Buffett/Berkshire - general news

[Jurgis]

In the last few years, it has been possible, in some instances and in a few European countries, to finance or refinance individual mortgages at a negative (!) yield for quite significant durations. In those specific cases, it looks like the financial institution would choose to incrementally lower the principal owed instead of paying interest to the customer. ???

https://www.bloomberg.com/news/articles/2019-05-23/bankers-stunned-as-negative-rates-sweep-across-danish-mortgages

 

Our CoBF European (or just Danish?) friends should be buying RE hand over fist for negative mortgages.  8)

[John Hjorth]

It's not that kind of real estate that I prefer to own, that the Danes are doing this with, Jurgis, [ : - ) ]

 

They are [generally speaking] doing it with that kind of real estate, that is called homes, which have the properties of not being cash generating - only cost generating. So basically it's borrowing with a liability posted as collateral.

 

Cigarbutt's post made me look around [we have public records here about how real estate is mortgaged]. That action caused a grenade shock.

 

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Perhaps we should continue this discussion in Seth's topic about cost of capital instead of here.

[DooDiligence]

South Florida luxury realtor joins BRK Home Services.

 

https://www.bloomberg.com/research/stocks/news/article.asp?docKey=600-201906201103KRTRIB__BUSNEWS_10080_4715-1&ex=true&ticker=EXPE

[DooDiligence]

https://www.bloomberg.com/news/articles/2019-06-19/axalta-to-consider-sale-of-company-as-part-of-strategic-review

[longterminvestor]

EWM joining Berk Real Estate is misleading.  Berkshire acquired EWM in 2003.  The story should be more about branding as EWM is changing their brand to match the ownership. 

[DooDiligence]

EWM joining Berk Real Estate is misleading.  Berkshire acquired EWM in 2003.  The story should be more about branding as EWM is changing their brand to match the ownership.

 

You are correct sir.

 

https://therealdeal.com/miami/2019/06/20/so-long-ewm-coral-gables-brokerage-rebrands-as-berkshire-hathaway-homeservices/

[Dynamic]

An interesting YouTube video from Home Services Relocation Services about the misalignment of incentives that has crept into the employee relocation business and what they're doing to realign it.

https://www.youtube.com/watch?v=O3e24YqEi8Q

 

I originally found the video via Seeking Alpha, and embedded in one of Home Services' pages, but it was kind of annoying how they embedded it. They're launching "True Partner" to realign the incentives.

[gfp]

Not a bad morning for a BRK with a $65 Billion - or thereabouts - portfolio of large banks.  Wells alone put the dividend from $1.8 to $2.04 and plans $23 Billion of gross repurchases against a $212 Billion market cap.

 

And BAC with this plan, not too shabby on 900 million shares

 

http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-newsArticle&ID=2402563#fbid=SebbpFlIj8A

[gfp]

Applied Underwriters sale is near completion, with United Insurance being identified as the buyer.  Details of the deal are still not known but looks like they are waiting on approval from a couple states to close. 

 

https://www.businessinsurance.com/article/20190628/NEWS08/912329351/Sale-of-beleaguered-comp-insurer-underway

 

https://nypost.com/2019/06/28/berkshire-hathaway-sells-insurer-probed-for-reverse-ponzi-scheme/

[DooDiligence]

Applied Underwriters sale is near completion, with United Insurance being identified as the buyer.  Details of the deal are still not known but looks like they are waiting on approval from a couple states to close. 

 

https://www.businessinsurance.com/article/20190628/NEWS08/912329351/Sale-of-beleaguered-comp-insurer-underway

 

https://nypost.com/2019/06/28/berkshire-hathaway-sells-insurer-probed-for-reverse-ponzi-scheme/

 

Speculations about how much cash will come to Omaha.

 

“It’s probably been a successful investment,” Meyer Shields, analyst at KBW, told The Post, estimating it could now be worth between $1 billion and $1.2 billion.

 

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This guy's never going to get to ask Omaha a question in public.

 

Meyer Shields, of Keefe, Bruyette & Woods, is among the critics of Berkshire’s disclosures, saying in an April 28 report they leave investors “disproportionately reliant” on Buffett’s public persona and past investment successes rather than actual knowledge about the company.

 

https://www.reuters.com/article/uk-berkshire-buffett-disclosure-idUKKCN1SA0QO

 

and

 

http://fortune.com/2012/05/05/the-only-analyst-who-doesnt-like-buffetts-berkshire/

 

He does put out quite a body of analysis throughout the industry though.

