Buffett/Berkshire - general news

[gfp]

They have a voting agreement with DVA as well.  It's common enough.  I think the Fed's demands for a restriction in commercial relationships with WFC was one of the bargaining points that wasn't agreeable to Buffett when he last gave up on seeking permission to allow WFC to push his position above 10%.

 

FT has an article with Warren this morning -

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

 

If you can't read it, try using incognito mode, going through google news and searching google news for "FT Buffett" - it should work

[Cigarbutt]

Berkshire continues to go after the primary insurance business with the launch of a new product called "THREE" that features a "three page policy" for small businesses covering workers comp, multiple liability coverages, property & auto.

 

https://www.businesswire.com/news/home/20190211005143/en/Big-News-Small-Business-Berkshire-Hathaway

 

https://www.reinsurancene.ws/berkshire-hathaway-to-launch-three-page-insurance-product-for-small-businesses/

 

www.threeinsure.com

 

- most interesting to me is that this is being launched under the Berkshire Hathaway name, not any of the existing primary companies in this space, like GUARD, BHSI, the various 'home state' companies, etc.  This one is all Ajit!

 

(this is the current offering direct offering - the new one will be a big marketing push to take share in this space)

https://www.biberk.com

https://www.reuters.com/article/us-berkshire-biberk-idUSKBN18528N

https://www.omaha.com/money/buffett/companies-like-biberk-aim-to-make-buying-insurance-paying-claims/article_815acffe-3188-5f79-a23d-c876d6580527.html

https://www.carriermanagement.com/features/2019/03/25/191219.htm?bypass=e03145bd4548bd8cd9548f6f89c3e8aa

Interesting complementary article with additional perspective.

This is work in progress with a lot of potential.

Standardized forms with streamlined procedures around a bunbled product can take advantage of scale effects.

Thinking outside the box resulted in simplification.

 

[gfp]

Cigarbutt, I saw this blurb from Insurance Insider and thought I would share with you.  Who knows if its worth anything -

 

E&S stress points to hardening US P&C market

 

Gavin Davis, Laura Sanicola, Adam McNestrie

 

After close to half a decade of weakness it seems the soft market in P&C may be finally breaking.

 

Although it is too early to make a definitive call, there are clear signs of momentum building for a broader improving US market, albeit with continuing uncertainty around magnitude and duration.

 

The clearest indicator is the current stress in excess and surplus lines (E&S) markets.

 

Widely viewed as the industry’s “safety valve”, the market serves as the leading indicator of a hardening market due to its role in absorbing business from admitted markets when risk appetite among admitted carriers contracts.

 

Multiple conversations with executives across the specialty admitted and E&S market in recent weeks have made clear the E&S market is in rapid expansion-mode, with each passing month showing an acceleration of momentum.

 

Executives describe the market as among the most stressed observed in recent history – well beyond the modest incremental rate movements in late 2017 and throughout 2018.

 

[Cigarbutt]

Cigarbutt, I saw this blurb from Insurance Insider and thought I would share with you.  Who knows if its worth anything -

 

E&S stress points to hardening US P&C market

 

Gavin Davis, Laura Sanicola, Adam McNestrie

 

After close to half a decade of weakness it seems the soft market in P&C may be finally breaking.

 

Although it is too early to make a definitive call, there are clear signs of momentum building for a broader improving US market, albeit with continuing uncertainty around magnitude and duration.

 

The clearest indicator is the current stress in excess and surplus lines (E&S) markets.

 

Widely viewed as the industry’s “safety valve”, the market serves as the leading indicator of a hardening market due to its role in absorbing business from admitted markets when risk appetite among admitted carriers contracts.

 

Multiple conversations with executives across the specialty admitted and E&S market in recent weeks have made clear the E&S market is in rapid expansion-mode, with each passing month showing an acceleration of momentum.

 

Executives describe the market as among the most stressed observed in recent history – well beyond the modest incremental rate movements in late 2017 and throughout 2018.

 

A hard market? What is a hard market?  :)

 

There has been noise about potential hardening including comments from rational players (TRV, RLI, WRB). Soft markets typically die of heart attacks but I guess they can also die from old age (poor pricing will eventually manifest, whatever the circumstances).

 

The pressure seen in the E&S segment may be a false dawn and may be related to AIG (finally) showing some discipline (#1 player in US E&S market). The outcome may depend to what degree others respond, in terms of capital supply (in US E&S market MKL#2, BRK#3 and FFH#8).

