Berkshire Q3 2023

[gfp]

It's Saturday morning nerds!

 

https://berkshirehathaway.com/news/nov0423.pdf

 

https://berkshirehathaway.com/qtrly/3rdqtr23.pdf

 

"

Approximately $1.1 billion was used to repurchase Berkshire shares during the third quarter bringing the nine month total to approximately $7.0 billion. On September 30, 2023 there were 1,445,546 Class A equivalent shares outstanding. At September 30, 2023, insurance float (the net liabilities we assume under insurance contracts) was approximately $167 billion, an increase of $3 billion since yearend 2022."

 

At 10/24 the share count was 1.444 million A-share equivalents  (2.166 Billion B-share eq.)

Edited November 4, 2023 by gfp

[gfp]

The Berkshire Bond Portfolio!  $22.4 Billion on a Trillion dollar asset base, with 78% of the "Bonds" maturing in a year or less

 

(yes, Berkshire also has a $24 Billion mortgage business but I believe that is largely a spread business funded by BH Finance borrowings)

Edited November 4, 2023 by gfp

[gfp]

Looks like they sold around 12.8 million CVX shares (~$2 Billion worth) in the quarter.  Not hugely surprising given recent trends in their CVX trading.

Edited November 4, 2023 by gfp

[gfp]

"

PacifiCorp increased its liability for estimated pre-tax probable Wildfire losses, before expected related insurance recoveries, by $1.4 billion in the third quarter and by $1.9 billion in the first nine months of 2023. Expected probable Wildfire losses, net of expected insurance recoveries, were approximately $1.3 billion in the third quarter and $1.7 billion in the first nine months of 2023. Such amounts were included in energy operating expenses in the accompanying Consolidated Statements of Earnings. PacifiCorp’s cumulative charges to date for estimated probable Wildfire losses were $2.4 billion through September 30, 2023."

[Charlie]

Berkshire Operating Profit Surged to Record $10.8 Billion in Latest Quarter

 

https://www.barrons.com/articles/berkshire-hathaway-earnings-stock-price-8f61fc76?siteid=yhoof2

 

 

Cheers!

[gfp]

[backtothebeach]

Last 3 quarters of cash + short term treasuries:

 

$ billion 130.6  ->  147.4 -> 157.2

 

Repurchased 1115 A shares in September at an average of $550,814 (=$367.21 in B shares). That's the highest repurchase price on record.
 

Edited November 4, 2023 by backtothebeach

[wabuffo]

28 minutes ago, backtothebeach said:

Repurchased 1115 A shares in September at an average of $550,814 (=$367.21 in B shares). That's the highest repurchase price on record.

 

It does seem like Buffett's buyback threshold on the A-shares is persistently higher than on the B-shares.  Looks to me to an average of around 10% or so.   There could be some non-economic reasons for that, but who knows for sure.

 

Bill

[sleepydragon]

5 minutes ago, wabuffo said:

 

It does seem like Buffett's buyback threshold on the A-shares is persistently higher than on the B-shares.  Looks to me to an average of around 10% or so.   There could be some non-economic reasons for that, but who knows for sure.

 

Bill

Maybe when he buys A shares it’s usually not from the market. Instead it’s from some family who who would like to sell and called Brk.

 

[wabuffo]

1 minute ago, sleepydragon said:

Maybe when he buys A shares it’s usually not from the market. Instead it’s from some family who who would like to sell and called Brk.

Yeah - that & I sometimes think as he donates his shares to charity, he keeps an eye on his voting control percentage too.

 

Bill

[gfp]

I think you guys have it right on the A-share preference.  It is likely a combination of factors -

 

1. He prefers to have fewer A-shares outstanding after his death

2. The A-shares are so illiquid and hard to buy in size that he is in the market more steadily buying some, instead of turning it on and off

3. The phone number for larger holders to call Mark Millard with blocks of shares to offer probably has some OG families offering A-share blocks.

[gfp]

You can really appreciate the diversity in income streams in a quarter like this, where reported profits from the electric utility business basically vanish (wildfire loss reserves wiping out accounting profits) but the absence of a consequential hurricane in Florida more than offsets with a windfall (more to come in q4 it seems).

 

GEICO has shrunk, halved ad spending and raised prices - returning to respectable profits for now.

