Buffett/Berkshire - general news

[sholland]

It took me about 15 minutes to find the Bernie Sanders letter and the Warren Buffett response letter.  Links below:

 

https://www.sanders.senate.gov/wp-content/uploads/Sanders-Letter-to-Buffett.pdf

 

https://www.sanders.senate.gov/wp-content/uploads/Letter.pdf

[gfp]

Thanks for posting the originals.  Pretty hilarious to hear Bernie point out to Warren that high inflation is what makes the wage increases inadequate.  I'm sure Warren got a chuckle out of that line of argument considering the source.

[ValueMaven]

How about the typo in the Sanders letter —- Precision Castports —- I had to do a double take 

[Spekulatius]

7 minutes ago, ValueMaven said:

How about the typo in the Sanders letter —- Precision Castports —- I had to do a double take 

Buffett should have written back that he does not own Precision Castports.

[alpha]

BRK is issuing more Yen debt - 

 

https://www.barrons.com/articles/berkshire-hathaways-yen-bond-sale-indicates-warren-buffett-is-buying-japanese-stocks-51641400198

[Mephistopheles]

On 12/30/2021 at 4:52 PM, Spekulatius said:

Buffett should have written back that he does not own Precision Castports.

I like that nice Rockefeller reference

[gfp]

NICO partnership / investment / quota share with Ariel Re -

https://www.reinsurancene.ws/berkshire-hathaways-nico-invests-in-ariel-re/

[gfp]

R.I.P. Lou Simpson

 

https://www.chicagotribune.com/news/obituaries/ct-louis-simpson-obituary-20220110-uc3znwwnznabnjc6ujfu534sty-story.html

[longlake95]

R.I.P Lou. What a legend.

[gfp]

HomeServices ends 2021 with five simultaneous acquisitions -

 

https://finance.yahoo.com/news/homeservices-america-closes-2021-five-170500077.html

[woodstove]

That is impressive.  $200B in residential real estate sales, 400k home sale transactions (so average $500k selling price per transaction), 46k sales associates.  How does that compare with the total US market?  What percent of real estate sales is typical revenue and typical profit, to Home Services?  What are the synergies and possibilities?  The article spoke of "delivering the highest level of customer service while removing any stress and worry from the moving process."  Seems like a good focus.

[DooDiligence]

Why speculate on Zillow when you can own this and sleep well?

[ValueMaven]

They need to move this business out of BHE and into MSR!!

[Dynamic]

4 minutes ago, ValueMaven said:

They need to move this business out of BHE and into MSR!!

While there's still a minority interest in BH Energy I think it will remain there as part of that 'Grove'.

 

The BYD Co HK:1211 stock is technically part of BHE too, so only about 91% owned by Berkshire Hathaway shareholders.

 

I don't think the difference is particularly material in the grand scheme of Berkshire as a whole.

[DooDiligence]

12 hours ago, Dynamic said:

While there's still a minority interest in BH Energy I think it will remain there as part of that 'Grove'.

 

The BYD Co HK:1211 stock is technically part of BHE too, so only about 91% owned by Berkshire Hathaway shareholders.

 

I don't think the difference is particularly material in the grand scheme of Berkshire as a whole.

 

I like the hidden gem aspect.

[gfp]

Berkshire priced the latest batch of Yen bonds -

 

(Berkshire has a higher credit rating than the government of Japan)

 

Quote from Bloomberg:

 

(Jan 14): Warren Buffett’s Berkshire Hathaway Inc. sold 128.5 billion yen ($1.13 billion) in bonds, taking advantage of Japan’s ultra-low borrowing costs.

The U.S. company priced a multi-part debt offering on Friday, marking its fourth bond deal in the Japanese currency in as many years.

With a coupon of 0.203%, the U.S. company priced its 5-year debt at a rate attractive to Japanese buyers given government bonds of that tenor offer negative yields and local companies can sell notes of a similar maturity at less than half that cost.

 

While bond yields in Japan have also climbed at the start of the year amid global consumer price pressures, the moves have been small compared with dollar markets due to the Bank of Japan’s negative-interest rate policy.

Berkshire Hathaway priced one of the biggest yen bond offerings ever by an overseas firm in 2019, and announced the following year that it had built up stakes of about 5% in Japan’s biggest trading companies.

The company’s 2022 yen issuance was smaller than its 160 billion yen transaction in April 2021.

 

update: here are the details, 5 year - 30 year bonds:

https://www.sec.gov/Archives/edgar/data/1067983/000119312522009641/d477637dfwp.htm

Edited January 14, 2022 by gfp

[Dynamic]

Interesting. I imagine it's possible that some additional small investments are being made in Japan with currency effects largely offset by this cheap debt, but the interest rate is certainly favorable.

 

Last year we did discover the exact holding in Itochu Corp as it came within the top 15 common stock holdings shown on page 7 of the Chairman's Letter portion of the 2020 Annual Report.

 

I suspect this year that Mitsubishi Corp might just make the cut too at around the 14th or 15th largest, while Mitsui & Co Ltd is likely to miss the cut at around 16th-18th largest.

 

Making no assumptions of buys or sells, here's my approximate top 15 list:

Probable Top 15 common stock investments to be shown in 
2021 Annual Report, approx page 7 of Chairman's Letter.

