Buffett/Berkshire - general news

[fareastwarriors]

https://www.cnbc.com/2020/09/08/berkshire-hathaway-salesforce-agree-to-buy-into-snowflake-ipo-.html

 

Snowflake IPO gets vote of confidence as Berkshire, Salesforce agree to buy shares

 

 

Snowflake bumps expected IPO price by about 30%, could debut at more than $30 billion valuation

 

Snowflake raised its estimated IPO price by around 30% in a new S-1 filing Monday.

 

The company now expects to go public at a share price between $100 and $110, according to the filing. It previously said the shares would likely debut between $75 and $85.

 

Last week, Snowflake revealed in a filing that Berkshire Hathaway and Salesforce each agreed to buy $250 million of stock at the IPO price in a concurrent private placement.

 

 

https://www.cnbc.com/2020/09/14/snowflake-bumps-expected-ipo-price-value-could-top-30-billion.html

[Munger_Disciple]

I wonder what "margin of safety" Todd sees in Snowflake. I don't like Combs/Berkshire chasing IPO pricing on this one. Seems like a radical departure from the past.

[John Hjorth]

Pretty much chaos at Berkshire HQ, -I wonder what the talks are about at those [was it] tuesday lunches [with the CIOs]?

[aws]

Great to hear the deal I was already skeptical about is now on track to cost 30% more for the same shares.  Although at least it's a relatively tiny position for Berkshire.  A year from now I'd expect to more likely be disappointed that Berkshire didn't sell any Apple near these recent tops than that they paid $105 a share for this.

[Spekulatius]

Snowflakes ticker $SNOW is a slang word for cocaine. I am sure momentum investors feel the same way.

[sleepydragon]

If buying SNOW a profitable trade, why complaining?

I would bet this is a short term trade, properly hedged.

The rational of this trade has more to do market structure and supply and demand than value investing.

 

 

[bizaro86]

If buying SNOW a profitable trade, why complaining?

I would bet this is a short term trade, properly hedged.

The rational of this trade has more to do market structure and supply and demand than value investing.

 

I am extremely (honestly!) curious how one would hedge an IPO allocation of a stock?

[sleepydragon]

If buying SNOW a profitable trade, why complaining?

I would bet this is a short term trade, properly hedged.

The rational of this trade has more to do market structure and supply and demand than value investing.

 

I am extremely (honestly!) curious how one would hedge an IPO allocation of a stock?

 

How about shorting a basket of public companies in the same industry but are more over valued? I.e CRM?

 

Or maybe they just have some insights that you don’t have? Maybe they have used SNOW’s product and found it’s extremely useful and have huge scalability? What insights you have that others don’t have so you have the confidence to discredit their investment decision?

 

 

[wescobrk]

This isn't a dumb move by Todd and/or Tad, SNOW raised the IPO price another 30%.

They will probably make a double on this within the year. A lot better than they have done the last decade. Per Warren, one underperformed the S&P since they started and the other is roughly even with the S&P.

[Spekulatius]

This isn't a dumb move by Todd and/or Tad, SNOW raised the IPO price another 30%.

They will probably make a double on this within the year. A lot better than they have done the last decade. Per Warren, one underperformed the S&P since they started and the other is roughly even with the S&P.

 

The raised IPO price just means Todd pays 30% more. I am sure it would be a great stock to flip, but they have to hold it for 12 month, based on the filings. I don’t think there is a way to hedge this either.

 

Well, I don’t worry too much about my son wasting his allowance either, at least not yet.

 

It might work out just fine, after all it is just as difficult to time the top than to time the bottom.

[wescobrk]

I don't know if it was Ted or the other chap but I bet they wish they didn't sell Amazon earlier in the year. Not sure how they missed that one. They could have put several hundred million of their cash to work.

I know they have helped Buffett in a lot of ways outside of portfolio management but they haven't exactly hit the ball out of the mark with the money they have managed over the last several years.

 

Berkshire is only 4000 Amazon shares off their all time high share count.  I don't think it was a meaningful sale of Amazon shares and it may not have been a sale at all with various subsidiary divestitures over the last year making it look like Berkshire was selling shares (DVA for instance) when they were not.

