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- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 0
changes. Seems to me if brk filed an 8k, or non-mandatory Form 4s, disclosing the dates of sales and that the apple sales were completed for the year, apple would be even higher, IF, he's done selling for the year. Do any brk partners actually believe there aren't members of the financial community that know what he's doing? Does brk use 5 different firms to execute its trades? How many, others, can trade apple in that size? Has anyone ever asked?
Every quarter most members of the financial press erroneously report brk trades for the quarter. For instance, does anyone believe ULTA is a Buffett buy? Stocks often pop 3-5 % or substantially more based on fake news, that Buffett is a buyer. Obviously, Buffett could make it clear which trades are NOT his, but he refuses. As a result, T and T benefit from the Buffett pop, and still, they have lagged the index by so much Buffett refuses to disclose this data. Buffett has given T and T every edge he can, but still, no success on that task.
If anyone still reads all the footnotes to the filings, does brk disclose the amount of unrealized capital gains on its public securities holdings? Presumable brk sold its highest cost apple and BAC but IF, IF, he believes the tax rate might rise 25 % or more, in the next two years, who knows what he might be doing? The strength in the stock sure has surprised most of us, that's, a beautiful thing! Thank you.
No. of Recommendations: 0
Trading is hard. For the past few years I mentioned STEW, because of its huge exposure to brk. After holding that brkb for decades, they sold 1/3 of their Bs early this year. They also sold 1/2 their WMT holdings. brk is up so much, the fund is still very overweight brk at 39 percent. Yep, trading is hard.
Stew Top Holdings As of 07/31/2024 still trading at a 22% discount. No material shareholder friendly moves, this year, yet, like ADX did.
Security Market Value Weight
1 Berkshire Hathaway, Inc. Class A $677,668,733.24 31.90%
2 JPMorgan Chase & Co. $218,758,400.00 10.30%
3 Berkshire Hathaway, Inc. Class B $151,282,500.00 7.12%
4 State Street Institutional U.S. Government Money Market Fund $125,447,778.51 5.91%
5 Yum! Brands, Inc. $113,968,140.00 5.37%
6 Enterprise Products Partners LP $105,339,000.00 4.96%
7 Microsoft Corp. $83,670,000.00 3.94%
8 Evercore, Inc. $75,117,000.00 3.54%
9 Stanley Black & Decker, Inc. $71,821,600.00 3.38%
10 Cohen & Steers Infrastructure, Inc. $66,989,999.51 3.15%
No. of Recommendations: 0
correction, they sold the brk and wmt late last year. Even worse.
No. of Recommendations: 9
... Does brk use 5 different firms to execute its trades? How many, others, can trade apple in that size? Has anyone ever asked?
...
If anyone still reads all the footnotes to the filings, does brk disclose the amount of unrealized capital gains on its public securities holdings? Presumable brk sold its highest cost apple and BAC but IF, IF, he believes the tax rate might rise 25 % or more, in the next two years, who knows what he might be doing? The strength in the stock sure has surprised most of us, that's, a beautiful thing! Thank you.Yes, of course Berkshire discloses unrealized gains in their financial statements. They break their equity securities into three categories, (Banks, insurance & finance / Consumer products / Commercial, industrial & other ) and give the cost basis, net unrealized gains and fair value. They also disclose deferred income taxes, which are primarily on unrealized gains at the corporate rate. That's why book value shot up when Trump lowered the corporate rate - that deferred tax liability decreased by billions of dollars (and could increase if the corp. tax rate were to rise).
As for equities trade execution, Warren and Todd seem to use Wallachbeth Capital almost exclusively for the last several years. Ted Weschler uses Glen Eagle Wealth for his orders. It is one way you can get clues about which manager is choosing which positions. Both firms specialize in working large orders anonymously and Wallachbeth especially is capable of enormous trades - they handled all of the Apple buys and all of the Apple sales. The orders are typically a percent of daily volume target over a long period of time.
https://wallachbeth.comhttps://gleneagleadv.com
No. of Recommendations: 0
thanks nola, YOU Daman! Gotta go to the park.
