Q3 results out

[physdude]

10Q here - http://www.berkshirehathaway.com/qtrly/3rdqtr15.pdf. Apart from the known rough patch for the investment portfolio, it looks decent though operating earnings growth has slowed. A particularly bright spot was BNSF which is still doing well in this environment.

[Charlie]

With a P/B of 1,3443 it is just 12% above buyback level.

It is still pretty cheap.

Float increased from $85,1 billion to $86,2 billion.

[Guest longinvestor]

Big Lump in lumpy

[Libs]

The Kraft Heinz transaction is spelled out on page 11. Two questions

 

1) at the bottom of the page, earnings are shown as negative, but then totaled as a positive $110MM for Berkshire shareholders.  Don't get this.

 

2) BRK is using the equity method yet only owns 26.8% of KHC. What are the ownership guidelins to use the equity method? I would have guessed you needed over 50%? Or in this case since we are partnering with 3G and the combined ownership is over 50% it's ok?

 

Thanks in advance.

 

 

[100 Shares]

The Kraft Heinz transaction is spelled out on page 11. Two questions

 

1) at the bottom of the page, earnings are shown as negative, but then totaled as a positive $110MM for Berkshire shareholders.  Don't get this.

 

2) BRK is using the equity method yet only owns 26.8% of KHC. What are the ownership guidelins to use the equity method? I would have guessed you needed over 50%? Or in this case since we are partnering with 3G and the combined ownership is over 50% it's ok?

 

Thanks in advance.

 

Equity method accounting is for when you own 20-50% of a company. https://en.m.wikipedia.org/wiki/Equity_method

 

So that's the accounting method. Buffett might view it differently for intrinsic value purposes. For example in the 2014 Annual Report, they owned 30% of USG but he lists it in his investments along with KO, AXP, etc and not as part of pre-tax non insurance earnings.

[jay21]

Libs -

 

Didn't look but I am guessing on pt 1) its the preferred dividends.

[Libs]

The Kraft Heinz transaction is spelled out on page 11. Two questions

 

1) at the bottom of the page, earnings are shown as negative, but then totaled as a positive $110MM for Berkshire shareholders.  Don't get this.

 

2) BRK is using the equity method yet only owns 26.8% of KHC. What are the ownership guidelins to use the equity method? I would have guessed you needed over 50%? Or in this case since we are partnering with 3G and the combined ownership is over 50% it's ok?

 

Thanks in advance.

 

Equity method accounting is for when you own 20-50% of a company. https://en.m.wikipedia.org/wiki/Equity_method

 

So that's the accounting method. Buffett might view it differently for intrinsic value purposes. For example in the 2014 Annual Report, they owned 30% of USG but he lists it in his investments along with KO, AXP, etc and not as part of pre-tax non insurance earnings.

 

Thanks.

[LowIQinvestor]

Just picturing Warren laughing in the bathtub at Mr. Market while writing this....

 

“IBM continues to be profitable and generate significant cash flows,” Omaha, Nebraska-based Berkshire said in a regulatory filing Friday. “We currently have no intention of disposing of our investment in IBM common stock. We expect that the fair value of our investment in IBM common stock will recover and ultimately exceed our cost.”

[scorpioncapital]

I would have felt better if the line read, "We have no intention of..." instead of "we *currently* have no intention of..." Quite a way to hedge your bet!