Buffett/Berkshire - general news

[Whensthepaintdry?]

Could brk do a deal with BAC kind of like they did with Graham holdings to dodge some taxes and buy back some stock. 

[gfp]

2 hours ago, John Hjorth said:

Based on the interesting discussion above about what's been going on in the market with regard Berkshire B shares and A shares I did a lookup today on the NYSE website to get an overall perception of daily trading volumes within the last few months.

 

For the A shares, there appear to be an abrupt change in trading volumes between June 6^th and June 7^th - trading volumes appear reduced - give or take - on June 7^th with about five sixth or so - in one huge one-time drop [<-!, ?].

 

Please see NYSE website, page for BRK.A, volume column - scroll down to June 2024 data rows .

 

Does anybody here on CoBF have any idea, guess or personal speculation about what this may be about?

 

If I remember correctly, a representative of the NYSE actually visited Buffett in Omaha a few days before that A-share volume reporting switch.  In my imaginary version of events Warren mentioned that it was a pet peeve of his, as the most active market participant in the A-class trading, that the A-share volume was hugely inflated / misreported every day since fractional share trading became "a thing."  Tiny fractions of A-shares purchased on robin hood or other fractional brokers are being logged as Volume = 1 and Warren is very aware of the actual A-share daily trading volume because when the shares are in his buying zone his trade execution firm is in the market daily buying a certain percent of the actual A-share ADV.

 

Miraculously, a couple days after the NYSE management visit to Omaha, the reported A-share volume returned to something - if not totally correct - at least a lot closer to reality.

 

It pays to speak up Warren!  LOL

 

 

 

edit: - Oh yeah, I remember why they visited him - they were playing cleanup over the erroneous trade fiasco on June 3rd!

https://fortune.com/2024/06/04/warren-buffett-berkshire-hathaway-discount-deals-canceled/

Edited September 1 by gfp

[73 Reds]

15 hours ago, aws said:

 

If you use IBKR, they allow you to buy new shares to deliver against any assigned calls so you never face the tax hit from getting low basis shares called away. I'm not sure if other brokers offer similar but it's something you might want to look into.

That is interesting and I too wonder how exactly that works.  Once the shares are called away how can the tax consequence be undone?

[gfp]

Just now, 73 Reds said:

That is interesting and I too wonder how exactly that works.  Once the shares are called away how can the tax consequence be undone?

It has to be done within the settlement window.  Just like when you sell some stock and have a day or so (lately, used to be a few days) to adjust which cost basis lot you would like the sold shares to come from. 

[John Hjorth]

Thank you, @gfp !

 

I'll buy that explanation about the drop in the trading volume of the A share at par!  Nice story, by the way.

Edited September 1 by John Hjorth

[73 Reds]

1 minute ago, gfp said:

It has to be done within the settlement window.  Just like when you sell some stock and have a day or so (lately, used to be a few days) to adjust which cost basis lot you would like the sold shares to come from. 

In that event you already own the shares (?). Here you have to initiate a separate transaction that occurs after the taxable event even though settlement occurs later.

[aws]

13 hours ago, LC said:

 

That's good to know! Do you know how to enable this? Is it something you select when you initiate a short call position?

 

You do it after you are assigned on the call, but you need the feature enabled in your account settings as well: https://www.interactivebrokers.com/en/trading/early-settlement.php

[73 Reds]

Just now, aws said:

 

You do it after you are assigned on the call, but you need the feature enabled in your account settings as well: https://www.interactivebrokers.com/en/trading/early-settlement.php

If it works it is certainly a nice feature but I'm surprised the IRS lets you do it for tax purposes.

[gfp]

1 hour ago, 73 Reds said:

If it works it is certainly a nice feature but I'm surprised the IRS lets you do it for tax purposes.

 

I don't see why the IRS should care.  I am allowed to naked short calls on any stock and have the exercise result in a short position that I can cover whenever I choose to cover.

 

Fidelity, for instance, lets me hold a long position and a short position in the same security at the same time - I know because I have accidentally put on an offsetting separate position when trying to close both long positions and short positions in the past.  They have their "buy to open", "buy to close", "sell to open", "sell to close" buttons. 

[73 Reds]

1 hour ago, gfp said:

 

I don't see why the IRS should care.  I am allowed to naked short calls on any stock and have the exercise result in a short position that I can cover whenever I choose to cover.

 

Fidelity, for instance, lets me hold a long position and a short position in the same security at the same time - I know because I have accidentally put on an offsetting separate position when trying to close both long positions and short positions in the past.  They have their "buy to open", "buy to close", "sell to open", "sell to close" buttons. 

Because when your shares are assigned it means they have been sold - right?  Any CPAs here who wish to chime in?

[LC]

3 hours ago, aws said:

 

You do it after you are assigned on the call, but you need the feature enabled in your account settings as well: https://www.interactivebrokers.com/en/trading/early-settlement.php

 

Thank you! 

[cubsfan]

13 hours ago, Munger_Disciple said:

 Charlie (Munger) said secret to happiness in life is having low expectations; so it is better to lower our expectations after the tremendous run-up in 2024. 

I think a lot would depend on the interest rate environment in the next 5-10 years and sadly that's almost impossible to predict. 

