Buffett/Berkshire - general news

[ValueMaven]

The guy has been on some of the largest public company boards for decades (KO, ADM, etc) ... Is the son of the most successful investor of all-time, and is being hand-picked as a non-executive chairman.  I dont see why people are getting so upset.  When I hear Howie speak - I personally have no issues at all.  

[LC]

4 hours ago, sleepydragon said:

that’s not what I concluded from reading this story. Howie is a “do-er”. Takes initiatives and get things done.  Who else you know traveled to a war zone a dozen times. He’s compassionate and full of passion, and is responsible.

 

When he was dress-up sheriff for a year, he paid a 10k “gift” to avoid doing the mandatory training hours. Dude wants to walk around carrying a gun, arresting people, with the law at his back…and won’t spend the time to prep for it?

Was he a do-er as Archer-Daniels board member when they were colluding to fix prices? 
 

I’m cherry picking my criticism, but at best he is willfully ignorant (the benefit of being a billionaires son I guess). Not someone I want as “cultural successor”.  
 

Btw- What kind of job is “cultural successor”, anyways? Sounds like a BS position anyways. If it was some DEI hire this board would be up in arms. 
 

Just my two cents!

[Gamecock-YT]

from shirtsleeves to shirtsleeves in 3 generations

[rohitc99]

does the investment thesis change on berkshire post Warren Buffett with Howie as the chairman v/ someone else ?

[ValueMaven]

@rohitc99 yes and no.  I do see the start of a dividend over the next 5yrs as highly likely, and large outpeformance has low probability.  Frankly, I'd love to learn more about how Ted/Todd/Greg/Ajit work together.  Between those 4 I feel very confident in BRK going forward.  

Edited Sunday at 01:54 PM by ValueMaven

[73 Reds]

8 minutes ago, ValueMaven said:

@rohitc99 yes and no.  I do see the start of a dividend over the next 5yrs as highly likely, and large outpeformance has low probability.  Frankly, I'd love to learn more about how Ted/Todd/Greg/Ajit work together.  Between those 4 I feel very confident in BRK going forward.  

Mostly agree but I think BRK has a better chance at outperformance because Ted and Todd will be in the forefront and looking for and needing a reason to shine.  Buffett's "circle of competence" may no longer be a constraint on a large portion of Berkshire's investible capital.  With much larger sums to invest, T&T may look to areas and/or regions for investment that don't necessarily make as much sense with smaller amounts to allocate.  My hunch is even while Buffett is still in charge they are doing a lot of prep work anticipating the day when they assume control of that much more investment capital.   

[Blugolds]

I still come back to this push for “going green” with the last administration, obviously that is probably put on the back burner for now, but the other aspects of needing tremendous amounts of energy are still there. Elon has the ear of POTUS and he is gonna push for more tech in the country (my opinion) and especially if the crypto grifters have anything to do with it, we need tons of energy and the only logical way to produce that cost effective is Nuclear. I dont think I have ever heard nuclear nuclear nuclear being touted as much as I have in the past several months and I think that a good thing for BHE as they have already been in talks about it and were set up and ready to go with plans to produce mini reactors etc in partnership with Gates. BHE is an industry leader, Greg is one of if not the best in the energy space and they have a fat a juicy bankroll for assurances and the ability to move quickly if they get the green light. I still think further down the road 5-10-15 yrs BHE will be the golden goose of BRK that is where I see the most potential, solid stable returns on large amounts of invested capital. Takes a lot of pressure off finding creative ways to invest the money, just run the energy business intelligently, make sure ROIC is decent etc. At least that is a future I can imagine, I struggle imagining a future that looks much like we’ve seen over the past several decades, the culture will remain intact as that is WB primary concern, for shareholders/partners..but finding elephants and getting the call because its WB I dont think continues in the same fashion. 