 

Thanks for pointing out the small number. I guess I was frustrated they didn't buy any after a huge sell off.

[wescobrk]

I don't know if it was Ted or the other chap but I bet they wish they didn't sell Amazon earlier in the year. Not sure how they missed that one. They could have put several hundred million of their cash to work.

I know they have helped Buffett in a lot of ways outside of portfolio management but they haven't exactly hit the ball out of the mark with the money they have managed over the last several years.

 

Berkshire is only 4000 Amazon shares off their all time high share count.  I don't think it was a meaningful sale of Amazon shares and it may not have been a sale at all with various subsidiary divestitures over the last year making it look like Berkshire was selling shares (DVA for instance) when they were not.

 

Thanks for pointing out the small number. I guess I was frustrated they didn't buy any after a huge sell off.

 

That's true. I guess we won't ever know until the sad day Warren passes away since they have never spoken to Berkshire shareholders.

[bizaro86]

If buying SNOW a profitable trade, why complaining?

I would bet this is a short term trade, properly hedged.

The rational of this trade has more to do market structure and supply and demand than value investing.

 

I am extremely (honestly!) curious how one would hedge an IPO allocation of a stock?

 

How about shorting a basket of public companies in the same industry but are more over valued? I.e CRM?

 

Or maybe they just have some insights that you don’t have? Maybe they have used SNOW’s product and found it’s extremely useful and have huge scalability? What insights you have that others don’t have so you have the confidence to discredit their investment decision?

 

You said you thought it was a short term hedged trade. I like learning new things, so wanted to know how you thought they might have done that.

 

I don't have any insights of any kind, and have no opinion on whether this is a good idea. I'm a bit concerned it is outside their circle of competence, but cloud databases are so far outside my circle of competence I have no idea what valuation is appropriate here. I certainly wasn't trying to discredit their decision, and that's not what the words that I wrote say.

 

Edited to add: I really like market structure/capital structure arbs, and do them often.

[Gregmal]

Personally I think its crazy the amount of focus being given to this when you look at the size of the investment vs Berkshire's total capital...

 

Additionally, whats wrong with doing this? I do similar things with the capital I have at my disposal...granted, not a few hundred million but still, speculating on small amounts is perfectly fine. Heres a newsflash for folks...over the past decade, investments like SNOW have worked wonderfully, whereas a good many of the ones put on by Berkshire under the "old formula" and many value investors, have not. Are people averse to making money? I would wager a good amount that this trade makes BRK some money.

[fareastwarriors]

https://www.businesswire.com/news/home/20200914005873/en/Katie-Farmer-Named-CEO-of-BNSF

 

 

BNSF names Kathryn Farmer as its next CEO

 

[fareastwarriors]

 

 

Snowflake is selling shares at $120 in its IPO, initially valuing the company at $33.3 billion.

 

The company raised its price range on Monday to between $100 and $110.

 

Snowflake is poised to be the biggest IPO in a heavy week for tech offerings.

 

 

https://www.cnbc.com/2020/09/15/snowflake-prices-ipo-above-increased-range-implying-initi.html

 

[Gregmal]

God damn it. The obvious was obvious. One can talk about the lockup, but a 100% head start aint bad. Perhaps now that Berkshire is doing it, people will dare to think(and maybe even venture) a little outside of their comfort zone.

[aws]

I'm more inclined toward thinking we are somewhere in the 1999-2000 timeline with these tech IPOs.  What is it now with this pop, like 150x revenue?  It's working now but how many companies can trade at such insane valuations?  Are they all going to get 100% revenue growth a year?

[wescobrk]

Personally I think its crazy the amount of focus being given to this when you look at the size of the investment vs Berkshire's total capital...

 

Additionally, whats wrong with doing this? I do similar things with the capital I have at my disposal...granted, not a few hundred million but still, speculating on small amounts is perfectly fine. Heres a newsflash for folks...over the past decade, investments like SNOW have worked wonderfully, whereas a good many of the ones put on by Berkshire under the "old formula" and many value investors, have not. Are people averse to making money? I would wager a good amount that this trade makes BRK some money.

 

Well said.

