John Hjorth Posted August 29, 2020 Posted August 29, 2020 Wirtschafts Woche [August 27th 2020] : Warren Buffett – die Bilanz des Gurus. Instead of bugging Spekulatius with a question on here about what "kleinanleger" translates to in English, I looked it up myself, and got a bit surprised, likely because I thought it meant "wimp" or something like that! [ : - D]
wisowis Posted August 30, 2020 Posted August 30, 2020 Warren Buffett’s Berkshire Hathaway buys stakes in Japan’s five leading trading companies https://www.cnbc.com/2020/08/30/warren-buffetts-berkshire-hathaway-buys-stakes-in-japans-five-leading-trading-companies.html They say 90 is the new 70, and in Warren Buffett’s case it may be true. The chairman and CEO of Berkshire Hathaway announced today, on his 90th birthday, that his company has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies. The companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. Berkshire said it acquired the holdings over a roughly 12-month period through regular purchases on the Tokyo Stock Exchange. Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion. The Japanese trading companies — known as “sogo shosha” — are conglomerates that import everything from energy and metals to food and textiles into resource-scarce Japan. They also provide services to manufacturers. The trading houses have helped grow the Japanese economy and contributed to the globalization of business there. But as they have extended their footprint overseas, they’ve also become more vulnerable to global predicaments, like the financial crisis from a decade ago. The trading houses also face increasing competition from venture capitalists and private equity funds. For Buffett, the move is no quick trading play. Berkshire says it intends to hold the investments for the long term, and that it may increase its holdings in any of the companies up to a maximum of 9.9%, depending on price. Berkshire also pledged to make no purchases beyond a 9.9% stake in any of the companies unless given approval by the trading companies’ boards of directors. In describing its intentions for the investment in the trading houses, Berkshire pointed to its history of long-term, passive holdings in companies like Coca-Cola Co., American Express Co., and Moody’s Corp., which each span multiple decades. “I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” said Mr. Buffett, adding that the trading houses have many joint ventures around the globe. “I hope that in the future there may be opportunities of mutual benefit,” he said. Berkshire also said that despite its large, yen-denominated bet, it would have little exposure to currency fluctuations because it holds 625.5 billion of yen-denominated bonds ($5.93 billion) that will mature at various dates from 2023 through 2060. The official news release: https://www.berkshirehathaway.com/news/aug3020.pdf
ValueMaven Posted August 31, 2020 Posted August 31, 2020 Warren Buffett’s Berkshire Hathaway has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies. Berkshire acquired the holdings in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. over a roughly 12-month period through regular purchases on the Tokyo Stock Exchange. Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion. Berkshire says it intends to hold the investments for the long term, and that it may increase its holdings in any of the companies up to a maximum of 9.9%, depending on price. https://www.cnbc.com/2020/08/30/warren-buffetts-berkshire-hathaway-buys-stakes-in-japans-five-leading-trading-companies.html Thats a $30B investment ... whoa...
changegonnacome Posted August 31, 2020 Posted August 31, 2020 Nice - he's bought a toll road on the Japanese economy.....very Buffett indeed but need to look at the valuations he's paid
ValueMaven Posted August 31, 2020 Posted August 31, 2020 toll roll ? how do you figure? I thought these Japanese trading houses had questionable pasts/weak ROEs ?? ie: doing dumb things at dumb times (writing puts on the nikkei, in late 80s, buying US subprime in 06/07 etc) - but who I am to question the great one. Also, imagine what Berk cash pile would be without this $30B investment ... no wonder he has let cash build ....
JPerez Posted August 31, 2020 Posted August 31, 2020 It is actually just 6B in total adding the stakes in the 5 companies. It is not a significant investment by any extend of the imagination. I haven't look at these companies yet, but there is no need to panic ;)
adesigar Posted August 31, 2020 Posted August 31, 2020 Right it seems to be 6.5 Billion total and not 6.5 each. Just hoping it turns out to be like AAPL and not like the airlines.
thepupil Posted August 31, 2020 Posted August 31, 2020 In my opinion, this is an advertisement to corporate Japan and to these companies that Berkshire is a friendly, long term oriented shareholder that is ready to make a commitment to Japan. This is not a $6.5 Billion investment in some cheap companies to double and move on. That’s how I read the release at least. I hope that in the future there may be opportunities of mutual benefit
ValueMaven Posted August 31, 2020 Posted August 31, 2020 yup...my bad. Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion.
changegonnacome Posted August 31, 2020 Posted August 31, 2020 Not unreasonable take: https://twitter.com/shaidardashti/status/1300267295655120897?s=21
gokou3 Posted August 31, 2020 Posted August 31, 2020 The total Japanese investment is $6B, not $30B.. see last paragraph of CNBC article stating they have neutral yen exposure due to their $6B yen bond..
John Hjorth Posted August 31, 2020 Posted August 31, 2020 Poor Dynamic! [ : - ) ], -It becomes harder and harder to keep the Berkshire portfolio updated. At least it keeps Dynamic away from trading!
Xerxes Posted August 31, 2020 Posted August 31, 2020 At least this Japanese experiment provides a much needed ammunition and material to the business podcasts that I listened to in these last waning days of august.
LearningMachine Posted August 31, 2020 Posted August 31, 2020 Makes sense why Berkshire started issuing yen-denominated bonds at ultra-low coupon rates as low as 0.17% in 2019 for the first time in its history. Starting April 2019, he borrowed 625 Billion Yens at low fixed rates with long maturities and used the cash to buy Yen-denominated securities that probably have a much higher earning yield than the ultra-low interest rate he has to pay. Pure interest rate arbitrage without spending Berkshire cash and without taking on currency risk.
