Jump to content

Recommended Posts

Posted

Not sure there's an easy answer here, but am I the only one wondering about this.  End of Q4 ~128 billion in cash, nothing announced not even USA will be fine.  Am I missing something here?

  • Replies 89
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

Posted Images

Posted

I think there are multiple reasons:

 

1. He owns too many companies that are bailout candidates or TBTF and thinks keeping his mouth shut is the best way for those companies to get the best deal from the government.  He doesn't want to get politicized.

2. His large ownership in certain industries is preventing him from making deals (financials, airlines).

3. He was too early in the GFC.

4. He has access to great economic data and doesn't want to give others ideas with it, until he has acted on it first.

5. The government is making better offers to help than he is, so he has nothing to report.

6. He may have higher than expected claims or more money losing businesses in this environment than the conventional wisdom expects, so needs to hold back more capital.

7. He doesn't think the market is cheap, similarly, he doesn't think BRK is particularly cheap in this environment either.

8. His outlook is negative and he doesn't want to scare anyone. He would rather tell common investors good news rather than bad news, so he is waiting until he is more optimistic.

9. He is saving his insights for the video AGM in May.  This one is not inconsequential.  He loves the AGM and doesn't want to diminish its value.

 

Overall though, I consider his silence a negative.  If he was bubbling with optimism, he'd already have been on TV.

 

Posted

^ Excellent listfrom Nocalledstrikes. I would also point out that many of BRK ownership (banks, airlines) as well as fully owned subs (retail, PCP Iscar)  are affected by the current crisis to a significant extend.

 

Their crisis is just barely 4 weeks old, even though it feels like a long time.

Posted

Before Friday, airlines have had at least a part of their investment thesis in place w/ an understanding that Warren will backstop them from collapse. By showing willingness to sell Airliners, Warren greater leverage and thereby a better deal on the table.

 

Similarly Boeing is playing hardball and not willing to sacrifice equity on a bailout terms from the government - I think Warren's move changes their strategy as well.

 

Like of the rest of us, I believe Warren in part is just waiting for better deals.

Posted

I think there are multiple reasons:

 

1. He owns too many companies that are bailout candidates or TBTF and thinks keeping his mouth shut is the best way for those companies to get the best deal from the government.  He doesn't want to get politicized.

2. His large ownership in certain industries is preventing him from making deals (financials, airlines).

3. He was too early in the GFC.

4. He has access to great economic data and doesn't want to give others ideas with it, until he has acted on it first.

5. The government is making better offers to help than he is, so he has nothing to report.

6. He may have higher than expected claims or more money losing businesses in this environment than the conventional wisdom expects, so needs to hold back more capital.

7. He doesn't think the market is cheap, similarly, he doesn't think BRK is particularly cheap in this environment either.

8. His outlook is negative and he doesn't want to scare anyone. He would rather tell common investors good news rather than bad news, so he is waiting until he is more optimistic.

9. He is saving his insights for the video AGM in May.  This one is not inconsequential.  He loves the AGM and doesn't want to diminish its value.

 

Overall though, I consider his silence a negative.  If he was bubbling with optimism, he'd already have been on TV.

 

Well said. 

 

He is waiting, like the rest of us.  Companies aren't really very cheap in aggregate, yet.

 

Posted

I actually find his silence re-assuring.

Give him time to assess his data and re-arrange his chessboard.

 

I wonder if he was expecting this "bear correction" to take place as the market plunged in Dec 2018. I recall some folks here were pretty concerned/angry why Buffet didn't do a major buy in Dec 2018 when the F13 filings came out in Q1 2019. Probably because he was expecting a major downdraft in Dec '18 that actually never happened ,,,, and was postponed till 2020. In between, he bided his time was able to collect more ammunition …. while taking flak for missing the "buy the dip" in 2018.

 

 

Posted

I actually find his silence re-assuring.

Give him time to assess his data and re-arrange his chessboard.

