Berkshire Q3 13F

[Ballinvarosig Investors]

[aws]

So the mystery new holdings were ABBV, MRK, and BMY. 

 

I think your screenshot is cutoff a bit.  It misses the complete disposition of COST for example.

[mattee2264]

 

  Very interesting. Everything Berkshire Hathaway are doing this year screams "defence". Gas pipelines. Japanese holding companies. Pharmaceuticals. And of course the ultimate defensive investment of all Berkshire Hathaway itself.

 

 

[Gregmal]

I guess they didnt want the $10 per share COST special dividend....

[scorpioncapital]

Quite a few 'aggregate' operations. the japanese stocks and pharma come to mind, and the airlines before that. It seems they do this when they think some area is interesting but are not 100% sure of the best name to own in concentrated form, yet think they know enough not to own a broad sector index.

 

 

[learner]

In one of the AGMs, Buffett had made the comment that they should’ve purchased a pharma basket in 90s and could’ve made a lot of money

[Cardboard]

Screaming "defence"?

 

Dump Costco, pile into Snowflake IPO then keep $109 billion of Apple out of a portfolio of $229 billion.

 

Seems more like irrational exuberance to me.

 

Cardboard

[widenthemoat]

I guess they didnt want the $10 per share COST special dividend....

 

$10 down, only $370 to go just to get your money back...

[LearningMachine]

Wondering if he is still thinking there is a non-zero probability that Covid will become an endemic, requiring a vaccine very year.

 

Another interesting thing to note is that all the pharma stocks he bought (ABBV, MRK, BMY, PFE) seem to be looking into Covid vaccines and treatments.  Wonder if it is going to be another pump and dump scheme like BRK seems to be doing for GOLD and might do for Snowflake, i.e. get some attention to these stocks, and ride on a high probability that one of them could have a vaccine or treatment take off, and then dump them.

[DooDiligence]

Wondering if he is still thinking there is a non-zero probability that Covid will become an endemic, requiring a vaccine very year.

 

Another interesting thing to note is that all the pharma stocks he bought (ABBV, MRK, BMY, PFE) seem to be looking into Covid vaccines and treatments.  Wonder if it is going to be another pump and dump scheme like BRK seems to be doing for GOLD and might do for Snowflake, i.e. get some attention to these stocks, and ride on a high probability that one of them could have a vaccine or treatment take off, and then dump them.

 

Day trading is the new value investing?

[LearningMachine]

Wondering if he is still thinking there is a non-zero probability that Covid will become an endemic, requiring a vaccine very year.

 

Another interesting thing to note is that all the pharma stocks he bought (ABBV, MRK, BMY, PFE) seem to be looking into Covid vaccines and treatments.  Wonder if it is going to be another pump and dump scheme like BRK seems to be doing for GOLD and might do for Snowflake, i.e. get some attention to these stocks, and ride on a high probability that one of them could have a vaccine or treatment take off, and then dump them.

 

Day trading is the new value investing?

 

Here is what Buffett and Munger said in 1999 about buying a group of pharma stocks at below market multiple:

 

Yes, they might be trading at below market multiple, especially if you compare to some tech stocks, but these pharma stocks are not cheap.

[Cardboard]

BMY is not so expensive. EPS this year are estimated at $6.38 and were $4.69 last year. $7.45 next year.

 

Probably bought most of it at $58-60 with a 3% yield so not bad.

 

I actually looked at them and decided to pass. I bought BMY way back in 2004 if I recall properly and it went nowhere fast.

 

They are always fighting to standstill with never ending patent expirations. It is hard to grow sales. Intense competition, products always more expensive to develop. Also, always pretty hard to figure out what is true free cash flow because there are always acquisitions and other elements by-passing earnings statements. Are they growth capex or maintenance capex?

 

Still there are worst things to buy and in the $100 billion+ category it is one of the few cheap spots.

 

Cardboard

[petec]

Yes. My thought is these buys largely scream value, not defence.

[LearningMachine]

Yes. My thought is these buys largely scream value, not defence.

 

Hi petec, would it be possible to share your reasoning?

 

If I count up their debt, and do an EBITDA/EV earnings yield, I'm not getting anything remotely close to 15% earnings yield, that is, before corporate and personal income taxes.  Are you thinking their EBITDA is going to go up a lot with their pricing power during inflation, or that their expenses include a lot of R&D expenses that need to be amortized not expensed directly, even though they have patent expirations coming that will need R&D almost as sustaining capital expenses?

[Ballinvarosig Investors]

Here is what Buffett and Munger said in 1999 about buying a group of pharma stocks at below market multiple:

 

Yes, they might be trading at below market multiple, especially if you compare to some tech stocks, but these pharma stocks are not cheap.

If he's buying a basket of pharma stocks, then I wonder has he bought more than the ones listed in this 13F?

 

I would not be at all surprised if he's bought Glaxo (London listed) and Sanofi (Paris listed). Both are good companies and would fit into his basket approach. He has also owned both before, and both are arguably cheaper than when he owned previously. He could have bypassed the 13F listing requirement by buying both stocks on the local exchanges, something he has done before (Tesco).

