Buffett/Berkshire - general news

[jbwent63]

On 11/11/2025 at 9:19 AM, 73 Reds said:

The letter was in one way very perplexing.  He continues to blame Berkshire's size for the chance of outsized future performance, which begs the question why Berkshire needs to retain its current size.  Would breaking up the company add to shareholder value?  Is there anything wrong with creating more shareholder value?  Some may read his thoughts as to suggest that his current asset allocators are not really up for the job.  Greg, Ted and Todd may read his letter and ask themselves what they are even doing at Berkshire if Buffett's predictions about future performance are indeed true. 

Given all the liability issues at BHE, it would be an excellent candidate for a spin-off. One negative would be the potential negative income tax implications assuming BHE continues to earn credits that up until now BH have been able to use on its consolidated US return. Then shareholders can decide if they want to take the risk of the wildfire and real estate commission potential payouts and own BHE or sell it post spin. Given Greg's history as CEO and former shareholder of BHE, this may be a bridge too far for him to consider.

[gfp]

4 minutes ago, jbwent63 said:

Given all the liability issues at BHE, it would be an excellent candidate for a spin-off. One negative would be the potential negative income tax implications assuming BHE continues to earn credits that up until now BH have been able to use on its consolidated US return. Then shareholders can decide if they want to take the risk of the wildfire and real estate commission potential payouts and own BHE or sell it post spin. Given Greg's history as CEO and former shareholder of BHE, this may be a bridge too far for him to consider.

 

Not gonna happen.  The future of Berkshire is going to look a lot like the recent past.  Occasional deals like OxyChem that make sense but everybody yawns about.  Bolt-ons at the operating subsidiaries.  Plenty of appetite for capital expenditures to fund internal growth opportunities if any can be identified by the managers.

 

Odds are that the market gets real bored of Berkshire and it trades low enough to repurchase meaningful amounts of its own shares.  "Problem" solved.

[John Hjorth]

29 minutes ago, jbwent63 said:

Given all the liability issues at BHE, it would be an excellent candidate for a spin-off. One negative would be the potential negative income tax implications assuming BHE continues to earn credits that up until now BH have been able to use on its consolidated US return. Then shareholders can decide if they want to take the risk of the wildfire and real estate commission potential payouts and own BHE or sell it post spin. Given Greg's history as CEO and former shareholder of BHE, this may be a bridge too far for him to consider.

 

@jbwent63,

 

Have you by this proposal thought of the tax conseqenses of your proposal? Are you imagining Berkshire as a controlling  shareholder after the spin-off [so a partially spin-off], or a total spin-off? I personally think that a total spin-off is a no go because it complicates Mr. Buffetts personal situation, because of what he has already planned, ref. what @gfp has posted above about Buffetts de facto effective control.

 

There are things that BHE can do, while other energy companies aren't able to do at the same terms, only because of BHEs joint taxation with Berkshire, the parent. BHE would loose that competive advantage as a stand-alone company.

Edited November 12, 2025 by John Hjorth

[73 Reds]

59 minutes ago, jbwent63 said:

Given all the liability issues at BHE, it would be an excellent candidate for a spin-off. One negative would be the potential negative income tax implications assuming BHE continues to earn credits that up until now BH have been able to use on its consolidated US return. Then shareholders can decide if they want to take the risk of the wildfire and real estate commission potential payouts and own BHE or sell it post spin. Given Greg's history as CEO and former shareholder of BHE, this may be a bridge too far for him to consider.

Yeah, and the problem with simply continuing the recent past is there is no catalyst.  We can probably all agree that cumulatively Berkshire's businesses are moderately better than average.  However, without consistent new and meaningful investments the company leans more toward the value of cash and further away from "moderately better than average".  Share buybacks can only take them so far and can't be the only reason to buy the stock.  If we are truly stuck in a holding pattern, as much as I don't want or need a dividend, it may be necessary.  Otherwise Berkshire is very likely to trade closer and closer to BV.  

[Hektor]

38 minutes ago, 73 Reds said:

Yeah, and the problem with simply continuing the recent past is there is no catalyst.  We can probably all agree that cumulatively Berkshire's businesses are moderately better than average.  However, without consistent new and meaningful investments the company leans more toward the value of cash and further away from "moderately better than average".  Share buybacks can only take them so far and can't be the only reason to buy the stock.  If we are truly stuck in a holding pattern, as much as I don't want or need a dividend, it may be necessary.  Otherwise Berkshire is very likely to trade closer and closer to BV.  

