Buffett/Berkshire - general news

[Guest]

thanks cigar!

 

 

As my wife might say with regard to Buffett and Uber... "He's wrong again."

[Guest longinvestor]

Buffett must be thinking hard about keeping future dealings under wraps. After all there has to be more and bigger deals coming. If Buffett is an admirer of Dara wil he still be one if the leak came from the other side? Admire from the sidelines Kinda like him admiring Bezos.

[scorpioncapital]

I think he's just a bit uncertain. So he asked for a particular deal price. Probably too conservative. And they said no...Conservatism pays in the next recession if you need funding. If you don't need it, you just don't need it.

[sleepydragon]

Warren Buffett confirms talks with Uber: 'I'm a great admirer of Dara'

 

https://www.cnbc.com/2018/05/30/warren-buffett-reportedly-offered-uber-3-billion-investment-but-talks-crumbled.html

 

Interesting that he confirms the talks, now if he doesn't confirm or comment on other roamers he is basically denying them

 

Cuz Uber is a big customer of Geico.

And I am sure Web has some insights on Uber through Geico.

 

[netnet]

My first reaction was shock.

 

My second reaction was, well in some of these late stage investors were guaranteed that the IPO price would be above their price, so if you put into a convert debt deal, it could become interesting.

 

Must be nice have 100 billion burning a hole in your pocket.

 

[gfp]

Dallas paper speculating the recent Homeservices deal could have been around $100 million all cash deal -

https://www.dallasnews.com/business/real-estate/2018/06/04/just-warren-buffett-paid-100m-ebby-halliday-realtors

 

Warren was apparently friendly with the founder and expressed an interest in buying her company for many years.

[Liberty]

29-minute interview with Buffett and Jamie Dimon:

 

https://www.cnbc.com/video/2018/06/07/warren-buffett-jamie-dimon.html

[Guest longinvestor]

End quarterly guidance! Indeed. Let’s see how this plays out.

 

On this note, is there a place, online  where one can go to see which companies are already doing this?

[villainx]

29-minute interview with Buffett and Jamie Dimon:

 

https://www.cnbc.com/video/2018/06/07/warren-buffett-jamie-dimon.html

 

Good interview!  No mentor fatigue yet.  =P

[Charlie]

Great interview, thanks for posting.  :)

 

Here is the transcript:

 

https://www.nbcumv.com/news/cnbc-transcript-berkshire-hathaway’s-warren-buffett-and-jpmorgan-chase’s-jamie-dimon-speak-cnbc?division=1&network=33135&show=151339

[OracleofCarolina]

looks like the link works if you cut and paste, but you can not click on it

[Dynamic]

https://www.gurufocus.com/news/692562/bayer-closes-merger-with-buffetts-monsanto

 

A misleading headline - Buffett is the Chairman & CEO of Berkshire, a minority shareholder in Monsanto until the takeover by Bayer - but this apparent Merger Arbitrage appears to have been successful for Berkshire, the takeover closing at $128 per share of Monsanto stock.

 

Berkshire's holding as of 31st March had been 18,970,134 shares of MON (then trading at $116.69) and worth $2,213,624,936 at that date.

The number of shares had increased 62.0% over 31st December 2017 and I wouldn't be surprised if buying continued since the quarter ended until MON ceased trading on 7th June.

 

Assuming the same holdings at the close of the transaction, they'd have been worth $2,428,177,152, an increase of 9.7% since quarter end, which compares favourably with S&P500 and the Total Return Index since 31st March.

SP500 +7.6%

SP500TR +8.1%

 

Weirdly all the Berkshire 13-F filings called it MOSANTO.

 

Of course, it will be missing from next quarter's 13-F but we might find some disclosure of it in the footnotes of the 10-Q, though there's no specific obligation to report the details.

 

I'll need to update my Look-Through spreadsheet to account for this (which I still haven't updated fully since the May 13-F). Perhaps I'll just enter something like $2.36bn of cash in its place (assuming about 21% tax on gains of very roughly $328mn). The effect of my assumption is fairly immaterial to the whole look-through portfolio.

[Spekulatius]

A billion here, a billion there, and soon we are talking about a serious amount of money.

[Dynamic]

I'll need to update my Look-Through spreadsheet to account for this (which I still haven't updated fully since the May 13-F). Perhaps I'll just enter something like $2.36bn of cash in its place (assuming about 21% tax on gains of very roughly $328mn). The effect of my assumption is fairly immaterial to the whole look-through portfolio.

 

I have now updated my Look Through Spreadsheets, taking account of perhaps $2.44 per share in tax on the gains (all estimated from unknown buy price) to include estimated net cash proceeds resulting from Monsanto of $125.56 per share. That would be about a 9% return after tax if my estimates are correct, which sounds about right for a 6-9 month merger arb.

