Jump to content

Buffett/Berkshire - general news


Recommended Posts

Bulls should note that BRK's main business aren't doing so hot lately:

 

BNSF - declining revenues and earnings if UP is an guide

Insurance earnings have been weak lately

Industrial demand has been weak and the strong US$ does not help (Mormon, PCP, Tungsten tool business)

Utility earnings impacted by low NG prices

 

I think here is a reasonable chance to get  BRK at  $120/share.

Link to comment
Share on other sites

Bulls should note that BRK's main business aren't doing so hot lately:

 

BNSF - declining revenues and earnings if UP is an guide

Insurance earnings have been weak lately

Industrial demand has been weak and the strong US$ does not help (Mormon, PCP, Tungsten tool business)

Utility earnings impacted by low NG prices

 

I think here is a reasonable chance to get  BRK at  $120/share.

 

Agree - not super cheap compared to when you could get ~BV before. Interesting but not a slam dunk.

Link to comment
Share on other sites

Bulls should note that BRK's main business aren't doing so hot lately:

 

BNSF - declining revenues and earnings if UP is an guide

Insurance earnings have been weak lately

Industrial demand has been weak and the strong US$ does not help (Mormon, PCP, Tungsten tool business)

Utility earnings impacted by low NG prices

 

I think here is a reasonable chance to get  BRK at  $120/share.

 

And you think BRK is at $130 why?

 

Newsflash: BRK is at $130 exactly because its investments and its businesses are not doing so well lately.

 

Is all the negative information already reflected in the price? Maybe, maybe not. You'll never know.

 

What is exactly the point of

here is a reasonable chance to get  BRK at  $120/share.
?

 

Of course there is. BRK went to $125 this year, so within 4% of $120.

 

Does this mean that we should sell BRK and wait to rebuy at $120? Just hold cash until it gets to $120? Buy something else?

I don't find such prognostications helpful. At least if you do it, do it the superforecaster way and give the time frame + probabilities. Otherwise, it's like talking heads on TV - they are always right, since they never specify probabilities or timeframes.

 

Take care

Link to comment
Share on other sites

Basicly +1 to what Jurgis posted.

 

Personally, I believe many investors underestimate what Warren Buffett, Charlie Munger, Ted Weschler & Tod Combs [in combination, including "synergy", by internal discussion, sparring and exchange of ideas and assesments] can and will do for BRK shareholders going forward, based on the [still] huge cash inflows, expected to continue [expected by me] going forward, despite non stellar results this year.

 

Spekulatius, perhaps you will get it @ 120, perhaps you will stand on the sideline forever.

Link to comment
Share on other sites

We will see how the share price goes. What I can say is that one can now build your own BRK buying business like UNP , relatively cheap industrials like PH, ITT, ETN, selected utilities and possibly some other stocks and have a similLar value than just buying BRK - the recent pullback in stock prices made that possible, despite the overall indices looking fairly healthy still.

 

What I do like about buying BRK rather than individual stocks is the discipline in capital allocation that I see with BRK, which I think alone is going to give an extra 1-2% of annual  performance.  We also get the deals that only Buffet seems to be able to get like the GS/BAC preferred and more recently the Heinz deals. So these special deals probably will give us another 1% of outperformance. Take this together and you hAve. Pretty sound chance of beating the index buy a couple percent each year over the long run. That is a very sound value proposition. If you can buy it really cheap at 1.2x book (or whatever price Buffet would buy back) than you can tack on another one time 10% revaluation going on this, that you likely will get. That's even better.

 

I think Todd and Weschler are very important now and will deeply influence investment decisions. Maybe they will be more important than Buffet soon. I think this will take BRK also in a different direction, but hopefully the culture will stay intact.

Link to comment
Share on other sites

Don't forget that Berkshire runs a well run insurance operation in which they gets paid for their float which juices individual stock returns.  It's something a lot of people miss and has and will continue to make shareholders a tremendous amount of money. 

 

We will see how the share price goes. What I can say is that one can now build there own BRK buying business like UNP , relatively cheap industrials like PH, ITT, ETN, selected utilities and possibly some si surname company stocks and have a similLar value than just buying BRK - the recent pullback in stock prices made that possible, despite the overall indices looking fairly healthy still.

