BRK - Berkshire Hathaway Inc (NYSE)

[Value Collector]

Berkshire Hathaway is a US Based conglomerate controlled by billionaire investor Warren Buffet. Warren Buffet currently is the largest shareholder owning a little over 25% of the company, and the stake represents 99% of his net worth.

Berkshire Hathaway controls 59 subsidiary companies holding a diverse list of businesses diversified by business type, geography and industries, many of Berkshire's subsidiary companies are themselves a diversified mix of businesses.

Berkshire also owns large stakes in more than 40 companies listed on the US share market, and some international investments.

On top of the business holdings above, Berkshire is currently sitting on a cash pile of roughly $40 Billion.

 

[galumay]

Re: BRK - Berkshire Hathaway

Probably worth mentioning that there are two classes of BRK traded,

Berkshire Hathaway Inc. has two classes of common stock designated Class A and Class B. A share of Class B common stock has the rights of 1/1,500th of a share of Class A common stock except that a Class B share has 1/10,000th of the voting rights of a Class A share (rather than 1/1,500th of the vote). Each share of a Class A common stock is convertible at any time, at the holder’s option, into 1,500 shares of Class B common stock. This conversion privilege does not extend in the opposite direction. That is, holders of Class B shares are not able to convert them into Class A shares. Both Class A & B shareholders are entitled to attend the Berkshire Hathaway Annual Meeting which is held the first Saturday in May.

Full details here, http://www.berkshirehathaway.com/compab.pdf

BRKA are $214,100 per share today and the BRKB shares are $142.09

 

[Value Collector]

Re: BRK - Berkshire Hathaway

Berkshire Hathaway's strategy,

Berkshire Hathaway is focused on building share holder value through a three pronged approach.

1, Berkshire, using sound value investing principles continues to expand it's holdings of 100% owned subsidiary companies, these companies inturn also then have access to Berkshire capital to continue to grow if suitable capital deployments can be made with in their businesses.

2, When Berkshire has cash in excess of what it needs to buy wholly owned subsidiaries, they will be looking to buy shares in companies on the stock market that meet their long term value investing criteria.

3, Berkshire also will deploy capital to make financing deals with JV partners when suitable deals can be found, past deals have taken on may shapes, be in general they have been very profitable. A recent example is the burger king/ tim hortens deal with 3G CAPITAL.

----------------------

Assisting the strategy above, Is Berkshires insurance subsidiaries, Berkshire Hathaway has in the last 50 years always held a pool of well managed insurance businesses, this has given then a mighty leg up. Insurance Businesses generate a "float", meaning a pile of cash that they have taken as insurance premiums can be invested and generate earnings while they hold it, because Berkshire has a history of making sound investments this "float" has help generate substantial returns, which can flow through to Berkshires holdings.

Provided that Berkshire doesn't make large insurance losses on average over the years, and they continue to write insurance premiums, the insurance businesses should continue to be good profit centres.

 

[Value Collector]

Re: BRK - Berkshire Hathaway

Dividend policy.

Berkshire currently does not pay a dividend and has not paid a dividend since 1965.

Warren believes that as long as Berkshire Hathaway continues to build book value at a rate better than the s&P 500 index, then it is better to retain 100% of earnings so that they can be reinvested back into the business at a higher rate of return.

However, Warren has also admitted that this won't be able to be done indefinitely, and has said that most likely within the next 10-20years, Berkshire will begin paying out excess cash as dividends, however his preference is to use excess cash for buybacks, as long as Berkshire is trading less than 130% of book value.

 

[luutzu]

Re: BRK - Berkshire Hathaway

Dividend policy.

Berkshire currently does not pay a dividend and has not paid a dividend since 1965.

Warren believes that as long as Berkshire Hathaway continues to build book value at a rate better than the s&P 500 index, then it is better to retain 100% of earnings so that they can be reinvested back into the business at a higher rate of return.

