Buffett/Berkshire - general news

[charlieruane]

32 minutes ago, Munger_Disciple said:

Can you elaborate on this? What comments are you referring to? Thanks

 

Chris Davis in 2021, three weeks before he was appointed to the board:

 

"I don’t think I would want Warren’s successor to feel that at any day they should make a $50B or $70B acquisition. Whereas, I am very comfortable with Warren making a $70B, or $80B, or $100B acquisition. And so, I would think that their successor should be … no longer searching for, “What’s the next big M&A opportunity for Berkshire?” 

 

[Value Investing With Legends Podcast (October 1, 2021), Chris Davis: A Multifaceted Perspective on Financial Services, 00:43:45.]

 

24 minutes ago, Munger_Disciple said:

Sue Decker has also mentioned a fondness for special dividends, for what that's worth.

 

The Decker "fondness" I mentioned is only relative to regular dividends. Sue Decker in 2024:

 

"Back in 2019, we started doing more systematic share repurchases for the first time. … In the hierarchy of choices [for returning capital to shareholders], a special dividend is something in between [share repurchases and regular dividends], something that on the Costco board we’ve employed really successfully. But that is not something that we’re discussing right now, and over time things could change, of course, but I think that redeploying the capital through share repurchases is the preferred method of the moment."

 

[CNBC Television (May 3, 2024), Interview with Susan Decker, 00:05:55.]

Edited August 4, 2025 by charlieruane

[dealraker]

Price to book is still 5% or so above the 20 year average.

[Munger_Disciple]

14 minutes ago, charlieruane said:

 

Chris Davis in 2021, three weeks before he was appointed to the board:

 

"I don’t think I would want Warren’s successor to feel that at any day they should make a $50B or $70B acquisition. Whereas, I am very comfortable with Warren making a $70B, or $80B, or $100B acquisition. And so, I would think that their successor should be … no longer searching for, “What’s the next big M&A opportunity for Berkshire?” 

 

[Value Investing With Legends Podcast (October 1, 2021), Chris Davis: A Multifaceted Perspective on Financial Services, 00:43:45.]

 

 

The Decker "fondness" I mentioned is only relative to regular dividends. Sue Decker in 2024:

 

"Back in 2019, we started doing more systematic share repurchases for the first time. … In the hierarchy of choices [for returning capital to shareholders], a special dividend is something in between [share repurchases and regular dividends], something that on the Costco board we’ve employed really successfully. But that is not something that we’re discussing right now, and over time things could change, of course, but I think that redeploying the capital through share repurchases is the preferred method of the moment."

 

[CNBC Television (May 3, 2024), Interview with Susan Decker, 00:05:55.]

 

Thanks @charlieruane for the Chris Davis clip. FWIW Buffett after his retirement announcement in May this year, has said that by continuing to be the Chairman, he could help Greg if he wanted to do something big by getting it approved by the board because he is a very large shareholder & the board knows he has close to 100% of his net worth in the company. 

 

I too watched Sue Decker on CNBC in 2024, and knew she said that about special dividends but disagree with her that it is the better approach for LT owners. Perhaps a combination of smaller annual dividends coupled with a special dividend once in awhile if they really can't even buyback a lot of stock after taking care of all the internal/external reinvestment opportunities. 

Edited August 4, 2025 by Munger_Disciple

[RadMan24]

2 hours ago, Munger_Disciple said:

 

Thanks @charlieruane for the Chris Davis clip. FWIW Buffett after his retirement announcement in May this year, has said that by continuing to be the Chairman, he could help Greg if he wanted to do something big by getting it approved by the board because he is a very large shareholder & the board knows he has close to 100% of his net worth in the company. 

 

I too watched Sue Decker on CNBC in 2024, and knew she said that about special dividends but disagree with her that it is the better approach for LT owners. Perhaps a combination of smaller annual dividends coupled with a special dividend once in awhile if they really can't even buyback a lot of stock after taking care of all the internal/external reinvestment opportunities. 

Annual dividends are not for Berkshire. Specials are far superior, if you prefer managment who can allocate capital to have the maximum flexibility . . .

[Munger_Disciple]

1 hour ago, RadMan24 said:

Annual dividends are not for Berkshire. Specials are far superior, if you prefer managment who can allocate capital to have the maximum flexibility . . .

 

I prefer massive buybacks assuming the stock is fairly valued (which is most of the time for BRK) instead of a special dividend. Far more tax efficient for shareholders and preserves flexibility for future capital allocation IMO.

