BRK Q3 Results

[gfp]

Press release:

https://www.berkshirehathaway.com/news/nov0224.pdf

 

10Q:

https://www.berkshirehathaway.com/qtrly/3rdqtr24.pdf

 

Insurance float up $5 Billion since the end of Q2!  Surprising

[SongDonkey.AI]

10 minutes ago, gfp said:

since the end of Q2!

 

since yearend 2023

[gfp]

1 minute ago, SongDonkey.AI said:

 

since yearend 2023

"At June 30, 2024, insurance float (the net liabilities we assume under insurance contracts) was approximately $169
billion."

 

"

At September 30, 2024, insurance float (the net liabilities we assume under insurance contracts) was approximately $174 billion, an increase of $5 billion since yearend 2023."

[gfp]

Looks like he kept selling Apple in the quarter and maybe the round number he stopped at is actually 300m shares

 

quite the tax bill

"Our sales of equity securities produced taxable gains of $23.4 billion in the third quarter and $97.1 billion in the first nine months of 2024"

Edited Saturday at 12:52 PM by gfp

[backtothebeach]

	2023 Q3	2024 Q2	2024 Q3
Book Value
BH SE in Mio.	525,330	601,697	629,069
A share equ Q end	1,445,546	1,436,696	1,437,608
BV per A	363,413	418,806	437,580
BV per B	242.28	279.20	291.72
current B share price	351.7	428.36	452.14
Mcap	762,598	923,135	975,000
BV multiple	1.45	1.53	1.55
Cash
cash & equiv.	25,573	36,884	32,287
treasury bills	126,401	234,618	288,031
cash railroad	5,267	5,440	4,894
payable for treasuries			-14,868
Total	157,241	276,942	310,344
Cash % of Market Cap	20.6%	30.0%	31.8%
Operating Earnings
Insurance underwriting	2,422	2,263	750
Insurance investment	2,470	3,320	3,664
BNSF	1,221	1,227	1,383
BHE	498	655	1629
Pilot	183	171	198
MSR	3,341	3,209	3,144
non-controlled businesses	226	220	199
other	400	533	-877
Operating Earnings	10,761	11,598	10,090

[backtothebeach]

Operating earnings not so great because of insurance and "other", whatever that includes. No buybacks during or after the end of the quarter. What the hell is he planning with all that cash?!

[Junior R]

6 minutes ago, backtothebeach said:

Operating earnings not so great because of insurance and "other", whatever that includes. No buybacks during or after the end of the quarter. What the hell is he planning with all that cash?!

buy chubb lol joking

[nwoodman]

9 minutes ago, backtothebeach said:

Operating earnings not so great because of insurance and "other", whatever that includes. No buybacks during or after the end of the quarter. What the hell is he planning with all that cash?!

1. Market valuation 2. A life insurance policy that only Berkshire can write….buybacks?

[gfp]

BRK underwriting results were hit by Helene ($565m) and a large NICO bankruptcy court settlement (~$500m).  Luckily GEICO is back in the black offsetting that.  Geico Helene losses were $260m of the total

 

 Milton will take a hit in Q4:

 

"

We currently estimate that pre-tax incurred losses from Hurricane Milton could be between $1.3 billion and $1.5 billion. Losses from this event will be reflected in our fourth quarter earnings based on information available at that time."

Edited Saturday at 01:29 PM by gfp

[73 Reds]

48 minutes ago, backtothebeach said:

Operating earnings not so great because of insurance and "other", whatever that includes. No buybacks during or after the end of the quarter. What the hell is he planning with all that cash?!

No share buybacks is not real surprising, particularly if you go back and read his last downtrodden letter to shareholders.  A combination of stretched valuations and stalwart holdings with a lot more future uncertainty doesn't provide much buyback appeal.   

[yesman182]

1 hour ago, gfp said:

97.1 billion in the first nine months of 2024"

Has this already been paid, or is 100 of the 300 cash already spoken for? 

[sleepydragon]

old man still capable of big swings— this time loading up on cash

[jbwent63]

Other includes huge swings in f/x gains and losses, primarily on the foreign denominated debt (think yen debt). If this is stripped away, operating earnings are actually higher.

[gfp]

16 minutes ago, yesman182 said:

Has this already been paid, or is 100 of the 300 cash already spoken for? 

 

$97 Billion is the taxable gain not the tax bill due.  You can use 21% to pencil in a figure.  Cash paid for taxes during the first 9 months has been $17.5 Billion so Berkshire is paying some tax as it goes.  There are a lot of moving parts and tax credits but cash arrives every day so I wouldn't be handicapping the cash pile for accrued expenses.  Especially if repurchases remain on pause - Berkshire can stack cash awfully quickly.  (plus we know the BofA sales continued after the quarter end)

Edited Saturday at 02:13 PM by gfp

[Masterofnone]

There seems to me to be only two possible reasons the old fellow is raising so much cash:

A huge purchase (think Mars) or a conviction that the odds are good for a substantial "correction" in the markets.