 

Google now makes it very easy to copy my look-through spreadsheet into your own private Google Sheet. A single operation File/Make a copy...

 

I've also made the other updates for the quarter and the sheet now shows crude quarter-to-quarter changes on the Combined Holdings sheet. This is supposed to represent owner-shares and owner-earnings, and excludes pension holdings where I could find them.

 

In further news Knauf 's takeover of USG is now approved but hasn't closed yet:

Within 6 months, the USG deal for $44 per share acquisition by Knauf will close, too, but for now I'll leave it on the spreadsheet. That deal will be $0.50 per share as a special dividend plus $43.50 per share in cash. For now, I expect the stock price to track an estimated time-value discount to the takeover price plus dividend, remaining close to $43-44 per share.

 

The look through spreadsheet I'd advise you to Make a copy of for your own use is:

• Berkshire Hathaway Look Through Earnings & Holdings

 

The spreadsheet that is publicly editable by anyone (but anyone can see any edits you make, the edit history, or corrupt the spreadsheet) is:

• Berkshire Look through earnings - Public editing allowed

 

[Dynamic]

Berkshire has filed a 13D/A regarding USG. Scrolling to the notes section: Same holdings as before but they have given their proxy to the acquirer, Knauf, to accept the acquisition offer and clarified that their previous offer of a $42-strike call option on all their stock to Knauf at $2 price did not proceed. The $43.50 + 50¢ special dividend offer provides the same $44 return to all shareholders.

 

Courtesy Rocketfinancial email alerts

[gfp]

Just to clarify on this, Berkshire was not proposing to receive $2 more than other shareholders in their original option proposal.  Their proposal was always going to result in Berkshire receiving the same consideration as other shareholders if a deal was consummated.

 

Berkshire has filed a 13D/A regarding USG. Scrolling to the notes section: Same holdings as before but they have given their proxy to the acquirer, Knauf, to accept the acquisition offer and clarified that their previous offer of a $42-strike call option on all their stock to Knauf at $2 price did not proceed. The $43.50 + 50¢ special dividend offer provides the same $44 return to all shareholders.

 

Courtesy Rocketfinancial email alerts

[gfp]

In thinking about Berkshire's continued buying of AAPL, it seems to me that Berkshire must have stopped buying.  Berkshire would be required to report to the SEC if it crossed above ~245.7 million shares, which represented 5% as of the last 10Q.  As Apple updates the share count to reflect repurchases, Berkshire will likely cross the 5% threshold and report an updated number for Berkshire ownership, but only following the publication of a new shares outstanding figure by Apple.

 

Or I could be wrong and a 13d could be filed any day showing Berkshire hitting 5%...

[Dynamic]

Thanks, gfp, for clarifying the call option proposal re USG. I obviously had lodged that in my brain incorrectly.

 

On thinking about your suspicion that Berkshire has stopped buying Apple, I think you're right and that they may potentially have even decided to trim their position by a small amount to stay below the reporting threshold.

 

Regarding Apple and the 13D requirements, I wasn't aware that 13D reporting came at 5% as I'm fairly new to trawling through all the EDGAR filings, especially since I've started receiving them on email via rocketfinancial and since I start looking at historic 13D filings to calculate the holdings by pensions funds for various Berkshire subsidiary employees to account for these in the Look Through spreadsheet, but here's a decent summary I found in response to gfp's post:

 

Schedule 13D

From Wikipedia, the free encyclopedia

 

Schedule 13D is an SEC filing that must be submitted to the US Securities and Exchange Commission within 10 days by anyone who acquires beneficial ownership of more than 5% of any class of publicly traded securities in a public company. A filer must promptly update the Schedule 13D filing to reflect any material change in the facts disclosed, including, among other things, the acquisition or disposition of 1% or more of the class of securities that are the subject of the filing.

 

I have recently had suspicions that a few more AAPL may have been purchased by Berkshire in the $162-$165 range at the end of April, but the run-up to $183-$194 ballpark since then may have curtailed their buying. Roughly 200 milion shares of AAPL traded in that April low period, so I would not have been shocked to find they've added another 50-60 million shares.

 

On the latest Apple 10-Q we have the figure:

4,915,138,000 shares of common stock, par value $0.00001 per share, issued and outstanding as of April 20, 2018

, which remains the latest published figure for outstanding shares.

 

Now it appears that 5% reporting threshold would currently be 245,756,900 shares.

 

Berkshire's 13-F holdings (Berkshire and New England Asset Management combined) as of 31st March including pension fund holdings are:

245,278,633 (4.990% of last known shares outstanding).

 

This is remarkably close to a threshold that wouldn't have been precisely known to Berkshire prior to 20th April. Can that be coincidence?