However, Warren has also admitted that this won't be able to be done indefinitely, and has said that most likely within the next 10-20years, Berkshire will begin paying out excess cash as dividends, however his preference is to use excess cash for buybacks, as long as Berkshire is trading less than 130% of book value.

... and you just bought some right?

 

[Value Collector]

Re: BRK - Berkshire Hathaway

... and you just bought some right?

I bought some a little while ago, and some more last night.

Basically I am funnelling the dividends that my US portfolio generates into Berkshire Hathaway.

 

[robusta]

Re: BRK - Berkshire Hathaway

I'm not set up to trade international shares, looked at GFL at around $0.55 a couple of years ago but never pulled the trigger.
- GFL is a LIC that is mostly invested in BRK

 

[The Triangle]

Should make for an interesting AGM tomorrow. CM will reportedly be involved and was missing last year due to Covid. Hopefully it doesn't get cluttered with the woke media agenda of board equity, crypto, and green energy.

Given this AGM will be during one of the strangest times for the company they should have some good non-political commentary on the current US Gov's spending. I'm also interested to see if they accept that there is a world outside of the US worth investing in. BKR is too focused on the US and really should see what the world has to offer. WB and Trump are probably the only 2 people left in America that still think its a great place.

 

[dyna]

I think it was 2006 when W.B. sunk $1 Billion into Microsoft when nobody,but nobody, thought there was any growth left in it! Even the great man himself,thought he was buying,what he new best,..a value stock.He's still holding and after last week's stunning result,Berkshire won't be a seller any time soon.

 

[dyna]

Oops,Apple not Microsoft.He's made quite a few $Billion on the the initial deal over 5 years ago.

 

[The Triangle]

Oops,Apple not Microsoft.He's made quite a few $Billion on the the initial deal over 5 years ago.

For all the tech he's missed out on - Don't think I'll give the man much credit for that tech purchase. Unfortunately there are limited opportunities to move the needle for him now - especially on the dividend front so he nearly has to invest in tech or go offshore.

Would like to see if he addresses BNPL. BRK is a big holder of banks, insurance, and credit cards.

 

[InsvestoBoy]

Another that has popped up in my research recently (as you can tell I've been looking at listed conglomerates).

What is Berkshire Hathaway? Is it a carefully curated selection of the choicest fundamentally analysed equities? High ROIC, low WACC, good management, compounding machines blah blah blah.

Sure. Probably.

But also, if you hadn't bothered with any of that and instead just taken all the US listed financial stocks and weighted them by market cap (which does include Berkshire FWIW), you would've gotten basically the same result going back ~10 years.

In fact, post GFC, XLF has well outperformed BRK.

It's only if you widen the lens to begin in the early 2000s that BRK outperforms.

 

[Dona Ferentes]

from out there in newsletterland

Buffett's Calling a Recession—and He's Probably Right​

I always look forward to the first Saturday in May…
And not just because of the Kentucky Derby—it’s also when Warren Buffett hosts the Berkshire Hathaway annual shareholders meeting.
I first made the trek to Omaha in 2014 to attend the meeting. If you’re a shareholder and haven’t been, I highly recommend it, especially since Buffett is turning 93 this year and his partner Charlie Munger is turning 99 next year. Sadly, time is ticking if you want to see the duo in action.
As always, this year’s meeting was full of great information. Yes, Berkshire is a huge insurance company with a massive investment portfolio. But inside Berkshire, there are huge operating businesses, and the performance of those businesses provides a great overview of how the US economy is performing.
In short, if the economy is doing well, Berkshire is likely doing well.
While the insurance and investment segments are in great shape, the operating businesses are where Buffett expects things to slow.
This all translates to Buffett saying we’re in (or are soon to be in) a recession.

All About Inventory​

According to Buffett, the US economy just went through the “most extraordinary economic period since World War II.”
That’s a heck of a statement.

