Buffett/Berkshire - general news

[Dynamic]

Thanks John,

 

At the foot of page 1 of BAC's 10-Q they state:

On July 26, 2019, there were 9,308,300,536 shares of Bank of America Corporation Common Stock outstanding.

 

Berkshire's 950,000,000 shares would represent 10.206% of the outstanding common shares at July 26, 2019.

 

On July 17, they reported the press release that there were  9,342,601,750 million shares outstanding at June 30th, so at that date, Berkshire's 950,000,000 shares had represented 10.168% of common shares outstanding at June 30th.

 

Either way, that's 10.2% rounded to the nearest 0.1% (Motley Fool had it wrong at 10.4% and I don't think they were alone in this), so only a little over the 10% reporting threshold. Berkshire would need to sell 15,739,826 shares to fall below the last known 10% threshold if that were necessary.

[Guest longinvestor]

https://www.supplychaindive.com/news/bnsf-PSR-adding-logistics-centers/559962/

 

At the annual meeting, Greg Warren asked about the reported financial improvement at other class I RR, notably UP versus BNSF. Buffett acknowledged that it was true that UP had cut costs. While BNSF was actually spending more. One of those advantages BNSF has being under the Berkshire umbrella and not be subject to Wall Street pressures.

 

Separately, it is rumored that the logistics hubs referenced here are geographically colocated with Amazon‘s regional fulfillment centers. Buffett briefly mentioned that some of Amazon’s goods are being carried by BNSF.

[gfp]

https://www.omaha.com/news/metro/downtown/bill-murray-and-warren-buffett-spotted-at-ted-and-wally/article_c53c04b0-5ed4-5df8-83af-859a8eba3581.html

 

https://www.cnbc.com/2019/08/02/warren-buffett-and-bill-murray-hung-out-and-told-jokes.html

[sleepydragon]

https://www.omaha.com/news/metro/downtown/bill-murray-and-warren-buffett-spotted-at-ted-and-wally/article_c53c04b0-5ed4-5df8-83af-859a8eba3581.html

 

https://www.cnbc.com/2019/08/02/warren-buffett-and-bill-murray-hung-out-and-told-jokes.html

 

So really what brought Bill Murray there? Any speculation?

[DooDiligence]

https://www.omaha.com/news/metro/downtown/bill-murray-and-warren-buffett-spotted-at-ted-and-wally/article_c53c04b0-5ed4-5df8-83af-859a8eba3581.html

 

https://www.cnbc.com/2019/08/02/warren-buffett-and-bill-murray-hung-out-and-told-jokes.html

 

Nice.

 

Did bitcoin boy get his lunch yet?

[Jurgis]

https://www.omaha.com/news/metro/downtown/bill-murray-and-warren-buffett-spotted-at-ted-and-wally/article_c53c04b0-5ed4-5df8-83af-859a8eba3581.html

 

https://www.cnbc.com/2019/08/02/warren-buffett-and-bill-murray-hung-out-and-told-jokes.html

 

Wow he looks so old...

 

...

 

...

 

and I'm not talking about Warren...  :-\

[CassiusKing1]

https://www.omaha.com/news/metro/downtown/bill-murray-and-warren-buffett-spotted-at-ted-and-wally/article_c53c04b0-5ed4-5df8-83af-859a8eba3581.html

 

https://www.cnbc.com/2019/08/02/warren-buffett-and-bill-murray-hung-out-and-told-jokes.html

 

So really what brought Bill Murray there? Any speculation?

Murray has that clothing business he started with his brothers.  Possibly seeking business advice?  No idea.

[gfp]

One small note I noticed so far this morning refers to Pilot Flying J (page 11 of the 10Q) as having "nearly $30 Billion in annual revenues."

 

What was interesting to me is that this time last year, the 10Q described it this way, "approximately $20 Billion in annual revenue."

[Sleepwell]

I know this is "meaningless" now but I see that P/B is somewhere around 1.29X, I know historically this area has been a pretty good entry point for BRK and if anything now more than ever given that P/B and Intrinsic Value per share have been diverging as underlying operating business value grows w/o being reflected in the balance sheet

[Gregmal]

Well, at the least I hope now people can stop fooling themselves with twisted logical narratives about Warren's secret strategy with the buybacks. At or around these prices, it is clear he has no interest in allocating meaningful capital to buybacks.

[Guest longinvestor]

Warren Ted Williams Buffett at bat! I am re reading Lowenstein’s book Buffett-making of an American Capitalist. Buffett has despised advice from anyone at any time and from age 5. My latest theory of why no buybacks are happening is Buffett spiting all the tips on how to spend the 100+ B!

[Spekulatius]

BRK‘s result were pretty mediocre. Industrial/other business  earnings were flat, Railroads were up a little and insurance underwriting was down quite a bit. KHC earnings are missing from their last earnings, but that’s only $185M.

 

Not, that one should buy BRK for one quarterly earnings, but still - it seems that the slowing economy leaves a mark on the income statement.

[gfp]

For the curious, BNSF's 10Q is filed this morning.  Another $1.2 Billion in cash distributions to Berkshire, same as Q1.

 

https://www.sec.gov/Archives/edgar/data/934612/000093461219000014/llc6301910q.htm

 

And the Berkshire Hathaway Energy 10Q as well -

https://www.sec.gov/Archives/edgar/data/71180/000108131619000014/bhe63019form10-q.htm

[gfp]

Occidental had a big response to their debt offering - "senior to Warren Buffett" is always a strong marketing tactic -

https://www.bloomberg.com/news/articles/2019-08-06/occidental-begins-jumbo-bond-sale-to-fund-anadarko-purchase

[Dynamic]

Kraft Heinz (KHC) has released its earnings for Q1 and Q2 combined as H1 this morning. Earnings are about 50% down including impairment charges. Sales down 4.6% in USD, about half of that decline being currency-related.