LearningMachine Posted August 31, 2020 Posted August 31, 2020 Thanks ShaiDardashti for sharing the 0% coupon bond filing: https://www.sec.gov/Archives/edgar/data/1067983/000119312520064645/d853116d424b5.htm. Ingenious! By the way, 625.5 Billion Yens translate to $5.911 Billion USD at today's currency rate for me.
gfp Posted August 31, 2020 Posted August 31, 2020 And remember, Berkshire has 625.5 Billion Yen in outstanding Yen-denominated bonds (more than the $4B USD being discussed here)
NoCalledStrikes Posted August 31, 2020 Posted August 31, 2020 Is it me or is today's press release, the first time Berkshire Hathaway has referred to itself "as the largest company in the U.S. as measured by shareholders’ equity." I get that this PR was written for a Japanese audience who may not know that, but it sounds a bit like a humble brag to me:) Berkshire Hathaway, the largest company in the U.S. as measured by shareholders’ equity, has a long history of substantial, passive holdings in successful businesses. For instance, Berkshire Hathaway has held major stakes in Coca-Cola for 32 years, American Express for 29 years and Moody’s for 20 years. https://berkshirehathaway.com/news/aug3020.pdf
LearningMachine Posted August 31, 2020 Posted August 31, 2020 Is it me or is today's press release, the first time Berkshire Hathaway has referred to itself "as the largest company in the U.S. as measured by shareholders’ equity." I noticed that too. It almost felt like it was trying to call attention to it trading at lower Price-to-Book than the companies with higher market cap currently, i.e., MSFT, AAPL, AMZN, GOOGL. That is almost like telling folks to buy BRK stock instead of MSFT, AAPL, AMZN OR GOOGL, increasing BRK's price, making it harder to do buybacks. Wonder why it was worded that way because I am sure Buffett knew local U.S. investors would also be reading into the Press Release on Berkshire website. Maybe it was always his dream to make BRK the highest valued company in the U.S. before he departs, and making that statement makes him feel he has reached that dream, and he wanted to call that out before anything happens to his health. Hope his health is ok. Maybe he started thinking more about his mortality risk as a result of turning 90.
sleepydragon Posted August 31, 2020 Posted August 31, 2020 Is it me or is today's press release, the first time Berkshire Hathaway has referred to itself "as the largest company in the U.S. as measured by shareholders’ equity." I get that this PR was written for a Japanese audience who may not know that, but it sounds a bit like a humble brag to me:) Berkshire Hathaway, the largest company in the U.S. as measured by shareholders’ equity, has a long history of substantial, passive holdings in successful businesses. For instance, Berkshire Hathaway has held major stakes in Coca-Cola for 32 years, American Express for 29 years and Moody’s for 20 years. https://berkshirehathaway.com/news/aug3020.pdf Likely because it’s his 90 years birthday?
TREVNI Posted August 31, 2020 Posted August 31, 2020 $6.25B of stock, bought with ~$4B of Yen-denominated debt. Put another way, that's an average yield of 4.99% leveraged up 2.7x for practically free. ~11% yield on equity today plus any incremental growth. Not a bad deal! Kind of rhymes with preferred + warrants, I think. source: I don't believe the two are connected. Berkshire has historically managed the two sides of its balance sheet completely separately. They thought the stock was a good buy at current prices and the debt attractive at its cost. Connecting them only makes for a good narrative.
kab60 Posted August 31, 2020 Posted August 31, 2020 Is it me or is today's press release, the first time Berkshire Hathaway has referred to itself "as the largest company in the U.S. as measured by shareholders’ equity." I get that this PR was written for a Japanese audience who may not know that, but it sounds a bit like a humble brag to me:) Berkshire Hathaway, the largest company in the U.S. as measured by shareholders’ equity, has a long history of substantial, passive holdings in successful businesses. For instance, Berkshire Hathaway has held major stakes in Coca-Cola for 32 years, American Express for 29 years and Moody’s for 20 years. https://berkshirehathaway.com/news/aug3020.pdf Japanese Companies are wayyy overcapitalized, I suppose he's making sure they understand Berkshire is as well to increase the chances of doing large deals together. Or he reached a personal Milestone and wanted to brag.
gfp Posted August 31, 2020 Posted August 31, 2020 Yeah, the whole press release was different from a standard BRK press release. Basically written for the Japanese business reader in mind. To disarm them and also remind them BRK is open for partnerships and co-investment opportunities. Another first - The contact at the bottom was not Marc Hamburg for a change. The contact is a new one: " Investor Relations [email protected] 402-978-5413 "
sleepydragon Posted August 31, 2020 Posted August 31, 2020 Yeah, the whole press release was different from a standard BRK press release. Basically written for the Japanese business reader in mind. To disarm them and also remind them BRK is open for partnerships and co-investment opportunities. Another first - The contact at the bottom was not Marc Hamburg for a change. The contact is a new one: " Investor Relations [email protected] 402-978-5413 " Maybe it’s written by Brk’s Japanese broker
sleepydragon Posted August 31, 2020 Posted August 31, 2020 Anyone know what this site is: http://berkshirehathaway340.weebly.com/
gfp Posted August 31, 2020 Posted August 31, 2020 Anyone know what this site is: http://berkshirehathaway340.weebly.com/ Looks like a student project from 2013 to make a fake or “improved” website for Berkshire Hathaway.
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