No. of Recommendations: 0
No. of Recommendations: 0
" In terms of total return, SPY beats STEW"
use 2 and 4 year, thanks. I'm sure brk beat stew too but include the divs.
No. of Recommendations: 0
nola, before I go, any theories with respect to why Buffett refuses to disclose which trades are his quarterly? Thank you, you have two hours to think about it,lol.
No. of Recommendations: 16
nola, before I go, any theories with respect to why Buffett refuses to disclose which trades are his quarterly? Thank you, you have two hours to think about it,lol.
I think he wants to disclose as little about their proprietary investment decisions as he is allowed to. He also wants to protect the other managers from public scrutiny and second guessing. I think most people can figure out which trades are Warren-sized and which are smaller. The other managers have a "style" so you can usually guess which trades are Ted (usually anything retail, Floor n Decor, Ulta, RH, Liberty stuff, DVA obviously) Todd was probably behind HEICO, Capital One, Snowflake, Visa, Mastercard, PCP, etc.)
Where it gets more mysterious is the positions like Citi that are kind of small for Warren and big for T/T. I personally believe through some clues that Citi is a Warren Buffett pick even though he has exited most of this bank investments.
Sometimes, when a trade is a stinker like Paramount - Warren will fess up that it was his loss, don't blame the guys...
Basically, it is Warren's job to judge Ted and Todd's process and results and anybody else's. We don't need to micromanage it as shareholders.
No. of Recommendations: 3
For the past few years I mentioned STEW
I've got to wonder why anyone would pay a 1.6% expense ratio for someone to buy them things like Berkshire, JPM, Microsoft, etc. Seems like a waste of money. Consider someone retired who is withdrawing 3% or 3.5% each year to cover their expenses ... they'd be paying about HALF of their annual income to the fund!!! That's absurdly wasteful.
No. of Recommendations: 1
"" Basically, it is Warren's job to judge Ted and Todd's process and results and anybody else's. We don't need to micromanage it as shareholders.""
I assume you meant, nobody else's? Sorry bud but that's wrong. When they started out hot he disclosed it, when they fell behind, he stopped. Selective disclosure is always wrong pal, and when Buffett passes WHO is going to manage the 300 Billion? I doubt I will convince you so we can just agree to disagree. Thanks man.
No. of Recommendations: 0
STEW S&P500
1 year +16.90% +22.15%
3 year +8.11% +9.60%
5 year +10.89% +15.00%
10 year +10.21% +13.15%
Eye popping expense ratio as well.
No. of Recommendations: 9
When they started out hot he disclosed it, when they fell behind, he stopped.
This isn't because of a sudden fear of disclosure of bad stuff.
Mr Buffett has long had the (very astute) management principle of "praise in public, criticize in private". If the investment returns of T&T are not what's expected of them or not good enough relative to risks taken, I'm confident that is a conversation that their boss has had with them. It is not usually astute to announce publicly that "our employee X has done a bad job".
Besides, within rounding error we know the result of their two portfolios since we know the name and approximate performance of every US pick if we care to look.
Jim
No. of Recommendations: 1
" I've got to wonder why anyone would pay a 1.6% expense ratio for someone to buy them things like Berkshire, JPM, Microsoft, etc."
Several years ago the stew expenses were much higher. The control family owns like 45 % of the fund and poppa is getting very old. There are several ways he could have maximized his estate plans. It was worth the shot at a shareholder friendly move, which might still happen. I mentioned ADX and CET as well for IRAs, and Americans facing RMDs like me. I'm looking at the stew annual report. For the past three years ending nov 2023, nav and market price have beat the spy. 5 and 10 years ago the fund was very shareholder unfriendly. I currently own a lot less of the fund tho.
No. of Recommendations: 3
No. of Recommendations: 5
two minor corrections to my posts -
The last batch of AAPL shares sold during the quarter were in Columbia Insurance company and they were sold at an average price of $207.64 / share vs. a cost basis of $56.94 / share. This was around $1.3 Billion of proceeds. So they definitely realized gains on their lower basis shares first, which isn't the typical way I would do it - so maybe he really does believe the 21% rate is too good to last.