Greg and co might go international too (e.g. India, China). Plus, they could start a healthy dividend.

[73 Reds]

4 minutes ago, Hektor said:

Greg and co might go international too (e.g. India, China). Plus, they could start a healthy dividend.

International could be great.  There are talented investors all across the globe; why not put some of them on Berkshire's payroll?  But there are other workable ways to increase performance.  One thing I am yet to understand is that Buffett long ago advised his surviving spouse to invest 90% of her inheritance in an S&P 500 index fund (the remaining 10% in bonds).  If SPY is desirable for his spouse - even more than Berkshire itself - why is it not OK for Berkshire's excess cash?   Even so, there are many large public companies that may not be world-beaters but generate consistent profits that are better than cash.  $10 billion here and $10 billion there eventually start to add up.   

[Munger_Disciple]

1 hour ago, 73 Reds said:

Yeah, and the problem with simply continuing the recent past is there is no catalyst.  We can probably all agree that cumulatively Berkshire's businesses are moderately better than average.  However, without consistent new and meaningful investments the company leans more toward the value of cash and further away from "moderately better than average".  Share buybacks can only take them so far and can't be the only reason to buy the stock.  If we are truly stuck in a holding pattern, as much as I don't want or need a dividend, it may be necessary.  Otherwise Berkshire is very likely to trade closer and closer to BV.  

 

If you are so unhappy with it, just sell & move on.

[CassiusKing1]

I still can't think of a better equity to own for myself going forward that offers a better risk/return.

 

Even when compared to a SP500 Index fund.  BRK may trail in bull markets, but which one will come out of a bear market better?  SP500 fund will simply rebound and get back to where it was and be the same. 

 

BRK has a price floor in place where they will buy back and retire shares.  This has multiple benefits.  Also, in a prolonged bear market they can also take advantage of any opportunities that present themselves and come out stronger as well.

 

I like to keep it simple and have yet been able to convince myself that there's a better long term sleep at night holding than BRK.

 

[Munger_Disciple]

18 minutes ago, CassiusKing1 said:

I still can't think of a better equity to own for myself going forward that offers a better risk/return.

 

Even when compared to a SP500 Index fund.  BRK may trail in bull markets, but which one will come out of a bear market better?  SP500 fund will simply rebound and get back to where it was and be the same. 

 

BRK has a price floor in place where they will buy back and retire shares.  This has multiple benefits.  Also, in a prolonged bear market they can also take advantage of any opportunities that present themselves and come out stronger as well.

 

I like to keep it simple and have yet been able to convince myself that there's a better long term sleep at night holding than BRK.

 

 

 

I would go one step further than you. Even if BRK underperforms the S&P 500 index slightly over the long pull let's say over the next 10-20 years, I would be a very happy & content BRK shareholder. 

Edited November 12, 2025 by Munger_Disciple

[Malmqky]

I just want Berkshire to trade at sub 1.3x book again. Or better yet book value like it did during covid.

[Pellom]

I am puzzled by opinions - both here and elsewhere - that Buffett is trying to hold on for too long, hog the spotlight, or make Greg's job tougher in some way.

 

Warren knows the cult of personality that follows him, and he knows Greg won't have the same benefit, so my read is he is using as much of his goodwill as possible to help him, not hurt him. 

 

Greg is going to have a lot of pressure on him immediately, and he'll almost certainly be faced with tough operational decisions that both Warren and Charlie admitted they ignored or tried to delay due to faith in well-meaning but poor management. 

[Hektor]

1 hour ago, 73 Reds said:

One thing I am yet to understand is that Buffett long ago advised his surviving spouse to invest 90% of her inheritance in an S&P 500 index fund (the remaining 10% in bonds).

I've always felt that he would have said 90%in BRK if he was not at the helm.

[Munger_Disciple]

3 hours ago, Pellom said:

Warren knows the cult of personality that follows him, and he knows Greg won't have the same benefit, so my read is he is using as much of his goodwill as possible to help him, not hurt him. 

 

Plus Warren is telling all the Wall Street a$$holes (PE, IB etc.) chomping at their bits to break up BRK after his tenure to  "f**k off". Thus the reference to "the next hundred years".

