BRK Q2 '24 Earnings

[yesman182]

I haven’t had a chance to read the q yet but has anyone seen anything about BYD? Is that holding being fully sold? 

[gfp]

20 minutes ago, yesman182 said:

I haven’t had a chance to read the q yet but has anyone seen anything about BYD? Is that holding being fully sold? 

 

There isn't any disclosure on BYD in the Berkshire Hathaway 10Q but we have more recent disclosures out of HK that show BHE owning 54.2 million HK:1211 shares as of 7/16/2024.  These shares would be worth around $1.52 Billion USD at current prices.  There won't be any more disclosure updates from the Hong Kong exchange because BHE has passed below 5% of the Hong Kong listed share class.  BHE will file a 10Q on Monday but it won't be more up to date than the 7/16 disclosure.  

 

Long way of saying: we won't know if the position is fully sold until Berkshire Hathaway Energy files a future 10Q showing it gone.

 

BHE has settlements to pay and large growth capex plans so they may want the capital.

[Munger_Disciple]

Insurance is doing great! Real estate brokerage business is still doing poorly (no surprise here), lost $116 mm in the first half of 2024 due to litigation payouts. BNSF earnings were down slightly with coal revenues down a lot. As @gfp already pointed out, BHE results were dragged down by wildfire loss accruals. MSR earnings down slightly.

My guess is that Warren continued to sell Apple in Q3 along with BAC. Warren probably thinks markets are quite frothy here and is clearing the deck of common stocks for Greg.

Edited August 3 by Munger_Disciple

[Jaygo]

looks pretty good to me. The smaller operating subs are likely flat to down. Just like the majority of industrial America btw.

 

I am please with the stock sales. It makes it easier on the others to have major decisions made before the handoff is completed. 

 

Greg is going to be a great operator and I wouldn't be surprised to see the operating earnings start to grind higher or those business be sold off.

 

The investment team is good but the size is just too much so sell some stakes and buyback the equivalent. A special div or return of capital if possible wouldn't be the worst outcome to start a fresh too. Let say they return $ 50.00 a b share. My average would be under $100 bucks on a 380 share price. if its possible to do it tax free all the better.

 

 

[Munger_Disciple]

34 minutes ago, charlieruane said:

Susan Decker suggested they'd consider a special dividend before a regular dividend. I wonder how Berkshire would telegraph that decision if it ever comes to pass—any ideas? 

 

For shareholders with large taxable stakes living in high-tax areas, it would be kind to announce the dividend a year or two in advance. 

 

As a long time shareholder, I would hate to see a special dividend unless it is tax-free (return of capital sort of thing). I would rather they buyback stock closer to intrinsic value even without a big discount than a dividend. I care less about what Susan Decker thinks; she owns almost nothing in Berkshire stock. Everyone else on Berkshire board owns a lot more stock & I hope they make the correct shareholder friendly decision. 

Edited August 3 by Munger_Disciple

[Spekulatius]

5 hours ago, gfp said:

If my envelope math is correct he is down to about 400m AAPL shares at quarter end (from 789.37m AAPL shares at Q1 quarter end)

 

Looks like CVX is down to ~ 118.9m shares from 122.98m, another trim there

 

Obviously BYD was being sold in the quarter.

 

Subsequent to quarter-end we have the BAC sales.  Seems possible he stopped selling AAPL after quarter-end but we'll see next Q.

 

Tax rate is ~ 20% on these sales.  US. Treasury is about to get some big checks from Omaha next two quarters.

I bet he sells down his entire Apple stake. Once he starts selling a significant part of his holding, he rarely stops. This wasn’t a permanent position after all or he thinks it just got too rich or maybe he is bothered by China risk.

[Eldad]

41 minutes ago, Spekulatius said:

I bet he sells down his entire Apple stake. Once he starts selling a significant part of his holding, he rarely stops. This wasn’t a permanent position after all or he thinks it just got too rich or maybe he is bothered by China risk.

The buyback magic probably already happened on Apple and there is no way to predicts it’s durability like a KO or BNSF. 

