Berkshire Hathaway

[weijian]

hi dreamybear,

If you had observed how Buffett's family members (late wife and kids) responded to his obsession of reading/studying - Buffett was there (he attended his kids' sporting events and had dinner with them every night) but he wasn't really there (without fail, he would go up to his study room after dinner) - it doesn't come at a surprise to know what and how many companies he has been tracking for XX years.

[Behappyalways]

If you offered me all the bitcoin in the world for $25, I wouldn’t take it, says Warren Buffett
https://m.youtube.com/watch?v=HVm7Pfb0ilY


https://m.youtube.com/c/CNBCtelevision/videos

[cyclone]

Berkshire bought $51 billion in stock as Buffett combats supply chain

Reporting by Jonathan Stempel in Omaha, Nebraska; Editing by Catherine Evans, Ros Russell and Diane Craft
April 30, 2022 9:29 PM GMT+7

OMAHA, Neb., April 30 (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N) dove into equity markets in the first quarter, spending more than $51 billion on stocks including a much larger stake in Chevron Corp (CVX.N).

Berkshire, which Buffett has run since 1965, also said on Saturday quarterly operating profit was little changed from a year earlier, with some businesses able to fend off supply chain disruptions. Geico, the car insurer, posted an underwriting loss.

The Omaha, Nebraska-based company also said it repurchased $3.2 billion of its own stock in the quarter, but none in the first three weeks of April.

Berkshire's disclosures suggest that Buffett has finally found large new uses to dispose of Berkshire's cash pile, which shrank more than $40 billion to about $106 billion.

The Chevron stake grew to $25.9 billion as of March 31 from just $4.5 billion three months earlier, as oil prices surged higher following Russia's invasion of Ukraine.

That came on the heels of Berkshire's purchase of well over $6 billion of stock in Occidental Petroleum Corp (OXY.N), where it already had a $10 billion preferred stock stake.

Buffett has also committed $11.6 billion to buy insurance company Alleghany Corp (Y.N), and bought $4.2 billion of HP Inc (HPQ.N) stock.

Berkshire ended March with $391 billion of stocks, more than half of the company's $712 billion overall market value.

More details in https://www.reuters.com/business/buffett...022-04-30/

[LionFlyer]

If you offered me all the bitcoin in the world for $25, I wouldn’t take it, says Warren Buffett
https://m.youtube.com/watch?v=HVm7Pfb0ilY


https://m.youtube.com/c/CNBCtelevision/videos

I don't invest in crypto myself, but I am puzzled by his conservatism.

The crriteria of assets is their ability to deliver something is a narrow definition. There are other investment assets like art that are value accretive but entirely subjective. Even gold might fall within this realm since it hardly delivers anything other than our belief that gold is a good "storage" of wealth.

https://www.cnbc.com/2022/04/30/warren-b...tcoin.html

[specuvestor]

Buffett mentioned the same about Gold:

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.”

I've tried to describe clumsily why similarly cashflow is more productive that assets that are purely capital in nature:
https://www.valuebuddies.com/thread-9368...#pid153162

[BlueKelah]

Buffett mentioned the same about Gold:

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.

Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?

Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.

A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.”

I've tried to describe clumsily why similarly cashflow is more productive that assets that are purely capital in nature:
https://www.valuebuddies.com/thread-9368...#pid153162

They still bought and sold Barrick Gold last year due to its massive profits/cash flows with the new management team. 

An argument against farmland is of course you need lots of initial CAPEX and ongoing inputs like WATER and FERTILISERS in order to make the farmland productive, these costs can BLOW OUT very quickly. It is also vunerable to seasonal weather disasters that can wipe out some farm businesses. 

That brings us to how he has made an unfair comparison.

A better and fairer comparison would be to compare farmland to gold mines. So farmland produces food for profit and gold mines produce gold and byproducts like silver/copper/etc. also for profit. The farmLAND should be compared to miningLAND and compared to resi/commLAND. It is unfair to just compare the commodity directly to something that can be made productive. There are royalty companies that invest initial capital into mines and then just reap the profits over the life of the mines just like you could build property and collect rent over the life of the building.