Edited November 12, 2025 by Munger_Disciple

[Blugolds]

51 minutes ago, Munger_Disciple said:

 

 

I would go one step further than you. Even if BRK underperforms the S&P 500 index slightly over the long pull let's say over the next 10-20 years, I would be a very happy & content BRK shareholder. 

Also consider deferred tax liability vs SP500, for those sitting on considerable gains and don’t want/need a divvy, that’s not immaterial 

[Munger_Disciple]

9 minutes ago, Blugolds said:

Also consider deferred tax liability vs SP500, for those sitting on considerable gains and don’t want/need a divvy, that’s not immaterial 

 

Exactly! 

[73 Reds]

2 hours ago, Munger_Disciple said:

 

If you are so unhappy with it, just sell & move on.

LOL, don't quit your day job (unless it is in money management).

[Spooky]

My initial take on Buffett holding more A shares is to give Greg a longer runway where the company doesn't have to worry about activist investors forcing a management change or the threat of a hostile takeover. It is a similar rationale when Tom Murphy and Capital Cities bought ABC - they needed a 400 pound gorilla in their corner to prevent the new company from being put into play. In that case Buffett even gave Tom Murphy proxy power to vote Berkshires shares. I like it, it should allow Greg to take a longer term view.

 

[Hektor]

From the Washington Post editorial board

 

https://www.washingtonpost.com/opinions/2025/11/12/warren-buffett-thanksgiving-letter-retirement/

 

The Oracle of Omaha will be missed as he goes quiet

Taking the long view has been key to Warren Buffett’s success.

 

[Pellom]

14 hours ago, Spooky said:

My initial take on Buffett holding more A shares is to give Greg a longer runway where the company doesn't have to worry about activist investors forcing a management change or the threat of a hostile takeover. It is a similar rationale when Tom Murphy and Capital Cities bought ABC - they needed a 400 pound gorilla in their corner to prevent the new company from being put into play. In that case Buffett even gave Tom Murphy proxy power to vote Berkshires shares. I like it, it should allow Greg to take a longer term view.

 

I'm not sure he's worried about the activist standpoint so much as the optics of him selling his shares as soon as his replacement takes over. 

 

Maybe I'm misguided in how Warren's kids typically operate their foundations, but the A shares aren't being converted simply to sit as B shares for the next 100 years. Those shares are going to be sold -- and according to his wishes, sooner rather than later. The stock will likely move lower as a result. 

Edited November 13, 2025 by Pellom

[John Hjorth]

12 minutes ago, Pellom said:

I'm not sure he's worried about the activist standpoint so much as the optics of him selling his shares as soon as his replacement takes over. 

 

What are you taking about?

 

A part of his A-shares are locked up when alive on covering his gift obligations from assuming them in 2006 to The Gates Foundation and his three kids foudations when he is alive, and rest he'll not sell ever, they go into his  estate according to the mechanism set out and explained in last and this years Thanksgiving Letters. Please see @gfps post about it above, upstream in this topic.

 

Or am I misunderstanding your post?

[Pellom]

21 minutes ago, John Hjorth said:

 

What are you taking about?

 

A part of his A-shares are locked up when alive on covering his gift obligations from assuming them in 2006 to The Gates Foundation and his three kids foudations when he is alive, and rest he'll not sell ever, they go into his  estate according to the mechanism set out and explained in last and this years Thanksgiving Letters. Please see @gfps post about it above, upstream in this topic.

 

Or am I misunderstanding your post?

 

Maybe I'm misguided here, but isn't the fact of the matter that he won't sell them, but the charitable trust (after his death) will begin selling them, with all distributions expected within 10 years? 

 

"At the latest, the proceeds from all of my Berkshire shares will be expended for philanthropic purposes by 10 years after my estate is settled. Nothing will go to endowments; I want the money spent on current needs."

 

Warren Buffett - The Giving Pledge

 

To me, this week's letter suggested he is speeding up the process by which his shares are converted and sold, because of his children's advancing ages. Again, he is not technically selling anything. He is gifting the shares to be sold. 

Edited November 13, 2025 by Pellom

[gfp]

11 minutes ago, Pellom said:

 

Maybe I'm misguided here, but isn't the fact of the matter that he won't sell them, but the charitable trust (after his death) will begin selling them, with all distributions expected within 10 years? 

