BRK Q3 Results

[Jaygo]

1 minute ago, 73 Reds said:

Can any one of those Canadian bargains move BRK's needle?  Maybe he should offer to buy a Canadian province.

Ouch!! Reds.

 

Yes there are lots of companies that could move the needle. They could easily buy anyone in the commodities space and have access to the longest reserve lives of oil, potash, gold or nat gas. Suncor, ARC energy, Agnico Eagle, Nutrien, WFC jump out as do able and all trade cheaper than BRK

 

Couch tarde, Dollarama, Transforce, Thompson Reuters, Waste connections are all great companies who could use the cheap capital BRK should supply to grow larger.

 

 

 

 

 

 

 

[gfp]

spotted on Greg Abel's office wall

 

[73 Reds]

5 minutes ago, Jaygo said:

Ouch!! Reds.

 

Yes there are lots of companies that could move the needle. They could easily buy anyone in the commodities space and have access to the longest reserve lives of oil, potash, gold or nat gas. Suncor, ARC energy, Agnico Eagle, Nutrien, WFC jump out as do able and all trade cheaper than BRK

 

Couch tarde, Dollarama, Transforce, Thompson Reuters, Waste connections are all great companies who could use the cheap capital BRK should supply to grow larger.

 

 

 

 

 

 

 

Comment was made in jest but are any of these companies truly large enough to make a difference?  With regard to commodities, what benefits does Canada offer to similarly situated companies in the US and elsewhere?

[KPO]

3 minutes ago, gfp said:

spotted on Greg Abel's office wall

 

Enbridge comes to mind, but that would have made more sense 3-4 years ago. Still own shares and love the business though, so there are certainly worse things they could buy. 

[Jaygo]

The comment was funny. Many of these companies do have the scale to move the needle as well as inflation protection built in via incredible reserves. Some oil sands players have 40 years of proven reserves. 

 

I think the benefit to the commodities space is reserves and the value placed on them. The oil sands are extremely long life assets that are very cheap in comparison to the US players as far as I know. Suncor did 10 billion in income last year and the company trades at a 55 Billion EV Chevron did 25B income on 320 B EV rough numbers

 

Ontario is now or soon to be the largest gold mining jurisdiction in the world and AEG is smack in the middle of it. There are decades of PM's in place plus basically every other valuable metal right in their backyard.

 

As for the non commodity companies they are excellent operators who grow via acquisitions. Seems like BRK could use that kind of energy around and why not use the cash hoard to advantage their own businesses via cheaper dept and a financial safe haven.

 

 

 

 

[Jaygo]

15 minutes ago, KPO said:

Enbridge comes to mind, but that would have made more sense 3-4 years ago. Still own shares and love the business though, so there are certainly worse things they could buy. 

Yes the pipes are amazing, stable businesses but two issues I see with them for BRK. One is possible antitrust, the second is liability. If BRK is going to have a target on its back for lawsuits the pipes may be a problem. A sagd mine out in the hinterland seems less litigated.

[flesh]

Anyone get updated brk b book value?

 

 

[wabuffo]

Back of the envelope, 7/16 ownership was 54,200,142 HK:1211 shares and I estimate 9/30 ownership was about 22.66m shares.  Wouldn't be surprised if that is zero now.

 

I get similar numbers.   In addition, DJCO has been a seller of its BYD position over the same time frame.  My calculations are that it has sold 65-70% of its original stake since the end of 2020.

 

Bill

[gfp]

12 minutes ago, flesh said:

Anyone get updated brk b book value?

 

 

 

$291.72 on 9/30

[Eldad]

1 hour ago, KPO said:

Enbridge comes to mind, but that would have made more sense 3-4 years ago. Still own shares and love the business though, so there are certainly worse things they could buy. 

I would expect him to have that on his wall with what they already own. 

[Xerxes]

2 hours ago, KPO said:

Enbridge comes to mind, but that would have made more sense 3-4 years ago. Still own shares and love the business though, so there are certainly worse things they could buy. 