 

Wise words indeed

Edited September 1 by cubsfan

[Spekulatius]

On 8/30/2024 at 1:20 PM, Eldad said:

Not sell the Apple when you already have cash problem. 

Cash is never a problem.

 

No cash, now that’s a problem.

[boilermaker75]

On 8/31/2024 at 4:38 PM, Munger_Disciple said:

 

Seems like a lot of agony for little upside. If you think BRK is trading somewhat above its intrinsic value, why not just lighten up a bit instead of all these mental gymnastics?

 

Because I don't want to pay $35k in taxes. It takes a couple of minutes to make the trades. And I don't have cash in that account to just buy higher cost basis stock to be called out.

Edited September 1 by boilermaker75

[John Hjorth]

Scribbles by Schumpeter on The Economist yesterday :

 

The Economist - Business [September 3^rd 2024] : Has Warren Buffett lost his touch? Assessing Berkshire Hathaway’s recent performance.

 

And [naturally and of course, I'm tempted to express], a bit later, 'da man from St. Louis, who ain't hard to find' [and who has nitpicked [dressed in boxing gloves] Berkshires track record from front, from behind, in the left ear and last the right ear] almost explodes on X with a call to all subscribers of The Economist to cancel their subscriptions! 

 

Damn, it's good entertainment!  - Also the cartoon above [Likely a KAL thingy] !

 

- - - o 0 o - - -

 

The Berkshire track record is what it is, and has already been nitpicked in all aspects and nuances - over and over again. That horse has alreday been beaten to death, I would say.

Edited September 6 by John Hjorth
Spelling

[Spooky]

Personally, I'm not that concerned with Berkshire's cash position at the moment. At least now they are earning decent interest income on cash. Looking around the world, the geopolitical situation is worrying - seems like lots of potential instability and conflict. War in the middle east as well as Europe with Russia aligning with Iran / China / North Korea. I wonder if the Apple sale is partly driven by risk management given its exposure to China when US and Chinese tensions are high and deteriorating. Not a bad time to have a healthy cash allocation and assets concentrated in safe jurisdictions.

 

Also, Buffett is the goat and has proven his doubters wrong many times. Who am I to question him.

Edited September 4 by Spooky

[Charlie]

https://archive.ph/WboyO

 

The author thinks we could be acquiring Chubb and is quoting the Thomas Gayner (Markel) sentence. 

Edited September 4 by Charlie

[sleepydragon]

5 hours ago, Charlie said:

https://archive.ph/WboyO

 

The author thinks we could be acquiring Chubb and is quoting the Thomas Gayner (Markel) sentence. 

 

if web is in the middle of negotiating to acquire Chubb, he won't be buying the stock.

on the contrary, since he sold MRK, he is more likely at least had some discussion about acquiring Markel, impo 

[CassiusKing1]

Acquiring Markel could make sense in adding Thomas Gayner to the BRK fold.  He could help run the insurance business as well as with cash allocation.  Hmmm.

[HubbadaPow]

I've been thinking about Buffett's preference for wholly-owned businesses, and I wonder if that preference is simply to avoid being deemed an investment company by regulators. Does anyone here have any insights into that?  

[gfp]

1 hour ago, HubbadaPow said:

I've been thinking about Buffett's preference for wholly-owned businesses, and I wonder if that preference is simply to avoid being deemed an investment company by regulators. Does anyone here have any insights into that?  

 

I don't think Buffett thinks about the risk of being deemed an investment company at all anymore.  It was decades ago he was careful about that.  Berkshire has something like 400,000 employees and some of the largest operating businesses in the country.  The securities are largely inside insurance companies.  It's a non-issue.

 

Even Munger - who was at risk (and probably technically was one) at DJCO just totally ignored the issue and paid it no mind.

[HubbadaPow]

44 minutes ago, gfp said:

 

I don't think Buffett thinks about the risk of being deemed an investment company at all anymore.  It was decades ago he was careful about that.  Berkshire has something like 400,000 employees and some of the largest operating businesses in the country.  The securities are largely inside insurance companies.  It's a non-issue.

 

Even Munger - who was at risk (and probably technically was one) at DJCO just totally ignored the issue and paid it no mind.

Thanks for the response.  You're probably right.  Although I am often surprised when I get talking to people running larger businesses and learn how many of their decisions are regulatory-driven.

[gfp]

https://www.sec.gov/Archives/edgar/data/70858/000095017024104183/xslF345X05/ownership.xml

 

11.1%

[UK]

5 hours ago, gfp said:

https://www.sec.gov/Archives/edgar/data/70858/000095017024104183/xslF345X05/ownership.xml

 

11.1%

 

Do you expect him to stop just under 10 percent or sell it all?

[gfp]

4 hours ago, UK said:

 

Do you expect him to stop just under 10 percent or sell it all?

 

I have no idea, but he will certainly gain more privacy once he crosses below 10%.  I don't expect him to stop before then.  With BAC repurchases expected in the future, he would want to at least get a fair bit under 10% before stopping or the reporting issue would just creep up again.

 

My guess is that if BAC's market price stays up here around $40 he will keep selling.  He may stop if the share price falls.  I would not be surprised to see him sell the entire position but we will only find out on 13fs and maybe the 10q.