 

I wonder if he was expecting this "bear correction" to take place as the market plunged in Dec 2018. I recall some folks here were pretty concerned/angry why Buffet didn't do a major buy in Dec 2018 when the F13 filings came out in Q1 2019. Probably because he was expecting a major downdraft in Dec '18 that actually never happened ,,,, and was postponed till 2020. In between, he bided his time was able to collect more ammunition …. while taking flak for missing the "buy the dip" in 2018.

 

He wanted to buy in Dece 2018.  He was working on a big deal that they couldn't get across the finish line.  I believe he explained this publicly in an interview.

Posted

I realize WEB wouldn't announce his actions intentionally. However, I figure WEB and Co. hasn't done any buying until at least April 1. Two reasons: WEB publicly stated he was too early in 08/09. Also, buying done before April 1 will appear in the Q1 13F. Any buying done now is not reported until mid-August. It gives them lots of time.

Posted

I actually find his silence re-assuring.

Give him time to assess his data and re-arrange his chessboard.

 

I wonder if he was expecting this "bear correction" to take place as the market plunged in Dec 2018. I recall some folks here were pretty concerned/angry why Buffet didn't do a major buy in Dec 2018 when the F13 filings came out in Q1 2019. Probably because he was expecting a major downdraft in Dec '18 that actually never happened ,,,, and was postponed till 2020. In between, he bided his time was able to collect more ammunition …. while taking flak for missing the "buy the dip" in 2018.

 

He wanted to buy in Dece 2018.  He was working on a big deal that they couldn't get across the finish line.  I believe he explained this publicly in an interview.

 

you are right.

I do recall that. But unless the deal he was working on was so gigantic, it doesn't explain its low buyback during the downdraft.

it is not like he cannot focus on two things at the same time.

Posted

He did mention he wanted to have the cash in case the deal in 2018 worked.  Buffett doesn't seem like the type to go 100% in.  He'll always keep cash on hand so given his minimum of 10-20 billion cash reserves he'd be comfortable with unless the markets collapse 50% he'll likely just be buying incrementally again and waiting to bag an entire company when the opportunity presents itself.  I can see him just buying more of apple and jpm and nothing else.

Posted

My guess is Apple at $230-260 still isn't quite cheap enough for Berkshire to load up.

JPM probably is reasonably attractive at sub $90 so I would not be surprised to see an increase in due course.

Posted

WEB's BFF Bill Gates published an op-ed last week in the Washington Post ("Bill Gates: Here’s how to make up for lost time on covid-19") that included the following paragraph:

 

"The country’s leaders need to be clear: Shutdown anywhere means shutdown everywhere. Until the case numbers start to go down across America — which could take 10 weeks or more — no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths."

 

Gates is the founder and co-leader of a $50 billion dollar nonprofit that has 1500 employees, some (many?) of whom are public health experts. Everyone in the world knows who Gates is and will take his calls. He is undoubtedly very, very well-informed about COVID-19.

 

WEB is likely getting his COVID-19 info from Gates. WEB may very believe that the full impact of a two or three month shutdown of the economy isn't priced in to the public markets yet.

Posted

He's 89 years old

 

LOL I can see him in isolation at home, unable to get his FaceTime to work. Or maybe his router needs to be reset, and nobody there to help him.

 

Posted

WEB's BFF Bill Gates published an op-ed last week in the Washington Post ("Bill Gates: Here’s how to make up for lost time on covid-19") that included the following paragraph:

 

"The country’s leaders need to be clear: Shutdown anywhere means shutdown everywhere. Until the case numbers start to go down across America — which could take 10 weeks or more — no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths."

 

Gates is the founder and co-leader of a $50 billion dollar nonprofit that has 1500 employees, some (many?) of whom are public health experts. Everyone in the world knows who Gates is and will take his calls. He is undoubtedly very, very well-informed about COVID-19.

 

WEB is likely getting his COVID-19 info from Gates. WEB may very believe that the full impact of a two or three month shutdown of the economy isn't priced in to the public markets yet.

 

I think it is correct that WEB gets info from Bill Gates as well as lots of income ing data from his wholly owned business.I am sure he knows quite well the how the economy is doing right now almost to this day After all, if you own a railroad, huge utility’s , retail and manufacturing companies, insurance companies dealing with millions of co summers, you bet he has knows quite well that is going on right now, probably more so than most economic ist.

