Buffett/Berkshire - general news

[73 Reds]

14 hours ago, Eldad said:

Ok that’s fair.
 

What about when they cut rates and you are getting 33x on the T-Bills? 
 

The rational for BRK not paying a dividend is that they can deploy the capital better than we can. Is that still true? They can’t move the needle with the vast majority of stocks and we can. They have been hesitant lately to buy depressed markets and many of us have not, etc., etc.

 

Many of you believe Greg is an operator more than a public company capital allocator. Will he be trying to make market beating stock purchases? If not why would he need 300 billion? 
 

WB is 94. How does that factor into the value of his cash call option? 

T-Bills and AAPL stock both provide optionality.  Most companies have far greater problems to complain about.  We should feel lucky.

[Charlie]

9 hours ago, Cigarbutt said:

Do you mean to say that Mr. Buffett is into market timing?

He is searching the world on a basis of opportunity cost.

It is not market timing. It is about getting the best risk-adjusted return.

[longlake95]

Happy birthday Warren! 

[CassiusKing1]

The Apple position while a good investment, did start to bother me a bit due to its size.

It had become 25-30% of Berkshire's total value.  I was becoming uncomfortable with 25-30% of my company being completely out of my control.  It's not like a wholly owned sub where WEB calls the shots.  It was a vulnerability that needed to be drawn back under control, IMO.

It was/is a great investment, dial back your risk as you're getting ready to hand over control to Greg.  

[UK]

8 hours ago, Charlie said:

We are in year 4 since the last correction.

 

This is not correct, since 2022 was even more bad than a correction, but since 2018 it was more like something happens once in a two years, so 2024 would fit this patern nicely:)

 

Edited August 30 by UK

[John Hjorth]

1 hour ago, 73 Reds said:

T-Bills and AAPL stock both provide optionality.  Most companies have far greater problems to complain about.  We should feel lucky.

 

This. This is absolutely worth to keep in mind when reminded about it, and to really appreciate.

[Eldad]

9 hours ago, Charlie said:

Statistically probably every 5-10 years there is a correction in the stock market. We are in year 4 since the last correction.

So opportunities are coming and things don´t grow to the sky.

The elephant gun is loaded for this and Berkshire is very good in investing when everything goes to hell.

It is a flaw in human nature to think that the future will look like the recent past.

It is still the boom and bust cycle and things can change very fast. 

 

The elephant gun was already loaded. He is doomsday prepping for the elephant apocalypse at this point. 

[John Hjorth]

On 8/28/2024 at 7:10 PM, adventurer said:

Anyone know whether there will be an interview with WB on his birthday with Becky Quick from CNBC?

 

Thanks, @adventurer ,

 

Your post actually made me turn on CNBC in the morning. No luck so far, - it's around 4:30 PM local time here now, and I'm switching back to Bloomberg TV, as the usual channel, when I'm at my usual spot during the day.

 

I checked Becky Quick's account on X also, no news about something like that upcoming there either.

 

Maybe later today ...

Edited August 30 by John Hjorth

[73 Reds]

29 minutes ago, Eldad said:

The elephant gun was already loaded. He is doomsday prepping for the elephant apocalypse at this point. 

As a Berkshire investor, is there a more appealing prospect?

[Eldad]

Just now, 73 Reds said:

As a Berkshire investor, is there a more appealing prospect?

Would be great. Just not sure A. It will happen and B. He will pull the trigger if it does. 
 

At the very least he will buy some BRK but he already had plenty of cash for that. 

[73 Reds]

3 minutes ago, Eldad said:

Would be great. Just not sure A. It will happen and B. He will pull the trigger if it does. 
 

At the very least he will buy some BRK but he already had plenty of cash for that. 

Then why own the stock?  Its a nice collection of businesses but brainpower optionality is what we're all here for.

[Eldad]

5 minutes ago, 73 Reds said:

Then why own the stock?  Its a nice collection of businesses but brainpower optionality is what we're all here for.

I love the stock. I love the collection of businesses. I love the values (when followed). He is handicapping himself and all of us in my opinion buy holding so much cash for this long and then he goes and makes the cash pile outrageous. He has not meaningfully bought a panic since the GFC that I can remember. He basically said himself 5 or 6 years ago it would be criminal to have that cash on the BS for this long. Follow your own rules dude or hand the keys over to Greg. 

[Eldad]

10 minutes ago, Eldad said:

I love the stock. I love the collection of businesses. I love the values (when followed). He is handicapping himself and all of us in my opinion buy holding so much cash for this long and then he goes and makes the cash pile outrageous. He has not meaningfully bought a panic since the GFC that I can remember. He basically said himself 5 or 6 years ago it would be criminal to have that cash on the BS for this long. Follow your own rules dude or hand the keys over to Greg. 

Adapt, you know? It’s not the 1970s. No one is going to call and offer you a 200 Billion business over the phone.
 

Implement a keep your capital scheme where the business managers can get a bigger bonus if they keep and deploy their own capital at a set ROTC. Set all the great Berkshire employees loose on the cash pile. Have Ted, Todd, and Greg oversee it with the Berkshire values as the framework. 

[John Hjorth]

52 minutes ago, Eldad said:

... He basically said himself 5 or 6 years ago it would be criminal to have that cash on the BS for this long. Follow your own rules dude or hand the keys over to Greg. 

 

@Eldad,

 

True, in the meaning he said at an AGM that 'he couldn't sit here in front of the shareholders with 150 B of cash on the balance sheet and at the same time consider himself a success'.

 

But : Focus on studying what he does in stead of what he says. [This also includes that I personally think that about every person can be 'caught' in inconsistencies over time spans of several years.]

 

Another way of expressing it could also be that his investment style over time still evolves.