01 Apple, Inc.      $161.2 bn
02 Bank of America   $46.0 bn (not inc pref <$0.1bn)
03 American Express  $24.8 bn
04 Coca Cola         $23.7 bn
05 Moody's Corporatio $9.6 bn
06 Verizon Communicat $8.3 bn
07 U.S. Bancorp       $8.1 bn
08 BYD Corp HKG:1211  $7.7 bn (but ~9.1% owned by minority interest in BHE)
09 Bank of NY Mellon  $3.9 bn
10 Chevron            $3.4 bn
11 Kroger             $2.8 bn
12 Charter Communicat $2.7 bn
13 Itochu Corp        $2.5 bn (see p7 of 2020AR)
14 Mitsubishi Corp   ~$2.4 bn ~ estimated as not in top 15 in 2020
15 General Motors     $2.4 bn
=============================
Likely to be included in Others ***:
16 DaVita             $2.1 bn
17 Mitsui & Co Ltd   ~$2.1 bn ~ estimated. Unlikely to make top 15 in 2021.
18 Snowflake          $2.1 bn
19 Verisign           $2.0 bn
20 Visa               $2.0 bn
21 AbbVie             $1.9 bn

Not including:
Kraft Heinz not inc [$11.7 bn] - not part
of Equity Investments Carried at Market

Occidental 8% pref/warr ~$9.0 bn ~ incl. 
warrants - part of Others *** - this might
be revalued in 2021AR given rise in oil 
prices in 2021.

 

Edited January 14, 2022 by Dynamic
Adjust line breaks in 'table'

[gfp]

New renewable project pitched by BHE:

 

https://www.businesswire.com/news/home/20220119005998/en/MidAmerican-Energy-Proposes-3.9-Billion-“Wind-PRIME”-Renewable-Energy-Project

 

https://www.bloomberg.com/news/articles/2022-01-19/buffett-s-berkshire-proposes-3-9-billion-wind-solar-project

 

Warren Buffett’s Berkshire Hathaway Inc. is proposing to spend $3.9 billion to bring more wind and solar generation to Iowa in a project that could be among the renewable industry’s biggest.

The “Wind Prime” renewable-energy project would bring 2,042 megawatts of wind generation and 50 megawatts of solar power, Berkshire’s MidAmerican Energy Co. said Wednesday in a statement. The firm is also planning to fund studies about technologies that could help with carbon capture, energy storage and smaller nuclear reactors. 

 

The project would bolster Iowa’s already significant wind market. In 2019, the state generated 41% of its total energy needs from wind, up from just 5.1% in 2006, according to the Iowa Utilities Board. Governor Kim Reynolds called the Wind Prime project a “commitment and investment on a whole new level.”

Berkshire, overseen by Buffett as chief executive officer, has been building MidAmerican’s renewable efforts in recent years. MidAmerican estimates that it delivered 88% renewable energy to Iowa customers on an annual basis in 2021.

 

Buffett has said that he expected the utility could achieve “wind self-sufficiency” in Iowa. MidAmerican said Wednesday that the Wind Prime project will help the utility provide renewable energy equal to its Iowa customers’ annual usage. 

 

“As MidAmerican continues to progress toward delivering 100% renewable energy to our customers, we are also preparing to meet an important milestone of net-zero greenhouse gas emissions,” Kelcey Brown, president and CEO of MidAmerican, said in the statement.

Berkshire expects the project to create 1,100 jobs during construction, and another 125 for ongoing efforts. It can generate an average of $24 million a year in local property-tax payments on the turbines and solar equipment, plus more than $21 million in annual landowner-easement payments. Berkshire expects construction to be completed in late 2024 if the project is approved.  

Edited January 20, 2022 by gfp

[Gregmal]

On 1/9/2021 at 4:26 PM, Gregmal said:

Someone should tell Cathy she needs to let the journalists and cameraman have "unprecedented access". One day there will be never before seen footage, and behind the scenes stories to be told via a remarkable, never before seen documentary. This is....The Last Dance.

With all the people looking for “The Top” and wondering when it will be….it was already found. Hopefully that helps with all the confusion. 

[RadMan24]

Post-pandemic performance: 

[gfp]

https://www.nytimes.com/2022/01/25/business/berkshire-hathaway-annual-meeting.html
 

BRK annual meeting in person this year

[Xerxes]

I sent this picture to a few friends, telling them that this is Berkshire Hathaway holding the line in a blinding blizzard of a bear market. (not exactly bearish with 10% down but still cool picture)

 

[ValueMaven]

American Express had a total blow-out quarter.  They are buying back a ton of stock AND raising the dividend aggressively.  If you have to think what this might look like in 5-10 years for Berkshire given the current pace of the buybacks...and that Berkshire owns north of 18% of AXP o/s

[gfp]

1 hour ago, ValueMaven said:

American Express had a total blow-out quarter.  They are buying back a ton of stock AND raising the dividend aggressively.  If you have to think what this might look like in 5-10 years for Berkshire given the current pace of the buybacks...and that Berkshire owns north of 18% of AXP o/s

 

Berkshire has permission to go up to 25% of AXP through repurchases (if I remember correctly - they have upped it several times).  Looks like AXP had 761 million shares left at the end of the year.  They retired 17m shares in Q4.  Berkshire's 151,610,700 shares put them at 19.9% ownership at that time, so BRK could plausibly be passing 20% ownership currently.  When AXP files their 10Q it would have a more precise recent figure.

[CorpRaider]

On 1/26/2022 at 5:39 PM, ValueMaven said:

American Express had a total blow-out quarter.  They are buying back a ton of stock AND raising the dividend aggressively.  If you have to think what this might look like in 5-10 years for Berkshire given the current pace of the buybacks...and that Berkshire owns north of 18% of AXP o/s

Gottdamnit I blew that one.