 

South Bow - which is really Keystone XL being spun off Transcanada energy (TC Energy)

[gfp]

This was a good article from Andrew Bary at Barrons on the two big charges at Berkshire's insurance businesses in the quarter -

 

https://www.barrons.com/articles/berkshire-insurance-losses-buffett-e50a8c10

[Munger_Disciple]

57 minutes ago, gfp said:

This was a good article from Andrew Bary at Barrons on the two big charges at Berkshire's insurance businesses in the quarter -

 

https://www.barrons.com/articles/berkshire-insurance-losses-buffett-e50a8c10

 

Can't imagine this being accurate:

 

"It appears that Berkshire Hathaway’s liability in the Whittaker Clark situation isn’t capped, which would be unusual for Berkshire Hathaway, which normally seeks to limit its liabilities in these situations."

[gfp]

When you think you're buying a bucket of money and asbestos liabilities and they throw in the Talc for free!

 

https://cases.stretto.com/public/x242/12153/CORRESPONDENCE/1215305042350000000011.pdf

 

https://news.bloomberglaw.com/bankruptcy-law/berkshire-affiliate-whittaker-strikes-535-million-bankruptcy-deal

https://www.wsj.com/articles/berkshire-affiliates-535-million-talc-plan-faces-conflict-claims-4fc040a6

Edited 16 hours ago by gfp

[Munger_Disciple]

15 minutes ago, gfp said:

When you think you're buying a bucket of money and asbestos liabilities and they throw in the Talc for free!

 

https://cases.stretto.com/public/x242/12153/CORRESPONDENCE/1215305042350000000011.pdf

 

Wow! Thanks for the info

[cubsfan]

10 hours ago, Spooky said:

 

You're onto something here Parsad. Either taxes need to rise or spending needs to be cut - otherwise the US could be headed for a similar story to what is happening in the UK with yields on government bonds rising sharply. The Fed is not really in control of interest rates on government debt, rather it is market participants' willingness to lend to the government. There is a scenario where US interests could end up being higher than the market is currently forecasting and we know what would happen to stocks in this scenario.

 

I thought the Paul Tudor Jones interview on this debt and tax issue was along the same lines.

Kicking the can down the road can't last forever.  Maybe WEB agrees.

 

 

 

 

[Parsad]

10 hours ago, Spooky said:

 

You're onto something here Parsad. Either taxes need to rise or spending needs to be cut - otherwise the US could be headed for a similar story to what is happening in the UK with yields on government bonds rising sharply. The Fed is not really in control of interest rates on government debt, rather it is market participants' willingness to lend to the government. There is a scenario where US interests could end up being higher than the market is currently forecasting and we know what would happen to stocks in this scenario.

 

21 hours ago, Parsad said:

Anyone know how much debt is coming up for renewal by the U.S. each year for the next 4 years?

 

Anyone know exactly how much debt will be added by Harris or Trump based on their policies over the next 4 years?

 

Is everyone convinced that rates on U.S. debt will continue to drop or remain where they are, even as the Fed continues to unwind their balance sheet?

 

Is Buffett too eager, or does he see that interest rates will have to rise over the next few years?

 

Cheers!

 

Some answers for you:

 

$9T of U.S. debt maturing this year alone.

 

$1T of deficits per year regardless of which party wins.

 

Another interesting fact:

 

Average duration of U.S. debt is only 6 years.

 

While I don't think we are going to see 1980 type rates, I certainly don't see low rates being offered on long-term U.S. debt, as the amount of debt maturing is going to be far higher than simple demand.  

 

Cheers!

 

 

 

 

 

 

[Spekulatius]

Sovereign debt buyers hate political instability for good reasons. Any default of sovereign debt is almost always the result of political upheaval. So if we get another riot post election, I think the chance are pretty high than that US debt will get an explicit or implicit (via higher interns rates)  downgrade.

