Guest longinvestor Posted August 30, 2019 Posted August 30, 2019 Happy 89th Birthday to Warren Happy Birthday! Wishing he keep tap dancing to 100+.
John Hjorth Posted August 30, 2019 Posted August 30, 2019 Happy 89th Birthday to Warren. Cheers! Happy Birthday! Wishing he keep tap dancing to 100+. Happy 90th birthday to Mr. Buffett! - Yes, the 90th, you know, when a child reaches the age of one, it has had two birthdays - and so on! [ ; - ) ]
Guest longinvestor Posted September 1, 2019 Posted September 1, 2019 Buffett interview: Thanks for posting. Buffett looking sharp! Only thing noticeable is the heavy breathing which is somewhat familiar to me with my 90 year old mother. I wonder why Yahoo doesn’t try to edit that out. Interesting comment about being early in deploying cash during 2008-09. “Ran out of powder at the depth of the crisis”. $122B and counting = Lesson learned, ha?
John Hjorth Posted September 1, 2019 Posted September 1, 2019 Yes, interesting "out of powder"-comment related to the situation in the GFC. Cash & cash equivalents at USD 25.334 B at YE 2008. Thank you for sharing to Liberty.
alwaysinvert Posted September 1, 2019 Posted September 1, 2019 That interview is from earlier this year. Not new.
Dynamic Posted September 2, 2019 Posted September 2, 2019 Thanks for posting. Buffett looking sharp! Only thing noticeable is the heavy breathing which is somewhat familiar to me with my 90 year old mother. I wonder why Yahoo doesn’t try to edit that out. If they can't remotely match the audio levels for interviewer (very quiet) and interviewee, I don't think they'll be filtering out his breath sounds. I very nearly switched to my noise-cancelling headphones while listening to this while doing my chores. Still, though, it's abundantly clear that Warren and Charlie are both very mentally acute and capable and happy to play the hand they're dealt to the best of their abilities, not at all swayed by what other people do or think. I imagine it could still be a while, but I can't wait for their next great insight, such as that one that brought BNSF into Berkshire.
Guest longinvestor Posted September 2, 2019 Posted September 2, 2019 Thanks for posting. Buffett looking sharp! Only thing noticeable is the heavy breathing which is somewhat familiar to me with my 90 year old mother. I wonder why Yahoo doesn’t try to edit that out. If they can't remotely match the audio levels for interviewer (very quiet) and interviewee, I don't think they'll be filtering out his breath sounds. I very nearly switched to my noise-cancelling headphones while listening to this while doing my chores. Still, though, it's abundantly clear that Warren and Charlie are both very mentally acute and capable and happy to play the hand they're dealt to the best of their abilities, not at all swayed by what other people do or think. I imagine it could still be a while, but I can't wait for their next great insight, such as that one that brought BNSF into Berkshire. Buffett said that he is now getting weekly numbers from some of the Berkshire subs. It’s hilarious the way he revels at this is like others flipping through playboy! It would be terribly interesting to have this board compile what those numbers are. We’re living through the Information Age but the picture that forms in the head with weekly doses of the most relevant information is priceless. It’s not hard to see how this would mold Ted, Todd and the next Chairman!
