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Anyone buying? CrownRock selling 29.6m shares:

"The stock is under pressure after CrownRock LP investors this month filed to sell 29.6 million Occidental shares acquired in Occidental's $12 billion deal for the Midland, Texas, oil producer.

Prior drops have routinely triggered big purchases. In June, Berkshire acquired 2.56 million shares at prices between $59.86 and $59.75 apiece. It bought nearly $590 million in Occidental shares after the price fell last December on the debt required in the CrownRock deal. The trend dates to fall 2022 with large Berkshire share acquisitions between $57.91 and $61.38.

In addition to its common shares, Berkshire owns warrants to purchase 83.5 million shares of Occidental at $59.62 per share, and holds preferred stock in the Houston-based company."

https://finance.yahoo.com/news/buffetts-put-oil-fi...

I have to say, if you're fan of coat-tailing Mr Buffett, I can't think of any other investment through history that gave such a long stretch of opportunities to get in at the same prices he's paying, and with constant reminders that he STILL likes it at that price. If it ends up doing well, this will be looked back on as "an glaringly obvious opportunity that was telegraphed for years."

Jim

I've done well coat-tailing WFC trades, others...not so much.
Besides, I'm totally bored buying 60-90 day T-Bills @ 5.2-5.4%!

I stuck my large snout in for a small snort @ $56 and change. I'm at 30% cash equivalents now...my highest
in many moons.

Apart from the secondary offering of OXY shares that doesn't seem to have closed yet, there has been this weakness in oil prices that have roughly tracked interest rates lately. Lower interest rates and lower oil prices (despite a cartel trying hard to keep prices up) both suggest weak demand.

Here is a 1 year chart of the 10 year treasury yield (lower yields = weaker economic growth and inflation expectations) vs. Oil (lower prices seem to primarily be a function of demand but what do I know?).


https://api.wsj.net/api/kaavio/charts/big.chart?no...


On the bright side, there is a seasonal bias for rising interest rates starting right about now, through the end of September at least. I am fixing to put on a trade betting the 10 year yield goes up. Wouldn't that be amusing with everyone focused on the beginning of the Fed rate cutting cycle. According to this chart, maybe that will give Oil a breather. Or maybe the friendly neighborhood cartel will do some more supply side magic.

Jim is right on this! So many opps to buy at his price or better, BNI did have moments too IIRC, but this one has gone on for longer.

Of course, LSXMK, you can buy for cheaper than Ted has and for a very long time too. But many don’t seem to care on this board about it.

Of course, LSXMK, you can buy for cheaper than Ted has and for a very long time too. But many don’t seem to care on this board about it.

But LSXMK will be delisted and disappear on Sep 9 when the spinoff deal finalizes.

“But LSXMK will be delisted and disappear…”

So what do you think will happen?

So what do you think will happen?

I'm not sure I understand exactly what Liberty is doing with this spinoff, but it appears that LSXMK (and LSXMA and LSXMB) will convert to some number of SIRI shares (originally 8.4 shares, but the latest filing says "conversion ratio to be determined on Sep 5"), then it seems that SIRI will do a 1:10 reverse split (that's new to me, but if I understand it correctly, that's what they plan to do on Sep 9 when the spinoff officially happens).

I don't own any LSXM*, but I do own some SIRI. I sold all of my SIRI last summer when that sudden spike to 7-something happened on a short squeeze (July 20, 2023). I remember that I had just exited my physical therapy session and casually glanced at my quotes tab on the CNBC app and was shocked and thought it was some sort of mistake. But I sat in the car, and opened the brokerage app (that I usually use only a few times a year, I prefer using a big screen for brokerage stuff), and I made a snap decision (which I almost never do), and clicked the box for "sell all shares" and the selector for "market order", and I got executions between $7.50 and $7.53, not exactly the max for the day, but still 7-something as it began settling down from the short squeeze. Later I bought some back in the 3's and then 2's because I was lending the shares out at absurdly high interest rates, like 20% to 100+% rates. Even last week, the rate I was being paid for lending those shares was in the 80s or 90s! Nothing like big demand from people shorting a stock you own. That gravy train will end on Sep 9th, and I will probably sell the shares any day now.

