Buffett/Berkshire - general news

[Spooky]

15 hours ago, Buckeye said:

How about Greg decides how much cash he’d like to have on hand, let Ted (or someone like Ted) manage another 100B or so, plus help out with acquisitions and then put everything else in an S&P fund?  

 

Why not just stick with the investing framework that they developed? Invert and eliminate all the companies that don't meet their criteria. Pretty good description of their framework here: https://investmentmanagementinsights.substack.com/p/graham-and-dodd-annual-breakfast

 

 

[CassiusKing1]

If the decision is not to pay a dividend, then Greg should hire someone to manage the Fixed Income investments.  Berkshire has a ton of cash coming in.

 

Berkshire taking down a Coke or John Deere takes care of the cash situation, but doesn't add much to returns.

 

I'd let Ted continue to manage the equity portfolio.  Maybe have someone or a team that manages some "Incubator Money".  Give them some money to invest in hopes of finding the next Nvidia.  If found early enough, can take them private.  

 

Otherwise, buy back stock and pay a dividend.

[bizaro86]

On 12/12/2025 at 4:57 PM, LC said:

 

Can we think of a single Berkshire company that is the definitive #1 leader in the field? Has Berkshire fully owned or developed something like a Google, Tesla, etc.?

 

I can't think of one.

 

Point being: I don't think Warren's version of Berkshire liked being operators or being 100% owners. They bought things that Warren was hoping would not require a lot of management or operational talent - think moaty stuff like railroads or Geico when it had a definitive cost advantage (employee owned). 

 

I think he just wanted to sit back and buy 10% stakes in stuff that turned $1.00 into $2.00 

 

Moving from that model to something where operations are #1 and passive investing is #2...it is a big shift.

 

I think Clayton is the #1 manufactured home firm.

 

But generally I agree operations hasn't historically been a huge BRK strength - capital allocation has been.

[bizaro86]

5 minutes ago, CassiusKing1 said:

Maybe have someone or a team that manages some "Incubator Money".  Give them some money to invest in hopes of finding the next Nvidia.  If found early enough, can take them private.  

 

It seems vanishingly unlikely to me that they'd do well at this over the long term. That's a tough, competitive market and I don't think they'd have an edge.

[marazul]

Difficult to know because Berkshire does not disclose much financial information about subsidiaries, but should be interesting to see if Precision Castparts has been benefiting from the AI boom. They used to have a significant energy business, and if we look at the charts and performance of things like Siemens Energy or GE V one should think they might be benefitting from the crazy demand. Might be an unexpected beneficiary.

[CassiusKing1]

19 minutes ago, bizaro86 said:

 

It seems vanishingly unlikely to me that they'd do well at this over the long term. That's a tough, competitive market and I don't think they'd have an edge.

Agreed.  I'm trying to evaluate all ways of investing a monster amount of money that eliminates the possibility of implementing a dividend.

 

Also thinking along the lines of a St. Joe, buy a ton of property and lease it out.  I'd think everything is on the table going forward.

[Spooky]

1 hour ago, bizaro86 said:

 

It seems vanishingly unlikely to me that they'd do well at this over the long term. That's a tough, competitive market and I don't think they'd have an edge.

 

It also won't move the needle for them in terms of capital deployment given their size.

[Buckeye]

4 hours ago, 73 Reds said:

Great money managers have, or should have better ideas than the S&P 500 at all times.  Everyone has a different measuring stick.  Mine is private businesses which generate returns consistently higher than SPY.  

So by your logic, was Warren Buffett not a great money manager?  Because it appears to me that he has been running out of ideas on how to put large sums of money to use. 

 

Your private businesses may be great at doubling your money when you’re investing a few hundred thousand or few million, but could you achieve the same results with a few hundred billion? 

 

If Greg called you tomorrow Reds and asked you what he should do with all of the extra cash, what should be your suggestion?  I offered what I think I would suggest. It’s a simple, straightforward, low cost, no-additional-overhead required, option.  And it may be stupid too, but at least it checks the first 4 boxes
 

[rogermunibond]

1 hour ago, marazul said:

Difficult to know because Berkshire does not disclose much financial information about subsidiaries, but should be interesting to see if Precision Castparts has been benefiting from the AI boom. They used to have a significant energy business, and if we look at the charts and performance of things like Siemens Energy or GE V one should think they might be benefitting from the crazy demand. Might be an unexpected beneficiary.

 

Looks like PCP still has a division that does industrial gas turbines.

 

https://www.pccenergy.com/markets/power-generation.html

 

[bizaro86]

4 hours ago, 73 Reds said:

Great money managers have, or should have better ideas than the S&P 500 at all times.  Everyone has a different measuring stick.  Mine is private businesses which generate returns consistently higher than SPY.  

 

Berkshire has been buying private businesses with good results for a pretty long time. I think it's pretty likely that's their first choice - but they're severely hampered by their size now. There are very few private businesses that would move the needle for BRK at this point. 

