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Berkshire Hathaway Inc. (BRK-B)

NYSE - NYSE Delayed price. Currency in USD
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420.52+3.59 (+0.86%)
At close: 04:00PM EDT
420.51 -0.01 (-0.00%)
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  • O
    Original Authentic Jay
    New BRK investors, my 2 cents as a long term investor. Welcome!

    I own Berkshire and have been overweight for many years. Will continue to be.

    Berkshire is run by Warren Buffett aware that many people have substantial % of entire net worth invested in it. One of Buffett's biggest concerns in life is not disappointing his partners. He views the structure of Berkshire as a partnership with you, the stockholder, as a partner. Buffett pays himself $100k in salary + personal security. No stock options You get exactly your proportional share and Berkshire, unlike a mutual fund, generates cash for your benefit. Berkshire is buying back $25 Billion of its stock each year--increasing your ownership. You could invest most of your net worth in Berkshire and have a nicely diverse portfolio.

    Mainstream media focuses almost exclusively on Berkshire's "investees"--namely its stock portfolio. While stock portfolio IS significant--Berkshires total value, mostly, and almost all of its total income is derived from its owned subsidiaries: EIGHTY companies owned outright: Burlington Northern, it's massive Insurance Group including GEICO, a large utility group (5th largest in US), largest furniture group, largest RE brokerage biz in US, etc etc...it's subsidiaries are its most important asset....

    Secret sauce for Berkshire is--it's Insurance Group is incredibly well managed, consistently profitable and generates "Float" (premiums PAID to Berkshire but not yet paid out in claims)--as long as Berkshire writes smart business and makes somewhat more in premiums than its payout in claims --this float never declines (premiums coming in exceed payouts). For Berkshire this has been a 5 decade long source of FREE FUNDS. It's zero cost leverage. Berkshire is actually PAID for this leverage! Berkshire has modest debt on its balance sheet. Float now totals $147 BILLION. That generates a nice source of free, unleveraged additional profit.

    Further, Berkshire has a fortress balance sheet including CASH that it were a COMPANY would be one of largest COMPANIES in US (size of Lowes/Raytheon/Bristol Myers). ..$145 BILLION. So Berkshire is positioned with optionality-- able to pounce on opportunities from a stock bear market.

    Berkshire is also well positioned for higher interest rates. Almost all of its "cash" is in ultra short term U.S. Treasuries. As rates rise, that cash will earn much more money. It'll earn $ 2 to 5 $Billion more simply as the Fed raises rates.

    It's succession is set. Greg Abel, an outstanding Berkshire manager, will succeed Warren as CEO. Todd Combs and Ted Weshler who manage $15 billion each for Berkshire--will assume investment management. They've been there for some time now and generate great investments including Apple which has made $100 Billion + in profit.

    Valuation wise I'd be very careful here. Following Berkshire--I've noticed its stock tends to settle in at about a 10% discount to estimated intrinsic value. Right now it's right AT intrinsic value. So this stock could be very iffy for the next year, but great value for 10 years. Keep in mind, reported "earnings" of Berkshire include ONLY the dividends paid by its investees. So, for example, Apple holding only includes a sub 1% dividend. If you include Berkshire 's actual OWNED earnings, it's "look through" earnings...it's PE is just 15. Versus S&P which is 21.