So my take is lsxmk will in fact disappear and those who own will get 8.3 shares of SIRI for every share of lsxmk, obviously Ted thought LSXMK was a value at higher prices and he has thought so for a very long time. The point of my post was that you could buy cheaper than Ted. SIRI throws off 1.2B of cash each year on a market cap of 12B and historically has used said cash flow to repurchase shares. Do the math, that is a pretty good return if the business stays stable.

The current structure has not been easy to understand, maybe now with one class of shares, a decent dividend and a reasonable valuation we will have a good investment going forward.

Sometimes folks on this board talk about OXY, BAC and other stocks that Warren Buffett has bought I thought it interesting that none care much at all about the other holdings, at least that is my perception.

Sometimes folks on this board talk about OXY, BAC and other stocks that Warren Buffett has bought I thought it interesting that none care much at all about the other holdings, at least that is my perception.

I think for the most part, people are more interested in talking about the holdings that have large impact overall. Basically those holdings over $5 or $10B. The smaller ones have very little impact individually.

Sometimes folks on this board talk about OXY, BAC and other stocks that Warren Buffett has bought I thought it interesting that none care much at all about the other holdings, at least that is my perception.
...
I think for the most part, people are more interested in talking about the holdings that have large impact overall. Basically those holdings over $5 or $10B. The smaller ones have very little impact individually.

They do still have potential as interesting investments for the rest of us, and at the very least there might be something to learn in terms of why they might have been selected.

In fact just last week I was thinking it would be useful for someone to start a series of threads, one for each ticker, to which folks might contribute insights. Berkshire holding of the week perhaps. Why was it bought, and does that thesis still hold? What's the outlook? Was it a good pick? (separate from whether the stock price has done well) How is the valuation now?

I remember the long and interesting discussion on the old board about the reason that BNSF was purchased. It wasn't an obviously cheap or rapidly growing pick, but merely by starting with the assumption that Mr Buffett saw great value there (and that he's usually right), many of us learned of new ways of thinking about investment selection.

Jim

In fact just last week I was thinking it would be useful for someone to start a series of threads, one for each ticker, to which folks might contribute insights. Berkshire holding of the week perhaps. Why was it bought, and does that thesis still hold? What's the outlook? Was it a good pick? (separate from whether the stock price has done well) How is the valuation now?

This could be very interesting (to me at least). Only question is, do they need to be inside this [active] Berkshire board, or should they be in their own stock board. Or maybe even a Berkshire Coattails board?

I like the idea of a “Berkshire Coattails” board

"This could be very interesting (to me at least). Only question is, do they need to be inside this [active] Berkshire board, or should they be in their own stock board. Or maybe even a Berkshire Coattails board?"

I'm very interested as well. However, I generally don't have too much time to visit the other Boards, and would prefer the discussion to be on this Board. I think that, given the structure of Berkshire, stocks and subsidiaries it holds are relevant to this board, but others may disagree.

It makes some sense to have a coattails board, but it takes a minimum number of insightful folks posting to get a board alive. Since the suggestion stemmed from a comment about how dead this board is (I paraphrase) perhaps this is still the better place? After all, as suggested it's only one thread per holding, and it's arguably on topic. If one ticker generates serious discussion, it can always have its own board.

Thoughts?

Jim

Great idea. Do it here.

Mungofitch: "It makes some sense to have a coattails board, but it takes a minimum number of insightful folks posting to get a board alive. Since the suggestion stemmed from a comment about how dead this board is (I paraphrase) perhaps this is still the better place? After all, as suggested it's only one thread per holding, and it's arguably on topic. If one ticker generates serious discussion, it can always have its own board."