 

There is no point in forecasting but I like what Mr. William Robert Berkley said on the last conference call (2 days ago): "So, look, I'm not going to predict the redundancy or the deficiency of the industry. I'll leave that to brighter people than me, but I would tell you that, I think that the marketplace has been pretty aggressive for the past couple of years. I think a lot of that has been glossed over as a result of what was a benign cat environment, as well as positive development from earlier years for the industry. And I think that, at some point you can't keep putting lipstick on the pig, that's my policy." (my bold)

 

[John Hjorth]

... FT has an article with Warren this morning -

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

 

If you can't read it, try using incognito mode, going through google news and searching google news for "FT Buffett" - it should work

 

Here is another one from FT : Financial Times [April 26^th 2019] : Warren Buffett ready to buy in Britain regardless of Brexit.

 

I think this article has root in the same interview referred to by gfp earlier, ref. the quote above. This is as close as it can get to an open and standing invitation to give Mr. Buffett a call if one has something to sell of size and value.

 

My knowledge about British private businesses has no problem balancing on the edge of vertical stamp. Does any fellow CoBF members have any of knowledge what Mr. Buffett might have laid his eyes on here?

 

- - - o 0 o - - -

 

gfp's advice about how to read FT articles works great - thanks, gfp.

[DooDiligence]

Not an elephant but interesting.

 

http://investors.applegreenstores.com

 

Courtesy of @Wexboy_Value on Twitter.

[sleepydragon]

Rolls Royce would be great if they are for sale, impo

[Lemsip]

I think some British papers are massaging the headline to cater to a local audience. Buffett gave his standard response "we will be happy to buy outside the US" and obviously being the FT, the questioner made it more specific and he obviously obliged.

In the past one of the issues Buffett has pointed out in the UK is that the reporting threshold for ownership positions here is 3% and he has said in the past this is a issue since they like to take large positions and this would alert others prematurely but he considers this a jurisdiction he understands well.

 

On another note, I don't see Rolls Royce as a viable candidate. Currently it is a well known brand but not a great business with zero growth, loads of debt, highly variable earnings and high capital intensity.

it has a 3 part  business strategy that includes the phrase "transform the business". If that does not keep Buffett away I'm not sure what will. It may be a good cigarbutt candidate though but Buffett doesn't do that anymore.

 

 

 

 

[karthikpm]

https://www.barrons.com/articles/warren-buffett-berkshire-hathaway-annual-meeting-51556318055

[John Hjorth]

I think some British papers are massaging the headline to cater to a local audience. Buffett gave his standard response "we will be happy to buy outside the US" and obviously being the FT, the questioner made it more specific and he obviously obliged.

In the past one of the issues Buffett has pointed out in the UK is that the reporting threshold for ownership positions here is 3% and he has said in the past this is a issue since they like to take large positions and this would alert others prematurely but he considers this a jurisdiction he understands well. ...

 

Thank you for providing your personal point of view as a British citizen on this interview, Lemsip,

 

It's really appreciated for my part.

 

- - - o 0 o - - -

 

Also, a very belated welcome to you here on CoBF. Please keep your posts coming.

[redskin]

I think some British papers are massaging the headline to cater to a local audience. Buffett gave his standard response "we will be happy to buy outside the US" and obviously being the FT, the questioner made it more specific and he obviously obliged.

In the past one of the issues Buffett has pointed out in the UK is that the reporting threshold for ownership positions here is 3% and he has said in the past this is a issue since they like to take large positions and this would alert others prematurely but he considers this a jurisdiction he understands well.

 

On another note, I don't see Rolls Royce as a viable candidate. Currently it is a well known brand but not a great business with zero growth, loads of debt, highly variable earnings and high capital intensity.

it has a 3 part  business strategy that includes the phrase "transform the business". If that does not keep Buffett away I'm not sure what will. It may be a good cigarbutt candidate though but Buffett doesn't do that anymore.

 

I think Buffett would be more interested in buying a private European business or a public European company in whole which would avoid the % restrictions.

[DooDiligence]

https://en.wikipedia.org/wiki/List_of_European_railways

 

Crap, they're all state owned.

 

Who needs money though?

[Dynamic]

I think European railways have quite different economics anyway. Fewer places are very distant from the sea and navigable rivers than in North America, population density is higher and thus road transport of containers directly from ports can be more viable than rail, a trend that has certainly reduced UK good trains by orders of magnitude since the 1970s, while shorter distances make passenger trains more viable, though some form of subsidy is usually necessary and the public private mix varies by country.