    Take a guess which one I think outperforms next decade? Good luck.
  • e
    ed
    Berkshire Hathaway reported operating earnings of $6.69 billion in the second quarter, up 21% from $5.51 billion in the same period a year ago.
    Overall earnings, which reflect Berkshire’s fluctuating equity investments, increased 6.8% year over year to $28 billion in the second quarter.
    Chairman and CEO Warren Buffett kept buying back Berkshire shares aggressively instead of making sizable acquisitions.
  • T
    TC
    After 25 years I did the unthinkable, I sold my Berkshire shares. I'm getting up there in age (82) and BRK-A was my retirement investment in 1995 and it has served me many times over (in 1965 I bought A shares for $22,600). I lived thru WWII in the UK and came to Canada in 1957. In my lifetime I have never seen anything like this and looking forward, with so many unemployed and so many Companies probably in dire financial distress I feel economically the worse is still ahead of us (my opinion only). Therefore because I have no crystal ball, its time for me to "protect my capital" and that was the reason (uncertainty) that prompted me to act. If I'm wrong, I'm still OK I preserved the bulk of my capital and who knows when the dust settles there may be many great investment values out there. I suspect that's what Warren is doing right now, getting ready to pounce when others are "fearful". I'll still be checking in daily, waiting for the next chapter to unfold, but for those of you still invested my hopes are for a positive resolution. My decision was based on self-preservation, I don't have that many years left to be able to recover, so safety was appropriate...... so stay safe, take care of your loved ones and it too will pass......ciao
  • M
    Munger Bunger
    Buffett: CNBC. My take:
    Highly unusual was not even ASKED a market or Berkshire related question.
    Buffett USUALLY allows Becky to ask whatever she wants. And makes time for such after making his pitch for the cause of the day (in this case the Goldman initiative)
    Quite clearly Buffett set DIFFERENT ground rules: No stock questions.
    Buffett is likely buying his stock aggressively here...and/or making substantial stock purchases. SOMETHING is up in the present real-time.
    WEB does NOT want to be ACCUSED OF pumping/hurting/influencing either Berkshire's price OR the general market giving his honest opinion --as he's conducting this business. now.
    This is my take.
  • B
    BAGS
    I feel like Berkshire is one of those stocks that is an obvious bargain but has under-performed for so long recently that no one wants it. Index's are so appealing in comparison because everyone is buying it pushing up the value and currently seems to be like shooting fish in a barrel. But this will remain the same until one day it isn't. After all it appears to me that as of today Berkshire has about 70% of its market value in stocks and cash. That leaves just 30% to account for the 90-some premium companies that it owns outright. If the company today were broke up and everything given to the stock holders there is no way to calculate what the true value of Berkshire is worth. I'm going to continue to hold with the belief that this stock is like shooting fish in a barrel and a lot safer than an index fund in the event of a market turndown.
  • W
    William
    BHE Buffett noted that BHE’s annual earnings have gone from $122 million to nearly $3.5 billion since purchase 21 years ago.. So, this looks like growth to me. BRK IS a growth stock but is valued as a non dividend paying mature company. Check this out below.
    " Last year’s adjusted net income of $3.47 billion was up 9% from 2019. This calculation excludes a big unrealized gain of $4.8 billion before taxes last year from BHE’s stake in BYD (BYDDY), the Chinese battery vehicle producer whose stock price soared in 2020. That gain flowed through BHE’s income statement. The BYD stake was worth $5.9 billion on Dec. 31, 2020, up from $1.1 billion a year earlier. The BYD stake is shown as one of Berkshire’s largest equity holdings in Buffett’s recent shareholder letter"
    .https://www.barrons.com/articles/why-berkshire-hathaway-energy-is-one-of-warren-buffetts-4-jewels-51614704142
  • T
    Terry
    Why Pricing Power is important

    KO-5% per yr increase since 1971
    DIS-7.15% inc. per yr. In theme park tickets last 50 years

    Since Jan 1986

    KO- 9.2%/yr return
    DIS-11.2%/yr return

    This does not even include dividends. Which in the case of KO would currently be roughly half every year of total amount invested in 1986

    Brk since Jan 86- 14.5% annualized return. So obviously done a good job with those dividends from KO
  • W
    William
    Berkshire now owns 5.4% of Apple,” Buffett had explained. The stake was increased without incurring any cost, aided by a repurchase of shares by Apple and Berkshire's own buyback of its shares over the last two years. Apple is the only big tech name that Berkshire Hathaway owns more than 1% of. May 3, 2021 ...“Our cost for that stake was $36 billion. Since then, we have both enjoyed regular dividends, averaging about $775 million annually, and have also — in 2020 — pocketed an additional $11 billion by selling a small portion of our position. Despite that sale — voila! — Berkshire now owns 5.4% of Apple,” Buffett had explained.
    Apple reports after market today. How is BRK doing on this investment ?
  • S
    Steven
    The OXY preferred and warrants were valued at $10.7b at year end. Since that time OXY is up over 50%. The warrants are now valued at $600 million more. This is essentially a risk free deal for BRK as they have the right but not obligation to buy 88 million shares of OXY for 59 a share until late 2027. The January 2024 60 call is trading above 6 now. Its likely that berkshire will be the largest shareholder in OXY in 2027 in accumulating a stake with warrants as they did with BAC . In the interim they are collecting $800 million a year in dividends on the preferred.
  • M
    Monkey
    7.5% - Percentage gain in BRK price YTD
  • B
    Brett
    David:

    For someone that appears to pride themselves on doing a "deep dive" of financial statements, I am somewhat amazed at the following narratives you come up with:

    1. Buybacks do not save the company any money.

    Talk to any corporate finance executive and I promise you "savings to the company" will not enter the conversation in regards to buybacks. Why would it? Dividends, CapEx, Buybacks, Acquisitions are distribute (dividends) or invested AFTER corporate income tax. There is no "savings" either way because these are not expensed. The only thing worth discussing is which of these will create more future shareholder value.

    If this was not the case no company would ever engage in buybacks.