 

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In other news, a soft market except in cyber & errors and omissions (E&O) insurance?

 

https://riskandinsurance.com/a-buyers-market-2/

 

https://www.biberk.com/get-a-quote/errors-and-omissions-insurance

 

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Seems like Berkshires insurance operations should provide a great source of information on potential investments / acquisitions & also red flags for who to stay away from.

[John Hjorth]

It's time of the year for the usual gift to the five foundations from Mr. Buffett.

 

Edit:

 

Friggin' mind boggling numbers in that press release ... - heck, the only number related to Berkshire that I can come up with that isn't mind boggling is the number of shares oustanding! [ ; - ) ]

[DooDiligence]

It's time of the year for the usual gift to the five foundations from Mr. Buffett.

 

Edit:

 

Friggin' mind boggling numbers in that press release ... - heck, the only number related to Berkshire that I can come up with that isn't mind boggling is the number of shares oustanding! [ ; - ) ]

 

Is there a reason why the shares get converted before being gifted?

[gfp]

The shares can only be converted in one direction (super voting -> regular), so by converting them before each gift he continually lowers the number of super voting shares in existence while also giving the foundations the more-liquid security to sell off over time.  Over the long term, they will be very few super voting shares remaining, making it harder for any future activist to make a fuss for BRK.

 

It's time of the year for the usual gift to the five foundations from Mr. Buffett.

 

Edit:

 

Friggin' mind boggling numbers in that press release ... - heck, the only number related to Berkshire that I can come up with that isn't mind boggling is the number of shares oustanding! [ ; - ) ]

 

Is there a reason why the shares get converted before being gifted?

[John Hjorth]

Thank you, gfp,

 

That explanation makes good sense.

[DooDiligence]

The shares can only be converted in one direction (super voting -> regular), so by converting them before each gift he continually lowers the number of super voting shares in existence while also giving the foundations the more-liquid security to sell off over time.  Over the long term, they will be very few super voting shares remaining, making it harder for any future activist to make a fuss for BRK.

 

It's time of the year for the usual gift to the five foundations from Mr. Buffett.

 

Edit:

 

Friggin' mind boggling numbers in that press release ... - heck, the only number related to Berkshire that I can come up with that isn't mind boggling is the number of shares oustanding! [ ; - ) ]

 

Is there a reason why the shares get converted before being gifted?

 

Yay!  :)  Thanks

[John Hjorth]

Siemens Gamesa News Release : Siemens Gamesa awarded the largest repowering order to date in North America by MidAmerican Energy [July 2^nd 2019].

[Dynamic]

Thanks John. I wonder if that's part of the capex detailed in the slide set that was linked to in the Berkshire Hathaway Energy thread or whether it's additional. Nonetheless, it's good to see continued capex that will doubtless offer a good return and in inexpensive, clean and safe generation with only maintenance and renewal costs, not ongoing fuel costs, greatly enhancing the generation efficiency of existing sites where it makes sense to do so.

[Guest longinvestor]

Thanks John. I wonder if that's part of the capex detailed in the slide set that was linked to in the Berkshire Hathaway Energy thread or whether it's additional. Nonetheless, it's good to see continued capex that will doubtless offer a good return and in inexpensive, clean and safe generation with only maintenance and renewal costs, not ongoing fuel costs, greatly enhancing the generation efficiency of existing sites where it makes sense to do so.

I believe that this is not a new investment. Just that all players, Siemens in this case getting their bit of PR out. Given how long the turbine parts are, it makes lots of sense to make it locally which is what Siemens is underlining here. I only travel to Omaha once a year but have always seen one of these long bed trailers on I80. Between local manufacturing, rent payments to farmers and low electricity rates, there are many stakeholders standing behind. At the BHE booth @ the AGM, I sensed a bit of withdrawal as MidAmerican approaches 100% wind capacity in a short time. Where next? Well, there is the other half of Iowa and 49 more states!

[John Hjorth]

Thank you for your posts, Dynamic & longinvestor,

 

By an unforced error, - and I apologize for that - I posted the Siemens Gamesa News Announcement here - I actually don't know where my head was, when I was posting it here in the "general news" topic instead of the recently started "Berkshire Hathaway Energy" topic. Let's continue talk about it there instead of here.

