Buffett/Berkshire - general news

[ValueMaven]

Source on Buffett selling puts on BNSF?  First time I've heard that 

[DooDiligence]

4 minutes ago, ValueMaven said:

Source on Buffett selling puts on BNSF?  First time I've heard that 

 

Warren Buffett’s Burlington Northern Stake Tops 22% With New Options-Related Stock Buy

 

In exchange for $14.8 million up front, Berkshire agreed to buy the 2.3 million Burlington shares at $75 each at the end of January.  The buyer was paying for a form of insurance.  In exchange for the premium of almost $15 million, the buyer of the options got protection against Burlington’s shares falling below $75, which they have.   If the stock had stayed above $75, the holder of the options would not have exercised them and held onto the stock instead.

 

===

 

Warren Buffett Again Sells Puts on Burlington Northern Santa Fe, Berkshire Hathaway Filing Reveals

Edited July 6, 2023 by DooDiligence

[gfp]

Speaking of Warren and derivatives, the FT has a piece out this morning on Berkshire's use of derivatives -

https://www.ft.com/content/f6524f65-188e-4d21-a943-18f9c6a61b8d

 

(fwiw, I read it and didn't find it to be of much value.  No mention at all that Berkshire's "huge" exposures to credit default swaps were essentially contained in a de novo bond assurance operation that was primarily writing 2nd-to-pay insurance on top of primary bond insurance coverage already in place.  And no clue what the author is getting at asserting that Warren was allowed to be "creative" and "flexible" in his accounting for losses.  Sheesh.)

Edited July 6, 2023 by gfp

[ValueMaven]

Thank you @gfp -- FT article is blocked by a paywall!

[gfp]

There isn't much to it but here it is as a pdf

Buffett’s derivatives bonanza doesn’t prove that Taleb is wrong | Financial Times.pdf

[boilermaker75]

On 7/5/2023 at 1:09 PM, Munger_Disciple said:

 

@boilermaker75 If I understand your strategy correctly, you are writing short dated, cash secured puts on a few stocks like BAC, WFC & BRK. So you are effectively trying to earn a decent short term profit on idle cash in excess of ST T-Bills. If you get these stocks put to you, what do you do?  Hold them (if so how long) or sell them immediately and take a loss? 

 

@Munger_Disciple I never sell them to take a loss. I either keep them, or write covered calls. It is not only idle cash, which I usually don't have much as a percentage of my account, but also a small amount that is not cash secured. So I occasionally will go slightly on margin. Occurs about once or twice a year. With higher interest rates I have scaled back so that it is unlikely I will get margined. All my position, some I have held for decades, were entered by being put to.

[Munger_Disciple]

5 hours ago, boilermaker75 said:

 

@Munger_Disciple I never sell them to take a loss. I either keep them, or write covered calls. It is not only idle cash, which I usually don't have much as a percentage of my account, but also a small amount that is not cash secured. So I occasionally will go slightly on margin. Occurs about once or twice a year. With higher interest rates I have scaled back so that it is unlikely I will get margined. All my position, some I have held for decades, were entered by being put to.

 

If you are selling naked calls & the stock gets put, you have to buy the underlying stock on margin & carry it forward with the associated debt + added risk. It seems like naked put writing isn't all that attractive with margin rates going up. 

[boilermaker75]

17 hours ago, Munger_Disciple said:

 

If you are selling naked calls & the stock gets put, you have to buy the underlying stock on margin & carry it forward with the associated debt + added risk. It seems like naked put writing isn't all that attractive with margin rates going up. 

 

You mean naked put not call? I agree going on margin with the current margin rates is not something I am going to be doing.

[Munger_Disciple]

53 minutes ago, boilermaker75 said:

 

You mean naked put not call? I agree going on margin with the current margin rates is not something I am going to be doing.

 

Sorry that's a typo. I meant selling naked puts not calls. The main problem I see is that you will go into debt if stock gets put so it can be risky depending on the amount of leverage. With interest rates being this high, we agree that it doesn't make much sense. But even if rates were lower, one needs take into account leverage & additional risk before writing naked puts. 

[maxthetrade]

Another strategy is to buy back the put close to expiration if it's underwater or immediatly selling the underlying if it gets put to you and simultaneously selling puts with a longer expiration date and often lower strike price.  As long you're pretty certain that the price will rise sometime in the future this is a nice strategy. 

[gfp]

I guess it's a sign of the times that Berkshire is so large now that a $3.3 Billion acquisition is not material enough to warrant a press release or an 8K from the parent company - just a press release and 8K for the BHE subsidiary.  Now we know what they plan to do with the BYD proceeds.  I wonder if there is room to expand at Cove Point.

