Be nice to people. This changes the whole environment.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 1
UNreal.
No. of Recommendations: 1
No. of Recommendations: 0
" Equity securities gains and losses include unrealized gains and losses from changes in fair values during the period on equity
securities we still own, as well as gains and losses on securities we sold during the period. Our proceeds from sales of equity securities
were approximately $133.2 billion in the first nine months of 2024 and $32.8 billion in 2023. In the preceding table, investment gains
and losses on equity securities sold during the period represent the difference between the sales proceeds and the fair value of the equity
securities sold at the beginning of the applicable period or, if later, the acquisition date. Taxable gains and losses on equity securities
sold are generally the difference between the proceeds from sales and cost. Our sales of equity securities produced taxable gains of $23.4
billion in the third quarter and $97.1 billion in the first nine months of 2024 compared to taxable gains of $759 million in the third
quarter and $5.4 billion in the first nine months of 2023. Other investment gains in the first nine months of 2023 included a non-cash
gain of approximately $3.0 billion from the remeasurement of our pre-existing 38.6% interest in Pilot through the application of
acquisition accounting under GAAP. "
We will certainly be paying, our fair share, of taxes, lol.
No. of Recommendations: 0
" Repurchases may be in the open market or through privately negotiated transactions. No
Class A or Class B shares were repurchased in the third quarter of 2024."
No. of Recommendations: 2
If his cash were accompany, it would be a top 20 market cap.
He is either 1). Hyper bearish or. 2). Major deal in the wings.
*Rumors of Chubb deal continue to swirl. Gets them Evan Greenberg too? Ajit succession?
No. of Recommendations: 7
Probably best to adjust that cash headline on 9/30 by $15 Billion since some of those t-bills hadn't been paid for yet. $310 Billion is still a strong number since we know BAC sales continued after quarter-end and cash rolls in every day.
No. of Recommendations: 1
The cash level is massive. Period. The question is WHY? Bearish signal or elephant?
No. of Recommendations: 23
I believe we’re in the neighborhood of cash/overall assets of the period about 20 years ago. Berkshire had a ballpark market cap of $140 Billion with $40 Billion in cash. So what’s happening? Buffett was positioned well back then for what was coming with the derivatives “weapons of mass destruction”. He KNEW it was coming. The date was unknown.
He profited handsomely when doomsday struck with several super favorable preferred issuances and a few other buys, but he’s said he regrets not “going even more all in”. Dare I say the fragility of the entire system EVEN scared Buffett then…I believe that. Only time in his entire life imo.
Well, here with are with a global system perhaps even more fragile than that period (so says Nassim Taleb of AntiFragile and Black Swan fame). Most money managers under age 40, in Taleb’s words, have “only known 15 years of Disneyland”.
People under 60 have only known a 40+ year straight line Bond Bull market. So Asset allocation hasn’t really mattered to folks under age 60. Bonds have won. Stocks won even more. A 40 year slide from 18% rates to Free money to 4% or so lifted ALL boats.
Now we’re in a massive global leverage/debt bubble, a world where assets have been confiscated by governments, a world with massive mistrust of people who make laws.
Buffett knows something will break in this fragile environment. Those who think who wins next week fixes this—are also in Disneyland..or just pumping their guy.
The big “break” could be in 5 years—it could be next month.
It will cause major dislocations that are likely manageable (my take) but, with a generation of investors with zero experience and NOW SIGNIFICANTLY an internet echo chamber of panic— 25% declines will become 45% declines or perhaps far more —just on sentiment. Buffett and Berkshire are prepared to act. And more aggressively than 2009/2010.
2004-2006 also felt like the wrong time to amass cash, but better to be too early than wrong.
No. of Recommendations: 34
The cash level is massive. Period. The question is WHY? Bearish signal or elephant?
I presume it's a mix of reasons.
But there are three obvious ones to consider.
* The boss is not 100% happy with the forward prospects of the big holdings he has been selling, at least not at recent prices. I include in this the presumably minor explanation of possibly higher capital gains taxes in future: that can't be a consideration unless you're thinking of selling anyway.
* He figures something else will come along soon enough to make dry powder not such a bad gamble, especially given that there is for now a modest positive real yield on the T-bills.
* The company is just really really big now.
The scale and particulars of the first two reasons are anybody's guess.
The last one is the only one we can assess, but it's pretty compelling as a significant part of the explanation.
e.g., consider that the cash isn't cash, it's T-bills. Either way, it's really just the shortest end of the fixed income spectrum. [Cash + fixed income] is at 53% of investments, a big number. But for a sense of scale, average 2001-2010 of the same metric was 56%, about the same.