    2. EPS is an "arbitrary" or somewhat insignificant financial metric

    Really????? When you get right down to it is there anything that matters more than this? How much in annual earnings your share of stock represents is the most important metric over the long haul. Like you said market cap is just an opinion. History has shown us over the last 100+ years that the greater the EPS the more value is created for the shareholder of a share over time. Again, this is a question of which in item 1 above creates more shareholder value.
  • J
    Jay
    Potential positive cataysts for the stock - 1) $25B increase in the value of the equity portfolio since Dec 31, 2) additional equity purchases made in Q1, 3) 1Q added operating earnings, 4)1Q company stock buybacks. Potentail negatives, only 1 - slight miss versus forecast on operating earnings possible because BNSF freight was weak due to weather/storms. Add the fact that you might get some news like an agreement with the Gates foundation for buybacks, a big aquisition, or a plan to do longer term buybacks. I'm all in and headed to Omaha to see it live. Good luck everyone.
  • C
    C
    Berkshire's proxy statement lists an updated share count for March 2, 2022:

    614,692 A-shares and
    1,287,633,719 b-shares

    That comes out to a b-share equivalent share count of: 2,209,671,719

    2/14/2022 share count was a b-share equivalent of 2,214,212,161

    So in the approximately two weeks there, it looks like Berkshire continued share repurchases and spent something like $1.4 Billion.

    I had in my notes that 12/31/2021 -> 2/14/2022 was something around $555 million worth (estimated dollar value).

    So:

    12/31/2021 -> 3/2/2022, repurchases were about $2 Billion worth, depending on what average price you use.

    FWIW, current market cap is approximately $741 Billion.

    https://www.berkshirehathaway.com/meet01/2022proxy.pdf

    There is some other new stuff in there. Susan Decker was elected "lead independent director" (this had been Bill Gates a few years ago) and the language about Howie becoming non-executive chairman after Warren is no longer on the scene is replaced by "a member of the Buffett family." So it could be Susie.

    Other new information is how much Berkshire stock the new board members own. Susie has quite a few non-foundation shares, likely inherited from her Mother or grandparents, Christopher Davis has quite a few A shares personally, and Wally Weitz has a ton of stock although he put most of it in his foundation. Ajit also has more than $200m worth of Berkshire shares when you include shares in his foundations. Impressive share ownership by the directors.
  • A
    Andrew
    Believe it or not, this has been my best stock in terms of percentage gain. I am up over 26% in 9 months with Berkshire. I have only been in the market for 10 months. I got in May 2021.
  • S
    Scott
    There must be a reason that I still peruse Yahoo! financial pages, but I sure don't know why. This article posted an hour ago:

    5 Things We Learned From The Warren Buffett Annual Letter
    Berkshire Hathaway has released its 2018 annual report, and the letter to shareholders from Chair Warren Buffett offers several key insights.

    News from three years ago, posted as the first article on the BRK-A page. Really, Yahoo!? Is that the best you can do?
  • V
    Vegas Cheerleader
    Buffett has pointed out that Berkshire's "cash" is almost exclusively in ultra short term treasuries. Buffett has EXPLICITLY been positioned for HIGHER interest rates ( he left a ton on yield income on the table in return for vastly reduced duration exposure). Looks like that bet has paid off brilliantly,

    Further ---THAT CASH is the equivalent of one of the largest COMPANIES in US--the size ofd Bristol Myers/Raytheon/Lowes.

    Buffett has a ton of optionality here...including major upside leverage to domestic growth,

    Growth. And Protection. AND optionality.
  • B
    Bill
    This sell off across the market is very confusing. We manufacture components for many industries but about seven in particular. Those being Oil & Gas, Heavy Truck (Axles & Transmissions), Heavy Machinery, Mining, Forestry & Logging, Hydraulic Cylinders and Rail. With that said, at any given time 2-3 of these industries will be in a down cycle. However, all seven are running at full capacity with increasing demands. Some are even BRK companies. I've been in my industry for over 30 years and honestly, have never seen it like this. It is amazing. Been through two major down cycles, seeing customers take their foot off the gas but not even close this time, everyone is increasing orders and offering more money. Where is the doom and gloom coming from? This is nothing compared to what this country has been through before.
  • K
    Karen
    The focal point of the CC will be how their cash was deployed. The portfolio gains are already priced in since that information is public. We already know about the Dominion assets deal, in addition to the Bank of America stock purchase and the over $5 billion in BRK stock buybacks. The main question is what else was purchased during this period? $137 Billion is a lot, and investors want to see that money put to work. I do feel confident in their business segment, but don't expect to see significant increases YOY gains (a few percentage points just like last qtr). The real gains will come once a vaccine is released and we see a sharp decline in cases.
  • S
    SAvio
    Once earnings are out the media will see that apple has added 30bn in BRKs accounts for June and start to push the price up. Buffet has stayed in the rich list because he ignores short term noise.
  • H
    Howie
    Sad to hear Lou Simpson has passed. Buffett held him in high regard.

    Simpson retired from Berkshire in 2010 and founded SQ Advisors with his wife, Kimberly Querrey, the following year. The firm, based in Naples, Florida, planned to manage money for Simpson’s family and friends, as well as outside charities, Simpson said in an interview with Bloomberg News at the time.