[DooDiligence]

I think European railways have quite different economics anyway. Fewer places are very distant from the sea and navigable rivers than in North America, population density is higher and thus road transport of containers directly from ports can be more viable than rail, a trend that has certainly reduced UK good trains by orders of magnitude since the 1970s, while shorter distances make passenger trains more viable, though some form of subsidy is usually necessary and the public private mix varies by country.

 

That makes sense.

[Libs]

Buffett no longer claims BRK should beat the S & P?

 

Seems like a bombshell comment, IMO:

 

 

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

 

Edit: Paywall. Sorry about that. Here's where I first found it:

 

https://www.cnbc.com/2019/04/25/buffett-says-investors-would-be-served-equally-well-by-sp-or-berkshire.html

[Casey]

Buffett no longer claims BRK should beat the S & P?

 

Seems like a bombshell comment, IMO:

 

 

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

 

Edit: Paywall. Sorry about that. Here's where I first found it:

 

https://www.cnbc.com/2019/04/25/buffett-says-investors-would-be-served-equally-well-by-sp-or-berkshire.html

 

Yep. I still own a lot of Berkshire, but have been selling (I think its about 20% of portfolio right now). They're accumulating so much cash while just kinda nibbling on bank stocks for the last couple years. Not really their fault. Possible actions that will have an impact at their size is a pretty constrained universe. Although why aren't they buying back more shares?

 

What I ended up asking myself is why stay in that constrained BRK universe? It's a nice, conservative way to grow at 10-12% a year. Meanwhile anything in payments and/or technology is going up 20% a minute. Probably a sign that the market has topped and I'm dumb for selling BRK, but hey.

[Guest longinvestor]

Buffett no longer claims BRK should beat the S & P?

 

Seems like a bombshell comment, IMO:

 

 

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

 

Edit: Paywall. Sorry about that. Here's where I first found it:

 

https://www.cnbc.com/2019/04/25/buffett-says-investors-would-be-served-equally-well-by-sp-or-berkshire.html

 

I sincerely hope that many shareholders (about $100B worth) think this way and sell their shares back to Berkshire and buy the index. All should be happy with that arrangement.

[shalab]

+1

 

Also hope the price/book fanatics will publish articles (morningstar, seekingalpha and other mediums) saying no one should buy BRK.A/BRK.B unless the P/B is 1.2.

 

It will allow me (and my extended family) to deploy our capital better  ;D

 

Buffett no longer claims BRK should beat the S & P?

 

Seems like a bombshell comment, IMO:

 

 

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

 

Edit: Paywall. Sorry about that. Here's where I first found it:

 

https://www.cnbc.com/2019/04/25/buffett-says-investors-would-be-served-equally-well-by-sp-or-berkshire.html

 

I sincerely hope that many shareholders (about $100B worth) think this way and sell their shares back to Berkshire and buy the index. All should be happy with that arrangement.

[Dynamic]

Yep. I still own a lot of Berkshire, but have been selling (I think its about 20% of portfolio right now). They're accumulating so much cash while just kinda nibbling on bank stocks for the last couple years. Not really their fault. Possible actions that will have an impact at their size is a pretty constrained universe. Although why aren't they buying back more shares?

 

What I ended up asking myself is why stay in that constrained BRK universe? It's a nice, conservative way to grow at 10-12% a year. Meanwhile anything in payments and/or technology is going up 20% a minute. Probably a sign that the market has topped and I'm dumb for selling BRK, but hey.

 

I think it's important to remember that not everyone is playing the same game, not everyone has the same goals in terms of upside potential and downside risks, and not everyone has the same approach or the same circle of competence.

 

So both the buyer and seller of Berkshire Hathaway at any one moment may both be making perfectly sound and rational judgements even though they're doing opposite things.

 

For example I've certainly sold some of my Berkshire stock on a number of occasions when I thought it was fairly cheap or even very cheap to fund the purchase of something I considered to offer a more attractive prospective return and risk profile at the time.

 

On at least one occasion I've even taken realised losses of as much as 4-5% since my most recent BRK.B purchase to do so (that one will feature in the capital gains section of my next tax return), and I have so far benefited greatly from doing so in comparison to the counterfactual situation where I didn't make the trade. But I can see that the person who bought my BRK.B shares was also making a very sound decision and would have profited well from it. I'm not so sure about the person selling what I bought with the proceeds.