But it makes sense: The government flooded the system with stimulus money. The Fed added fuel to the fire with 0% interest rates. Everyone who owned a home refinanced their mortgage, dropping their mortgage payment substantially. That was stimulative. And, of course, the government handed out a ton of cash to individuals and businesses.
With all the extra cash, consumers bought “stuff.” Lots and lots of stuff, which depleted the inventory on hand at many retailers. In response, retailers bought as much inventory as they could get their hands on. By the time a lot of that inventory arrived, consumers began to slow their purchases. The stimulus wore off, and unfortunately, retailers were stuck with all this inventory.
That’s where we are today.

According to Buffett, he expects earnings out of the operating businesses at Berkshire to be lower than before. A broad-based decline in earnings is one sign of a recession.
Is it time to sell stocks based on this? Of course not. We’re likely in a recession now. But it doesn’t appear to be a big one.
It will take time for businesses sitting on inventory to clear what they have—be it through sales, markdowns, or write-offs. That’s painful, but it also isn’t catastrophic. The stronger players, like all of Berkshire’s operating businesses, should survive.

One Berkshire Segment That’s Growing​

As I mentioned, Berkshire isn’t just a bunch of operating businesses. It also has a massive investment portfolio.
This isn’t all just common stocks such as Apple, Chevron, and Occidental Petroleum. It’s also a massive pile of cash.
Buffett remarked that this pile of cash—$120 billion or so—earned the company a whopping 0.04% in prior years. That pencils out to $50 million.
This year, with higher rates on short-term government bonds, that cash pile should see interest income grow 10,000%. That means Berkshire’s cash pile should generate $5 billion in interest income.
From $50 million to $5 billion… and all of it essentially risk-free.

Shareholders and the media bashed Berkshire for holding so much low-earning cash in years prior. Many were calling for the company to pay a dividend (it didn’t).
But now, it’s printing money… and in a low-risk way.
Despite declining earnings in its operating businesses, interest income will likely more than offset the decline. It’s truly a remarkable situation.

 

[farmerge]

from out there in newsletterland

Buffett's Calling a Recession—and He's Probably Right​

I always look forward to the first Saturday in May…
And not just because of the Kentucky Derby—it’s also when Warren Buffett hosts the Berkshire Hathaway annual shareholders meeting.
I first made the trek to Omaha in 2014 to attend the meeting. If you’re a shareholder and haven’t been, I highly recommend it, especially since Buffett is turning 93 this year and his partner Charlie Munger is turning 99 next year. Sadly, time is ticking if you want to see the duo in action.
As always, this year’s meeting was full of great information. Yes, Berkshire is a huge insurance company with a massive investment portfolio. But inside Berkshire, there are huge operating businesses, and the performance of those businesses provides a great overview of how the US economy is performing.
In short, if the economy is doing well, Berkshire is likely doing well.
While the insurance and investment segments are in great shape, the operating businesses are where Buffett expects things to slow.
This all translates to Buffett saying we’re in (or are soon to be in) a recession.

All About Inventory​

According to Buffett, the US economy just went through the “most extraordinary economic period since World War II.”
That’s a heck of a statement.

But it makes sense: The government flooded the system with stimulus money. The Fed added fuel to the fire with 0% interest rates. Everyone who owned a home refinanced their mortgage, dropping their mortgage payment substantially. That was stimulative. And, of course, the government handed out a ton of cash to individuals and businesses.
With all the extra cash, consumers bought “stuff.” Lots and lots of stuff, which depleted the inventory on hand at many retailers. In response, retailers bought as much inventory as they could get their hands on. By the time a lot of that inventory arrived, consumers began to slow their purchases. The stimulus wore off, and unfortunately, retailers were stuck with all this inventory.
That’s where we are today.

According to Buffett, he expects earnings out of the operating businesses at Berkshire to be lower than before. A broad-based decline in earnings is one sign of a recession.
Is it time to sell stocks based on this? Of course not. We’re likely in a recession now. But it doesn’t appear to be a big one.
It will take time for businesses sitting on inventory to clear what they have—be it through sales, markdowns, or write-offs. That’s painful, but it also isn’t catastrophic. The stronger players, like all of Berkshire’s operating businesses, should survive.