Count me in for the BRK Coattails Shrewd'm board!


BTW, how does one Italicize a quote on these boards?

BTW, how does one Italicize a quote on these boards?


I use basic HTML to do it. Same with bold face. I will try to show how to do it without my code being executed and disappearing:



Text in between these thingies will be italicized


Text in between these thingies will be bold

Ha! The code showed up in the preview correctly and still rendered in the post. Beats me - google basic HTML italics and bold

BTW, how does one Italicize a quote on these boards?

To start italics, put the following three symbols ahead of the desired text, but don't use any spaces: < i >

To end italics, use the following four symbols after the desired text, without the spaces: < /i >

For bold, just replace the "i" letters with "b".

Tails

also tt for typewrite

and
pre for

pre-formatted, leave spacing alone  

Thank you.

Jim,

Thanks for your post. I started buying OXY in June 2023, the first of 8 tax lots with the Aug 21, 2024 lot being my latest. My combined basis is $56.64. I've watched its sedate serpentine march more as a spectator with an initial 5 year hold period before deciding if I want to be in it beyond. I was drawing from a cash position in a retirement account, so the buying decision was simplified and my timetable allows for patience.

There has been such a value puzzle in quite a bit of other stuff and I always figure by the time I know some market "insight", it will have been 9 months known, digested and traded on. So yes, I have shamelessly used WEB's assessment of fair value with a margin of safety to enter. I also feel like WEB's insight is helped by his relationship and history with CVX, who could one day become a consolidator.

OXY also felt like it offered some hedge on inflation for me, though that analysis was "crude" at best. I don't think of myself as someone who can pick a team in the 2 or 3 inning and bet with conviction they'll win the game.
That seems to translate to stock timing as well. Also, I don't know what will become of their CO2 capture venture, but I like the way Vickie is willing to give the idea every chance to succeed as much as her laser focus on managing debt. She also seems to be agile and successful finding prospects to incrementally upgrade their O&G assets. There's an absence of fog when they report earnings. That gumbo of (thought?)has been marinating a while.

This position doesn't necessarily square well with my politics, but I don't believe the general public has an appreciation for how much inertia the O&G industry has in this economy and that lots of earnings are out there in a transition that might unfold over the next 20-30 years. I expect a future with some diversified energy mix.


Best wishes,

Dan

"I don't believe the general public has an appreciation for how much inertia the O&G industry has in this economy and that lots of earnings are out there in a transition that might unfold over the next 20-30 years. I expect a future with some diversified energy mix."

Exxon just came out with their global energy outlook. They believe global oil demand will remain flat at 100 MMBD at least until 2050 (26 years from now):

https://finance.yahoo.com/news/exxon-says-oil-gas-...
https://corporate.exxonmobil.com/sustainability-an...

Chris Wright of Liberty Energy in Denver states there has been "no energy transition."
"-Hydrocarbons accounted for 85% of global energy during the Yom Kippur War (1973)."
"-Over the last 50 years, global primary energy consumption has more than doubled (1.6% CAGR)."
"- Hydrocarbons still make up 85% of global energy today"
(Slide 22)
https://enercomdenver.com/wp-content/uploads/2024/...
https://enercomdenver.com/company/liberty-energy/

Both Exxon and Liberty talking their book, but might help to explain Mr Buffett's thinking. Who knows, maybe they're right?

Both Exxon and Liberty talking their book, but might help to explain Mr Buffett's thinking. Who knows, maybe they're right?