[73 Reds]

30 minutes ago, Buckeye said:

So by your logic, was Warren Buffett not a great money manager?  Because it appears to me that he has been running out of ideas on how to put large sums of money to use. 

 

Your private businesses may be great at doubling your money when you’re investing a few hundred thousand or few million, but could you achieve the same results with a few hundred billion? 

 

If Greg called you tomorrow Reds and asked you what he should do with all of the extra cash, what should be your suggestion?  I offered what I think I would suggest. It’s a simple, straightforward, low cost, no-additional-overhead required, option.  And it may be stupid too, but at least it checks the first 4 boxes
 

Of course Buffett was (is) a great money manager and capital allocator.  And you're right, it is far easier for me and almost any capable individual investor to earn higher returns with small sums of money.  Buffett has gone out of his way to tell shareholders that his ideas are limited.  That is precisely the issue for Berkshire and Greg Abel going forward.  To your point, is a large position in SPY better than T-Bills?  The answer is clearly yes but you don't need Berkshire or great money managers for that.

[UK]

https://www.investing.com/news/stock-market-news/how-the-us-freight-rail-industry-got-dirtier-than-coal-power-plants-4408868

[xboojum]

7 hours ago, bizaro86 said:

Berkshire has been buying private businesses with good results for a pretty long time. I think it's pretty likely that's their first choice - but they're severely hampered by their size now. There are very few private businesses that would move the needle for BRK at this point. 

 

Never say never, but it seems to me that true elephant-sized takeover of a private business is pretty unlikely at this point. If you were a family-owned giant like, say, Mars, why would you choose less money and still give up control to Berkshire? Something the size of e.g. Sheetz could certainly be taken down, but as you say, that's essentially an OxyChem-sized deal at this point rather than a needle-mover. And I think they could be doing more of these, but they've never built up the repeatable framework for doing serial acquisitions. They might be able to land some public companies, too, but as private equity has gotten bigger and bigger (and Buffett has shown an admirable unwillingness to overpay) that seems less likely, too, although Alleghany was a welcome exception (although not that much bigger than OxyChem). There just aren't that many $50 billion-plus acquisitions out there that make sense, don't involve a nosebleed control premium, and would represent a willing partnership; I think you'd have to see some sort of market dislocation for it to happen.

[bizaro86]

28 minutes ago, xboojum said:

 

Never say never, but it seems to me that true elephant-sized takeover of a private business is pretty unlikely at this point. If you were a family-owned giant like, say, Mars, why would you choose less money and still give up control to Berkshire? Something the size of e.g. Sheetz could certainly be taken down, but as you say, that's essentially an OxyChem-sized deal at this point rather than a needle-mover. And I think they could be doing more of these, but they've never built up the repeatable framework for doing serial acquisitions. They might be able to land some public companies, too, but as private equity has gotten bigger and bigger (and Buffett has shown an admirable unwillingness to overpay) that seems less likely, too, although Alleghany was a welcome exception (although not that much bigger than OxyChem). There just aren't that many $50 billion-plus acquisitions out there that make sense, don't involve a nosebleed control premium, and would represent a willing partnership; I think you'd have to see some sort of market dislocation for it to happen.

 

Yeah. My preference would be for them to start systematically buying back shares. I don't think they'll be able to invest their cash flow going forward.

[UK]

"Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it's imperative that we rush outdoors carrying washtubs, not teaspoons."

 

This was written in ~2015 I think, but somehow (and perhaps without the good reasons, especially looking from WB perspective) this feature was kind of turned off in the last decade or so at BRK. Like in 2020 or 2022, or arguably even now, if your do not think that the SNP500 is your only investment option. But maybe this will change after the transition. Still lots of ways, including some serious shrinking, to be more proactive, opportunistic or creative (or aggressive:)) for BRK. 

 

Edited December 16, 2025 by UK

[NnnnotSoSmart]

Wasn't sure where to post this, but this thread seemed the best place.

 

Recent Li Liu Interview:

 

"November 28th marks the first anniversary of Charlie Munger’s death. With the collaboration
of Munger Institute and CITIC Publishing Group, Mr. Li Lu, asset manager of the Munger family
and founder of Himalaya Capital, accepted an online interview with Zhenghe Island on the same
day.

This is the first interview Mr. Li Lu has accepted with domestic media after four years. In the
interview, Li Lu recalled his mentor Munger, summarized his spiritual legacy, and pointed out
that it was Munger who made value investing possible in the global practice.

The following is the transcript of this exclusive interview, compiled by Munger Institute,
approximately 12,490 words, and estimated reading time of 25 minutes. "

 

https://moiglobal.com/wp-content/uploads/li-lu-on-charlie-munger-202412.pdf

 

[Jaygo]

11 hours ago, bizaro86 said:

 

Yeah. My preference would be for them to start systematically buying back shares. I don't think they'll be able to invest their cash flow going forward.