He doesn't like to buy things when prices are dear, so my odds-making would be that he is substantially pessimistic about where markets are headed.

Any thoughts?

[73 Reds]

10 minutes ago, Masterofnone said:

There seems to me to be only two possible reasons the old fellow is raising so much cash:

A huge purchase (think Mars) or a conviction that the odds are good for a substantial "correction" in the markets.

He doesn't like to buy things when prices are dear, so my odds-making would be that he is substantially pessimistic about where markets are headed.

Any thoughts?

My thoughts about Berkshire extend well beyond the present time.  How does Buffett view the future?  If investment alternatives are limited now, what about 5 and 10 years from now?  How large can Berkshire grow until something needs to change?  Will any such changes happen during Buffett's tenure, and if so, what will they be?

[gfp]

Cash headlines seem to be a little bit inflated if there isn't another explanation for these $14.868 Billion in T-bills that Berkshire hadn't yet paid for on 9/30:

 

(under liabilities)

Payable for purchases of U.S. Treasury Bills

14,868

[backtothebeach]

1 hour ago, gfp said:

Cash headlines seem to be a little bit inflated if there isn't another explanation for these $14.868 Billion in T-bills that Berkshire hadn't yet paid for on 9/30:

 

(under liabilities)

Payable for purchases of U.S. Treasury Bills

14,868

Yes, there is one precedent for that, in Q3, 2020 I think, when the media didn’t notice the payable for T bills as well, some of them corrected it, some didn’t.

[gfp]

5 minutes ago, backtothebeach said:

Yes, there is one precedent for that, in Q3, 2020 I think, when the media didn’t notice the payable for T bills as well, some of them corrected it, some didn’t.

Yeah I remember that happening.  It's just an overnight liability really but the balance sheet is a snapshot of a moment in time.  Either way, BAC sales are probably ongoing and there is plenty of cash rolling in

[LearningMachine]

Wow, BRK currently has more invested in treasuries & cash ($310.34B) vs. equity securities ($271.65B).

 

Looks like it was the case from 2000 to 2006 as well, and then Buffett started deploying in 2007-2009.  So, he has got lots of patience. 

 

Would love to hear stories from anyone else with that much patience in waiting while treasuries were yielding reasonably, and then successfully leveraging the opportunities when they came.

 

Edited Saturday at 05:08 PM by LearningMachine

[RunPacoRun]

2 hours ago, Masterofnone said:

Any thoughts?

 

Combining your thoughts here, LearningMachine's, and others on this thread, the Berkshire's underlying motives really go back to the basics:

* The discount to intrinsic value for equities in the portfolio has been reached or exceeded.

* Treasuries at today's quoted risk-free rates than what's out there for equities and large wholly-owned companies.

* They're going to make a big purchase, such as CB.

 

Looking back to pre-2008 and pre-2000, they were just acting on points 1 and 2.

 

Again, these are just inferences from other people's ideas and what has been written in the annual reports.

[Spooky]

He sure does love T-Bills right now. Up to $288 B from $129 B at year end! I wonder how much of the equity sales are tied to: a) the risk of higher potential taxes after the election; b) overvaluation of Apple; or c) probability of some kind of financial crash. Buffett always said he doesn't do market timing / macro but he has been pretty good at it in the past.

 

For point c) one thing I have been thinking about are Elon's comments if Trump wins where he will slash government spending by $2 Trillion. Given how much government spending / deficits are contributing to GDP currently this could create a serious recession.

Edited Saturday at 05:48 PM by Spooky

[DooDiligence]

4 hours ago, Masterofnone said:

There seems to me to be only two possible reasons the old fellow is raising so much cash:

A huge purchase (think Mars) or a conviction that the odds are good for a substantial "correction" in the markets.

He doesn't like to buy things when prices are dear, so my odds-making would be that he is substantially pessimistic about where markets are headed.

Any thoughts?

 

A guy can dream, right?

 

https://markets.businessinsider.com/news/stocks/warren-buffett-spent-billions-help-mars-buy-wrigley-2008-crisis-2020-7-1029366581

 

Pet products and rolling up vet clinics is interesting.

 

Just another pointless fantasy?

 

 

Edited Saturday at 06:42 PM by DooDiligence

[Munger_Disciple]

12 minutes ago, DooDiligence said:

 

A guy can dream, right?

 

https://markets.businessinsider.com/news/stocks/warren-buffett-spent-billions-help-mars-buy-wrigley-2008-crisis-2020-7-1029366581

 

Pet products and rolling up vet clinics is interesting.

 

Just another pointless fantasy?

 

 

 

There is no way the Mars family wants to sell such a great business unless there are family issues with control. 

[KPO]

11 minutes ago, Munger_Disciple said:

 

There is no way the Mars family wants to sell such a great business unless there are family issues with control. 

I suppose he could buy the world’s largest packaged food company if he cashed in their L’ Oreal stake, but I suspect he’s just doing some combination of portfolio rebalancing, building a war chest for the next downdraft and setting up his successor.