[gfp]

https://www.sec.gov/Archives/edgar/data/315090/000095017025102303/xslF345X05/ownership.xml

[Munger_Disciple]

2 hours ago, gfp said:

https://www.sec.gov/Archives/edgar/data/315090/000095017025102303/xslF345X05/ownership.xml

 

Looks like Ted is reinvesting SIRI dividends and pehaps also recycling DVA proceeds. 

Edited August 5, 2025 by Munger_Disciple

[charlieruane]

SIRI is pretty unlike the typical Buffett/Munger "great biz with low debt at a reasonable price" setup, right? 

[Munger_Disciple]

25 minutes ago, charlieruane said:

SIRI is pretty unlike the typical Buffett/Munger "great biz with low debt at a reasonable price" setup, right? 

I don’t understand the attraction of SIRI but then Ted is way smarter than me

[charlieruane]

Yeah, I really want to know what his "variant perception" is (as he puts it) on this one. 

[Pellom]

13 hours ago, dealraker said:

Agree.  And especially that the investment universe will broaden.

 

I wonder if they may go the Markel route in the investment portfolio -- more selections at smaller commitments. Buffett didn't like diversification, but there may be no choice (unless you want to buy the whole of something). 

[Pellom]

5 hours ago, Munger_Disciple said:

I don’t understand the attraction of SIRI but then Ted is way smarter than me

 

5 hours ago, charlieruane said:

Yeah, I really want to know what his "variant perception" is (as he puts it) on this one. 

 

I can't remember who said it (I probably read it on this board) but there was some thinking when they started buying that there is a ton of value in having that many satellites in the sky. I can't exactly remember if the thesis was, "the satellites can be used for other industries/sold/leased", or, "the federal government will have to stop allowing new satellites at some point, creating scarcity." I don't know -- above my head. 

Edited August 5, 2025 by Pellom

[CassiusKing1]

I think Greg is going to evaluate all wholly owned companies and focus on them.  He'll make add on acquisitions and bolster them.  I don't see him making an elephant sized buy.

I would hope that prior to paying a dividend they exhaust all opportunities to buy back stock.  I'd rather see them loosen the qualifications to buying back stock rather than pay a dividend.

Edited August 5, 2025 by CassiusKing1

[73 Reds]

1 minute ago, CassiusKing1 said:

I think Greg is going to evaluate all wholly owned companies and focus on them.  He'll make add on acquisitions and bolster them.  I don't see him making an elephant sized buy.

I would hope that prior to paying a dividend they exhaust all opportunities to buy back stock.  I'd rather see them loosen the qualifications to buying back stock rather than pay a dividend.

Yeah.  It would be disappointing if a company that can literally invest in anything feels a need to pay a dividend.

[John Hjorth]

14 minutes ago, 73 Reds said:

Yeah.  It would be disappointing if a company that can literally invest in anything feels a need to pay a dividend.

 

At least Mr. Buffett is still the largest shareholder. I feel confident that what ever kind of dividend considered by the board, he personally is not interested in it. So, subject to Mr. Buffett being alive, I personally can't imagine any board member participating in stepping on his toes in any dividend decisions that are against his preferences, which we have access and insight to in writing, available on the Berkshire website to read.

Edited August 5, 2025 by John Hjorth

[73 Reds]

5 minutes ago, John Hjorth said:

 

At least Mr. Buffett is still the largest shareholder. I feel confident that what ever kind of dividend considered by the board, he personally is not interested in it. So, subject to Mr. Buffett being alive, I personally can't imagine any board member participating in stepping on his toes in any dividend decisions that are against his preferences, which we have access and insight to in writing, available on the Berkshire website to read.

For that reason alone I hope he does succeed in challenging Methuselah.

[dealraker]

1 hour ago, Pellom said:

 

I wonder if they may go the Markel route in the investment portfolio -- more selections at smaller commitments. Buffett didn't like diversification, but there may be no choice (unless you want to buy the whole of something). 

Seems possible.  With Markel I've not been at all disappointed in Gainor's stock picking.  The Ventures thing to me has a low chance of being the ticket to paradise and may have distracted management focus on expenses and underwriting.

[John Hjorth]

14 minutes ago, 73 Reds said:

For that reason alone I hope he does succeed in challenging Methuselah.

 

Yes, @73 Reds,

 

The fact is the issue at hand discussed here [a discussion that for obvisous reasons certainly qualify and has merit, I might add], is really mostly in its inner nature a luxury issue, perhaps mostly not for Mr. Buffett. A kind of issue to have that is not one the worst kinds. I personally acknowledge and apreciate that you are actively reminding us all of that, and it advantages also, here in this topic.