[adesigar]

I doubt he is bothered by China risk for AAPL. Risk is nowhere close to TSMC.

 

I think he is either really worried about the economy/tax increases or is making BRK more manageable for Greg Abel before he hands things off. I really hope its not some huge one time dividend. What's annoying is that he could have bought back so much more stock in 2022/2023 but didn't.

[John Hjorth]

49 minutes ago, charlieruane said:

Susan Decker suggested they'd consider a special dividend before a regular dividend. I wonder how Berkshire would telegraph that decision if it ever comes to pass—any ideas? 

 

For shareholders with large taxable stakes living in high-tax areas, it would be kind to announce the dividend a year or two in advance. 

 

Personally I have no clue which kind of interaction between Berkshire management and Berkshire board of directors could lead to such a decision and thereby similar message to shareholders.

 

Personally, I would consider it capitulation.

 

If it may ever happen in future, I'll consider Mr. Abel not fit and proper for his position, and take the consequences related hereto, over time.

 

More than the last half decade or so, I've constantly and relentlessly been thinking about what to substitute Berkshire with, if the tax heat from Berkshire on me and my family gets too intense, from a shareholder perspective, and I've now localized and found what to me a suitable alternative for going forward, a mental process that now has taken almost half a decade.

 

At that place there has never been any public discussions about if size matters to returns - That angle is simply a no-go. The only thing that matters there is what to do from where you are, and then to really do it, and execute. No talk about size etc. - ever.

 

This size issue is also about attitude : 'What is possible to achieve?' -The answer to the question is lot about attitude.

[Junior R]

Berkshire didn't really buy alot of stocks during covid drop not sure having this much cash means much for market

[Eldad]

5 minutes ago, Junior R said:

Berkshire didn't really buy alot of stocks during covid drop not sure having this much cash means much for market

The old man is an enigma for sure. 

[Charlie]

Barrons take on Berkshire's earnings: Berkshire Hathaway’s Operating Profit Rises 15%, Cash Level at Record $277 Billion

 

https://www.barrons.com/articles/berkshire-hathaway-earnings-warren-buffett-d33b8026?mod=md_stockoverview_news

[valueinvesting101]

I wonder if he is planning to do something with his own holding of Berkshire Hathaway. He recently made a change for donation to Gate's charity. It could a trade to swap Apple holding for a large buyback. With the recent sale of BAC in July, possibly more shares sales of other holdings such as CVX, continued cash generation from operating companies, dividend interest income in the next few months, cash could easily top $300 billion soon. I wonder if he is planning to make an announcement around his birthday. 

Edited August 3 by valueinvesting101

[Spekulatius]

 Maybe he just creates a clean slate for his successor. He is making quite a few changes to his donations already, so I think this could be another estate planning move.

[Buckeye]

Any chance they’d do a tender offer? 

[Blugolds]

Return of capital would an option, although I would rather they have solid alternative options. I dont think a Div is on the table currently. BRK shareholders (myself included) have been pretty clear about how they feel about div when voting on proposals. I dont think BRK would sell Apple and pay a tremendous amount of tax on that money, just to pay it out to shareholders who then also pay tax on it. Just doesnt seem logical. 

 

My guess is Apple position getting big, valuation is full. I think its funny when people comment on BRK Apple position as being too big, too dependent on one single holding, too much risk...then they reduce the position and then people complain, "well what the hell is he gonna do with all that cash?! what is the better alternative!? why is he keeping KO and selling Apple?!" 

 

This IS a tremendous amount a cash, and certainly seems like such behavior would indicate some kind of reasoning for such. 

[KPO]

5 hours ago, valueinvesting101 said:

I wonder if he is planning to do something with his own holding of Berkshire Hathaway. He recently made a change for donation to Gate's charity. It could a trade to swap Apple holding for a large buyback. With the recent sale of BAC in July, possibly more shares sales of other holdings such as CVX, continued cash generation from operating companies, dividend interest income in the next few months, cash could easily top $300 billion soon. I wonder if he is planning to make an announcement around his birthday. 

This is an interesting possibility. One thing I’ve always wondered is how he tries to keep the A shares in the hands of people that protect the culture.  