 

We believe that 2,837,753 shares are owned by pension schemes within Berkshire (per 10-K annual report). (0.058% of AAPL)

 

From the financial-benefit definition of beneficially owned, Berkshire has 242,440,880 (4.933% of AAPL), excluding the pension scheme holdings that are not for the financial benefit of Berkshire's owners.

But from the voting power definition of beneficially owned, it's the 4.990% known directly from the two 13-F filings that counts.

 

I assume from the 4.990% being just below 5.000% that it may be the latter that would trigger the 13D and that this threshold is what curtailed Berkshire's buying in the first quarter to avoid reporting responsibilities.

 

It is even possible, perhaps likely, that Berkshire may engage in slight trimming this quarter at the $180+ range to avoid 13D filing responsibilities that might arise the moment that Apple next makes a filing that discloses a reduced number of shares outstanding.

 

In this way, Apple, like Wells Fargo, may well then remain at about this size, with Berkshire estimating the extent of Apple buybacks and trimming slightly from quarter to quarter, unless the SEC is willing to grant them an exemption from public filing within 10 days until they hit a higher limit such as 10%. I imagine such an exemption is possible, because I don't recall 13D filings about the 0.4% Wells Fargo position trimming appearing prior to the release of the 13-F this quarter, and this trimming ws to keep Berkshire just below the 10% level to avoid being considered a Bank Holding Company, which is, of course, well above the 5% 13D threshold. If they are allowed exemption from public filing of 13D while they build their position.

[gfp]

Good discussion there.  Berkshire did have to report the Wells share sales within 3 days.  Berkshire issued a press release and briefed Becky Quick on it just before the filings hit so people wouldn't freak out - "Berkshire selling Wells Fargo!" which would be seen as a big negative, especially given the headlines surrounding Wells recently..

 

https://www.sec.gov/Archives/edgar/data/72971/000120919117026722/xslF345X03/doc4.xml

[Dynamic]

Aha, I see that to get Form 4 reports on EDGAR search you must select "• Include" next to the filter entitled "Ownership?". I was thus able to find the filing you linked to, gfp, both via Wells Fargo and via Berkshire Hathaway, Inc.

 

When accessing EDGAR via the SEC filings link at berkshirehathaway.com the 'Include' option does not appear to be selected, so Form 4 filings (e.g. Ajit Jain's disposals when gifting to charity) do not normally show up. I usually see these via my http://www.rocketfinancial.com/ portfolio email alerts, which are set to "All News and Filings".

 

If you search Berkshire Hathaway, Inc and •Include Ownership, and search prior to date 20170420 you will see the first 4 filing type is the Wells Fargo filing you linked to. The second was a charitable gift of BRK.B stock by Warren Buffett.

 

[gfp]

You can also look at just the insider transactions by clicking the red link "Get insider transactions" for this 'issuer' or for this 'reporting owner'

 

Under this reporting owner, for Berkshire, you get the recent PSX sale, the Liberty Sirius accumulation, PSX purchases, etc..

 

Under this issuer, you get the insider transactions for BRK stock, which are primarily charity related.  But sometimes there is an interesting one like Charlie transferring a huge block of his Berkshire stock near the exact bottom of the financial crisis to his children in exchange for a promissory note.  Charlie's no dummy

https://www.sec.gov/Archives/edgar/data/1067983/000118143108063602/xslF345X03/rrd224408.xml

[boilermaker75]

You can also look at just the insider transactions by clicking the red link "Get insider transactions" for this 'issuer' or for this 'reporting owner'

 

Under this reporting owner, for Berkshire, you get the recent PSX sale, the Liberty Sirius accumulation, PSX purchases, etc..

 

Under this issuer, you get the insider transactions for BRK stock, which are primarily charity related.  But sometimes there is an interesting one like Charlie transferring a huge block of his Berkshire stock near the exact bottom of the financial crisis to his children in exchange for a promissory note.  Charlie's no dummy

https://www.sec.gov/Archives/edgar/data/1067983/000118143108063602/xslF345X03/rrd224408.xml

 

I'd much rather have Charlie for a father than Warren!

[alpha]

 

BNSF oil train derailed in Iowa.

 

https://www.ctvnews.ca/world/estimated-230-000-gallons-of-oil-spilled-in-derailment-bnsf-1.3986622

[John Hjorth]

Nasdaq [June 26^th 2018]: Lee Enterprises will manage Berkshire Hathaway Newspaper and Digital Operations in 30 Markets.

 

Edit:

 

CNBC Warren Buffett Archive [April 5^th 2018]: Buffett's complicated relationship with the newspaper business.

[John Hjorth]

Repowering order from PacifiCorp to Vestas Wind Systems.

 

Quite amazing that it's optimal to scrap nacelles and blades after only approx. 11 years of operation, to get better performance. It says a lot about how the technology in this industry is advancing over time. [Mentioned by Uccmal before here on CoBF.]