[73 Reds]

25 minutes ago, Blugolds said:

I still come back to this push for “going green” with the last administration, obviously that is probably put on the back burner for now, but the other aspects of needing tremendous amounts of energy are still there. Elon has the ear of POTUS and he is gonna push for more tech in the country (my opinion) and especially if the crypto grifters have anything to do with it, we need tons of energy and the only logical way to produce that cost effective is Nuclear. I dont think I have ever heard nuclear nuclear nuclear being touted as much as I have in the past several months and I think that a good thing for BHE as they have already been in talks about it and were set up and ready to go with plans to produce mini reactors etc in partnership with Gates. BHE is an industry leader, Greg is one of if not the best in the energy space and they have a fat a juicy bankroll for assurances and the ability to move quickly if they get the green light. I still think further down the road 5-10-15 yrs BHE will be the golden goose of BRK that is where I see the most potential, solid stable returns on large amounts of invested capital. Takes a lot of pressure off finding creative ways to invest the money, just run the energy business intelligently, make sure ROIC is decent etc. At least that is a future I can imagine, I struggle imagining a future that looks much like we’ve seen over the past several decades, the culture will remain intact as that is WB primary concern, for shareholders/partners..but finding elephants and getting the call because its WB I dont think continues in the same fashion. 

Yeah, when is the last time Buffett "got the call"?  Those days are largely long over.  Hopefully T&T are a little more aggressive when it comes to finding suitable acquisition candidates.  The culture need not be degraded by pursuing more and waiting less.  There is nothing wrong with competing with and bidding against others for acquisitions; each of Berkshire's operating companies competes for business against competitors every day.

[Gregmal]

18 minutes ago, 73 Reds said:

Yeah, when is the last time Buffett "got the call"?  Those days are largely long over.  Hopefully T&T are a little more aggressive when it comes to finding suitable acquisition candidates.  The culture need not be degraded by pursuing more and waiting less.  There is nothing wrong with competing with and bidding against others for acquisitions; each of Berkshire's operating companies competes for business against competitors every day.

This and the post you quoted are one of the best summarizations of the new age of investing. Buffett has largely gotten by unscathed because he’s made some great investments. But the above sort of textbook ideology has ruined the careers and returns of many an investor. Waiting for “the call” so to speak. A redux of past crises that ain’t coming. God like yesterday the impending housing crash of 2022 called by all the experts lol. And it turns out not only did we not crash, but the exact opposite of what they predicted occurred. Same with the general “market is expensive” crap. 
 

Hopefully within Berkshire post Buffett there is a little more effort to be proactive. What they don’t seem to realize, is that there’s a huge built in advantage in “being Berkshire”. And only waiting for “the call” to capitalize on it, is wasting that card.

[Castanza]

I’m in my low 30’s and have owned a position in BRK pretty much since I started investing. But I never sized it up significantly because I never expected outperformance. I expected consistency and preservation of capital from a top notch management team that let me sleep easy at night.  
 

When WB if gone I expected consistency and BRK to maintain their culture, their identity and their durability. However I expect T&T to bring a little agility to their approach. I’m more excited about Berkshire now than I have been the last 10 years. I bet it outperforms over the next 20.  I hope it continues to stay no dividend though.  

[Spekulatius]

On 1/10/2025 at 10:54 AM, ValueMaven said:

Mercury General is getting crushed right now .. down -25%.  They are a very large auto insurance, with very sizable CA exposure  and the CEO is well over 100 years old at this point (he owns 45% of O/S).  Seems like it would be a great acquisition for GEICO, given the near-term distress.  Anyone have thoughts on this?

Mercury also writes a lot of homeowners insurance. I had my home and car insured with them for years when living in CA. They used to have the lowest rates. They probably get hammered for their home insurance losses due the fire. Why would Berkshire be interested in them? I don’t  think they had ever good underwriting and management and Berkshire exited CA for good reasons.

[LC]

Here's a question: if Ted outperforms and Todd doesn't, what happens? What about over a 5, 10 year horizon? What if they both collectively underperform over similar timeframes? Who holds the accountability here to shareholders? 

[Munger_Disciple]

You guys are all talking about Todd & Ted but Buffett said at the 2024 AM that Greg will be managing marketable securities once he becomes CEO just as Buffett is doing now. This means that their current roles are unlikely to change once Greg takes over. They will still be managing relatively small % of BRK's equity portfolio as they are now. 

