Berkshire Q3 2020 Report

[John Hjorth]

It should be noted for those that haven't seen this already that consolidated cash was widely mis-reported, by myself as well, as we hastily missed the line item for a $6.795 Billion payable for purchase of U.S. Treasury Bills on the balance sheet.  Consolidated cash more like $138.9 Billion at quarter end.

 

hat tip to Christopher Bloomstran at Semper Agustus -

https://mobile.twitter.com/ChrisBloomstran/status/1325130867635744770

 

Thanks, gfp,

 

-Posted on Twitter by the Uber-Berkshire-nitpicker-second-to-none! [ ; - ) ]

 

- - - o 0 o - - -

 

Looking back through the last quarters, I see the following balance sheet items to "net" to get to "net cash" :

 

EOP 2020Q3 : USD 6.795 B,

EOP 2020Q2 : USD 1.114 B,

EOP 2020Q1 : USD 8.360 B,

EOP 2019 : USD 0 B [<- ?, not sure about that, John]

[Guest longinvestor]

Now you got the vaccine news. Names like Berkshire will benefit this morning on the back of the buyback as well. 

 

The real “juice” in my opinion is when BRK operating earnings will go back to normalization sometimes say in late 2021. That normalized operating earning will be passing through a much lower share count, boosting the EPS. Assuming anyone is following EPS for BRK.

 

Yes indeed. Numerator up by earning CAGR denominator down modestly(10% less?) and it will be a statement!

 

Additionally the attendant BV accounting calculation-distortions start to be material. Perhaps the world remains anchored in the BV multiple paradigm four years after Buffett stopped talking about it in the Annual letter.

[ValueMaven]

Correct me if I am wrong but next quarter the D assets will follow into BHE's results correct?

[wescobrk]

Apologies if I missed it but I read that he bought some industrials but we won't know until the 13f filing.

He sold $4 billion of Apple and bought some industrials. Assuming that is correct, any guesses on what he is buying?

[RadMan24]

Apologies if I missed it but I read that he bought some industrials but we won't know until the 13f filing.

He sold $4 billion of Apple and bought some industrials. Assuming that is correct, any guesses on what he is buying?

 

Are you sure Buffett sold Apple or did one of his lieutenants sell out of his Apple position?

 

 

[ValueMaven]

For those interested - Chris Bloomstrain had a fantastic recap of Berk's 3Q on the 'This Week In Investing' podcast hosted by MOI.  You can find it on iTunes.  He gave some really interesting insights into the various operating biz's and his thoughts on the buybacks.  Worth listening too. 

 

-VM

[mattee2264]

"When we sell something, very often it’s going to be our entire stake: We don’t trim positions." WEB @ the AGM

 

  Obviously not quite true when it comes to Berkshire's bank holdings. But should probably give him the benefit of the doubt.

[longterminvestor]

"When we sell something, very often it’s going to be our entire stake: We don’t trim positions." WEB @ the AGM

 

 

When I think about Berkshire selling Apple, a few things comes to mind:

#1 - Compare to KO position in in late 90's

#2 - Apple was trimmed in 2019

#3 - Mr. Buffett does not look at Apple as a stock, its his 3rd largest business

#4 (and what I think about mostly) - if Mr. Buffett sells Apple....what is he gonna buy?  Where does he redeploy $120B in Capital?

[ValueMaven]

"When we sell something, very often it’s going to be our entire stake: We don’t trim positions." WEB @ the AGM

 

 

When I think about Berkshire selling Apple, a few things comes to mind:

#1 - Compare to KO position in in late 90's

#2 - Apple was trimmed in 2019

#3 - Mr. Buffett does not look at Apple as a stock, its his 3rd largest business

#4 (and what I think about mostly) - if Mr. Buffett sells Apple....what is he gonna buy?  Where does he redeploy $120B in Capital?

 

1,000% agreed.  If you look at how BERK has been built throughout the decades - most of the major businesses are fairly uncorrelated.  If point #3 is REALLY how WEB views AAPL - then it fits in extremely nicely given the unique biz of insurance, rails, msr, and BHE.  Frankly - we are lacking a large tech investment - and AAPL in my view is it.  Plus it offers unique plays on consumer, 5G, tech capital allocation etc - which is lacking at BERK.

[Xerxes]

Thanks for posting that great discussion and the podcast.

Didn't have the podcast on my list.

 

I like his speculation on the Q3 $12 billion common stock buy looking at the energy patch and the clues in the filing.

i guess we'll know tomorrow AM as 13F are posted.

 

On Apple, i always held the view that its outperformance in 2020 had increased Buffet's margin of safety and pushed the envelope on the upper end of his perceived intrinsic value, thus Buffet is and will be more aggressive on buybacks. I think that it is evident listening to Bloomstrain how he was explaining that Berkshire buyback's are at increasingly higher costs (latest batch in October). Not mentioned in the podcast, the hardening of the insurance cycle that gets talked about a lot in the Fairfax threads, applies to Berkshire as well. if the corporate Omaha is seeing that in the same way, than more the reason to buyback shares before that tailwind fully develops.