Buffett/Berkshire - general news

[StubbleJumper]

Yes, the volume of A trades over recent weeks has 5 or 6 times what it usually is.  I had assumed that somebody who bought them in 1980s must have died and the estate was finally settled. If you get a situation where a long-term holder dies and the estate is split up amongst 4 or 5 children, there is almost always a considerable portion of the estate that ends up getting converted to cash because the children have immediate plans for their windfall.

 

 

SJ

[thepupil]

yea, this is pretty big, daily average value traded is $100mm over the past 5 years, $350mm in 2021, $520mm since February 1, and $910mm since March 1st, with what seems like a record $1.25 billion yesterday.

[MarioP]

Yes, the volume of A trades over recent weeks has 5 or 6 times what it usually is.  I had assumed that somebody who bought them in 1980s must have died and the estate was finally settled. If you get a situation where a long-term holder dies and the estate is split up amongst 4 or 5 children, there is almost always a considerable portion of the estate that ends up getting converted to cash because the children have immediate plans for their windfall.

 

 

SJ

 

What is the tax law on estate in USA? In Canada if the shares are for the children they have to pay the tax that would be calculated on a sale so you have to sell around 25% just to pay the tax for the kind of gain a long term holder have on BRKA.

 

It is interesting that the record volume happen with upticks. High probability that Berkshire is buying a lots

[sleepydragon]

Bank of New York has unusual amount of A shares on their 13F filing. I wonder why?

It could be some client’s?

 

BNY is the largest custodial bank in the world.  They have something like $40 TRILLION in other people's assets in their custody.  The assets themselves would belong to the customers of brokerage houses, funds, institutions, endowments, companies like First Manhattan, etc..

 

On the A-share volume, I would assume that record high share prices and still-low long term capital gains tax rates have convinced more long term holders (who would primarily hold the original stock) to call the phone number listed in the Annual Report.  Berkshire's request was to call either before or after the market was open and we have seen large blocks of A shares cross the 'tape' at the open each day.  Consistent with negotiated trades that were worked out before or after market hours.  Then that activity draws in more activity as prices rise I suppose

 

Sorry, I mean First Manhattan bank. 25% of their 13F is Brka ($5b)

[cubsfan]

^First Manhattan - home of Sandy Gottesman, First Manhattan founder and  longtime Buffett friend and BRK board of director.

Sandy owns $3-4B by himself!

 

No surprise there.

[gfp]

Right, which is why I used them as an example.  First Manhattan uses Pershing for custody, which is a subsidiary of BNY.  An example of a big block of A-shares and why it would show up at BNY.  Fidelity has its own custodian as far as I know, so BNY wouldn't show the contrafund A shares, but that is another big chunk.

 

Interesting also that with A shares at $400k currently, B shares are at 263.76 instead of $266, which would correspond to $400k on the A's.  The spread seems to have widened this year.

 

By the way, Sandy's 10,000 A-shares (which have been distributed to trusts for his heirs and foundations by now) would be worth $4 Billion today

[bookie71]

Don't forget that the Gates Foundation (as a private foundation) is required to spend 5% of it's assets every year.

[StubbleJumper]

Yes, the volume of A trades over recent weeks has 5 or 6 times what it usually is.  I had assumed that somebody who bought them in 1980s must have died and the estate was finally settled. If you get a situation where a long-term holder dies and the estate is split up amongst 4 or 5 children, there is almost always a considerable portion of the estate that ends up getting converted to cash because the children have immediate plans for their windfall.

 

 

SJ

 

What is the tax law on estate in USA? In Canada if the shares are for the children they have to pay the tax that would be calculated on a sale so you have to sell around 25% just to pay the tax for the kind of gain a long term holder have on BRKA.

 

It is interesting that the record volume happen with upticks. High probability that Berkshire is buying a lots

 

 

I have no idea what kind of tax arrangement that a large US domiciled holder would face.  My thinking was simply reflecting my bias that often one generation accumulates a large pile of wealth and then their good-for-nothing children anxiously await the death of their parents so they can either "manage the wealth properly instead of letting it languish in BRK" or "use the wealth (spend) for the benefit of the family rather than living miserly."  Both of those behaviours result in the sale of assets when the estate is settled.  Not every kid is a loser, but if you have 4 or 5 of them, it's likely that at least a couple of them will be spendthrifts or married to a spendthrift.

 

 

SJ

[SouthernYankee]

"Both of those behaviours result in the sale of assets when the estate is settled.  Not every kid is a loser, but if you have 4 or 5 of them, it's likely that at least a couple of them will be spendthrifts or married to a spendthrift."

 

-For those of us who are not millionaires or billionaires, and who own businesses that provide a service to those who can afford that service, the more spendthrifts the merrier!

 

 

[longterminvestor]

Understood on Gates Foundation being gifted B shares. I knew that. But to circle back, wouldn’t Gates Foundation, under mandate to dispose of shares in 12 years, naturally give BRK first right of refusal on the shares gifted by Mr. Buffett ? 

 

My point is 30% of the entire firm will be sold 12 years postmortem. That’s a certainty. So we already know the volume will be there - just hoping the price is right. And wouldn’t Mr. Buffett anticipate this and provide a rough plan to execute. I always have thought about this - interesting. Hope he loves to 100!

[John Hjorth]

Understood on Gates Foundation being gifted B shares. I knew that. But to circle back, wouldn’t Gates Foundation, under mandate to dispose of shares in 12 years, naturally give BRK first right of refusal on the shares gifted by Mr. Buffett ? 

 

My point is 30% of the entire firm will be sold 12 years postmortem. That’s a certainty. So we already know the volume will be there - just hoping the price is right. And wouldn’t Mr. Buffett anticipate this and provide a rough plan to execute. I always have thought about this - interesting. Hope he loves to 100!