Edited Monday at 02:40 AM by Munger_Disciple

[gfp]

1 hour ago, Munger_Disciple said:

You guys are all talking about Todd & Ted but Buffett said at the 2024 AM that Greg will be managing marketable securities once he becomes CEO just as Buffett is doing now. This means that their current roles are unlikely to change once Greg takes over. They will still be managing relatively small % of BRK's equity portfolio as they are now. 

 

That's not exactly what he said.  But, yes - Greg will have final say on capital allocation and that includes everything.  Warren does firmly believe that there needs to be one person in charge, not a committee.  The board of directors can fire that one person, but unless they do the buck stops with Greg.

[Munger_Disciple]

1 hour ago, gfp said:

 

That's not exactly what he said.  But, yes - Greg will have final say on capital allocation and that includes everything.  Warren does firmly believe that there needs to be one person in charge, not a committee.  The board of directors can fire that one person, but unless they do the buck stops with Greg.

 

I came away with the understanding that Greg's responsibilities will mirror Warren's when he takes over and that makes sense. Only the CEO in-charge will be able to compare different capital allocation alternatives which include internal reinvestment, acquisition of 100% of businesses, minority ownership of marketable securities and buybacks; and determine the best option for retained earnings. 

Edited Monday at 05:31 AM by Munger_Disciple

[Munger_Disciple]

@gfp Here is what Buffett actually said during 2024 annual meeting on this topic:

 

BECKY QUICK: All right, the next question comes from Slavin Vucelbrot. As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing, or will this function be exercised by Mr. Combs and Mr. Weschler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions, such as large acquisitions, be separated from the common stock selection process?

 

WARREN BUFFETT: Yeah, I would say that decision actually will be made when I’m not around, and I may try and come back and haunt them if they do it differently. But I’m not sure the Ouija board will get that job done. So that job, I’ll never know the answer on whether it [will] get covered, but I feel very comfortable about the fact that it will be made by a board, that they’ve got loads of brainpower, they’ve got a dedication to an unusual institution, and they will figure things out.

 

But I would say that if I were on that board and were making the decision, I would probably, knowing Greg, I would just leave… I would leave the capital allocation to Greg. And he understands businesses extremely well. And if you understand businesses, you understand… you understand common stocks. I mean, if you really know how business works, you are, you are an investment manager. How much you manage, maybe just your own funds or maybe other people’s [funds]. And if you really are primarily interested in getting assets under management, which is where the money is, you know, you don’t really have to understand that sort of thing.

 

But that’s not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely with Greg. The responsibility has been with me, and I farmed out some of it. And I used to think differently about how that would be handled, but I think the responsibility should be that of the CEO. And whatever that CEO decides may be helpful in effectuating that responsibility. That’s up to [him or her] to decide at the time they’re running the money.

So I would say that my thinking on that has developed to some extent as the sums have grown so large at Berkshire, and we do not want to try and have 200 people around that are managing a billion each. [It] just doesn’t work. And I think that when you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things, and I think Greg [is] capable of doing that. I think I’ve missed a lot of stuff in the past, so I’m actually wiser about doing that now. But I, you know, I would do it better this time around in 2008 and 2009 if something akin to that happened. But it won’t be exactly like 2008 or [2009], you can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly… Maybe it will be once every five years, probably [more like] once every ten years or something. But as the world gets more sophisticated, complicated, and intertwined, more can go wrong. And there’s no sense going through here exploring the possibilities of the different things that could happen.

 

But you do want to be able to act when [something] happens. And I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn’t that people didn’t have money in 2008. It’s that they were paralyzed. And we did have the advantage of having some capital and eagerness to act, and a government that, in effect, looked at us as an asset instead of a liability.

 

And I think that all of those qualities will be even more important as our capital pile grows. So I think Greg may have even more fun than I had in a period when extraordinary things were happening, and we were the logical place to go. You never know whether it’ll be next week, next year, [or the] next decade, but you [know], it won’t be a century from now, that is for sure. [The more] intertwined and sophisticated the world financial situation gets, the more vulnerable it gets in a certain sense. It solves a lot of small problems, but it leaves [the system] more vulnerable to large problems.

[Blake Hampton]

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

[Castanza]

9 minutes ago, Blake Hampton said:

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

Now look up their cost basis and how much they get paid in dividends every year. 
 