One Berkshire Segment That’s Growing​

As I mentioned, Berkshire isn’t just a bunch of operating businesses. It also has a massive investment portfolio.
This isn’t all just common stocks such as Apple, Chevron, and Occidental Petroleum. It’s also a massive pile of cash.
Buffett remarked that this pile of cash—$120 billion or so—earned the company a whopping 0.04% in prior years. That pencils out to $50 million.
This year, with higher rates on short-term government bonds, that cash pile should see interest income grow 10,000%. That means Berkshire’s cash pile should generate $5 billion in interest income.
From $50 million to $5 billion… and all of it essentially risk-free.

Shareholders and the media bashed Berkshire for holding so much low-earning cash in years prior. Many were calling for the company to pay a dividend (it didn’t).
But now, it’s printing money… and in a low-risk way.
Despite declining earnings in its operating businesses, interest income will likely more than offset the decline. It’s truly a remarkable situation.

Dona this is an interesting article Thanks

 

[Value Collector]

Dona this is an interesting article Thanks

I haven’t read the full article yet, but just wanted to correct the second paragraph, Charlie is turning 100 next year in Jan, he is already 99.

I was at the share holders Meeting, he is slowing down, but his mind is still sharp ??

 

[farmerge]

I haven’t read the full article yet, but just wanted to correct the second paragraph, Charlie is turning 100 next year in Jan, he is already 99.

I was at the share holders Meeting, he is slowing down, but his mind is still sharp ??

Obviously retirement is notgoing to be part of his future thinking.

 

[Value Collector]

Obviously retirement is notgoing to be part of his future thinking.

At the Meeting Warren pointed out that Rose Blumpkin ran the Nebraska Furniture Mart (a Berkshire owned company) until she was 103, she retired and died the next year at 104. Warren said let that be a warning to all of Berkshires managers, retirement will kill you. ?

 

[JohnDe]

A good short review -

 

[JohnDe]

Warren Buffett’s friend, partner Charlie Munger dies aged 99

No equal business partner has ever played second fiddle better than Charlie Munger.

Warren Buffett’s closest friend and consigliere for six decades, the billionaire vice chairman of Berkshire Hathaway died Tuesday at age 99.

In public, especially in front of the tens of thousands of attendees at Berkshire’s annual meetings, Munger deferred to Buffett, letting the company’s chairman hog the microphone and the limelight. Munger routinely cracked up the crowd by croaking, “I have nothing to add.”

In private, Buffett often deferred to Munger. In 1971, Munger talked him into buying See’s Candy Shops for a price equivalent to three times the chocolate stores’ net worth—a “fancy price,” Buffett later recalled, far higher than he was accustomed to paying for businesses.

See’s would go on to generate some $US2bn in cumulative earnings for Berkshire over the coming decades.

As Buffett wrote in 2015, “This purchase ended my pursuit of ‘cigar-butt’ investments—mediocre companies at ‘bargain’ prices—and set me in pursuit of splendid businesses selling at [reasonable] prices.” He added, “Charlie had been urging this course for some years, but I was a slow learner.”

Buffett nicknamed Munger the “abominable no-man” for his ferocity in rejecting potential investments, including some that Buffett might otherwise have made. But Munger, who was fascinated by engineering and technology, also pushed the tech-phobic Buffett into big bets on BYD, a Chinese battery and electric vehicle maker, and Iscar, an Israeli machine-tool manufacturer.

Warren Buffett and Charlie Munger forged a successful and rich partnership over decades. Picture: Johannes Eisele//AFP

Munger was a brilliant investor in his own right. He began managing investment partnerships in 1962. From then through 1969, the S&P 500 gained an average of 5.6 per cent annually. Buffett’s partnerships returned an average of 24.3 per cent annually. Munger’s did even better, averaging annualised gains of 24.4 per cent. In 1975, shortly before he joined Berkshire as vice chairman, Munger shut down his partnerships.

