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https://www.berkshirehathaway.com/news/aug0323.pdf

Actually I intended to sell a little Berkshire today - but this I didn't take into account, raising the question whether to rather wait until next week.

May I ask what the ones here having closely followed Berkshire's actions and portfolio during the last quarter expect?

Actually I intended to sell a little Berkshire today - but this I didn't take into account, raising the question whether to rather wait until next week.
May I ask what the ones here having closely followed Berkshire's actions and portfolio during the last quarter expect?

For whatever it's worth, I lightened up a bit yesterday. I sold about 4% of my holdings.
That doesn't mean it was a good idea. And recall that I live from my portfolio, I am not an accumulator.

The stock is in that twilight zone of being higher than the average valuation multiple, but lower than what it's probably worth.
I don't expect double digits in the next year. One of my models predicts one year returns around inflation + 4.6% from today's $352.60 per B, most of my other models expect a bit less.
I'll have fresher expectations after I read the statements tomorrow.

The main thing I'm going to be looking for in the quarterly statements is the after-tax operating earnings on the "steady things".
Rails, Utilities, Manufacturing/Service/Retail.
The last three quarters these have come out quite a lot below my model expectations based on trend and seasonality, so these units definitely have not been keeping up with inflation lately.
Perhaps part of that is a lag effect, part of it some supply-chain price problems, and part of it is just some cyclical weakness in the economy, but it's a trend that I hope will end.
If we expect extremely powerful pricing power from our collection of allegedly high-moat operating businesses, it isn't showing up so far in this bout of inflation.
Prior to these last three quarters (and 2020-Q1 of course) these things taken together were very easy to predict quite well.

Jim

I took some leverage off today closing all of my Jan24 option contracts. I flipped to shares in all of my tax free accounts. Holding cash in my taxable account. Dollars at risk only down 5-10%.

Trailing p/b is near recent highs. Looking forward to expected Q2 p/b we are likely in or close to upper quartile levels. Squinting into Q3 we are likely well above median currently even then.

I don't expect good things from BNSF for Q2. Transportation in the US is currently way off. Yellow Corp is heading to bankruptcy as an example. Some highlights of the challenges for freight industry in the marketplace article here too.
https://www.marketplace.org/2023/08/01/in-the-frei...


I haven't had a chance to read through the apple report today but the market didn't like it apparently. I have been expecting their net income to be flat to down this year anyway. I think growth in the equity portfolio at brk will be challenged for a bit.

I think there will be better opportunities to put leverage back on. The market will likely prove me wrong :)

Jeff

For whatever it's worth, I lightened up a bit yesterday. I sold about 4% of my holdings.

This is surprising. I was going to respond with a bit of retelling of your post a few weeks ago. The one that said we've hit a high multiple to highest book value to date (232 or so) but warned that we've seen a lot of inflation since that book value was released.

I expect to see a new high book value, partially to adjust for inflation since our highest to-date book value, and partially given where Apple was trading at the end of Q2. Whether exciting Q2 results are rewarded with higher market prices, I'm not sure. Berkshire's stock price seems to increase a few percentage points leading up to each quarterly earnings report. Maybe we've already seen the expected increase.

For whatever it's worth, I lightened up a bit yesterday. I sold about 4% of my holdings.
...
This is surprising. I was going to respond with a bit of retelling of your post a few weeks ago.

Yes, well, what can I say?

I made a *very* conservative guess of what book and IV might look like tomorrow, and it looks nice.
But the current market price isn't cheaper than usual relative even to even that bumped-up number, so, if valuations stay in the same sort of range that they have since the credit crunch, the short term outlook isn't particularly exciting.

Longer term it makes almost no difference. The deviation from "normal" is very small, so only the trend of value increase is material.
But I'm the sort of person who looks at things more frequently than that.

Book will certainly look good, and Mr Market might like that.
But as I have mentioned (and sometimes got dumped on for!) I don't think the value of Apple has risen faster than its (smooth) earnings per share, so a chunk of the Q2 book bump, as with the Q1 bump, will be in that sense meaningless.
On the bright side, I don't think Apple is worth any less than it was a few days ago when the price was 7% higher : )

And if the profits in the operating subsidiaries surprise me to the upside I'll no doubt regret the sale.

Jim

"I took some leverage off today closing all of my Jan24 option contracts. I flipped to shares in all of my tax free accounts. Holding cash in my taxable account. Dollars at risk only down 5-10%."

I've done basically the same, though my selling included my Jan25 contracts. Some very nice returns on the options, and I don't think the remaining potential upside is as valuable as having the capacity to load up again in the event of another swoon.

https://seekingalpha.com/news/3997677-berkshire-ha...

'The broad range of businesses that Warren Buffett has assembled in Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A) should help to insulate it from wide swings in any one of its businesses. That's likely to keep its Q2 earnings, to be released on Saturday, fairly stable.
CFRA analyst Catherine Seifert sees the diversified revenue and earnings mix a positive for the shares, "though it leaves the firm exposed to an array of pressures facing the broader economy," she said in a recent note to clients. One such pressure is inflation.

For Q2, Seifert expects Berkshire (BRK.B) operating earnings of $3.94 per class B share compared with $4.21 in Q2 2022.

Its GEICO insurance unit's underwriting results are likely to remain under pressure due to heavy catastrophe losses in the quarter, she said. (Note that rival Allstate (ALL) suspended its stock buyback program on Tuesday after $2.7B of catastrophe losses resulted in underwriting losses in Q2.)

And while the property & casualty business suffers from a series of severe storms in the quarter, its reinsurance business is expected to benefit from pricing power. Berkshire's (BRK.B) acquisition of Alleghany Corp. in 2022 gives it an even bigger position in that sector. Seifert sees Berkshire's reinsurance businesses as "poised to leverage a 'hard' pricing environment that we expect to continue well into 2023, driven in part by an expected $55B to $70B in industry-wide insured losses from Hurricane Ian."

She sees Berkshire reinsurance units' written premium rising 8%-12% in 2023...'

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