The other correction is that I guessed earlier that Capital One was a Todd Combs pick but I looked into it and it seems more likely that it was purchased by Ted Weschler despite Todd being the big data / finance guy who hired the Capital One tech lady over to GEICO.
By the way, if you haven't read these hilarious behind the scenes tweets about Snowflake and GEICO they are pretty funny - scroll down a bit:
https://x.com/laurenbalik?ref_src=twsrc%5Etfw%7Ctw...
No. of Recommendations: 1
" I've got to wonder why anyone would pay a 1.6% expense ratio for someone to buy them things like Berkshire, JPM, Microsoft, etc."
Good question. The unpopularity of this ETF makes for an intriguing situation. It's a CEF that sells for a 22% discount to NAV, so you're effectively buying Berkshire for $350 a share. And nearly 40% of the entire fund is BRKA or BRKB. And the NAV discount makes the payout rate 3.60%. They fund the payout it appears largely through LT cap gains almost all of which have come from their massive Berkshire holdings.
I'm not saying that justifies the 1.6% expense ratio-but it's interesting. They're also regularly buying back shares and raising the payout. I think the play here is the discount narrows--it's about 5 points or so higher than average...
No. of Recommendations: 2
at least some of what is being called the 1.6% expense ratio is interest on the borrowed funds the CEF uses to add leverage. Most of the time the discount on these CEFs is just the capitalization of the fees - think of it like slapping a 14x PE ratio on 1.6% of annual leakage.
No. of Recommendations: 1
It's a CEF that sells for a 22% discount to NAV, so you're effectively buying Berkshire for $350 a share. And nearly 40% of the entire fund is BRKA or BRKB.
Oh, wait, this is BIF that changed to STEW a few years ago.
I fell for that, too. The story about "getting BRK at a discount". Back when BIF was still BIF.
The discount doesn't matter if it never narrows. STEW (née BIF) has been at a discount between -15% and -22% for the last 5 years. According to the graph at cefconnect, the discount has bobbled around -17% +/- 3% from 2009 to 2024.
Buying BRK at a 20% discount doesn't matter if you also wind up selling it at a 20% discount.
All the while getting clobbered with that high E/R.
IIRC, it is essentially a family held & run fund which they graciously allow the general public to also buy.
According to their web page, the average annual return AND cumulative return has underperformed the S&P500 Total Return Index. Also the market price return has underperformed the NAV return.
No. of Recommendations: 1
" at least some of what is being called the 1.6% expense ratio is interest on the borrowed funds the CEF uses to add leverage. "
good morning nola, if the Horejsi family agrees with Buffett with respect to potential tax rates going forward, could they sell the entire fund to brk today at a 5 % discount to NAV? Look at the holdings, would brk be interested? Could STEW spin out the brk and sell the rest and close in down? It would be a very small deal for brk but Buffett LOVES to buy from investors who have held brk and the As, for many decades. Years ago BIF had fees and expenses above 3 % with no leverage. It made no sense back then. In the past three years this CEF has become much more shareholder friendly with lower costs. In an IRA the divs kicked off from stew, adx, and cet resulted in being able to take my RMDs without selling anything. Just a thought for you kids out there. BTW, if you posted it I missed it, brks current unrealized cap gains on our public securities? Thanks, bud, those footnote disclosures get smaller and smaller the older you get. Have a grand day.
No. of Recommendations: 3
BTW, if you posted it I missed it, brks current unrealized cap gains on our public securities?
The net unrealized gains on the equity portfolio was $196.418 Billion at June 30th. We know some BAC has been sold since then and obviously prices move around.
Comes to something like $41.2 Billion in deferred tax liability ~ interest-free loan from the government at the current rate.
No. of Recommendations: 0
" Comes to something like $41.2 Billion in deferred tax liability ~ interest-free loan from the government at the current rate."