 

Berkshire continues to de-leverage, repurchase some stock, and "t-bill and chill."

 

[Jaygo]

I was hoping they would start winding down the publicly traded asset column to a more manageable level. Say 20% of total assets and with the proceeds shrink the share count a bit to make it easier on future managers to make investment deductions. 
 

having 150B in apple alone is one hell of a decision for management to make. 
 

if the future managers are very good they can grow it back with their own performance not relying on the goats picks from decades past. 

[RiskAdjReturn]

can some tell me book value per share (in B term). so can see P/B mult against todays' trading level

 

i hate how this metric is shown anywhere

[gfp]

3 minutes ago, RiskAdjReturn said:

can some tell me book value per share (in B term). so can see P/B mult against todays' trading level

 

i hate how this metric is shown anywhere

BV was 242.28 / B-share at quarter end 

[Spekulatius]

2 hours ago, Jaygo said:

I was hoping they would start winding down the publicly traded asset column to a more manageable level. Say 20% of total assets and with the proceeds shrink the share count a bit to make it easier on future managers to make investment deductions. 
 

having 150B in apple alone is one hell of a decision for management to make. 
 

if the future managers are very good they can grow it back with their own performance not relying on the goats picks from decades past. 

I think AAPL went into the coffee can, just like KO and AXP did decades ago. I don’t think they will sell.

[sleepydragon]

2 hours ago, Jaygo said:

I was hoping they would start winding down the publicly traded asset column to a more manageable level. Say 20% of total assets and with the proceeds shrink the share count a bit to make it easier on future managers to make investment deductions. 
 

having 150B in apple alone is one hell of a decision for management to make. 
 

if the future managers are very good they can grow it back with their own performance not relying on the goats picks from decades past. 

Iphone is the new tobacco— highly addictive. When my in law lost her iPhone, she immediately spent a thousand dollar to buy a new one. There’s a video online that in China when a middle school teacher took a kid’s iPhone, the kid neck choked his teacher.

 

[crs223]

1 minute ago, sleepydragon said:

Iphone is the new tobacco

 

Wow … I’ve never heard it said that way.  You are spot on.

 

Isn’t it amazing a product so addictive, expensive and “critical” to day-to-day functioning … and no other company can come close to offer an alternative.  Insane.  And nonsensical.  The addiction is not to the phone/camera/calendar/maps (otherwise a competitor would have come along).  the addiction is to the brand!

[gfp]

I agree with you guys except for this bit, “no other company can come close to offer an alternative.  Insane.  And nonsensical. ”

 

obviously there is a strong competitor in Android phones

[Whensthepaintdry?]

I tried to argue once that it’s pretty much a staple now, but I was quickly corrected. 

[John Hjorth]

8 minutes ago, Whensthepaintdry? said:

I tried to argue once that it’s pretty much a staple now, but I was quickly corrected. 

 

@Whensthepaintdry?,

 

Is your comment above related to Apple or related to Berkshire?

[UK]

So, excluding wildfire losses, operating pretax earning are up 59 per cent in Q3 and 27 per cent YTD? 

 

Who says elephants can't dance:)?

[Munger_Disciple]

4 hours ago, wabuffo said:

 

It does seem like Buffett's buyback threshold on the A-shares is persistently higher than on the B-shares.  Looks to me to an average of around 10% or so.   There could be some non-economic reasons for that, but who knows for sure.

 

Bill

 

I don't think this is true. Page 52 of 10-Q shows share buybacks on a monthly basis. During Q3, they bought back both A & B shares only in the month of September; A shares were purchased at a premium of just 2.8% above B shares. However they bought back an order of magnitude more (in dollars spent) A shares, so there is clearly a preference for A shares but only when the premium over B shares is reasonable. 

 

Very logical & shareholder friendly execution of buyback as always from Warren. 

Edited November 4, 2023 by Munger_Disciple

[John Hjorth]

53 minutes ago, UK said:

So, excluding wildfire losses, operating pretax earning are up 59 per cent in Q3 and 27 per cent YTD? 

 

Who says elephants can't dance:)?

 

It's not an elephant dancing, it's a crowd of elephants, dancing! 

[crs223]

1 hour ago, gfp said:

obviously there is a strong competitor in Android phones

 

Buffett says iPhone customers wouldn’t permanently give up the brand even for $10,000… and he is right!