gfp Posted September 5, 2019 Posted September 5, 2019 Applied Underwriters sale information - https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/53946178
Spekulatius Posted September 5, 2019 Posted September 5, 2019 Applied Underwriters sale information - https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/53946178 Interesting read . It looks like Applied Underwriters was competing for business with Berkshire subs. BRK generally doesn’t integrate their subs and this one had minority interest outstanding, so even if they wanted to, they couldn’t without buying out minority interests. That’s one of the limitations with Berkshire’s modus operandi and a sale is the better option at this point. Also on a side note, workers comp claim stats tend to get far worse when the labor market goes cold in a recession,
DooDiligence Posted September 5, 2019 Posted September 5, 2019 Applied Underwriters sale information - https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/53946178 Interesting read . It looks like Applied Underwriters was competing for business with Berkshire subs. BRK generally doesn’t integrate their subs and this one had minority interest outstanding, so even if they wanted to, they couldn’t without buying out minority interests. That’s one of the limitations with Berkshire’s modus operandi and a sale is the better option at this point. Also on a side note, workers comp claim stats tend to get far worse when the labor market goes cold in a recession, and competing with questionable side agreements (if I'm understanding this correctly). "DFS said that its investigation found that the formula the RPA used to calculate costs was “complex and the way in which it was presented to employers was misleading,” with a result being that many New York employers ended up paying more for coverage than they would have paid under the workers’ compensation policies alone, according to the officials." https://www.insurancejournal.com/news/east/2019/07/19/533394.htm --- Has BHHC been experiencing the same 30% loss of premiums quoted for Applied or are they taking business away from Applied? Looks like NY has some opportunities now.
Munger_Disciple Posted September 5, 2019 Posted September 5, 2019 2x return in 13 years! Not a great return unless Applied upstreamed a whole bunch of dividends to the mother ship over the years. Ajit & Warren are probably just getting rid of a "problem child".
gfp Posted September 6, 2019 Posted September 6, 2019 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm https://asia.nikkei.com/Business/Markets/Berkshire-taps-Japan-s-hunger-for-yields-with-4bn-bond-debut
longtermdave Posted September 6, 2019 Posted September 6, 2019 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm Am I reading that right; they'll pay less than 1% on average annually for those notes?
gfp Posted September 6, 2019 Posted September 6, 2019 Yes - ¥108,500,000,000 0.170% Senior Notes due 2024 ¥61,000,000,000 0.270% Senior Notes due 2026 ¥146,500,000,000 0.440% Senior Notes due 2029 ¥19,000,000,000 0.787% Senior Notes due 2034 ¥59,000,000,000 0.965% Senior Notes due 2039 ¥36,000,000,000 1.108% Senior Notes due 2049 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm Am I reading that right; they'll pay less than 1% on average annually for those notes?
John Hjorth Posted September 6, 2019 Posted September 6, 2019 Yes - ¥108,500,000,000 0.170% Senior Notes due 2024 ¥61,000,000,000 0.270% Senior Notes due 2026 ¥146,500,000,000 0.440% Senior Notes due 2029 ¥19,000,000,000 0.787% Senior Notes due 2034 ¥59,000,000,000 0.965% Senior Notes due 2039 ¥36,000,000,000 1.108% Senior Notes due 2049 Am I reading that right; they'll pay less than 1% on average annually for those notes? Cigarbutt recently used the word "obscene" related to [almost] similar interest rate conditions here [for me] locally. It is what it is : Obscene. [ : - D ]
Guest longinvestor Posted September 6, 2019 Posted September 6, 2019 Yes - ¥108,500,000,000 0.170% Senior Notes due 2024 ¥61,000,000,000 0.270% Senior Notes due 2026 ¥146,500,000,000 0.440% Senior Notes due 2029 ¥19,000,000,000 0.787% Senior Notes due 2034 ¥59,000,000,000 0.965% Senior Notes due 2039 ¥36,000,000,000 1.108% Senior Notes due 2049 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm Am I reading that right; they'll pay less than 1% on average annually for those notes? More gifts for the successor.