 

Yeah I agree. Maybe the purist will say it is not cheap enough but I think a stable buyback would really help shrink the size issue and lessen the effect of the cash "burden"

 

At 3 % of shares outstanding yearly would send a message and I think it would help get the share price moving steadily in the right direction. My assumption when I bought in 2014 was BRK would double every 5-6 years and that has basically been bang on. A buyback could help keep that train chugging along and I really don't want a dividend the way I have it setup in my accounts.

[Pellom]

7 hours ago, UK said:

"Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it's imperative that we rush outdoors carrying washtubs, not teaspoons."

 

This was written in ~2015 I think, but somehow (and perhaps without the good reasons, especially looking from WB perspective) this feature was kind of turned off in the last decade or so at BRK. Like in 2020 or 2022, or arguably even now, if your do not think that the SNP500 is your only investment option. But maybe this will change after the transition. Still lots of ways, including some serious shrinking, to be more proactive, opportunistic or creative (or aggressive:)) for BRK. 

 

 

I think the dark clouds he wrote about were more of the Salomon Brothers and Goldman Sachs variety. It's not as simple as the market is down a lot and there are things to buy. 

 

They want to be asked for help by a large institution that has exhausted all other options. 

[73 Reds]

9 minutes ago, Jaygo said:

 

Yeah I agree. Maybe the purist will say it is not cheap enough but I think a stable buyback would really help shrink the size issue and lessen the effect of the cash "burden"

 

At 3 % of shares outstanding yearly would send a message and I think it would help get the share price moving steadily in the right direction. My assumption when I bought in 2014 was BRK would double every 5-6 years and that has basically been bang on. A buyback could help keep that train chugging along and I really don't want a dividend the way I have it setup in my accounts.

IMO share buybacks are a tool, not a strategy.  Shrinking the balance sheet is fine for most mature companies but when you can invest in literally anything, not so sure it is a good long-term objective, particularly when the day comes when the inevitable shit hits the fan when no one is expecting it (it will).  They have a variety of alternatives.  Broaden their circles of competence by hiring new talent.  Go global.  Become a large-scale landlord.  Become a large scale shadow lender.  Make a bid for companies like JOE.  Develop or create entirely new business enterprises.  Focus on areas like energy or health care where there will always be a need.  All of this takes a lot of brainpower.  What is stopping them?

[Charlie]

I like an old Buffett quote from Outstanding Investor Digest:

 

"We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely."

 

When everybody here comes up with great ideas for Berkshires cash, that is like telling Michael Jordan how to throw the basketball. 

[73 Reds]

10 minutes ago, Charlie said:

I like an old Buffett quote from Outstanding Investor Digest:

 

"We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely."

 

When everybody here comes up with great ideas for Berkshires cash, that is like telling Michael Jordan how to throw the basketball. 

Problem is "waiting by the phone for someone to call" only works when there is something to wait for.  Meanwhile the world moved on.  And Michael Jordan in his prime would probably not stand a chance against some of today's talent.

Edited December 16, 2025 by 73 Reds
missed line

[bizaro86]

3 hours ago, 73 Reds said:

Problem is "waiting by the phone for someone to call" only works when there is something to wait for.  Meanwhile the world moved on.  And Michael Jordan in his prime would probably not stand a chance against some of today's talent.

 

And eventually Michael Jordan gets replaced by Coby White.

 

When that happens you shouldn't just assume the Bulls shooting guard can carry the team to a championship, you need to make a new plan.

 

Waiting for the phone to ring isn't going to work for Greg. 

 

Not just because he's not WEB either - the size means the investible universe is smaller. And corporate America has embraced chapter 11 restructurings - most corporate managers would probably rather file chp 11, wipe out equity, reduce debt, and take a huge incentive package in new equity than take a Brk cash infusion and try to manage out of a crisis.

Edited December 16, 2025 by bizaro86

[CassiusKing1]

So, it's been discussed that large deals won't come easily if they do at all.  Hard to find an investment worthy of moving the needle.  So at most, maybe some bolt-on's for already owned subs.

 

There's still a pile of cash and more coming in daily.  I don't see Greg getting away from a regular stock repurchase if paying a dividend is completely off the table.  There's already more than enough cash on the books, adding to it only causes more headaches.  Maybe half the cash coming into Omaha goes to buybacks and the rest to bolt-on acquisitions.  All this does is spend some cash that is coming in regularly.  Not even talking about the cash hoard that already exists.

[backtothebeach]

17 minutes ago, CassiusKing1 said:

Hard to find an investment worthy of moving the needle.

 

Only true if you if you add "within Warren's comfort zone, in terms of circle of competence and margin of safety", otherwise I don't buy this at all.

 

I mean, 5% of Google and 5% of Microsoft and poof the cash is gone...

[bizaro86]

53 minutes ago, backtothebeach said:

 

Only true if you if you add "within Warren's comfort zone, in terms of circle of competence and margin of safety", otherwise I don't buy this at all.

 

I mean, 5% of Google and 5% of Microsoft and poof the cash is gone...

 

Ok, but if we're buying things outside the circle of competence and/or without a margin of safety, what's even the point?