 

Net earnings for 2019H1 amounted to $854 mn. With 1,223 million diluted shares outstanding that's $0.6983 per share in fully diluted EPS.

 

Berkshire's share of the H1 earnings, having 325,442,152 shares of KHC, is about $227.3 million

 

I'm not sure if the same impairment charge was already included in Berkshire's 10-K based on KHC's initial year-end earnings release published the day before Berkshire 2018 report, but KHC then had a late-filed 10-K after making some restatements, so I'm not 100% sure how to account for it at first glance, and I'd welcome input.

 

If we can simply add $227.3 million to Berkshire's 2019Q2 Book Value, we get $382,771 million.

With 2,451,065,473 Class B equivalent shares outstanding that's $156.17 per BRK.B (or $234,248 per class A BRK.A share), an increase of about $139 per Class A share and $0.0927 per Class B share, so not enormously consequential, but worth having.

[John Hjorth]

I'm not sure if the same impairment charge was already included in Berkshire's 10-K based on KHC's initial year-end earnings release published the day before Berkshire 2018 report, but KHC then had a late-filed 10-K after making some restatements, so I'm not 100% sure how to account for it at first glance, and I'd welcome input.

 

I would posture these impairments are new ones, Dynamic,

 

Please see the KHC 2018 10-K, p. 41. Please take a look at the basic assumptions for growth in the defined CGUs [1.5% - 4.7%], while there really isen't any growth.

 

-Also [same p.]:

 

Although our annual impairment test is performed during the second quarter, we perform a qualitative assessment each interim reporting period to determine if it is more likely than not that the fair value of any reporting unit is below its carrying amount. While we have not completed such impairment assessment for the first fiscal quarter of 2019, nor have we completed our 2019 annual impairment testing as of the first day of our second fiscal quarter, it is reasonably possible that an impairment of certain reporting units or brands could occur based on continued industry trends impacting our results of operations.

 

The wonders of GARP investing. Lack of growth can easily make capital disappear in GARP investing. Spekulatius would say in his mother tongue : "Keine hexerei, nur behändichkeit!" - I think KHC is absolutely uninvestable directly because of this.

 

I'm sorry I never got to a short write-up about the KHC 2018 10-K in the KHC topic, after recognizing this.

[Dynamic]

Thanks John. It sounds like big bath accounting writing down as much as possible to make the metrics look better in future. I get the impression that Kraft diluted the brand value per share compared to Heinz alone. Not do bad in the US and Canada but not all that great in the rest of the world. I think Berkshire will probably still do okay with KHC in the long run but people who bought at such high prices in ~2017 will suffer poor returns for quite some time.

[gfp]

wsj has an article highlighting Berkshire's $100 Billion investment in Banking / financial services.  Whats the earnings yield on that $100 Billion? 

 

https://www.wsj.com/articles/warren-buffett-is-a-huge-backer-of-u-s-banks-11565775006?mod=hp_lead_pos6

 

In February, Mr. Buffett told CNBC that financial companies are “very good investments at sensible prices, based on my thinking. And they’re cheaper than other businesses that are also good businesses, by some margin.”

 

He added that banks benefited from the 2018 changes to U.S. tax law and that even in a low-interest-rate environment, some large banks continue to generate outsize returns.

 

** in other Berkshire related news, the OXY-APC merger closed on August 8th, so $10 Billion has left Berkshire and commenced earning 8%.

[SHDL]

Ackman apparently bought a bunch of BRK B shares recently according to their 13-F.

[cubsfan]

Glenn Greenberg too - 14% position

[SlowAppreciation]

https://www.forbes.com/sites/brucejapsen/2019/08/15/oscar-health-lands-berkshire-hathaway-deal-ahead-of-obamacare-expansion/#180561442051

[John Hjorth]

Ackman apparently bought a bunch of BRK B shares recently according to their 13-F.

Glenn Greenberg too - 14% position

 

Thanks SHDL & Mike,

 

How do you perceive these moves by Mr. Ackman & Mr. Greenberg?

 

Remember Mr. Buffett's talk about the issuance of B shares in response to the threatened creation of unit trusts in the 1996 shareholder letter [dated February 28^th 1997]?

 

Tweet by Ed Borgato. I don't understand his "The job is to make money, not land backflips" comment. I understand the first part, not the last one. Perhaps it's lingual for me here, I suppose it means "It doesn't have to be advanced, as long as it makes money" [A bit like "Keep it simple"]. Or perhaps I'm just dumb - thick books can be written about what I don't understand.

[Dynamic]

In investing unlike Olympic diving you don't get added points for difficulty.

 

An investment offering good value in plain sight is still a good investment that can outperform

[John Hjorth]

Thanks, Dynamic,

 

I suppose I got it right in the first place. I appreciate the visualization.

[cubsfan]

In investing unlike Olympic diving you don't get added points for difficulty.

 

That is such a good way to frame it.

 

I'm also encouraged knowing that Greenberg is a highly concentrated LT investor with few positions that knows his holdings well.

Usually around 10 stocks. He stays out of the spotlight, buying companies that he feels deliver high returns on capital.

Perhaps along the lines of Lou Simpson.