Cigarbutt Posted September 6, 2019 Posted September 6, 2019 Yes - ¥108,500,000,000 0.170% Senior Notes due 2024 ¥61,000,000,000 0.270% Senior Notes due 2026 ¥146,500,000,000 0.440% Senior Notes due 2029 ¥19,000,000,000 0.787% Senior Notes due 2034 ¥59,000,000,000 0.965% Senior Notes due 2039 ¥36,000,000,000 1.108% Senior Notes due 2049 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm Am I reading that right; they'll pay less than 1% on average annually for those notes? Fascinating. 2-sided question: 1-Why is he doing this? 2-Who is buying this and why? 2-I understand that the demand was higher than expected and that helped with size and yield and the offer may target Japanese domestic investors who are very thirsty for yield. It appears that many Japanese banks and other institutions are ready to buy anything with a yield superior (even if barely) to risk-free rates. It appears also that international investors who are exposed to domestic positive investment-grade yields (with the US among the last standing) can synthetically derive a positive return because of the negative hedging costs. https://www.bloomberg.com/news/articles/2019-09-03/japan-s-small-banks-load-up-on-risk-as-they-fight-to-survive?srnd=markets-vp https://www.schroders.com/en/lu/professional-investor/insights/markets/six-reasons-why-it-can-make-sense-to-buy-a-bond-with-a-negative-yield/ 1-About 15 years ago, Mr. Buffett was bearish on the USD and actually built financial positions as a hedge. The debt issue may be to hedge Japanese assets to be but that would be a break from decades of investments. The low rates may simply be too enticing. I assume the funds resulting from the issue will translated into USD and I wonder if Mr. Buffett does not expect extra return from currency movement as this appears to be an unhegded (or naked...) bet.
randomep Posted September 8, 2019 Posted September 8, 2019 Yes - ¥108,500,000,000 0.170% Senior Notes due 2024 ¥61,000,000,000 0.270% Senior Notes due 2026 ¥146,500,000,000 0.440% Senior Notes due 2029 ¥19,000,000,000 0.787% Senior Notes due 2034 ¥59,000,000,000 0.965% Senior Notes due 2039 ¥36,000,000,000 1.108% Senior Notes due 2049 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm Am I reading that right; they'll pay less than 1% on average annually for those notes? Fascinating. 2-sided question: 1-Why is he doing this? 2-Who is buying this and why? 2-I understand that the demand was higher than expected and that helped with size and yield and the offer may target Japanese domestic investors who are very thirsty for yield. It appears that many Japanese banks and other institutions are ready to buy anything with a yield superior (even if barely) to risk-free rates. It appears also that international investors who are exposed to domestic positive investment-grade yields (with the US among the last standing) can synthetically derive a positive return because of the negative hedging costs. https://www.bloomberg.com/news/articles/2019-09-03/japan-s-small-banks-load-up-on-risk-as-they-fight-to-survive?srnd=markets-vp https://www.schroders.com/en/lu/professional-investor/insights/markets/six-reasons-why-it-can-make-sense-to-buy-a-bond-with-a-negative-yield/ 1-About 15 years ago, Mr. Buffett was bearish on the USD and actually built financial positions as a hedge. The debt issue may be to hedge Japanese assets to be but that would be a break from decades of investments. The low rates may simply be too enticing. I assume the funds resulting from the issue will translated into USD and I wonder if Mr. Buffett does not expect extra return from currency movement as this appears to be an unhegded (or naked...) bet. Ya I also wanted to ask, has he ever acquired large foreign currency positions? This is just bizarre, he has no need for Yen, so what will he do with it? Hedge doesn't make a lot of sense either. He is in the business of earning US dollars. A bet? Maybe, but how much profit can he expect? Could the most plausible explanation be that he is hoarding Yen to ultimately buy Japanese companies?
DooDiligence Posted September 8, 2019 Posted September 8, 2019 I Googled "warren buffett buy japanese company" and came up with some interesting old & new articles. IDK enough about SoftBank to say, but this Forbes article speaks about Masa's attempt to buy Swiss RE and it made me think that he prob wouldn't mind being a part of Berkshires universe. https://www.forbes.com/sites/williampesek/2019/03/26/move-over-warren-buffett-for-this-200-billion-man-from-japan/#4fe2e8702107 --- This one wraps a hand full of icons together as a comparison to Masa, https://www.institutionalinvestor.com/article/b14z9v4ccf7q2z/buying-warren-buffett-richard-branson-and-steve-jobs-at-a-discount --- and this one kind of throws shade on Masa's sun, https://www.asiatimes.com/2019/08/article/is-japans-warren-buffett-losing-his-mojo/ --- Then a Goole search of "warren buffett masa son" turned this up, where Masa tried to put the arm on WEB & Malone, https://www.wsj.com/articles/sprint-executives-have-engaged-warren-buffett-about-investment-1500055560 Could WEB have fallen under Masa Sons spell? Not quite sure how I'd feel about that. Living up to my signature.
