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Buffett/Berkshire - general news


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Good to see that Buffett is making an all-cash acquisition and not issuing any BRK stock.   I wonder if a superior bid to BRK's offer comes in and, if so, what the break-up fee is.

 

Buffett must really be worried about inflation - he's putting the cash pile to work w/ OXY, Y.  What else will he go after next?

 

Bill

Edited by wabuffo
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I like the deal.  Y has a bunch of really boring businesses, but is very profitable and strong underwriters from the Insurance side.  Diversifies Berkshire insurance exposure.  I know Buffett loved Brandon at one point - but wasnt he forced out of Gen Re due to a weird AIG transaction back in the day?  Obviously Buffett/Jain knows a lot more about this when we do.  

 

Good use of capital and a fair price.  Let's hope this closes.

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Ajit has been a big fan of TransRe for a long time and did a quota share with them last year.  Also, I don't think Buffett really wanted to fire Joe Brandon over that AIG "scandal."  I think Warren thought Berkshire/GenRe had accounted for the transaction properly but regulators wanted some heads on the Berkshire side as well.

 

FWIW, Alleghany Capital has a steel building/stadium subsidiary that built MSGE's Sphere.

 

Here is a recent investor presentation for Y:

https://s24.q4cdn.com/857140222/files/doc_financials/2021/q4/Alleghany-Corporation-Fourth-Quarter-Investor-Presentation.pdf

Edited by gfp
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I would like to point out that Buffett/BRK seems to buy these leveraged bond portfolios (ie, P&C insurers) at the tippy-top of aging, multi-decade bull markets right before big equity market declines.

 

1966- National Indemnity

1998 - Gen Re

2022 - Alleghany (?)

 

coincidence... or cue ominous sounding music....

 

spacer.png

 

Bill

Edited by wabuffo
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Transatlantic Holdings, Inc. was a buyout target by BRK in 2012, but was trumped by Y after BRK refused to raise its offer( does it ever). Buffett is trying to get the whole enchilada 10 years later (unless someone offers more, in which case doubt he would raise his bid).

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5 minutes ago, mjm said:

Transatlantic Holdings, Inc. was a buyout target by BRK in 2012, but was trumped by Y after BRK refused to raise its offer( does it ever). Buffett is trying to get the whole enchilada 10 years later (unless someone offers more, in which case doubt he would raise his bid).

 

I think that Transatlantic bid by Ajit was some sort of favor to Transatlantic management.  I forget the specifics but I don't think Berkshire was expecting to actually acquire the company - although they were certainly willing to at their bid price.  I'll have to look back into why I formed that opinion but I remember considering it a favor Ajit did for a respected colleague.

 

edit - maybe it was to keep Validus from getting Transatlantic?

Edited by gfp
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47 minutes ago, gfp said:

This one seems pretty small to make much of a difference - 22 or 23 Billion in investments.  I have a feeling the phone rang and that is the extent of the timing.

 

I guess I was wrong on "the phone rang" part - Barrons has a source close to the deal reporting that Berkshire initiated the transaction.  

https://www.barrons.com/articles/berkshire-hathaway-deal-for-insurer-alleghany-is-great-for-berkshire-not-so-good-for-alleghany-51647877030

 

Quote

The Berkshire deal appears to have come about pretty quickly, which is typical for Buffett who tends to make rapid decisions. Berkshire as usual didn’t use an investment banker—reflecting Buffett’s disdain for them. Berkshire initiated the transaction talks, according to a person familiar with the deal. 

 

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58 minutes ago, wabuffo said:

I would like to point out that Buffett/BRK seems to buy these leveraged bond portfolios (ie, P&C insurers) at the tippy-top of aging, multi-decade bull markets right before big equity market declines.

 

1966- National Indemnity

1998 - Gen Re

2022 - Alleghany (?)

 

coincidence... or cue ominous sounding music....

 

spacer.png

 

Bill


Brk’s stock portfolio ‘s bond proportion increases as a result. 

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24 minutes ago, wabuffo said:

This one seems pretty small to make much of a difference

 

That's the wrong way to look at it.

 

Bill

 

What's the right way to think about it?  Alleghany has about a $16 Billion bond portfolio, FWIW.

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What's the right way to think about it?

 

From the seller POV.

 

The sellers we're talking about are smart & and as they look out, they see falling bond prices (and equity values).  Not much fun when you are holding a large bond (and to some degree equity) portfolio.

 

Bill

Edited by wabuffo
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