Probably. But a big change like switching, or mostly switching, from fossil fuels to other forms of energy, will take a VERY long time. No matter what we do. For example, there are about 200M vehicles in the USA. Even if 10 million a year switch over to electric, it'll take nearly 30 years to switch (because more than 10 million a year are purchases, so 10M will be electric and 5-6 million will still be ICE, as it progresses). BUT, we haven't even reached the 10M point yet today, we are only at 1.6M right now. So it is entirely possible that the 26 year number is correct, maybe it's 20 years, maybe it's 30 years, but probably in that ballpark. And vehicles are only one example, there are powerplants all across the nation, and those can't be swapped out as easily as a vehicle can, takes years if not decades to get them approved and built and commissioned, etc. There are 150M+ hot water heaters that are inefficient and need to be replaced with heat pump versions that are much more efficient. There are probably 500M+ appliances that are inefficient and need to be switched someday, that'll take 20 or 30 or 40 years best case. And so on for anything that uses energy.

"Probably. But a big change like switching, or mostly switching, from fossil fuels to other forms of energy, will take a VERY long time. No matter what we do. For example, there are about 200M vehicles in the USA. Even if 10 million a year switch over to electric, it'll take nearly 30 years to switch (because more than 10 million a year are purchases, so 10M will be electric and 5-6 million will still be ICE, as it progresses). BUT, we haven't even reached the 10M point yet today, we are only at 1.6M right now. So it is entirely possible that the 26 year number is correct, maybe it's 20 years, maybe it's 30 years, but probably in that ballpark. And vehicles are only one example, there are powerplants all across the nation, and those can't be swapped out as easily as a vehicle can, takes years if not decades to get them approved and built and commissioned, etc. There are 150M+ hot water heaters that are inefficient and need to be replaced with heat pump versions that are much more efficient. There are probably 500M+ appliances that are inefficient and need to be switched someday, that'll take 20 or 30 or 40 years best case. And so on for anything that uses energy."

It should also be noted that oil is used for other uses and not just energy. It is used in making lubricants, plastics, and a whole host of other products of which there is no obvious replacement. Oil will be around in some form for a long time.

Exxon just came out with their global energy outlook. They believe global oil demand will remain flat at 100 MMBD at least until 2050 (26 years from now):

...

"-Hydrocarbons accounted for 85% of global energy during the Yom Kippur War (1973)."
"-Over the last 50 years, global primary energy consumption has more than doubled (1.6% CAGR)."
"- Hydrocarbons still make up 85% of global energy today"
(Slide 22)
https://enercomdenver.com/wp-content/uploads/2024/...
https://enercomdenver.com/company/liberty-energy/

Both Exxon and Liberty talking their book, but might help to explain Mr Buffett's thinking. Who knows, maybe they're right?


Flat demand doesn't sound like they are exagerating at all. World population will be going from about 8 billion now to 9.7 billion in 2050. Energy consumption typically grows about 2%/year. Per capita, it was 13 000 kWh in 1965, and it was 21 000 kWh in 2023, a 1% annual increase. https://ourworldindata.org/grapher/per-capita-ener... And during that time, the population went from 3.3 billion to 8.0 billion, a 1.5% annual increase. Population growth has now slowed to about 0.9% a year; so 2% annual total energy growth seems like a fair estimate for the next few years.

Renewable energy accounts for about 15% of the total, with fossil fuels (oil, gas, coal) at about 82%; they were 85% 5 years ago. Renewables will undoubtedly continue to take market share, but so far, they have not been growing fast enough to actual reduce fossil fuel consumption. As an example, going from 85% 5 years ago to 82% now, with a total that is now 10% bigger, means that fossil fuel use has still been growing. For renewables to supply all of the 2% annual total energy growth, they would have to increase about 15% a year, and they have not been growing anywher near that fast; current projections are for 4% annual growth for the next five years: https://www.statista.com/outlook/io/energy/renewab.... If that seems too low, it is because it is for TOTAL energy use; renewables have made more progress as a source for electricity, but electricity is only 20% of total energy use.

The big things that could lead to a significant reduction in fossil fuel use are a lot more nuclear power, cheap batteries, and fusion power. None of those are going to happen in scale for the next 25 years, so I don't think fossil fuel producers have anything to worry about.

DTB

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