It was also Berkshires largest “publicly traded” position at close to 40%. If you account for the privately owned businesses Apple was only ever like ~11% of Berkshires IV. 

Edited Tuesday at 06:28 PM by Castanza

[73 Reds]

8 minutes ago, Blake Hampton said:

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

Can you imagine what they are working on for the future?  That's part of what you get.  PEs and earnings growth only tell a story of the immediate past. 

[thepupil]

34 minutes ago, Blake Hampton said:

I would like to quickly point out that Buffett's largest position is in a company that is selling at 38x earnings with negative earnings growth over the last 3 years.

 

he's sold at least 2/3 of his peak shares. wouldn't be surprised if he's sold more come 13-F day. 

 

I think the AAPL position was 1/3 of equity at one point and is now like 7% (not including its associated DTL so it's actually a little smaller). 

 

Edited Tuesday at 06:52 PM by thepupil

[Gregmal]

Well, it’s also fair to point out, in light of the ease with which we appeal to authority regarding Buffett, that much like when “Buffett was really bearish” around May 2020….he also sold much of his AAPL….like 20-30% below todays prices. Clearly not a great move if we judge it marked to market. 

[Mephistopheles]

Not to mention his sales of Wells Fargo in the 20s during Covid 

[Blugolds]

Also important to remember that Buffetts #1 priority is to protect the base, protect the shareholders..hindsight is 20/20 now re covid but at the time you’ll remember that there were daily tally’s and updates regarding fatalities, Ackman was crying on MNSBC telling the gov to shutdown to protect his dad, and they were parking Hospital ships in the NY harbor for extra beds..hindsight says that was a crazy overreaction and everyone should have been buying hand over fist…but AT THE TIME it was anybody’s guess as to how bad this would be and what would be the result, and when we would get control of it, the entire world was in chaos, every country.

 

At least to me, it seems reasonable that someone who’s primary objective is to protect the base, shareholders money and remain the “Fortress” that is BRK would come out of the other side looking like they behaved “too conservatively” that is the luxury we have of coming out the other side relatively unscathed, to be able to say hey, the old man goofed…vs he hit it out of the park and made bank, you’ll probably never be able to say that about BRK, hey they took advantage of the opportunity, took the gamble and it paid off, made the intelligent bet when everyone else (the entire world) predicted doom and gloom and are richer for it. BRK goal is respectable returns while mitigating against significant loss of capital so by its very nature it will never ever make the sexy bet/call and as a shareholder you’ve gotta expect that and be Ok with it. 

 

If you’re primary goal is remain the fortress and protect shareholders from extreme loss of capital, it 100% logical that you would behave as Buffett did when the entire world is in chaos, there is no end in sight and it still hasn’t played out as to how bad it will be and how significant the impact will be. He errors on the side of caution and doesn’t swing for the fences if there is even 1% that it will be a detrimental blow to BRK. Didnt know the fed would be as aggressive as it was, it could have also been another GFC or worse and then people would have been saying why was he such a shmuck leaving so much exposure for BRK. 

 

 Just playing devils advocate here, but it’s easy to forget what the viewpoint AT THE TIME was compared to what we know now and its easy to Monday morning QB that today. Do I wish he would have been a little less conservative and taken advantage of opportunities…yes, but I also understand why he didnt and Im ok with it. 

Edited Wednesday at 04:58 AM by Blugolds

[Blake Hampton]

15 hours ago, Blugolds said:

Didn't know the fed would be as aggressive as it was, it could have also been another GFC or worse and then people would have been saying why was he such a shmuck leaving so much exposure for BRK.

 

The economic circumstances surrounding 2020 were so bad that it gave Jamie Dimon a heart attack that nearly killed him. Most people don't understand just how close to the edge we got.

 

JPMorgan’s Jamie Dimon and His Brush With Death - WSJ

 

Edited Wednesday at 06:03 PM by Blake Hampton

[Gregmal]

Things were so extreme and emotional in Spring 2020 that there was only one direction we could have gone, and that was up. It was so screamingly obvious then, almost as much as it is in hindsight. I know plenty of people even on this board who murdered it. Was one of those generational setups.