Cigarbutt Posted September 8, 2019 Posted September 8, 2019 Yes - ¥108,500,000,000 0.170% Senior Notes due 2024 ¥61,000,000,000 0.270% Senior Notes due 2026 ¥146,500,000,000 0.440% Senior Notes due 2029 ¥19,000,000,000 0.787% Senior Notes due 2034 ¥59,000,000,000 0.965% Senior Notes due 2039 ¥36,000,000,000 1.108% Senior Notes due 2049 Berkshire Yen notes offering (~$4 Billion USD) https://www.sec.gov/Archives/edgar/data/1067983/000119312519239290/d779071dfwp.htm Am I reading that right; they'll pay less than 1% on average annually for those notes? Fascinating. 2-sided question: 1-Why is he doing this? 2-Who is buying this and why? ... 1-About 15 years ago, Mr. Buffett was bearish on the USD and actually built financial positions as a hedge. The debt issue may be to hedge Japanese assets to be but that would be a break from decades of investments. The low rates may simply be too enticing. I assume the funds resulting from the issue will translated into USD and I wonder if Mr. Buffett does not expect extra return from currency movement as this appears to be an unhegded (or naked...) bet. Ya I also wanted to ask, has he ever acquired large foreign currency positions? This is just bizarre, he has no need for Yen, so what will he do with it? Hedge doesn't make a lot of sense either. He is in the business of earning US dollars. A bet? Maybe, but how much profit can he expect? Could the most plausible explanation be that he is hoarding Yen to ultimately buy Japanese companies? In 2015, 2016 and 2017, Mr. Buffett ‘built’ what I think is basically an unhedged Euro debt position. I guess the proceeds were physically converted and the result has been a net exposure to the Euro relative value. Results from periodic revaluations or “remeasurements” of the liability (non-cash): 45M loss after-tax in 2015, 264M pre-tax gain in 2016, 990M pre-tax loss in 2017, 366M pre-tax gain in 2018 and as of now about 300M pre-tax gain in 2019. Mr. Buffett seems to intend on building further European debt (Euro and pound). So, the jury is still out. Looking at note 17 of the 2018 annual report, one can see that this periodic revaluation, which was favorable during that year, reduced the carrying value of the debt translated in USD. With a weighted average interest rate of 1.1%, this looks strangely like a modern Danish mortgage. Perhaps not obvious to the creditor but the debtor may hope to continue to pay this sliver of interest and the progressively lower carrying amount in USD may mean, on a net basis, a negative interest rate. (!) I wonder if the same applies for the recent Yen issue. I assume that the proceeds will be physically converted to USD. If the intent is to buy Japanese companies, building a Yen cash position now IMO makes little sense (unless Mr. Buffett finds a specific out of favor or temporarily injured candidate) because 'real' bargains coming to the market in Japan are likely to be related to an environment where the Yen will depreciate, perhaps significantly, especially against the Master currency. In the end, this is all speculation because Mr. Buffett plays his cards close to the vest and probably does not want to be labeled as an opportunist speculator but, in the early 2000’s, he used foreign currency forward contracts to make money on the expected depreciation of the USD against some specific currencies. Later on, he even ‘bet’ on the Brazilian real, an act IMO difficult to reconcile with the official message of fundamental analysis of specific stocks. https://www.forbes.com/forbes/2005/0110/036.html#91c32e3677c0 https://archive.fortune.com/2008/02/29/news/international/buffett_dollar.fortune/index.htm?postversion=2008022916 In the early 2000’s, the message was: the trade deficit is unsustainable and the relative value of the dollar will go down. The message now: the trade deficit is unsustainable and it’s time to load up on foreign currencies on the liability side. The ironic thing is that I think he is likely to make money on the two occasions and then some say this is easy. @DooDiligence Mr. Son is a complex person but I don’t think there would be a symbiosis as Mr. Son has been reported to have said: “I ask investors to trust my instincts. The premonition that something will work bubbles up inside me” and “For startups, cash flow is less important than leadership and a stellar business model. You have to feel it, like in ‘Star Wars’—feel the force.” Can you feel the Force?