[73 Reds]

1 hour ago, Eldad said:

Adapt, you know? It’s not the 1970s. No one is going to call and offer you a 200 Billion business over the phone.
 

Implement a keep your capital scheme where the business managers can get a bigger bonus if they keep and deploy their own capital at a set ROTC. Set all the great Berkshire employees loose on the cash pile. Have Ted, Todd, and Greg oversee it with the Berkshire values as the framework. 

I dunno, people complain he is behind the times and then he goes and buys AAPL which is by far his best equity investment and then they complain when it gets too big and now they complain about the sales proceeds and excess cash.  Tough crowd if you ask me.  If you'd like to place a side bet that the cash hoard never gets invested in anything but T-Bills, please feel free to DM me!

[Hektor]

Fortunately, people can complain all they want, but WEB decides what to do

[Eldad]

35 minutes ago, 73 Reds said:

I dunno, people complain he is behind the times and then he goes and buys AAPL which is by far his best equity investment and then they complain when it gets too big and now they complain about the sales proceeds and excess cash.  Tough crowd if you ask me.  If you'd like to place a side bet that the cash hoard never gets invested in anything but T-Bills, please feel free to DM me!

Haha you are rolling all the complainers into one. I did not complain that Apple was too big or about buying Apple. Apple basically saved BRK from its conservatism over the last 7-8 years. 
 

I went back and did the % of cash to total assets on the balance sheet going back to 1995. So if you take the average in 10 year periods it is:

1995-2004: 8%
2005-2014: 13%
2015-2024 First Half: 16%
 

We are now sitting at 25% (and growing) which is the highest in that 30 year stretch. We had 23% in both 2004 & 2005.

 

Just some objective numbers. 

 

 

[Malmqky]

2 hours ago, Eldad said:

I love the stock. I love the collection of businesses. I love the values (when followed). He is handicapping himself and all of us in my opinion buy holding so much cash for this long and then he goes and makes the cash pile outrageous. He has not meaningfully bought a panic since the GFC that I can remember. He basically said himself 5 or 6 years ago it would be criminal to have that cash on the BS for this long. Follow your own rules dude or hand the keys over to Greg. 

What would you have him do with the cash?

 

Not too many elephants out there at the moment.

[Eldad]

1 minute ago, Malmqky said:

What would you have him do with the cash?

 

Not too many elephants out there at the moment.

Not sell the Apple when you already have cash problem. 

[73 Reds]

5 minutes ago, Eldad said:

Haha you are rolling all the complainers into one. I did not complain that Apple was too big or about buying Apple. Apple basically saved BRK from its conservatism over the last 7-8 years. 
 

I went back and did the % of cash to total assets on the balance sheet going back to 1995. So if you take the average in 10 year periods it is:

1995-2004: 8%
2005-2014: 13%
2015-2024 First Half: 16%
 

We are now sitting at 25% (and growing) which is the highest in that 30 year stretch. We had 23% in both 2004 & 2005.

 

Just some objective numbers. 

 

 

More cash = more investment opportunities.  I understand your point but the real test of any investment is whether you are satisfied with your results.  Just a guess but there are many more former BRK owners who are unhappy they sold the stock than there are current shareholders who are unhappy with their results.  

[gfp]

9 minutes ago, Eldad said:

Haha you are rolling all the complainers into one. I did not complain that Apple was too big or about buying Apple. Apple basically saved BRK from its conservatism over the last 7-8 years. 
 

I went back and did the % of cash to total assets on the balance sheet going back to 1995. So if you take the average in 10 year periods it is:

1995-2004: 8%
2005-2014: 13%
2015-2024 First Half: 16%
 

We are now sitting at 25% (and growing) which is the highest in that 30 year stretch. We had 23% in both 2004 & 2005.

 

Just some objective numbers. 

 

 

 

What if he put $200 Billion in bonds slightly longer than the t-bills so they weren't classified as cash (like Fairfax) and reminded everybody that Berkshire was one of the largest insurance companies in the world - would that quiet the cash issue down?

[73 Reds]

4 minutes ago, gfp said:

 

What if he put $200 Billion in bonds slightly longer than the t-bills so they weren't classified as cash (like Fairfax) and reminded everybody that Berkshire was one of the largest insurance companies in the world - would that quiet the cash issue down?

LOL, they'd complain that he has even MORE cash.

[Eldad]

2 minutes ago, gfp said:

 

What if he put $200 Billion in bonds slightly longer than the t-bills so they weren't classified as cash (like Fairfax) and reminded everybody that Berkshire was one of the largest insurance companies in the world - would that quiet the cash issue down?

That might be worse for me personally. I holding out hope that he has something in the works. If we get to next years meeting and he says “well the cash was less of a problem at 5% but now at 3% it’s a real problem so we are hopeful the phone will ring.” I think I would have to swallow hard and prepare to pay a lot of capital gains taxes. 

[gfp]

1 minute ago, 73 Reds said:

LOL, they'd complain that he has even MORE cash.

 

I'm describing him taking 2/3 of the "cash" and extending duration into lower yielding "notes."  There would be less "cash" and a completely conventional bond portfolio for an insurance business this size.  Not more cash.  Fewer complainers

[gfp]

Just now, Eldad said:

That might be worse for me personally. I holding out hope that he has something in the works. If we get to next years meeting and he says “well the cash was less of a problem at 5% but now at 3% it’s a real problem so we are hopeful the phone will ring.” I think I would have to swallow hard and prepare to pay a lot of capital gains taxes. 

 

I think he likes having the cash vs. what is available in the market to him presently.  Are you crazy bullish at the moment or what?  Sure he would love to buy stuff, but there is nothing for sale at a price he is willing to pay.  And lowering his standards just to do a deal is the worst type of precedent to set right before you hand over the reigns.