[gfp]

https://www.reinsurancene.ws/berkshire-gets-giant-1bn-share-of-florida-citizens-reinsurance-renewal/

[ValueMaven]

Looks like Berkshires merger-arb play is going to workout!  Sizable profit for Berkshire

 

Jewish Treasury Bonds as Munger called it!!  LOL

[John Hjorth]

Buffett Sun Valley gossip  : New York Post [July 13^th 2023] : Warren Buffett’s wife grumbles about $4 coffee at Sun Valley.

 

It's great to have a cost conscious life companion. I just hope Mr. Buffett is well.

Edited July 16, 2023 by John Hjorth

[MCR]

4 hours ago, John Hjorth said:

Buffett Sun Valley gossip  : New York Post [July 13^th 2023] : Warren Buffett’s wife grumbles about $4 coffee at Sun Valley.

 

It's great to have a cost conscious life companion. I just hope Mr. Buffett is well.

That comment about struggling with poor balance...

[John Hjorth]

29 minutes ago, MCR said:

That comment about struggling with poor balance...

 

@MCR,

 

It's basically about geriatric-related loss of functional capacity - here, the loss of muscle mass and strength in your legs. According to @gfp [upsteam in this very topic] Mr. Buffett has been training to keep going / walking - literaly. This geriatric decline is a fact for all of us - one can postpone it by physical exercise - eventually, it will get us all, for the majority of us, likely before we each individually pass away.

 

If you start using a golf cart to do the 18 holes on a golf court, it will take short time, and you'll never be able again to walk the whole playground again, because walking the 18 holes is what keeps you able to walk the 18 holes. Stop doing something like that at high age, and you'll never be able to do it again, because the struggle to get to 'the path to getting back to past greatness' increases with your age, and is gradually verging to becoming impossible.

 

The tear of time is relentless for us human beings. It must be of female gender, I think, because it's a bitch, without exceptions.

[gfp]

https://www.sec.gov/Archives/edgar/data/718877/000119312523188107/d491908dsc13ga.htm

 

Berkshire's ATVI holdings are much lower than many assumed (as of June 30th)

[Parsad]

On 7/16/2023 at 11:19 AM, John Hjorth said:

 

@MCR,

 

It's basically about geriatric-related loss of functional capacity - here, the loss of muscle mass and strength in your legs. According to @gfp [upsteam in this very topic] Mr. Buffett has been training to keep going / walking - literaly. This geriatric decline is a fact for all of us - one can postpone it by physical exercise - eventually, it will get us all, for the majority of us, likely before we each individually pass away.

 

If you start using a golf cart to do the 18 holes on a golf court, it will take short time, and you'll never be able again to walk the whole playground again, because walking the 18 holes is what keeps you able to walk the 18 holes. Stop doing something like that at high age, and you'll never be able to do it again, because the struggle to get to 'the path to getting back to past greatness' increases with your age, and is gradually verging to becoming impossible.

 

The tear of time is relentless for us human beings. It must be of female gender, I think, because it's a bitch, without exceptions.

 

+1!  Cheers!

[Paarslaars]

The tear of time is even worse on women guys 

[John Hjorth]

14 hours ago, gfp said:

https://www.sec.gov/Archives/edgar/data/718877/000119312523188107/d491908dsc13ga.htm

 

Berkshire's ATVI holdings are much lower than many assumed (as of June 30th)

 

Tweet by Kevin Carperter about it [I haven't checked if the observation is correct, while I certainly expect it to be so, based on the identity of the author].

 

 

 

[John Hjorth]

1 hour ago, Paarslaars said:

The tear of time is even worse on women guys 

 

Is this consideration gravity related? 

[Paarslaars]

More related to how society values women and men based on different qualifies. Much more appearancd based for women and that happens to be the one most affected by time.

[james22]

On 7/16/2023 at 1:19 PM, John Hjorth said:

 

@MCR,

 

It's basically about geriatric-related loss of functional capacity - here, the loss of muscle mass and strength in your legs. According to @gfp [upsteam in this very topic] Mr. Buffett has been training to keep going / walking - literaly. This geriatric decline is a fact for all of us - one can postpone it by physical exercise - eventually, it will get us all, for the majority of us, likely before we each individually pass away.

 

https://www.runnersworld.com/health-injuries/a20790871/running-preserves-motor-units/

[dealraker]

Some say I am about as fit as anyone ever my age at 69.  If so, my view is that with age strength training is probably even more important than cardio.  Of course I do both, but I do witness that those around me who do almost nothing but cardio seem very fragile.  I have  reduced the weights, but  try to be regular.

 

Still it is interesting that with age that the things I do regularly like cycling, mostly mountain biking, I am noticing little change.  But things I do irregularly like wakeboarding, tennis, or pickleball...well my hand-eye coordination is far down as is my ability to recover from the physical stresses.

 

 

Edited July 20, 2023 by dealraker

[LC]

Squat and deadlift as much as you can! Gotta keep the lower body strong…if you have access to a sled, sled pushes are incredible and they don’t load the spine like a squat does, if that concerns you. 

Edited July 20, 2023 by LC