Buffett/Berkshire - general news

[Munger_Disciple]

42 minutes ago, John Hjorth said:

 

No worries @Munger_Disciple,

 

It does not harm to get - here, four different - approaches to the same thing, it's ensures everone reading the topic are on the same frequency about this. 

 

- - - o 0 o - - -

 

In elementary school, when my math teacher was standing in the classroom with the back against his mathematics sprouts, writing with his piece of chalk of the blackboard, wiggling with his butt, repeating something, he was mutterering to us : 'Repetition is the path to learning'. [Needless to say, everyone was studying the movemenmt of his butt instead af reading what he was writing.]

 

Indeed! Your math teacher is right, more reps is always good whether it's weight training, math or investing. 

 

[Munger_Disciple]

Looks like BRK realized gain of $10.4 Billion from sales of equities in Q3. I suspect it was more Apple & BAC sales in Q3 that accounts for vast portion of the gain. 

[John Hjorth]

19 hours ago, Munger_Disciple said:

Looks like BRK realized gain of $10.4 Billion from sales of equities in Q3. I suspect it was more Apple & BAC sales in Q3 that accounts for vast portion of the gain. 

 

Where do you get that from in the 10-Q,? and how?, @Munger_Disciple?,

 

Thank you in advance.

[Munger_Disciple]

1 hour ago, John Hjorth said:

 

Where do you get that from in the 10-Q,? and how?, @Munger_Disciple?,

 

Thank you in advance.

 

By reading the 10-Q carefully !

 

See Note 6 to the Consolidated Financial Statements: Investment gains (losses)

Edited November 2, 2025 by Munger_Disciple

[Munger_Disciple]

This paragraph from 10-Q also caught my eye:

 

Amounts sought in outstanding complaints and demands filed in Oregon and in certain demands in California total approximately $55 billion, excluding any doubling or trebling of damages or punitive damages included in the complaints and excluding damages that may be sought by additional plaintiffs granted substitution counsel in the James class action lawsuit described below. Generally, the complaints filed in California do not specify damages sought and are excluded from this amount. Of the $55 billion, $52 billion represents the economic and noneconomic damages sought in the James mass complaints described below. Oregon law provides for doubling of economic and property damages in the event the defendant is found to have acted with gross negligence, recklessness, willfulness or malice. Oregon law provides for trebling of damages associated with timber, shrubs and produce in the event the defendant is determined to have willfully and intentionally trespassed.

 

Berkshire reserved 2.85 Billion (ex- insurance recoveries & taxes) for wildfire damages so far & paid out $1.4 Billion so far. But I noticed that the $55 Billion number grew from Q1 number of $51 Billion. 

 

Of course Pacificorp would declare bankruptcy & hand the keys off to the states if the damages come anywhere close to the $55 Billion number. Still, a shit show at Pacificorp/BHE. 

Edited November 2, 2025 by Munger_Disciple

[John Hjorth]

8 minutes ago, Munger_Disciple said:

By reading the 10-Q carefully !

 

See Note 6 to the Consolidated Financial Statements: Investment gains (losses)

 

Awesome! - That is a very good catch, @Munger_Disciple ,

 

Again, thank you for sharing it here on CofB&F!

 

 

-And yes, soon, with the 13-F/HR soon to come, we'll see what it is about.

[Munger_Disciple]

Just now, John Hjorth said:

 

Awesome! - That is a very good catch, @Munger_Disciple ,

 

Again, thank you for sharing it here on CofB&F!

 

 

-And yes, soon, with the 13-F/HR soon to come, we'll see what it is about.

 

You are welcome!

[Pellom]

So, if I'm thinking about this correctly, Berkshire is trading at a 12-13x Operating PE with nearly $400 billion to spend in the next market downturn? 

[gfp]

1 minute ago, Pellom said:

So, if I'm thinking about this correctly, Berkshire is trading at a 12-13x Operating PE with nearly $400 billion to spend in the next market downturn? 

 

I think at the Q3 run-rate we are currently at 19x operating PE.  They don't have "nearly $400 billion" in excess cash if that is what you are counting.  They certainly have plenty of debt capacity, cash and securities to liquidate to buy anything they want.  And they probably will not buy much of anything.

[Whensthepaintdry?]

I have absolutely no law background whatsoever. Is anyone worried that those pacificorp payments may become much bigger? I was shocked to see the 50b number in the report. 

[Pellom]

10 minutes ago, gfp said:

 

I think at the Q3 run-rate we are currently at 19x operating PE.  They don't have "nearly $400 billion" in excess cash if that is what you are counting.  They certainly have plenty of debt capacity, cash and securities to liquidate to buy anything they want.  And they probably will not buy much of anything.

 

Got it. I'm thinking about it in terms of putting the treasuries and stock portfolio to the side, removing it from the market cap, and basing the operating earnings multiple on that lower number.

 

I know this is not a technically correct way to think about the accounting and how the market is valuing the company, but I try to think of the operating business and the investing business as different things -- I wouldn't do this for any company other than Berkshire, whose management I trust implicitly. 

[gfp]

I think a lot of those operating earnings are coming from the capital you are putting to the side, including the ability to run one of the largest insurance operations in the world.

 

Cash was $358 Billion at quarter-end, so don't get caught up in the $382 Billion number.  A lot of that cash is going to stay put or become "bonds" and never get "spent."

[wabuffo]

Cash was $358 Billion at quarter-end, so don't get caught up in the $382 Billion number.  A lot of that cash is going to stay put or become "bonds" and never get "spent."

