Buffett/Berkshire - general news

[Spooky]

1 hour ago, Masterofnone said:

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.

 

Part of the reason for less buyback seems to be the 1% tax that was instituted on buybacks. Buffett alluded to it changing the calculus.

[backtothebeach]

There is plenty of opportunity out there, but nothing that fits Buffett's style. Gotta admire his patience.

He is still waiting for the fat pitch. Maybe he'll never get it, but if he does, and he goes in with $100B that does a 5-bagger in 3 years, everyone criticizing now will shut up again.

[Masterofnone]

1 hour 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. 

Fair point, unless Berkshire's price to book also retreats back to say 1.3.

Edited May 7, 2025 by Masterofnone

[Blake Hampton]

 

 

There certainly will be opportunity.

[Blake Hampton]

Future events are gonna be a wicked slap in the face for some of you.

[rogermunibond]

Precision Castparts has come back a long way from 2020-2021.  I would say that despite the writedown in goodwill for the long haul it should still be a great operating company for Berkshire.

[gfp]

Just now, rogermunibond said:

Precision Castparts has come back a long way from 2020-2021.  I would say that despite the writedown in goodwill for the long haul it should still be a great operating company for Berkshire.

 

I strongly agree - you only have to buy these companies once.  Being an all cash deal helps as well

[gfp]

12 minutes ago, Blake Hampton said:

Future events are gonna be a wicked slap in the face for some of you.

 

Ah to be young again!

 

I know you are super sure of a specific future - but what's the answer for how to be invested right now?  Some of us have a job to do and bills to pay

[Blake Hampton]

17 minutes ago, gfp said:

Ah to be young again!

 

I know you are super sure of a specific future - but what's the answer for how to be invested right now?  Some of us have a job to do and bills to pay

 

Prepare for both long-term, serious inflation as well as a severe credit crisis.

[gfp]

9 minutes ago, Blake Hampton said:

 

Prepare for both long-term, serious inflation as well as a severe credit crisis.

 

This is a game of specifics Blake - everyone has to sit down in a chair every night.  What are you gonna own right now to prepare for / profit from your predicted scenario?

 

( on the real possibility your generation doesn't get the reference I will pin this here: https://en.wikipedia.org/wiki/Musical_chairs )

Edited May 7, 2025 by gfp

[Blake Hampton]

1 minute ago, gfp said:

This is a game of specifics Blake - everyone has to sit down in a chair every night.  What are you gonna own right now to prepare for / profit from your predicted scenario?

 

Oil and cash

[Castanza]

4 minutes ago, gfp said:

 

This is a game of specifics Blake - everyone has to sit down in a chair every night.  What are you gonna own right now to prepare for / profit from your predicted scenario?

Unobtanium is the only logical answer here. 

[gfp]

1 minute ago, Blake Hampton said:

 

Oil and cash

 

But no gold right? 

[Blake Hampton]

14 minutes ago, gfp said:

But no gold right? 

 

Probably should’ve bought producers when it was cheaper, but I missed the opportunity.

 

I like productive assets. Gold is just a useless metal that people tend to flock to when they're afraid of currency. Maybe it's the smartest place to be—I don’t know.

 

How do you value gold? How do you value crypto? How do you value something that doesn’t produce anything and has no redeeming qualities beyond people’s affinity for it? It’s effectively the same game many are playing with overvalued stocks—just hoping to find a greater fool later on. But we’re heading into a future where money will likely tighten significantly, and a lot of people may struggle just to survive. Do you really think they’ll want to be holding onto this dogshit then? During the Great Depression, people literally couldn’t even afford to eat, let alone buy equities or other assets.

 

People don’t realize how serious this all is. Huge fiscal and monetary imbalances aren’t just some joke—they define the very system we live in.

 

Edited May 7, 2025 by Blake Hampton

[Blake Hampton]

I know I sound serious, but so is the situation.

[valueinvesting101]

1 hour ago, Masterofnone said:

Fair point, unless Berkshire's price to book also retreats back to say 1.3.

 

Berkshire was buying BRK.A around $620K in March-April 2024 when book value per share was $400K. So seems like they were paying multiple in excess of 1.5

 

Buffett had set the threshold to buyback shares to 1.1 P/B in 2011 and increased to 1.2 in 2012. He also talked about his rationale for increasing it and how they thought about it. Increasing value of operating companies not being captured in book value and growing percentage of total assets being presented by operating companies was the main reason. Zero cost deferred tax liability, accelerated depreciation and float were also the factors.

 

If these factors are extrapolated from 2012->2025, it is easy to see why Buffett is paying a higher multiple for repurchasing the stock. The small amount of repurchases makes me think that the difference between market price and intrinsic value was small but market price was definitely less than conservatively calculated intrinsic value. I would definitely defer to Buffett's valuation of the intrinsic value of Berkshire Hathaway. 

I hope Berkshire does drop to 1.3 P/B or closer to it but I think buyback will start/pick up around 1.5 P/B multiple. There might be some large block selling coming from Charity donation/estate planning of existing shareholders.

[cubsfan]

33 minutes ago, Blake Hampton said:

 

Prepare for both long-term, serious inflation as well as a severe credit crisis.

 

I don't know if we're going to have inflation or de-flation, big growth or no growth.

I share your concerns about the debt, etc.   

 

Just don't know to act on it - other than invest carefully.