And of course a more direct comparison would be gold vs food products etc.. as commodities. The commodity produced like grains/palm oil/sugar etc.. is  highly perishable compared to gold  a miner cannot eat his gold but i can still use it to barter for whatever farmer produces

In the future people will need to eat, but tech/computers will use a lot of gold/silver as well, and as world supply of easily mined minerals diminishes, costs go way up, so in the future, aboveground mines will be worth so much more. So mining companies vs farmland/agri companies which is better? I think the answer is all are good, you just have to invest in them during the proper cycles.

And if you are prepping for a rainy day, I would have gold/silver/canned food and lotsa rice and fuel.

[specuvestor]

Interesting point about comparing to gold mine instead of gold. So for crypto it will be mining rigs?

End of the day the main message is that the better asset is one that has cashflow that arises from the asset, which is related to the demand for the produce eg agri or metals, goods or services. The quality of the demand is the complicated one... sustenance vs necessity, wants vs speculative

[BlueKelah]

Interesting point about comparing to gold mine instead of gold. So for crypto it will be mining rigs?

End of the day the main message is that the better asset is one that has cashflow that arises from the asset, which is related to the demand for the produce eg agri or metals, goods or services. The quality of the demand is the complicated one... sustenance vs necessity, wants vs speculative

Yes for crypto the BTC or ETHEReum or whatever coins need to be mined (its a concept possibly taken from gold mining) And miners would be paid for their computing power which in essence does all the transactions for the blockchain. That's also why the "gas fees"  or transactional cost was very high for bitcoin transactions making them unpopular as a regular payment method, you would lose a lot of value just buying a cup of coffee and paying with crypto. A lot of bitcoin/crypto design was to emulate functions of gold/currency, the original creators initially wanted it to become an alternative form of independent non gov. digital currency. But a distributed computing platform is actually quite inefficient and requires extra computing power to run compared to a centralised form, as a lot of data is replicated throughout all the "nodes". Hence miners all over the world are needed to run the transactions rather than running them all in a centralised server farm.

I believe there are a few listco on US stock exchangs that are actually just involved with crypto mining. 

Yes agreed, end of the day Buffett's investments are all made in companies that have demonstrated history of solid cashflows and constant demand that are trading at "fair value" or when he first started of early days if they were very undervalued. 

He also does a lot of big opportunistic deals, only available to funds like his with deep pockets, when some big company stocks are down and they need funding etc..  but he is confident of stepping in and providing funding support and he even has some younger managers that can go in and restructure and improve things at companies that he takes private or gets a controlling share in.

Personally I take most of what is said at berkshire meetings with a grain of salt.

[specuvestor]

A bit late but interesting interviews

https://www.youtube.com/watch?v=rq2TcwB1qLk

[dreamybear]

Maybe can glean some insights into the thinking of the maestro ....

---- (bold added below) ----

Here’s why Warren Buffett bought all the Occidental Petroleum shares he could, even with oil prices well above $100
Fri, June 24, 2022, 4:42 AM
https://finance.yahoo.com/news/why-warre...00947.html
".....Berkshire backed up the truck on OXY after the company’s earnings conference call held in late February. Buffett read the transcript and liked what he saw.

“I read every word, and said this is exactly what I would be doing. She’s running the company the right way,” the billionaire investor told CNBC, referring to Occidental CEO Vicki Hollub. “We started buying on Monday and we bought all we could.” ....."

I reckon this is the one : 

Occidental Petroleum (OXY) Q4 2021 Earnings Call Transcript
Feb 25, 2022 at 7:30PM
https://www.fool.com/earnings/call-trans...-call-tra/


Occidental Petroleum Key Metrics
https://www.reuters.com/markets/companie...and-volume