Edited August 5, 2025 by John Hjorth

[mengan]

I used AI to help me dig out the parts of the OBBBA that could affect BHE

 

• Termination of Clean Electricity Production and Investment Credits (Sec. 70512 & 70513): The termination of the Production Tax Credit (PTC) and Investment Tax Credit (ITC) for wind and solar facilities placed in service after December 31, 2027, is arguably the most significant threat. These credits have been fundamental drivers of investment in wind and solar energy. Their removal would likely increase the cost of new renewable energy projects, potentially making them less competitive with other energy sources.
   

• Termination of Cost Recovery for Energy Property (Sec. 70509): Repealing favorable depreciation rules (cost recovery) for energy property construction beginning after December 31, 2024, would reduce the tax benefits associated with building new energy facilities. This directly affects the financial modeling and returns on investment for new projects.
   

• Phase-Out of Advanced Manufacturing Production Credit (Sec. 70514): Terminating this credit for wind energy components after December 31, 2027, would impact the domestic supply chain for wind turbines and other essential parts. This could lead to higher equipment costs for wind projects.
   

• Termination of Clean Hydrogen Production Credit (Sec. 70511): For any part of the business focused on emerging clean energy technologies, the termination of the clean hydrogen credit by January 1, 2028, curtails a significant incentive for development in that sector.
   

• New Fees and Revenue Sharing on Federal Land (Sec. 50302 & 50303): The introduction of new acreage rent and capacity fees for renewable energy projects on federal land would increase operational costs. The revenue-sharing provision, while directing funds to states and counties, represents a new financial obligation on these projects.

   

Edited August 5, 2025 by mengan

[mengan]

Dupe

Edited August 5, 2025 by mengan

[gfp]

9 minutes ago, mengan said:

Termination of Cost Recovery for Energy Property (Sec. 70509): Repealing favorable depreciation rules (cost recovery) for energy property construction beginning after December 31, 2024,

 

This is just for solar and wind, not all "energy property construction"

 

Berkshire will be a large beneficiary of accelerated deprecation / 100% bonus depreciation for capital investment.  They will finish what they can finish on the green energy side and go with the flow on new investment.

 

BHE is going to do just fine

 

Quote

Termination of Clean Electricity Production and Investment Credits (Sec. 70512 & 70513): The termination of the Production Tax Credit (PTC) and Investment Tax Credit (ITC) for wind and solar facilities placed in service after December 31, 2027

 

This date should be 2025 not 2027 right?

 

------

 

From the recent BHE 10-Q:

 

On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted, introducing substantial revisions to federal energy-related tax policy. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements applicable to facilities commencing construction after December 31, 2025. The Company is currently evaluating the potential implications of the OBBBA on its future financial results and will assess its impact on the viability and economics of prospective renewable energy, storage and technology neutral projects.

 

On July 7, 2025, a federal executive order (the "Executive Order") was issued directing the Secretary of the Treasury to promulgate new or revised guidance consistent with applicable law to ensure that policies concerning the "beginning of construction" requirements are not circumvented for wind and solar-powered generating facilities. Such guidance may materially affect the applicability of safe harbor provisions and impose more stringent compliance thresholds for eligibility than under existing tax credit frameworks. The Company is actively monitoring developments related to the Executive Order and intends to implement practicable measures to mitigate any adverse effects on its prospective renewable energy projects.

 

The Company's future financial performance and capital expenditures related to renewable energy, storage and technology neutral projects may be affected by the combined effects of the OBBBA, the Executive Order, and broader macroeconomic and geopolitical conditions, including changes in international trade policies and tariff regimes. The pace of change in these areas has accelerated during 2025, and significant uncertainty persists regarding the scope and duration of these external factors. Accordingly, the Company is unable to estimate their impact on its business at this time.

Edited August 5, 2025 by gfp

[mengan]

2027. But the bill is really hard to read.

 

[gfp]

Thanks - I see now that one date was "started construction" and one date was "placed in service"

[mengan]

I don't see changes in the OBBBA that would add direct tax credit from investing in non-renewable PP&E, only a permanent extension of the bonus depreciation introduced under the Tax Cuts and Jobs Act at 100%. Without direct credits, at best, BHE will pay $0.00 tax, but not negative as they do now (i.e. receive money back).

[gfp]

1 minute ago, mengan said:

I don't see changes in the OBBBA that would add direct tax credit from investing in non-renewable PP&E, only a permanent extension of the bonus depreciation introduced under the Tax Cuts and Jobs Act at 100%. Without direct credits, at best, BHE will pay $0.00 tax, but not negative as they do now (i.e. receive money back).

 

BHE will still have a hugely negative tax rate because they will not lose the production credits on what they already have in service.

 

The bonus depreciation I was referring to started at 100% back in 2017 but was being phased down and was 60% in 2024, would have been 40% this year, etc...  Now it is back to 100% and BRK is a large cash tax payer.