[John Hjorth]

Wall Street Journal [July 4^th 2019] : Farmers Built a Soybean Export Empire Around China. Now They’re Fighting to Save It.

 

From the article :

 

... Railroads expanded service from the upper Midwest to the Pacific Northwest’s ports, which in turn devoted hundreds of millions of dollars to boost farm-commodity shipments eastward. In the past five years, BNSF Railway Co. has invested over $6.1 billion in its northern corridor, adding or repairing more than 30,000 miles of track and replacing nine million railroad ties. ...

[gfp]

what a disaster the US soybean farming business is right now.  Thankful we were able to get a corn crop in the ground at the last minute on our midwest family farm (Indiana).  The wet fields almost forced planting soy since it can be planted later and still produce a crop.  For the life of me I can't understand per acre farm prices in relation to what the land throws off in average income.  An apartment building would never be valued that way.  Nobody wants to be the one to sell the family farm that has been in the family over a century though...

[boilermaker75]

what a disaster the US soybean farming business is right now.  Thankful we were able to get a corn crop in the ground at the last minute on our midwest family farm (Indiana).  The wet fields almost forced planting soy since it can be planted later and still produce a crop.  For the life of me I can't understand per acre farm prices in relation to what the land throws off in average income.  An apartment building would never be valued that way.  Nobody wants to be the one to sell the family farm that has been in the family over a century though...

 

My wife's family has a farm in Montgomery county, IN. They got their corn in but many others in Montgomery County could not. I was there July 3 and it was knee high, so will be ok. Passed many farms that were soy.

[John Hjorth]

what a disaster the US soybean farming business is right now.  Thankful we were able to get a corn crop in the ground at the last minute on our midwest family farm (Indiana).  The wet fields almost forced planting soy since it can be planted later and still produce a crop.  For the life of me I can't understand per acre farm prices in relation to what the land throws off in average income.  An apartment building would never be valued that way.  Nobody wants to be the one to sell the family farm that has been in the family over a century though...

 

My wife's family has a farm in Montgomery county, IN. They got their corn in but many others in Montgomery County could not. I was there July 3 and it was knee high, so will be ok. Passed many farms that were soy.

 

It reads a lot like Danish farming, actually [ : - ) ],

 

Finally I also got the grasp of where the phrase "To bet the farm" comes from. Personally, I'm a believer, that all this tariff stuff will go away eventually by getting settled. I simply can't believe in - so globalized that the whole world is today - that we are at the beginning of an era affected by protectionism. POTUS however must not insult or push too hard on Chinese leadership, or else the whole thing will end in deadlock.

 

To me, it's mind-boggling that tariffs now have imposed US farming subsidies. To me, that's just so a non-american way to do things.

 

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It's just amazing to think about that there are negative second-order effects from this tariff situation to Berkshire because Berkshire is so vast.

 

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Perhaps I'm wrong. I just can't help being long term optimistic for the future. If I was French, I think "optimist" would be spelled hoptimist, [with a mute "h"] [ ; - ) ].

[Poor Charlie]

For the life of me I can't understand per acre farm prices in relation to what the land throws off in average income.  An apartment building would never be valued that way. 

I’m also surprised farmland has held up so well.  Prices are still above $10,000 per acre in a lot of areas.  At $10,000 per acre, even the most productive farmland is yielding less than a short-term government bond.

 

 

Nobody wants to be the one to sell the family farm that has been in the family over a century though...

I dealt with this problem a few years ago.  We had farmland that had been in the family for over 150 years.  It was immaterial in relation to overall resources and generated little cash (in relation to capital value), but my family had a strong emotional attachment to it.  It was indeed tough to get past these non-economic factors during the sale. 

 

[Spekulatius]

For the life of me I can't understand per acre farm prices in relation to what the land throws off in average income.  An apartment building would never be valued that way. 

I’m also surprised farmland has held up so well.  Prices are still above $10,000 per acre in a lot of areas.  At $10,000 per acre, even the most productive farmland is yielding less than a short-term government bond.

 

 

Nobody wants to be the one to sell the family farm that has been in the family over a century though...

I dealt with this problem a few years ago.  We had farmland that had been in the family for over 150 years.  It was immaterial in relation to overall resources and generated little cash (in relation to capital value), but my family had a strong emotional attachment to it.  It was indeed tough to get past these non-economic factors during the sale.

 

So it looks like at some point AGM is going to be in deep trouble. AGM is farming equivalent of FNM/FRE.