SHDL Posted September 8, 2019 Posted September 8, 2019 There are apparently a good number of small, private, niche, but very profitable manufacturers over there that few people seem to know about. My best guess would be that he has his eyes on those. I really hope he doesn’t buy SoftBank or put money into a Vision Fund.
gfp Posted September 8, 2019 Posted September 8, 2019 Warren is not the type to borrow in advance of a hoped-for acquisition in a particular country. If he wants to borrow to fund a portion of any future deal in any country, there is plenty of time between signing and closing a deal to do so. He has commented on several occasions that he evaluates acquisitions on an un-levered basis, since any debt he would employ to juice the potential returns on a prospective deal is really just using the general leverage available to Berkshire and not logical to mentally assign to a particular acquisition. Despite this, he did chose to borrow a portion of the BNSF cash consideration. When looking for an explanation for the Euro, UK and Japanese debt offerings I really do think you only need to look at the interest rates on those bonds and what he perceives as a low risk of large adverse currency losses over the life of the notes. Unless he wants to generally inch up Berkshire's general leverage (which he very well may wish to do - or just keep it more or less constant over time with retained earnings factored in), he may elect to have some of the USD notes mature without being rolled over. None of it is really material to Berkshire at these numbers and I have long said that a big part of his motivation to dabble in these offerings is his desire to raise Berkshire's profile in the business communities in these countries he would be thrilled to be offered more wholly owned businesses in. That and his life-long fascination with negative cost leverage (or capital with a reasonable expectation of near-zero cost). Did he have to offer the SQUARZ? No, it was Warren messing around. Did he have to sell billions in premium of index puts and deal with the mark to market fluctuations? No, it was Warren dabbling and proving a point (that he looks to have proven with a combined ratio of near zero on the billions in premiums). Apple, Proctor & Gamble and others borrowed in Yen recently and nobody speculates that they are imminently announcing a deal for a Japanese acquisition. Investment Bankers are out there actively pitching this idea and the cost of borrowing is the primary attraction. BRK just put out 5 year paper at 17 basis points before the tax deduction. 10 year paper at 44 basis points. Interesting times
Spekulatius Posted September 8, 2019 Posted September 8, 2019 I don’t think he raises Yen denominated debt because he has a deal in mind for a Japanese business. I think it is just one way for him to raise very cheap debt. He could even hedge out the currency risk, if he wanted to, but he doesn’t care about Market to market fluctuations, so he probably won’t. I don’t think the Yen is currently very undervalued relative to the USD either. Companies like PG have some business in Japan somit makes sense for them to raise some Yen denominated debt as a Natural currency hedge, somit speak. I don’t think this is the case with BRK though.
roberts1001 Posted September 8, 2019 Posted September 8, 2019 Could someone please help me understand the Japanese notes? I have a couple of questions: 1. Am I correct that if Buffett wishes to convert the $4 billion in yen that he has borrowed into US dollars, he can buy USD on the foreign exchange market while selling yen? If so, while the contract is open doesn't he earn about 2% in interest on the USD bought and pay about negative 0.1% interest on the yen sold? Or do I have that backwards? 2. Why issue notes in Japan instead of Switzerland where interest rates are lower? Thank you for your help.
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