Over their 14-year history, his portfolios gained an average of 19.8 per cent annually; the S&P 500 grew at only a 5.2 per cent rate.

The two men had long invested differently. Buffett, under the influence of his mentor Benjamin Graham, would buy almost any business, even if it was near-dead, so long as it was cheap.

Among such “cigar butts” was Berkshire Hathaway itself, which had been a dilapidated textile manufacturer when Buffett bought it in 1965.

As Buffett turned Berkshire into a holding company for insurance and other firms, he kept looking for mediocre businesses at bargain prices. Munger instead focused on great businesses at acceptable prices, reckoning that their ability to produce cash in the future would more than compensate for paying a premium price upfront.

Over years of discussion, Munger persuaded his partner to change.

“I have been shaped tremendously by Charlie,” Buffett said in 1988. “Boy, if I had listened only to Ben [Graham], would I ever be a lot poorer.”

In 2015, Buffett wrote that Munger taught him: “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.”

Berkshire “has been built to Charlie’s blueprint,” Buffett added.

Charles Thomas Munger was born in Omaha, Neb., on New Year’s Day, 1924. His father, Alfred, was a lawyer; his mother, Florence, was a homemaker and avid reader.

Munger majored in mathematics at the University of Michigan, then left school to enlist in the U.S. Army Air Corps during World War II. The military first sent Munger to study thermodynamics and meteorology at the University of New Mexico and the California Institute of Technology, then posted him to an air base in Nome, Alaska, where he served as a weather forecaster.

After the war, Munger talked a dean at Harvard Law School into admitting him without a college degree. He graduated magna cum laude.

He considered joining his father’s practice in Omaha before settling in Southern California. He and several partners eventually opened their own law practice in 1962. Today the firm, known as Munger, Tolles & Olson, employs about 200 lawyers.

His first marriage, to Nancy Huggins, ended in divorce. He married his second wife, Nancy Barry Borthwick, in 1956. She died in 2010. They had four children together and two each from their prior marriages.

Munger also confronted tragedy: In 1955, his son Teddy died of leukaemia at age 9. Munger later recalled pacing the streets of Pasadena in tears at “losing a child inch by inch.” More than six decades later he would still choke up at the memory of his son’s suffering.

In 1978, a surgeon bungled a cataract surgery, leaving Munger blind in one eye, which later had to be surgically removed. The investor refused to blame the doctor, noting that complications occurred in 5% of such procedures. For him, as always, it was about the numbers.

Munger taught himself braille, then realised he could still see well enough to read. He ended up driving his own car, often to the consternation of friends and family, until his early 90s.

The two men who would run Berkshire Hathaway met in 1959 when Munger, who had already moved to Los Angeles, went to a dinner in his hometown that Buffett also attended.

They already knew each other’s names: Munger worked in Buffett’s grandfather’s grocery store as a boy. One of the first investors in Buffett’s partnership gave him money because, he said, “You remind me of Charlie Munger.”

Buffett’s first wife, Susan, recalling that dinner, said in 1998: “I think Warren felt that Charlie was the smartest person he’d ever met, and I think Charlie felt Warren was the smartest person he had ever met.”

They instantly hit it off and before long became inseparable, often talking by phone several times a day.

A photo from a trip to Savannah, Ga., in the 1980s captures the two investors looking eerily alike: talking and striding in lock-step, both wearing khakis and open-collared blue dress shirts. Everything from their height to their hairlines, from their eyeglass frames to the wrinkles in their clothes, seems to match.

Munger’s hero was Benjamin Franklin, whom he admired for his curiosity, ingenuity and wit. Munger’s own common sense, biting humour, pathological bluntness and disdain for conventional wisdom made him a celebrity among investors.

During the question-and-answer sessions at Berkshire’s annual meetings, Munger would sit silent as Buffett spoke in elaborate paragraphs. The adoring audience knew Munger was waiting to uncork a zinger.

