and significantly cheap, it just gets much less comfortable to be paying "fair to expensive" when 2/3 of assets / all of equity is in "easy to value"* cash / stocks. We've all read buffett's thoughts on cash as an option on everything else, but if we're paying a 10-20-30-40%** premium to that cash, and that cash is $350 billion, and we lack evidence of successful LARGE scale capital deployment outside of share repo's at Berkshire for a while...it just becomes tough for me...

 

anyways, I'll be the black sheep at the family reunion once my parents see their tax bill...

 

 

*I say this with some humility of course. AAPL was "easy to value" before it went up a shit ton. If there's anything in the public portfolio with similar upside, I certainly don't see it. 

**we're paying a 70% premium to book, but Berkshire worth more than book, so the premium paid to cash is lower. 

 

An interesting tension with Buffett/Berkshire is that he has long talked about how size is the enemy of performance in investing, yet he refused to repurchase shares until only the last few years.  This would have shrunken the size of the company and lengthened the runway for outperformance.  He knew this and also encouraged management of other public companies, including the ones he owned, to do so.  I think if you pumped him with sodium pentothal he would acknowledge this and that he really just wanted to see how big he could make Berkshire in his lifetime.

[Munger_Disciple]

42 minutes ago, Masterofnone said:

At this valuation it is hard to see how Berkshire can outpace the index. 

 

I will take the other side of this bet. I agree that the forward 10-year returns of Berkshire won't match that of its  last 10 years but it's a lot less over-valued (only by about 10% per my math) than the S&P 500 index, which is grossly overvalued IMO. So, Berkshire will out-perform the index with a very high probability. 

Edited May 7, 2025 by Munger_Disciple

[73 Reds]

1 hour ago, thepupil said:

 

yea...in today's world that'd be bid to 15%-18% gross highly levered IRR by PE firms. 

 

@73 Reds I like that they showed discipline and sold huge slugs of AAPL after it significantly re-rated. completely resonates with me and hard to do given the giant tax bill involved. I just wish Berkshire's own stock didn't follow suit. After a decade+ or so of being somewhere between moderately and significantly cheap, it just gets much less comfortable to be paying "fair to expensive" when 2/3 of assets / all of equity is in "easy to value"* cash / stocks. We've all read buffett's thoughts on cash as an option on everything else, but if we're paying a 10-20-30-40%** premium to that cash, and that cash is $350 billion, and we lack evidence of successful LARGE scale capital deployment outside of share repo's at Berkshire for a while...it just becomes tough for me...

 

anyways, I'll be the black sheep at the family reunion once my parents see their tax bill...

 

 

*I say this with some humility of course. AAPL was "easy to value" before it went up a shit ton. If there's anything in the public portfolio with similar upside, I certainly don't see it. 

**we're paying a 70% premium to book, but Berkshire worth more than book, so the premium paid to cash is lower. 

Yeah, everything in their investment universe is overpriced so what do do?   I know Buffett downplayed RE at thte last AM because of the time involved in every deal but I could see Berkshire someday buying and redeveloping entire communities.  In distressed areas it is not terribly difficult for even small developers to buy entire streets and city blocks and municipalities sometimes even help contribute to redevelopment costs.   Just thinking out loud but changes are surely coming one way or another.

[sleepydragon]

28 minutes ago, Munger_Disciple said:

 

I will take the other side of this bet. I agree that the forward 10-year returns of Berkshire won't match that of its  last 10 years but it's a lot less over-valued (only by about 10% per my math) than the S&P 500 index, which is grossly overvalued IMO. So, Berkshire will out-perform the index with a very high probability. 

you guys talk about that spx, BrK overvalued. What is undervalued nowadays? My local housing price practically doubled from 2 years ago. Rent is also up too. Gold is up 30%.  Brk is relatively undervalued compared to everything.

Oil is probably the only undervalued asset out there, because it was artificially held down by Arab, but it cant last forever, just like all fastings.

 

[Masterofnone]

Yes, but you don't have to buy anything at all if you feel that's the case.

[gfp]

10 minutes ago, sleepydragon said:

because it was artificially held down by Arab

 

think you've got that one backwards bud

[gfp]

11 minutes ago, sleepydragon said:

What is undervalued nowadays?

 

Plenty of "undervalued" stuff out there (as usual!)  - you just gotta keep looking until you find stuff.  I mean, 50% of this website's name is still a great value and that one isn't even hiding.