Posted

He's 89 years old

 

LOL I can see him in isolation at home, unable to get his FaceTime to work. Or maybe his router needs to be reset, and nobody there to help him.

 

He's sitting in the kitchen eating ice cream right out of the container, flipping through Valueline.

 

 

 

Posted

One thing that really annoys me about Buffet in the last 2-3 years is his constant preaching that stocks are not expensive if interest rates stays low.  At the same time, Berkshire was building a war chest of $100bn of cash.  It's one thing when Bill Ackman says that stocks are cheap with interest rate being low.  It's another when it is the icon of value investing pretty much saying that paying 30x FCF is okay due to low interest rates.

Posted

One thing that really annoys me about Buffet in the last 2-3 years is his constant preaching that stocks are not expensive if interest rates stays low.  At the same time, Berkshire was building a war chest of $100bn of cash.  It's one thing when Bill Ackman says that stocks are cheap with interest rate being low.  It's another when it is the icon of value investing pretty much saying that paying 30x FCF is okay due to low interest rates.

Personally I agreed with Buffett. I did think stocks were cheap (or fairly priced) in the context of 2-3% long term rates and nobody knowing what a coronavirus was.

 

But I've got Buffett beat because I didn't get on CNBC and publicly say so (not that they would have me), so I don't have to deal with anyone's ire :D

Posted

One thing that really annoys me about Buffet in the last 2-3 years is his constant preaching that stocks are not expensive if interest rates stays low.  At the same time, Berkshire was building a war chest of $100bn of cash.  It's one thing when Bill Ackman says that stocks are cheap with interest rate being low.  It's another when it is the icon of value investing pretty much saying that paying 30x FCF is okay due to low interest rates.

 

He never said that paying 30X FCF is ok. He said that if you know that interest rates will remain low for very long time(like a decade or two) then stocks are cheap.

 

A decade or two is my interepretation here.

 

 

Posted

Well lets answer that question!

 

Personally, as a mid 30s(yuck) dude, do I look at stocks(specific ones of course) as attractive relative to the alternatives? You bet I do. If you have 5+ year time horizon, how isn’t this the case?

Posted

Well lets answer that question!

 

Personally, as a mid 30s(yuck) dude, do I look at stocks(specific ones of course) as attractive relative to the alternatives? You bet I do. If you have 5+ year time horizon, how isn’t this the case?

 

No one should be in stocks with less than 5 years of time frame. There are many good assets priced at decent price right now, but I get a sense that many want to time the bottom or afraid of price getting cheaper in near future.

 

Unless, you are buying the entire market, there is always something decent to buy. Right now, you don't have to look too hard and that's the difference.

Posted

One thing that really annoys me about Buffet in the last 2-3 years is his constant preaching that stocks are not expensive if interest rates stays low.  At the same time, Berkshire was building a war chest of $100bn of cash.  It's one thing when Bill Ackman says that stocks are cheap with interest rate being low.  It's another when it is the icon of value investing pretty much saying that paying 30x FCF is okay due to low interest rates.

Personally I agreed with Buffett. I did think stocks were cheap (or fairly priced) in the context of 2-3% long term rates and nobody knowing what a coronavirus was.

 

But I've got Buffett beat because I didn't get on CNBC and publicly say so (not that they would have me), so I don't have to deal with anyone's ire :D

 

Also, I think the whole cash position is not only earmarked for investment, but also for insurance for any catastrophic losses. Especially considering he has a rule about it - I think it was called the Noah Rule.

 

Not sure why there's hostility against Ackman (not that BG2008 has it - however in general with media and the value investing community). I think he's phenomenal, really smart and could become one of the greatest investors of our time.

 

Before you post Valeant, JC Penny, Herbalife, etc. If you've invested in Ackman at the start of his fund, through the ups and downs, you should be able up 8x (even more before fees) over a sixteen year period.

 

I guess what I'm asking - is there something some of you all are seeing that I am not seeing?

 

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...