Looked at the other way, even after the recent sales, equities are still 47% of investments. The average in that old stretch was 36%.
Bottom line: the equity allocation isn't unusual. The cash+fixed allocation isn't unusual. The only thing that's different is that the cash+fixed has moved to a very short average duration. One reason for that is that real bond yields aren't what they once were, so it's not attractive to hold them. Plus, some unknown mix of the top two reasons above: less than comfortable with those holdings, and/or figuring another streetcar will come along soon enough.
Jim
No. of Recommendations: 15
* The company is just really really big now.
----------------------------
I think the current pile of cash is a direct reflection of the concentration of market power among corporations worldwide. In "the olden days", say 20-30 years ago and beyond, the distribution of capitalization of public and private companies had more dollar value "meat" in the middle of that distribution. If you were an investor like Buffett and Munger with tens or hundreds of millions to invest into new opportunities somewhere in the middle of that distribution, there was a lot more to choose from.
As companies have merged in major industries and market capitalization has been absorbed into ever larger entities, the middle of that capitalization distribution has been hollowed out. And companies with the largest capitalizations are now generating hundreds of millions or billions in free cash. The problem is that it is "easy" to find a company that might be able to generate 8-10% yearly returns over the next decade if their revenues are only $10 million. It's virtually impossible to find a company that can do that with billions in revenue. When BRK goes looking for opportunities that can absorb that influx of investment, there's nothing left in the middle and all of the opportunities are locked up in other megacorps. Any purchase by BRK of any entity capable of utilizing multiple billions of investment would likely involve a firm already at the limit where antitrust measures would prevent completion of a deal.
The real issue here is the concentration of market share. The fact that the smartest guy in investing has so much money that no investment can accomodate his available cash is a sign the corporate world has been allowed to grow beyond scales that actually produce any efficiency according to classic theories of competition.
I susepct the dynamic that will play out over the next decade is that some of these existing megacorps are going to encounter operational problems that their size and arrogance insulated them from correcting before issues snowballed. At that point, divestitures will become more common as existing owners unload businesses they've forgotten how to operate efficiently. At that point, BRK will have opportunities but they will be far riskier than BRK's prior diet. Instead of buying up well-operating mid-sized businesses with strong management, these divestitures will reflect neglected businesses with inefficiencies, operational issues and potentially incompetent management.
WTH
No. of Recommendations: 2
"I suspect the dynamic that will play out over the next decade is that some of these existing megacorps are going to encounter operational problems that their size and arrogance insulated them from correcting before issues snowballed."
----------------------
Yes, who of the current market leaders will replace the past fallen angels.... GE, Intel, Cisco,.... of past market corrections?
https://www.visualcapitalist.com/a-visual-history-...ciao
No. of Recommendations: 3
I susepct the dynamic that will play out over the next decade is that some of these existing megacorps are going to encounter operational problems that their size and arrogance insulated them from correcting before issues snowballed. At that point, divestitures will become more common as existing owners unload businesses they've forgotten how to operate efficiently. At that point, BRK will have opportunities but they will be far riskier than BRK's prior diet. Instead of buying up well-operating mid-sized businesses with strong management, these divestitures will reflect neglected businesses with inefficiencies, operational issues and potentially incompetent management.
This is what I don't understand. Yeah, it's a story ("suspect") but it is barely one of many possible scenarios. What is the confidence level where the story will play out more or less along the line as described? And because of such concern Buffett was willing to pay a huge tax tab to bat? At the very least there has to be much more to it, I suspect.
No. of Recommendations: 1
If this has already been posted I apologize, Im hopelessly behind on this board. (That’s a good thing, I think. Lots of reading material.)
I saw this the other day and just asked Dr Google again, and this is what it said:
Warren Buffett's Berkshire Hathaway now owns more short-term Treasurys than the Federal Reserve. The company held $234.6 billion in short-term US Treasury Bills at the end of the second quarter, according to its latest earnings release. That's up 81% from the roughly $130 billion it owned at the end of 2023. https://finance.yahoo.com/news/warren-buffetts-ber...That’s one helluva pile. Nice to know there’s liquidity in case somebody gets into a car accident or something. ;)
No. of Recommendations: 0
If this has already been posted I apologize, Im hopelessly behind on this board. (That’s a good thing, I think. Lots of reading material.)We discussed it last week. Here is my response -
https://www.shrewdm.com/MB?pid=70160664