[Xerxes]

From CNBC

 

“Confidential information has been omitted from the public Form 13F report.”

BRK has building a position in secret

[LearningMachine]

From CNBC

 

“Confidential information has been omitted from the public Form 13F report.”

BRK has building a position in secret

 

From Barron's article at https://www.barrons.com/articles/why-warren-buffetts-berkshire-hathaway-fell-out-of-love-with-jpmorgan-51605629567:

 

Berkshire’s total purchases as reported on the 13-F report total about $9 billion, while the company said in its 10-Q that it bought $17.6 billion of stocks in the quarter.

 

The discrepancy appears to reflect a confidential filing of a holding with the Securities and Exchange Commission and some purchases of foreign stocks, including the five Japanese trading companies that Berkshire disclosed in late August.

 

Overseas stockholdings are not reported on 13-F filings, and Berkshire’s purchases of the Japanese trading companies may have totaled $1 billion to $2 billion in the third quarter—the total holding in them is $6 billion bought over a period of a year.

 

This means that a U.S. sizable holding of possibly $5 billion or more has gone undisclosed.

 

Not sure if they have take into account NEAM figures in that $9 billion total purchase amount.

[DooDiligence]

Here is what Buffett and Munger said in 1999 about buying a group of pharma stocks at below market multiple:

 

Yes, they might be trading at below market multiple, especially if you compare to some tech stocks, but these pharma stocks are not cheap.

If he's buying a basket of pharma stocks, then I wonder has he bought more than the ones listed in this 13F?

 

I would not be at all surprised if he's bought Glaxo (London listed) and Sanofi (Paris listed). Both are good companies and would fit into his basket approach. He has also owned both before, and both are arguably cheaper than when he owned previously. He could have bypassed the 13F listing requirement by buying both stocks on the local exchanges, something he has done before (Tesco).

 

Didn't he own Sanofi before?

[LearningMachine]

Here is what Buffett and Munger said in 1999 about buying a group of pharma stocks at below market multiple:

 

Yes, they might be trading at below market multiple, especially if you compare to some tech stocks, but these pharma stocks are not cheap.

If he's buying a basket of pharma stocks, then I wonder has he bought more than the ones listed in this 13F?

 

I would not be at all surprised if he's bought Glaxo (London listed) and Sanofi (Paris listed). Both are good companies and would fit into his basket approach. He has also owned both before, and both are arguably cheaper than when he owned previously. He could have bypassed the 13F listing requirement by buying both stocks on the local exchanges, something he has done before (Tesco).

 

Didn't he own Sanofi before?

Yes, he sold out after some time because Sanofi didn't go anywhere in terms of making money for shareholders.

[Spekulatius]

I also bought MRK in the mid seventies and think it is a classic  GARP stock, above average quality (business, balance sheet) for a below market multiple. MRK seems like a straightforward buy for Buffet holding.

 

He has avoided Pharma so der because he was unsure about valuing their product pipelines. I guess that is why he takes the basket approach.

[CassiusKing1]

Any good speculation on what BRK is acquiring and got the non-disclose from the SEC for?  Let's have some fun with it!

 

A TSLA friend sent me this: 

 

But seriously, what does everyone think?

[LearningMachine]

Any good speculation on what BRK is acquiring and got the non-disclose from the SEC for?  Let's have some fun with it!

 

A TSLA friend sent me this: 

 

But seriously, what does everyone think?

 

Thanks CassiusKing1 for starting this :-). 

 

I think almost 0% probability that he is buying TSLA :-).

 

I was puzzled when BAC was trading below his earlier purchases for many weeks, but there were no SEC filings showing up.  This might explain the mystery, i.e. the statement in the latest 13F that "Confidential information has been omitted from the public Form 13F report and filed separately with the U.S. Securities and Exchange Commission."

 

So, my guess is BAC.  It is possible it is not that because banks are riskier than other companies for concentration, especially if the probability of Covid becoming endemic materializes.  If not that, then maybe something in the energy sector.

[gfp]

The confidential security is definitely not BAC for several reasons. 10-Q makes the end of quarter BAC position very clear.

[LearningMachine]

The confidential security is definitely not BAC for several reasons. 10-Q makes the end of quarter BAC position very clear.

 

Thanks gfp.  You are right.  I forgot that the 10-Q did say "Approximately 70% of the aggregate fair value was concentrated in four companies (American Express Company – $15.2 billion; Apple Inc. – $111.7 billion; Bank of America Corporation – $24.9 billion and The Coca-Cola Company – $19.7 billion)."

 

Given BAC closed at $24.09 on Sep 30, BRK owned about 1.03 billion BAC shares as of then.  There is no confidentiality statement in 10-Q either.

[Xerxes]

Of the big tech, the only one remaining to fit the criteria of relatively cheap for a big buyer is probably Alphabet.

 

Unrelated

 

I was listening to a podcast recommended on this thread, it was from few months ago, in it the commentators talked about how BRK position in Apple can be liquidated in 8 days and it’s position in BAC can take more than a month to liquidate. Goes to show how important liquidity is and how even between the bluest of the blue chips like Apple and BAC there is a huge difference.