No. of Recommendations: 39
In no particular order or weighting:
Chris Bloomstran cited in Gabelli conference Friday morning how Berkshire Hathaway Energy (BHE) would be a larger financial contributor than BNSF within three to four years. This was essentially confirmed by Warren Saturday as he described how the Inflation Reduction Act of 2023 was already being heavily leaned into by BHE and how Berkshire's size enabled it to utilize all the various tax advantaged credits. This was further confirmed in conversation with a BHE staff member in their exhibit hall booth.
BHE is well underway with construction of the first 345MW sodium-cooled fast reactor system with attendant molten-salt based energy storage system.
https://www.terrapower.com/natrium-demo-kemmerer-w...BHE is getting hefty incentives for this nuclear plan and also for battery-based storage at other BHE sites being converted from coal to clean energy alternatives. If the Terra Power modular system works well, it will be plug and play installed at many other BHE generating sites where the nuclear power is delivering 24/7 base load power. A disclaimer: I had a conversation with a fellow shareholder Saturday who has an advanced Physics degree. He pointed out some concerns regarding the Terra Power system being untested and how the fuel is different than what is currently utilized by conventional nuclear power plants.
https://en.wikipedia.org/wiki/TerraPower If this modular nuclear works as hoped, this is icing on the BHE cake. The information gleaned at the meeting points to BHE doing fine without this development.
Warren made some strong points several times about doubting the power grid would be improved as much as needed because of individual state and other territorial groups standing in the way. I think he was signaling all the various powers involved regarding this matter.
The exhibit hall sites sold out. There was scant inventory left anywhere Saturday afternoon.
Clayton Homes is doing a ton of business. They had a wonderful conventional type home on display. A Clayton staff member told me Clayton also develops property. From working with folks in their twenties and thirties, there is a crying shortage of affordable single family homes. Clayton is a big player in this market space.
Standing in line Saturday morning (5:00 AM arrival), it was amazing the number of folks who were attending for the first time. In our compressed group zone there were attendees from multiple countries as well as various US states. I was also struck by the numbers of folks from Nebraska, Iowa and South Dakota attending.
We are Markel shareholders and looked forward to attending the Markel brunch Sunday morning. The meeting room was wall-to-wall packed and turning away folks. Markel had a surprisingly large number of staff members attending the brunch. In the Omaha airport waiting area today I spoke to a gent from Europe who manages a large family office fund and without prompting, said essentially the same thoughts as I had regarding the takeaways from the Markel gathering.
My thumbnail analysis once again arrives at Berkshire edging Markel in investment opportunity going forward. Yes, this is surprising given the size difference in the companies (the effects of the Law of Large Numbers). Berkshire's most significant edge is in what Buffett laid out Saturday regarding its ability to soak up money, re-deploy in big chunks across the various companies with opportunities or to buy companies with outstanding profits or to bail out companies in a pinch when times get tough and most of all in coupling investments with federal funding and tax advantages being copiously handed out by the U.S. Government. At the end of the day, it all gets down to margin of safety pricing and future compounding opportunities.
Buffett made a special point about being ready with money when past dumb moves put companies into tough situations. Dumb moves was Buffett's words, not mine. You get the feeling he thinks there will be opportunities arising for those types of situations. This correlates with two different knowledgeable folks I met who spoke of private equity firms starting to feel the burn of higher interest rates and how this is affecting the flipping of assets between PE firms. The gent from Europe at the airport today spoke of how this flipping between PE firms in recent years has never made much sense in the big scheme of things. Who are these investors and creditors holding the risk?I have felt this way for more than ten years in viewing these moves between PE firms. Will we one day see who is naked when the tide goes out? (famous Buffett quote over the years) Having lived through the Greenmail era of the 1980's where companies sold their prized assets so as to save their companies from raiders, it feels like a similar situation may be arising where PE firms have to sell their best companies so as to raise sufficient funds to meet their obligations. The best stuff has to be sold because the not-so-good stuff no one wants to buy, at least that was what mostly occurred during the Greenmail era. Folks with more experience or better memory of that era are welcome to correct me in this matter.
This was our first Berkshire meeting despite our owning Berkshire stock since 1996. It was good making acquaintances with total strangers and getting their views on investing, the economy in their regions, their view on the dollar, stocks they own and interestingly, private companies they formerly owned or currently own. There are a lot of former and present entrepreneurs attending. One fellow I met has a company that is putting advertising signage on stop light control boxes. Another gent sold his risk management business. Risk management in this case was controlling for avalanches, rock slides and other highly dangerous physical matters around construction sites, facilities, etc. These types of conversations were so compelling that we plan to attend the meeting every year. There were many other small business owners we met in various settings. Great stuff for a fellow small business owner like myself.
Omaha is an absolutely delightful city. The arena and adjacent Old Town areas have restaurants, hotels, a city park area and shops all within five to fifteen minute walking distances. The people are friendly, the city is clean and never once did we feel concern for our safety. We look forward to coming back to Omaha in 2024.
Uwharrie
