Jump to content

Next Berkshire acquisition speculation


gfp

Recommended Posts

They won't buy MSFT because of Gates. But at this point they may as well buy OXY. Chump change.

 

You think Buffett would buy E&P even if it is cheap? I'd think it's too commodity and too future-uncertain.

 

BTW, I think he might buy OXY notes or prefs or even stock as a trade. But not whole co.

Link to comment
Share on other sites

He explicitly said he won't buy an airline.

 

He said it was unlikely and cited the reasons why its complicate for BRK to buy one. I left with the impression that he might consider it in extraordinary circumstances.

 

"It'd be very unlikely we would do that," Buffett said. "I'm not saying it's impossible, but, it's complicated. There's a lot of complications because it's a regulated industry. Anytime you get into a regulated industry, you have more complications in transactions."

Link to comment
Share on other sites

Yeah he really only addressed the issue with buying Delta and Delta seems like his favorite.  Nothing to stop him from buying Southwest if he wanted it and they agreed.  He would then likely sell all the other positions similar to how the train deal went down.

Link to comment
Share on other sites

He explicitly said he won't buy an airline.

 

He said it was unlikely and cited the reasons why its complicate for BRK to buy one. I left with the impression that he might consider it in extraordinary circumstances.

 

"It'd be very unlikely we would do that," Buffett said. "I'm not saying it's impossible, but, it's complicated. There's a lot of complications because it's a regulated industry. Anytime you get into a regulated industry, you have more complications in transactions."

 

Yeah, he's too smart to not leave himself an out.

 

I'll bet that he won't.

 

See him buy airline tomorrow.  8)

Link to comment
Share on other sites

He explicitly said he won't buy an airline.

 

He said it was unlikely and cited the reasons why its complicate for BRK to buy one. I left with the impression that he might consider it in extraordinary circumstances.

 

"It'd be very unlikely we would do that," Buffett said. "I'm not saying it's impossible, but, it's complicated. There's a lot of complications because it's a regulated industry. Anytime you get into a regulated industry, you have more complications in transactions."

 

Yeah, he's too smart to not leave himself an out.

 

I'll bet that he won't.

 

See him buy airline tomorrow.  8)

 

Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

 

Link to comment
Share on other sites

Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

 

Hmm, is NetJets a success currently? I remember it was not doing great at some point. I think it's too small to be mentioned anymore, so probably we can't know how it is doing.

Link to comment
Share on other sites

Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

 

Hmm, is NetJets a success currently? I remember it was not doing great at some point. I think it's too small to be mentioned anymore, so probably we can't know how it is doing.

 

Your right. It’s just a blip. Internet estimates put it around 300M top line in 2019.

Link to comment
Share on other sites

Agreed. I think a pref + warrant deal is more likely with the airlines. On the flip side, there must be some advantages to owning NetJets and major airline. For example a loyalty program that spanned both. Efficiency improvements? Speculating, I don't know enough about the businesses to know if it impact returns.

 

Hmm, is NetJets a success currently? I remember it was not doing great at some point. I think it's too small to be mentioned anymore, so probably we can't know how it is doing.

 

I think it's not mentioned anymore because WEB parroted the excellent management in place at Netjets for years in the annual letters, promising profit was just around the corner until losses mounted and he turfed the CEO. I don't believe it was ever mentioned again after the management transition was announced.

Link to comment
Share on other sites

Regarding Delta - only spent $45MM on shares at $45.  Not the end of the world.  I remembered an interview and watched it again for some "words of wisdom" in turbulent times.  Quoting his words he was a little early in '08.  Not even Warren Buffett can catch "the bottom" however LETS HOPE HE IS WAITING FOR HIS PITCH ON THE BIG BUY!!!

 

Excerpt from Buffett's interview with Andrew Sorkin regarding 2008 financial crisis (https://www.cnbc.com/video/2018/09/10/warren-buffett-talks-to-cnbcs-andrew-sorkin-2008-financial-crisis.html):

 

Sorkin: "When you look back in retrospect, is there any thing you wish you had done that you didn’t do? Any investments that you wish you could have made?"

 

Mr. Buffett: "I can look back on any week and come up with that.  The situation, ah, we’d have been better off, considerably better off at Berkshire if we had waited 4 of 5 months to buy anything.  I mean, the low was set in March, and it was much lower…I wrote that Op’Ed for the NY Times in late October while it was right on a long term basis but it was way off for 3 or 4..4 or 5 months at least."

 

 

Link to comment
Share on other sites

By my calcs. in 2001 Buffet bought Petro china at a price of:

$2.2 (not including leverage) per Barrel of Oil equivalent (proven), or

$3.3 (including leverage) per Barrel of Oil equivalent (proven).

 

However, if we take inflation into consideration the 2001 prices equate to the following 2020 prices:

$3.49 (no leverage) / BOE proven

$5.24 (including leverage) / BOE proven

 

 

Today's prices are very similar:

$2.6 (no leverage) / BOE proven. (cheaper today than 2001)

$6.0 (including leverage) / BOE proven. (more expensive today than 2001)

 

 

note: This is just looking at the price to purchase Petro China's proven reserves.

 

All feedback welcome (the more brutal the better). Keen to learn more about oil companies.

Link to comment
Share on other sites

Guest longinvestor

The mother lode of capital allocation opportunity is likely going to be in the insurance segment. Lots of the "idiot capital" that went into it over the past decade will be shown up; the longer this crisis takes to blow over, the surer it becomes.

 

As close to the center of the circle center of competence for Berkshire as it can get!

Link to comment
Share on other sites

I don't think there will be deals. Government money will have significantly better terms than a Warren deal. Prices haven't even come down that much either. You take todays prices, add a control premium and the valuation sucks. If he didn't do the deal 1 or 2 yeas ago why would he do it now?

 

I think we'll see an expanded equity portfolio. The old man is probably buying bank stocks like crazy. And why not? The equity deals you can get right now are better than the deals you would get on the private market.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...