 

I know that the 10-Q says that all but $30B is sequestered in order to meet immediate & unforeseen insurance business needs.  But hasn't BRK historically held near 100% cash and cash equivalents to match insurance liabilities?  LAEs +Unearned premiums this last Q add up to $184B.

 

So I always think that Buffett/Abel have closer to $170B of excess cash (rather than $358B).

 

Bill

[Pellom]

2 minutes ago, gfp said:

I think a lot of those operating earnings are coming from the capital you are putting to the side, including the ability to run one of the largest insurance operations in the world.

 

Cash was $358 Billion at quarter-end, so don't get caught up in the $382 Billion number.  A lot of that cash is going to stay put or become "bonds" and never get "spent."

 

No doubt. Not necessarily betting on it getting spent. We know x amount is there as reserves for insurance. 

 

My general feeling is they'll be more of a distressed player (thinking in terms of, say, Goldman Sachs or Bank of America deals in the past) under Abel than going for huge swings in the equity market.

 

Either way, I like the set-up over the long-term as I am not chasing performance. I understand people not being super excited about it as a market beating stock over the near or medium term. 

[Munger_Disciple]

53 minutes ago, wabuffo said:

Cash was $358 Billion at quarter-end, so don't get caught up in the $382 Billion number.  A lot of that cash is going to stay put or become "bonds" and never get "spent."

 

I know that the 10-Q says that all but $30B is sequestered in order to meet immediate & unforeseen insurance business needs.  But hasn't BRK historically held near 100% cash and cash equivalents to match insurance liabilities?  LAEs +Unearned premiums this last Q add up to $184B.

 

So I always think that Buffett/Abel have closer to $170B of excess cash (rather than $358B).

 

Bill

 

That seems about right. BRK now has roughly $143B in cash/other liquid assets at the parent level which supports your thesis. The insurance business for comparison has roughly $593B in assets, partially funded by $176B in float liabilities. 

Edited November 3, 2025 by Munger_Disciple

[gfp]

26 minutes ago, wabuffo said:

Cash was $358 Billion at quarter-end, so don't get caught up in the $382 Billion number.  A lot of that cash is going to stay put or become "bonds" and never get "spent."

 

I know that the 10-Q says that all but $30B is sequestered in order to meet immediate & unforeseen insurance business needs.  But hasn't BRK historically held near 100% cash and cash equivalents to match insurance liabilities?  LAEs +Unearned premiums this last Q add up to $184B.

 

So I always think that Buffett/Abel have closer to $170B of excess cash (rather than $358B).

 

Bill

 

Yes I agree with that and will add that if there is a downturn that produces prices Berkshire would be interested in, interest rates will be low and Berkshire will use leverage to do whole-company acquisitions.  Not for preferred deals but buying operating subsidiaries.

And anything large that Berkshire tries to buy will take long enough to close that Berkshire will generate another $20 or $30 billion in cash while it waits for the merger to close.

[Libs]

1 hour ago, gfp said:

 

I think at the Q3 run-rate we are currently at 19x operating PE.  They don't have "nearly $400 billion" in excess cash if that is what you are counting.  They certainly have plenty of debt capacity, cash and securities to liquidate to buy anything they want.  And they probably will not buy much of anything.

I'm a fan of using look-through earnings. BRK has $283 B of equities, for which they only report dividend income. Last I checked I think there are ~$10B in unreported earnings from the stocks. (Which passes the smell test; 10B / 283B = 3.5% earnings yield, or 28X earnings, so surely $10B is a reasonable number. Probably low actually)

 

Operating earnings of $13 B might be a bit high this quarter; insurance losses were miniscule. So I'm going to say operating earnings run-rate is ~$50B.

 

50 +10 = $60B look-through.

 

1 trillion / 60 = 16.6X earnings. Entirely reasonable.

[Munger_Disciple]

Article on Pacificorp lawsuits:

 

https://finance.yahoo.com/news/buffett-owned-utility-warns-strained-164543002.html

 

These look more & more like tobacco lawsuits. Greg will probably put Pacificorp into bankruptcy above a certain amount of damages. 

Edited November 3, 2025 by Munger_Disciple

[Hektor]

https://www.kgw.com/article/money/business/amazon-charges-pacificorp-failing-power-data-centers/283-091f8e8a-be97-4cf1-a679-e8cc54706004#

 

Amazon accuses PacifiCorp for failing to power up Oregon data centers

 

[gfp]

I always nerd out a little when the Berkshire CFO emails me but nobody cares around here so I'm posting it to you nerds.  We were only discussing a clerical error in the yen bond prospectus but still he's a nice guy.

 

[Kuhndan]

So what did Hamburg say?

[gfp]

1 minute ago, Kuhndan said:

So what did Hamburg say?

 

Hey Dana, he said (I'm clipping out my name)

 

[yesman182]

2 hours ago, gfp said:

 

Hey Dana, he said (I'm clipping out my name)

 

“Once again” Damn. 

[LC]

@gfp is out here single-handedly ensuring the US financial reporting system is staying on the rails. Well done!  

 

@SEC/Paul Atkins get your act together, ya bums! 

[cubsfan]

31 minutes ago, LC said:

@gfp is out here single-handedly ensuring the US financial reporting system is staying on the rails. Well done!  

 

@SEC/Paul Atkins get your act together, ya bums! 

 

Pretty cool - nothing slips by GFP. Warren would be proud.