So, he decided to sell half the apple and about 15 Billion of our interest free loan from the govt got paid. It remains to be seen if that net cash can outperform apple by 25 % going forward. Do you shoot dice bro? I'm betting the don't pass, but we shall see! Thanks, nap time.
No. of Recommendations: 1
<<good morning nola, if the Horejsi family agrees with Buffett with respect to potential tax rates going forward, could they sell the entire fund to brk today at a 5 % discount to NAV>>
Not sure that would net much progress, if any, to STEW shareholders after the large tax bill was subtracted on the deferred capital gains. His basis on BRK is very low having accumulated it decades ago.
No. of Recommendations: 0
" Not sure that would net much progress, if any, to STEW shareholders after the large tax bill was subtracted on the deferred capital gains. His basis on BRK is very low having accumulated it decades ago."
If I sell my STEW to brk, I have a cap gain on my stock sale, my cost in the stock vs what buffett pays me, no?
No. of Recommendations: 2
<<" Not sure that would net much progress, if any, to STEW shareholders after the large tax bill was subtracted on the deferred capital gains. His basis on BRK is very low having accumulated it decades ago."
If I sell my STEW to brk, I have a cap gain on my stock sale, my cost in the stock vs what buffett pays me, no?>>
Correct. Which is why I’d be reluctant to buy an ETF at NAV or stock at present market price that comes with large associated deferred unrealized capital gains. And why an investor must make an adjustment downward on the price of such an investment.
No. of Recommendations: 3
I mentioned ADX and CET as well for IRAs, and Americans facing RMDs like me.
It appears that you didn't quite understand what I wrote. Let's say you have $3M invested for retirement, and you withdraw 3.2% of it each year to cover your annual expenses (above pensions and social security). So you withdraw $96,000 a year from that $3M invested. Now, let's say you invest in something like STEW with a 1.6% expense ratio. That means that you are paying the fund a fee of 1.6%, or $48,000 a year to manage your $3M for you. A FULL HALF of your annual withdrawal goes to the fund managers! That's absurd, don't you think?
No. of Recommendations: 0
Buying BRK at a 20% discount doesn't matter if you also wind up selling it at a 20% discount.
All the while getting clobbered with that high E/R.
1. I think the "family" is receiving the ER money, no? All of it.
2. The "family" can choose to buy lots and lots of the fund from the non-family holders over time, then they at the same time, outside the fund, they can short enough of Berkshire to capture the 20% discount.
3. And then they can simply terminate the closed end fund, deliver the shares and enjoy that 20% discount on all the Berkshire shares they were able to short and deliver at a 20% discount.
That's the usual case for an arbitrage opportunity. SOMEONE almost always avails themselves of the arbitrage when it presents itself. Especially 20% kind of arbitrage!
No. of Recommendations: 0
" It appears that you didn't quite understand what I wrote. Let's say you have $3M invested for retirement, and you withdraw 3.2% of it each year to cover your annual expenses (above pensions and social security). So you withdraw $96,000 a year from that $3M invested. Now, let's say you invest in something like STEW with a 1.6% expense ratio. That means that you are paying the fund a fee of 1.6%, or $48,000 a year to manage your $3M for you. A FULL HALF of your annual withdrawal goes to the fund managers! That's absurd, don't you think?"
Thanks, if you have the time do this math. You put three million into brk 5 years ago. I buy a million ADX ,a million CET, and a million STEW. adx and cet have .6 expense ratios , stew added the leverage 3 years ago. Let's say the entire portfolio has a 1 % expense ratio, on average. At the end of 2023 how many shs of brk do you own after selling 3.2 % a year? ADX did a tender two weeks ago, I sold 30 % of my stock back to the fund at 98% of NAV or 22.49 a share. I never sold one share of the funds to meet my RMDS because the divs more than covered it. I have no idea which plan would have been better off BUT, I thought stew might do something shareholder friendly, maybe even close it down and sell it off but so far, that wasn't the plan. When they sold off 1/3 of their Bs in 2023 I was very surprised, terrible timing after holding it for decades. Hence, I sold most of the stew. They sold 1/2 their WMT too timing is hard. Thanks.