[wabuffo]

… I certainly don't see low rates being offered on long-term U.S. debt, as the amount of debt maturing is going to be far higher than simple demand

 

US Treasury security issuance is always, ALWAYS, pre-funded by the deficit spending that precedes it.  
 

As a floating exchange rate sovereign issuer in its own currency, the purpose of US Treasury security issuance is to drain the reserves its deficit spending creates, otherwise rates fall to zero (or even go negative).

 

And now that the Federal Reserve is allowed to pay interest on excess reserves, I’m not sure Treasury security issuance is even necessary (other than due to political constraints that do not permit the Treasury to overdraw its general account at the Fed.)

 

Interest rates are a policy choice to offer safe interest earning assets to the private sector.  The term structure of rates is not set by market forces.
 

There are no bond vigilantes.  There is no “crowding out”.

 

Bill

[Eldad]

11 minutes ago, wabuffo said:

… I certainly don't see low rates being offered on long-term U.S. debt, as the amount of debt maturing is going to be far higher than simple demand

 

US Treasury security issuance is always, ALWAYS, pre-funded by the deficit spending that precedes it.  
 

As a floating exchange rate sovereign issuer in its own currency, the purpose of US Treasury security issuance is to drain the reserves its deficit spending creates, otherwise rates fall to zero (or even go negative).

 

And now that the Federal Reserve is allowed to pay interest on excess reserves, I’m not sure Treasury security issuance is even necessary (other than due to political constraints that do not permit the Treasury to overdraw its general account at the Fed.)

 

Interest rates are a policy choice to offer safe interest earning assets to the private sector.  The term structure of rates is not set by market forces.
 

There are no bond vigilantes.  There is no “crowding out”.

 

Bill

Lot of words to just say “Print Money”. There is nothing new under the sun.

[UK]

Who knows, but maybe all this selling is not some kind of mother of all market timing at all and is more related with future managment transition at BRK?

 

Edited 11 hours ago by UK

[Blake Hampton]

Look at how much fixed-income Buffett currently owns, I believe the treasury markets are asking for it. The problem to me lies in the fact that every other asset market is underpinned by treasuries, particularly real estate through mortgage financing.

[Munger_Disciple]

There was a good interview with Sheila Bair, former chair of FDIC on CNBC today. She also warned about the un-sustainability of growing US debt and its potential impact on the yield of longer dated US treasuries. 

[Parsad]

3 hours ago, wabuffo said:

… I certainly don't see low rates being offered on long-term U.S. debt, as the amount of debt maturing is going to be far higher than simple demand

 

US Treasury security issuance is always, ALWAYS, pre-funded by the deficit spending that precedes it.  
 

As a floating exchange rate sovereign issuer in its own currency, the purpose of US Treasury security issuance is to drain the reserves its deficit spending creates, otherwise rates fall to zero (or even go negative).

 

And now that the Federal Reserve is allowed to pay interest on excess reserves, I’m not sure Treasury security issuance is even necessary (other than due to political constraints that do not permit the Treasury to overdraw its general account at the Fed.)

 

Interest rates are a policy choice to offer safe interest earning assets to the private sector.  The term structure of rates is not set by market forces.
 

There are no bond vigilantes.  There is no “crowding out”.

 

Bill

 

I would agree with this 99 out of 100 times.  It's that 1 in 100 event that I wonder about.  The event that economists and officials haven't put into their models...or somehow manage to ignore.  Only when the shit hits the fan, do the cracks appear.  Cheers!

[Spooky]

10 hours ago, wabuffo said:

And now that the Federal Reserve is allowed to pay interest on excess reserves, I’m not sure Treasury security issuance is even necessary (other than due to political constraints that do not permit the Treasury to overdraw its general account at the Fed.)

 

Interest rates are a policy choice to offer safe interest earning assets to the private sector.  The term structure of rates is not set by market forces.

 

Can you please elaborate on this further? What would happen if there is not enough private sector demand to buy the US Treasuries offered at auction?