I type on my phone and don't spend more than a few seconds typing my messages as I'm not trying to impress anyone on the board, it is more of just sharing my thoughts and what I'm doing and being part of discussing companies.

if it works it works. Yes, I'm very well are of process and outcome but the Todd and Ted doubled their investment on this.

 

Sometimes this board comes across as too rigid in thinking but there are some very sharp people on this board as well and the reason why I still check it.

I miss Ericopoly's posts. He had some great ones. I guess he isn't on much anymore. His BAC option posts were very good.

[Gregmal]

I'm more inclined toward thinking we are somewhere in the 1999-2000 timeline with these tech IPOs.  What is it now with this pop, like 150x revenue?  It's working now but how many companies can trade at such insane valuations?  Are they all going to get 100% revenue growth a year?

 

There is often a misperception that you are either a participant in the bubble and bound for doom, or you sit on the sidelines and wait to get rich after it implodes. The truth is there is very much in between, and there are many ways to dance and enjoy the party without blowing yourself up. There is also, often, quite a bit of time spent waiting/doing nothing while the party goes on. Why waste that time? As a BRK shareholder, moves like this one and RH, make my happy. If they were doing this with billions....yea that would change the profile for me. But taking shots on high probability trades is a good thing. Simply putting the Berkshire name behind something, has historically shown to be a valuation booster. I'd gander that is part of the reason this IPO is so hot. Monetize that more often!

[John Hjorth]

I like to read your stuff, Greg.

 

Interesting times. -Please keep your posts coming.

[Spekulatius]

I'm more inclined toward thinking we are somewhere in the 1999-2000 timeline with these tech IPOs.  What is it now with this pop, like 150x revenue?  It's working now but how many companies can trade at such insane valuations?  Are they all going to get 100% revenue growth a year?

 

There is often a misperception that you are either a participant in the bubble and bound for doom, or you sit on the sidelines and wait to get rich after it implodes. The truth is there is very much in between, and there are many ways to dance and enjoy the party without blowing yourself up. There is also, often, quite a bit of time spent waiting/doing nothing while the party goes on. Why waste that time? As a BRK shareholder, moves like this one and RH, make my happy. If they were doing this with billions....yea that would change the profile for me. But taking shots on high probability trades is a good thing. Simply putting the Berkshire name behind something, has historically shown to be a valuation booster. I'd gander that is part of the reason this IPO is so hot. Monetize that more often!

 

Yes, they can definitely monetize the Berkshire brand. This looks like a win  and I think they can do even better participating in late round venture capital.

 

I also see the opportunity for them to do creative deals and use Berkshires size to their advantage. If a tech startup has a promising product that is useful for Berkshire’s operating subs, make a deal and give them a contract (and hence immediate validation) and take a stake in them at the same time.

 

Could be a win win and something other venture investors can’t do. In the end, this is a big enterprise that needs to evolve, or become a dinausaur...

[mattee2264]

 

Yeah it is good that Berkshire seems to be adapting. Warren has been whining for years about how cheap money and competition from PE has made it very difficult to find any good acquisitions that move the needle for Berkshire and over the last decade lack of exposure to Big Tech has hurt investment returns.

Todd and Ted are clearly very smart and tech savvy so if they are able to use Berkshire's deep pockets and reputation to get in on some of the better tech IPOS then why not especially if they are not risking a huge amount of money?

[fareastwarriors]

 

Occidental to Pay Buffett Dividend in Cash, Signaling Confidence

 

 

Shale explorer was making payments to billionaire in shares

Debt-laden Occidental hit harder than many by 2020 oil crash

 

https://www.bloomberg.com/news/articles/2020-09-21/occidental-to-pay-buffett-dividend-in-cash-signaling-confidence

[gfp]

Small acquisition for IMC Group (Iscar) -

https://www.ctemag.com/news/people-companies/imco-carbide-tool-joins-imc-group

 

Also Ted tendered 2 million of Berkshire's DVA shares into DVA's $88 tender offer last week. (and 200k shares of his personal DVA)

 

https://www.sec.gov/Archives/edgar/data/927066/000120919120051292/xslF345X03/doc4.xml