 

What I do like about buying BRK rather than individual stocks is the discipline in capital allocation that I see with BRK, which I think alone is going to give an extra 1-2% of annual  performance.  We also get the deals that only Buffet seems to be able to get like the GS/BAC preferred and more recently the Heinz deals. So these special deals probably will give us another 1% of outperformance. Take this together and you hAve. Pretty sound chance of beating the index buy a couple percent each year over the long run. That is a very sound value proposition. If you can buy it really cheap at 1.2x book (or whatever price Buffet would buy back) than you can tack on another one time 10% revaluation going on this, that you likely will get. That's even better.

 

I think Todd and Weschler are very important now and will deeply influence investment decisions. Maybe they will be more important than Buffet soon. I think this will take BRK also in a different direction, but hopefully the culture will stay intact.

Link to comment
Share on other sites

From a quantitative valuation using book value or other multiples you miss the following:

-Tax efficiencies from allocating exces cash flows of certain businesses into other productive assets with no leakage

-Buffett special deals (sellers that will only sell to BRK, network of contacts or distressed companies that need the credibility)

-Deferred tax liability that will probably never be realized

-Float historically has EARNED not COST Berkshire money, so it is a good growing liability to have.

-As time goes on and Berkshire becomes more of a conglomerate of operating companies the difference between IV and BV should expand.

-You have the best capital allocator in the world running the show for free, no fees.

 

Link to comment
Share on other sites

  • 2 weeks later...
  • 4 weeks later...

Entertaining [biased?] read from Bloomberg with the title : "Who owns the sun?" [buffett or Musk] - about NV Energy:

 

http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/

 

The ending part made me chuckle:

...Collier had planned to retire from his job flying small cargo planes. But he doesn’t want to stop working until he has a better handle on his monthly bills from Buffett’s utility. “If it goes totally haywire, I’m going to look at batteries,” he says. “I’d love to just go off the grid totally, and tell them to f--- off.”
Link to comment
Share on other sites

Entertaining [biased?] read from Bloomberg with the title : "Who owns the sun?" [buffett or Musk] - about NV Energy:

 

http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/

 

The ending part made me chuckle:

...Collier had planned to retire from his job flying small cargo planes. But he doesn’t want to stop working until he has a better handle on his monthly bills from Buffett’s utility. “If it goes totally haywire, I’m going to look at batteries,” he says. “I’d love to just go off the grid totally, and tell them to f--- off.”

 

 

Surely, good old Uncle Warren wouldn't abuse his position to keep rooftop solar from spreading? Don't you know he only invests in businesses with durable competitive advantages, so that just couldn't be what's happening.

 

 

Link to comment
Share on other sites

Entertaining [biased?] read from Bloomberg with the title : "Who owns the sun?" [buffett or Musk] - about NV Energy:

 

http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/

 

The ending part made me chuckle:

...Collier had planned to retire from his job flying small cargo planes. But he doesn’t want to stop working until he has a better handle on his monthly bills from Buffett’s utility. “If it goes totally haywire, I’m going to look at batteries,” he says. “I’d love to just go off the grid totally, and tell them to f--- off.”

 

 

Surely, good old Uncle Warren wouldn't abuse his position to keep rooftop solar from spreading? Don't you know he only invests in businesses with durable competitive advantages, so that just couldn't be what's happening.

 

Well, I guess that running a highly regulated business just means that lobbying is part of managing and running the business.

 

Mr. Buffett has several times in his shareholder letters written about a "social contract" with society in which the company operates.

 

BRK has so far commited about USD 25B to wind power and solar power.

 

Just take a look at the german energy companies E.ON and RWE to see what happens "when a social contract is not any longer needed". [it's about nuclear power in the first place [after the Japaneese TEPCO incident], and now also coal powered plants].

Link to comment
Share on other sites

 

Well, I guess that running a highly regulated business just means that lobbying is part of managing and running the business.

 

Mr. Buffett has several times in his shareholder letters written about a "social contract" with society in which the company operates.

 

BRK has so far commited about USD 25B to wind power and solar power.

 

Just take a look at the german energy companies E.ON and RWE to see what happens "when a social contract is not any longer needed". [it's about nuclear power in the first place [after the Japaneese TEPCO incident], and now also coal powered plants].

 

Clearly they're great lobbyists. And not just of politicians and regulators.

 

 

 

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...