[UK]

Personally I like WB selling that much of Apple. Even after this sale it would still be ~30 percent of total marketable securities? Probably should even sell some more:). It makes a lot of sense because of the huge position size, valuation, maybe even too much of China dependance etc. But, despite of him also selling some BAC and other investments, I do not think this tells anything much about the market, as some in the media are trying to suggest. Anything, perhaps even including very big acquisition, is possible, but my guess all this is more likely related to a preparation for a future managment transition. I am not sure what to think of about 1/3 of BRK market CAP being in cash now. I still would not like to see a special (or any:)) dividend, but am afraid this is also quite possible. On the flip side, if it stays this way, one will be able to say BRK is his cash substitute even more assuredly:)

 

Edited August 4 by UK

[Libs]

I was never comfortable with how big the AAPL position got. Very glad to see this news. 

[Cigarbutt]

1 hour ago, UK said:

...I do not think this tells anything much about the market...

Limitations related to below:

-What do i know?

-Mr. Buffett's investing area of present interest is different from mine

-There may be idiosyncratic reasons not visible now etc...

-But

Using a conceptual thinking frame suggested by Brooklyn Investor:

2017   105

2018   101

2019   106

2020   109

2021   108

2022   88

2023   106

The average (1995-2023) is still 105 and the standard deviation is 13 (12.6), so as of end of Q2 2024, the ratio (1.62) is about 4.5 x SD from mean.

There are reasons for some variation and it's possibly only some kind of correlation and not a conscious effort to time markets but it's interesting nonetheless..

-----

Of course, i have no clue what's going on and can only admire breathtaking moves such as what is being accomplished now; it's a feeling similar to watching some of the Paris Olympics competitions, ie one can vaguely grasp the value of amazing performances without really understanding how this can be achieved.

But history shows that luck is not the main factor.

Edited August 4 by Cigarbutt
minor and non-material correction

[UK]

2 hours ago, Cigarbutt said:

2017   105

2018   101

2019   106

2020   109

2021   108

2022   88

2023   106

The average (1995-2023) is still 105 and the standard deviation is 13 (12.6), so as of end of Q2 2024, the ratio (1.62) is about 4.5 x SD from mean.

There are reasons for some variation and it's possibly only some kind of correlation and not a conscious effort to time markets but it's interesting nonetheless..

 

Yes, I agree, more likely than not, quite soon this extra will be either spend somehow (elephant?) or somehow (special dividend, but hopefully something else/creative?) returned to shareholders. What I doubt, it is some kind of market timing, as some headlines a starting to suggest, but what do I know...

[Charlie]

16 hours ago, Cigarbutt said:

Of course, i have no clue what's going on and can only admire breathtaking moves such as what is being accomplished now; it's a feeling similar to watching some of the Paris Olympics competitions, ie one can vaguely grasp the value of amazing performances without really understanding how this can be achieved.

But history shows that luck is not the main factor.

 

+1

 

Yeah, Buffett is in investing what Micheal Phelps is in swimming, Michael Jordan is in basketball, Tiger Woods is in golf, Einstein was in physics and Mozart was in music. The best capital allocator in the world and capital allocation is enormously important. 

And he is surrounded by people similar to him.

 

Edited August 4 by Charlie

[73 Reds]

9 hours ago, Libs said:

I was never comfortable with how big the AAPL position got. Very glad to see this news. 

I'm of a different ilk.  If you believe this is a "better" than wonderful company, why pay taxes and then have to find an even better than "better wonderful company" in which to invest?

[Spekulatius]

What is most surprising to me is that BRK can sell 5% of a Megacap in a quarter and nobody noticed it, until the filing came out.

[nwoodman]

37 minutes ago, Spekulatius said:

What is most surprising to me is that BRK can sell 5% of a Megacap in a quarter and nobody noticed it, until the filing came out.

Isn’t that the very definition of a “Megacap”.  Berkshire is a mere minnow.

 

Edit: sorry if the subtlety of you comment was lost on me , it won’t be the first time.

Edited August 4 by nwoodman