 

And at certain times, having made a great return elsewhere, I've traded back into Berkshire at a somewhat higher price than I had previously traded out.

 

As a very smart value investor recently pointed out to me over a bagel, it's always best to play your own game and not to try to emulate someone else's, because your goals, risk appetites and circles of competence will clearly differ.

 

It's also more important to focus on how you're positioned now to benefit from future developments (and how your portfolio's Intrinsic Value may have grown) than to be concerned with whether you're currently ahead of the index or trailing it since the last arbitrary snapshot date at some particular point in the earth's orbit around the sun. Frankly just seeking a decent return and safety of principal going forward is far more important than chasing to catch up with the index in a certain timeframe at all costs. If you get that right, you can still outperform and/or meet your goals in the long run even if you underperform for a few periods and will probably be safer in doing so.

 

For me, the point about short-term index comparisons is certainly relevant right now. My returns last year benefited from a big boost in the last few trading days of 2018, but four months into 2019, while I have a satisfactory gain so far, I'm trailing the S&P500TR and the FTSE100-TRI by a few percent. Although I passed on one great recovery play that didn't quite meet my demanding margin of safety (which subsequently left the station at great speed without me on board), I still feel that what I have will come good eventually. I believe that my portfolio's IV has improved and that I should be pretty well positioned to benefit from hidden value I believe I have identified that should at least partially get priced in later in the year as what I have discerned becomes more obvious to Mr Market, so I'm happy to accept temporary 'underperformance' whilst the market has been on a tear as my cost of entry for positions that I believe have been undervalued but will likely soon be re-rated upwards. So I should hopefully do OK for 2019 (whether or not I overtake the index) even if I don't come across any of those rare high conviction ideas that meet my margin of safety, and I'm happy that I'm playing my own game according to my own strategy.

 

Back to Berkshire specifically, as someone else pointed out recently around here, the 10 year comparison is very interesting right now as the S&P500 was quite cheap at the beginning of that period in the GFC bear market and rose more sharply than Berkshire and is now close to regaining all-time highs, while Berkshire today is moderately cheap in comparison and is about 3.3% below its all-time high which I think wasn't as lofty as the S&P500's all-time high. In a year's time, the comparison will start in 2010 and Berkshire may well look like the winner in that comparison, just as it does over a 9 year comparison now. People with 10 fingers across two hands just happen not to be focusing on the 9-year comparison right now. I'd be quite happy if we get a lot of press saying that Buffett has lost his edge to lower the price while I'm buying and while Berkshire may be buying back stock.

[james22]

Buffett’s Berkshire Hathaway to invest $10 billion in Occidental Petroleum for Anadarko takeover

 

https://www.cnbc.com/2019/04/30/buffetts-berkshire-hathaway-to-invest-10-billion-in-occidental-petroleum-for-anadarko-takeover.html

 

$90B to go.

[Dynamic]

Very interesting. Looks pretty attractive if their acquisition is successful. Thanks for posting, @james22

[CorpRaider]

Buffett no longer claims BRK should beat the S & P?

 

Seems like a bombshell comment, IMO:

 

 

He's basically been saying that since like 1957.  He might be right this time...I wouldn't bet on it.

[DooDiligence]

Buffett’s Berkshire Hathaway to invest $10 billion in Occidental Petroleum for Anadarko takeover

 

https://www.cnbc.com/2019/04/30/buffetts-berkshire-hathaway-to-invest-10-billion-in-occidental-petroleum-for-anadarko-takeover.html

 

$90B to go.

 

Noice!

 

$90B 2 go is exactly what I thought when I saw it  ;)

[gfp]

Funny that this deal was telegraphed in advance by one of those research services tracking the Occidental corporate jet tail number.  News yesterday was that the jet was in Omaha...

 

https://seekingalpha.com/news/3455802-occidental-petro-jet-reported-omaha-last-weekend

 

Not redeemable for 10 years, and then it costs 105% to redeem...  plus the warrants on 80 ml shares

[sleepydragon]

Buffett’s Berkshire Hathaway to invest $10 billion in Occidental Petroleum for Anadarko takeover

 

https://www.cnbc.com/2019/04/30/buffetts-berkshire-hathaway-to-invest-10-billion-in-occidental-petroleum-for-anadarko-takeover.html

 

$90B to go.

 

Noice!

 

$90B 2 go is exactly what I thought when I saw it  ;)

 

Hmm, think It’s 90b +20ish B(or 25?) to go?

New cash keeps coming in, and Web is 50% on target for 2019 spending :)