 

It's an interesting discussion, thank you to all contributers!,

 

The Bill & Melinda Gates Foundation has the option to call Berkshire HQ at the phone number in the stated time frame [, ref. one of gfp's latest posts in this topic], or sell the B shares in the market.

 

It's not that complicated.

[boilermaker75]

Understood on Gates Foundation being gifted B shares. I knew that. But to circle back, wouldn’t Gates Foundation, under mandate to dispose of shares in 12 years, naturally give BRK first right of refusal on the shares gifted by Mr. Buffett ? 

 

My point is 30% of the entire firm will be sold 12 years postmortem. That’s a certainty. So we already know the volume will be there - just hoping the price is right. And wouldn’t Mr. Buffett anticipate this and provide a rough plan to execute. I always have thought about this - interesting. Hope he loves to 100!

 

Loving to 100 sounds great. And what a way to go!

[ValueMaven]

4,200 A shares traded today.  Something is up...

[sleepydragon]

And A share up more than B shares

 

[sleepydragon]

The A share volumes are spiking in March.

I think it can’t be buffett cuz he will only do x% of the daily volume.

And A is trading at a premium than B.

So it seems someone is buying, perhaps trying to gain controls?

 

 

[John Hjorth]

The A share volumes are spiking in March.

I think it can’t be buffett cuz he will only do x% of the daily volume.

And A is trading at a premium than B.

So it seems someone is buying, perhaps trying to gain controls?

 

I wonder if sleepydragon's basis for reasoning is correct here? -I mean does selling BRK.A shares [or BRK.B shares for that matter] calling Mr. Millard and doing a privately negotiated deal count as a part of daily volume for the date of the deal?, ref. Berkshire 2019 Annual report, p. 14 :

 

... Shareholders having at least $20 million in value of A or B shares and an inclination to sell shares to Berkshire may wish to have their broker contact Berkshire’s Mark Millard at 402-346-1400. We request that you phone Mark between 8:00-8:30 a.m. or 3:00-3:30 p.m. Central Time, calling only if you are ready to sell. ...

[DooDiligence]

I love how reading a BRK proxy only takes 5 minutes, because there's no long and drawn out explanation / obfuscation of management compensation.

 

Also: Chris Bloomstran on Buffett and Berkshire $BRK.B with Tobias on The Acquirers Podcast

 

 

---

 

edit: OK, so I posted that link about 5 minutes into watching. Basically, if you're having a bad day & need a pick me up, watch this. Bloomstran spends the majority of the interview outlining BRKs' recent and historical capital allocation, most of which has been discussed at length here. I'll go out on a limb and say he's a permabull.

 

Notably, he makes a quick statement about being a deflationist at minute 24:30, and then proceeds to talk a lot about hyper-inflation  :o

 

He pivots to macro around 30:00 and talks about public & private debt, his ideas on the results of federal spending policies, and the effects of digital federal currency.

 

At about 40:00 he says "circling back to Berkshire. The last thing you'd want to own in a hyper inflation is cash or bonds. You want to own long duration, durable assets", and he starts relating his comments about macro back to BRK.

 

Carlisle steered the conversation to world markets and Japan at 47:00

[wabuffo]

BRK Proxy Statement provides updated share count of A and B-shares as at March 3rd. 

https://www.sec.gov/Archives/edgar/data/0001067983/000119312521080418/d938053ddef14a.htm

 

In 15 days since the 10-K on Feb. 16th, Buffett has repurchased a further 839 A-shares and 1,274,254 B-shares.

 

FWIW,

 

wabuffo

[gfp]

So it would seem that Warren cut back his purchase volume significantly in response to higher prices.  Not surprising but good data point on what price level he cools at.

[wabuffo]

So it would seem that Warren cut back his purchase volume significantly in response to higher prices.  Not surprising but good data point on what price level he cools at.

 

Yes - his buying cooled over a period where the B's were trading in the low $240s. 

 

BRK's is getting hit today by a one-two punch:

- market is triangulating this new buyback info and processing Buffett's buy-price limit.

- increased talk about the new administration's tax plans which include raising the Federal corporate tax rate from 21% to 28% (this impacts BRK both on operating earnings as well as an increase in its capital gains deferred tax liabilities).

 

wabuffo

[cubsfan]

^ Brilliant. Particularly point 2.

[DooDiligence]

So it would seem that Warren cut back his purchase volume significantly in response to higher prices.  Not surprising but good data point on what price level he cools at.

 

Yes - his buying cooled over a period where the B's were trading in the low $240s. 

 

BRK's is getting hit today by a one-two punch:

- market is triangulating this new buyback info and processing Buffett's buy-price limit.

- increased talk about the new administration's tax plans which include raising the Federal corporate tax rate from 21% to 28% (this impacts BRK both on operating earnings as well as an increase in its capital gains deferred tax liabilities).

 

wabuffo

 

Another sweet buying opportunity coming, for WEB & for us?!?

[Thelilyinvestor]

Hi everyone,

 

Does any one have a rough idea of total share buybacks of WEB in the entire 1st quarter?

 

Thank you very much in advance.

[aceskc]

      Mar 3rd         26-Feb           31-Dec         Feb 26 to Mar 3   Jan1 to Feb 26    Q1 TD

Class A 639747         640,586           643,931         839                           3,345                 4,184

Class B 1,335,074,355 1,336,348,609 1,340,043,471 1,274,254           3,694,862         4,969,116

Class B Eq 2,294,694,855 2,297,227,609 2,305,939,971 2,532,754           8,712,362         11,245,116

 

thats roughly ~2.5B-2.7B through March 3, assuming 230-240 average Class B eq. buying price

 

 

[Lemsip]

Roughly $5b quarter to March 3 reducing share count by a further 0.92% since Dec 31.