 

"At the latest, the proceeds from all of my Berkshire shares will be expended for philanthropic purposes by 10 years after my estate is settled. Nothing will go to endowments; I want the money spent on current needs."

 

Warren Buffett - The Giving Pledge

 

To me, this week's letter suggested he is speeding up the process by which his shares are converted and sold, because of his children's advancing ages. Again, he is not technically selling anything. He is gifting the shares to be sold. 

 

that's exactly right.  All his shares will be sold, none will be sold by him, and he has modestly accelerated the process.  If he lives a couple more years, we should see all his shares converted and sold by 12-15 years from now.  (it will be hard to hit the 10 year thing exactly so there is probably some leeway there)

 

Much like interest rates aren't set by the supply of government borrowing, I don't think Buffett's shares coming into the market will be the defining factor on Berkshire's trading price.

 

Index weightings will gradually increase as the "free float" increases.  Berkshire will repurchase shares.  The stock will trade on its merits as an investment.

Edited November 13, 2025 by gfp

[John Hjorth]

@Pellom,

 

Thanks for elaborating. We're on the same page / frequency.

[sleepydragon]

1 hour ago, Pellom said:

I'm not sure he's worried about the activist standpoint so much as the optics of him selling his shares as soon as his replacement takes over. 

 

Maybe I'm misguided in how Warren's kids typically operate their foundations, but the A shares aren't being converted simply to sit as B shares for the next 100 years. Those shares are going to be sold -- and according to his wishes, sooner rather than later. The stock will likely move lower as a result. 

Not necessarily, cuz the weight of various index of brk will increase due to more shares become free float, providing support to the stocks has etfs will have to buy more brk to minic the index

[Charlie]

Mohnish Pabrai has a bad reputation here, but I often find he says interesting things:

 

"One thing Warren Buffett says is that you get a punch card, which you can

punch 20 times in your lifetime. Each time you buy a stock, one punch is

gone. What Warren is saying is that if there were a rule that said that you

cannot buy more than 20 stocks in your whole life, you would be thoughtful

about what you bought. Those decisions might be good because you only

have 19 left and then 18 left, and so on.

In venture investing, a small sliver of companies that venture capitalists

invest in do well. If we look at the stock market, 4% of listed companies

generate 90% of the return. Most companies that we may think about

investing in are likely not to do well for us. It is a 96% odds, and that is why

the index is so important. When you buy the index, you buy that 4%. If you

go pick stocks, you have about a one in 25 chance of getting one of those

4%."

"Warren Buffett has said that over his 50 years of running Berkshire

Hathaway, he has made hundreds of investments, and only 12 have moved

the needle for Berkshire Hathaway. It is the same 3 or 4% rule, where if we

say that Warren made 300 investments (he probably made more than 300),

only 12 have resulted in what we see as Berkshire Hathaway today. The

important thing was not the buy decision on those 12; it was never selling

them."

"The S&P has plenty of periods where it does nothing. It is somewhat

overheated right now. But if you have a long enough time horizon and you

are dollar-cost averaging in, it is perfectly okay. What you could also do as

an alternative is buy Berkshire Hathaway. That is a stock, BRK.B. You could

tell these people to just put it into Berkshire Hathaway. It is like an index.

Again, it is a “set it and forget it” approach. You do not need to think about

the investing side. You focus on the yellow, and keep putting this little

money away on the side, and it is going to compound. Let us go over this

example. At 18, you put away $5,000, with a 10% return on the money. Fast

forward to when you are 68, 50 years later. Let us say every seven years,

your money doubles. Using the Rule of 72, if you divide 70 by 10, that is

seven, 50 years is seven doubles. Seven times seven is 49. Two to the power

of seven is 128. We can throw away the 28 to keep it simple. You are going

to have a hundred times what you started with. So the 5,000 at 18 is going

to be 500,000 at 68. At 19, if you put in another 5,000, that is another

500,000. At 20, you might have 10,000 you can put in. You can start seeing

that over a lifetime, you are going to have too much money.

 

http://www.chaiwithpabrai.com/uploads/5/5/1/3/55139655/20250917_mohnish_pabrais_session_at_the_diary_of_a_ceo_on_july_13_2025_v3.pdf

 

 

Cheers!