 

I probably only remember a few times when it looked like the coast is clear.

 

Good luck figuring it out.

[Masterofnone]

2 minutes ago, valueinvesting101 said:

 

Berkshire was buying BRK.A around $620K in March-April 2024 when book value per share was $400K. So seems like they were paying multiple in excess of 1.5

 

Buffett had set the threshold to buyback shares to 1.1 P/B in 2011 and increased to 1.2 in 2012. He also talked about his rationale for increasing it and how they thought about it. Increasing value of operating companies not being captured in book value and growing percentage of total assets being presented by operating companies was the main reason. Zero cost deferred tax liability, accelerated depreciation and float were also the factors.

 

If these factors are extrapolated from 2012->2025, it is easy to see why Buffett is paying a higher multiple for repurchasing the stock. The small amount of repurchases makes me think that the difference between market price and intrinsic value was small but market price was definitely less than conservatively calculated intrinsic value. I would definitely defer to Buffett's valuation of the intrinsic value of Berkshire Hathaway. 

I hope Berkshire does drop to 1.3 P/B or closer to it but I think buyback will start/pick up around 1.5 P/B multiple. There might be some large block selling coming from Charity donation/estate planning of existing shareholders.

Agree completely and will be a buyer if prices drop to around 1.5 book- ~$450.

Yes book is not a very useful measure anymore but does serve as a rough comparison of how the market is perceiving the company over modest time frames.

[Castanza]

23 minutes ago, Blake Hampton said:

 

Probably should’ve bought producers when it was cheaper, but I missed the opportunity.

 

I like productive assets. Gold is just a useless metal that people tend to flock to when they're afraid of currency. Maybe it's the smartest place to be—I don’t know.

 

How do you value gold? How do you value crypto? How do you value something that doesn’t produce anything and has no redeeming qualities beyond people’s affinity for it? It’s effectively the same game many are playing with overvalued stocks—just hoping to find a greater fool later on. But we’re heading into a future where money will likely tighten significantly, and a lot of people may struggle just to survive. Do you really think they’ll want to be holding onto this dogshit then? During the Great Depression, people literally couldn’t even afford to eat, let alone buy equities or other assets.

 

People don’t realize how serious this all is. Huge fiscal and monetary imbalances aren’t just some joke—they define the very system we live in.

 

 

And what did oil do during the Great Depression? Oil is only as "productive" as the demand that requires it. The picture you paint doesn't make sense to me. China and the US are the largest consumers of oil....According to you at least the US is headed for ruin and despair. Yet somehow the two largest economies in the world will increase oil demand in a depression like environment?

 

Something tells me you're a big Mad Max fan...

[gfp]

1 minute ago, Castanza said:

 

And what did oil do during the Great Depression? Oil is only as "productive" as the demand that requires it. The picture you paint doesn't make sense to me. China and the US are the largest consumers of oil....According to you at least the US is headed for ruin and despair. Yet somehow the two largest economies in the world will increase oil demand in a depression like environment?

 

Something tells me you're a big Mad Max fan...

 

 

The best I can make of it, Blake studied the 70's and misunderstood some kind of cause/effect relationship between oil prices and inflation where he thinks that when people see inflation getting bad this causes them to "invest in oil" and that pushes up the price of oil.  It's a bizarre cause-effect dynamic, but I could see how someone looking at correlation and ignoring a bunch of exogenous factors that caused oil prices to be high at that time would somehow confuse a correlation with causation.  The direction of the causation is bonkers - people don't invest in oil - they buy only the oil they need to consume and not a drop more.

 

Also, when he says he owns Oil I assume he owns stock in companies that make their money selling oil.  Which is of course a different thing all-together.

[Blake Hampton]

10 minutes ago, gfp said:

The best I can make of it, Blake studied the 70's and misunderstood some kind of cause/effect relationship between oil prices and inflation where he thinks that when people see inflation getting bad this causes them to "invest in oil" and that pushes up the price of oil.  It's a bizarre cause-effect dynamic, but I could see how someone looking at correlation and ignoring a bunch of exogenous factors that caused oil prices to be high at that time would somehow confuse a correlation with causation.  The direction of the causation is bonkers - people don't invest in oil - they buy only the oil they need to consume and not a drop more.

 

Also, when he says he owns Oil I assume he owns stock in companies that make their money selling oil.  Which is of course a different thing all-together.

 

Oil is priced in dollars.

[gfp]

everything is priced in dollars Blake

[rogermunibond]

If you're really concerned about the US dollar, open a Swiss CHF or Japanese yen bank or brokerage account and transfer xx% of your net worth.

 

One could also open a forex account and trade currencies as many a Mrs. Yamamoto did in Japan.

[Castanza]

11 minutes ago, Blake Hampton said:

 

Oil is priced in dollars.

 

Aren't you worries about a debt crisis or something that could cause the dollar to lose reserve status? 

[gfp]

12 minutes ago, Castanza said:

 

Aren't you worries about a debt crisis or something that could cause the dollar to lose reserve status? 

Yes - that's why he wants to be short the USD by being long Oil.

 

The rest of us are short the USD via being long actual good investments and debt-financed (read: short the dollar) productive real estate that dumps those dreaded dog shit dollar bills into our bank accounts on the first of every month.

 

Before John comes over and yells at us for messing up the Berkshire thread we better stop here - you know he's gonna wake up and be unhappy

Edited May 7, 2025 by gfp