At Berkshire’s annual meeting in 2000, a shareholder asked how the speculation in internet stocks would affect the economy. Buffett answered with nearly 550 words. Munger growled, “if you mix raisins with turds, they’re still turds.”

When a shareholder asked at the 2004 meeting how Berkshire sets pay for executives, Buffett spoke for more than five minutes. Munger drawled, “Well, I would rather throw a viper down my shirt-front than hire a compensation consultant.”

In an op-ed for The Wall Street Journal in 2023, published when he was 99, Munger called for the U.S. government to ban bitcoin and other cryptocurrencies, writing that crypto is “a gambling contract with a nearly 100 per cent edge for the house.” Earlier, he had described bitcoin as a “scumball activity” and “rat poison.”

Munger’s laconic image was only an act he put on to avoid upstaging Buffett. When he wasn’t sharing the limelight with Berkshire’s chairman, Munger was loquacious. At regular lunches and dinners with friends and family, and at the annual meetings of Daily Journal, a small media company he chaired, he would speak for hours.

As many friends noted, if he paused to take a sip of water and someone else started to talk, Munger would imperiously raise his index finger to prevent the other speaker from cutting in before he could finish swallowing.

His stamina was extraordinary, too. In 2019, when Munger was 95, two Wall Street Journal reporters showed up at his modest house in Los Angeles at 6pm. He talked nearly non-stop until almost midnight. Several times after 10pm, one or both of the reporters haltingly began to stand up to leave; Munger motioned them to sit back down.

In August 2023, at age 99 and mostly wheelchair-using, Munger insisted on joining his large family, including more than a dozen grandchildren and great-grandchildren, on the annual fishing trip they had been making to Minnesota for decades.

That year, Munger was “mentally even better than he’s ever been before,” said his friend Peter Kaufman, chairman of Glenair, an aerospace-parts manufacturer.

Content with his public persona as Buffett’s cantankerous sidekick, Munger amassed his own fortune.

He donated to institutions ranging from Stanford University and Los Angeles’s good Samaritan Hospital to Planned Parenthood. He was also an amateur architect and lived in the house he had designed himself in the 1950s. Late in life, he became obsessed with designing buildings for university and high-school campuses.

Alongside investment gains came a cult following. Munger chaired Wesco Financial, a Berkshire unit whose shares remained publicly traded until its corporate parent absorbed the firm entirely in 2011. Fans flocked from as far away as China and India to hear him speak at Wesco’s annual meetings, and later Daily Journal’s.

An anthology of writings by and about Munger called “Poor Charlie’s Almanack,” edited by Kaufman, became an international bestseller.

Munger never stopped preaching old-fashioned virtues. Two of his favourite words were assiduity and equanimity.

He liked the first, he said in a speech in 2007, because “it means sit down on your arse until you do it.” He often said that the key to investing success was doing nothing for years, even decades, waiting to buy with “aggression” when bargains finally materialised.

He liked the second because it reflected his philosophy of investing and of life. Every investor, Munger said frequently, should be able to react with equanimity to a 50 per cent loss in the stock market every few decades.

Munger retained his sense of humour into his 90s, even though he was nearly blind, could barely walk, and his beloved wife, Nancy, had died years earlier. Around 2016, an acquaintance asked which person, in a long life, he felt most grateful to.

“My second wife’s first husband,” Munger said instantly. “I had the ungrudging love of this magnificent woman for 60 years simply by being a somewhat less awful husband than he was.”

– The Wall Street Journal

 

[Value Collector]

Berkshire Hathaway hit a market cap of $1 Trillion today, it’s an amazing achievement given that Warren grew this company from a modest sum of around $100K.

It’s the first non tech company to hit a $1 Trillion market cap.

I hope Warren enjoys a cherry coke today and reflects on the journey, it’s a bit sad that Charlie just missed it.

This short little video gives a sense of how far Warren has come.