Berkshire Hathaway

Buffett's Berkshire buys more Occidental shares, raises stake to about 16.4%

Reporting by Abinaya Vijayaraghavan in Bengaluru; Editing by Sherry Jacob-Phillips
June 28, 2022 3:09 PM GMT+7

June 28 (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N) said on Monday it has purchased another 794,389 shares of Occidental Petroleum Corp (OXY.N), giving the conglomerate a nearly 16.4% stake in the Houston, Texas-based oil company.

The purchases were made in multiple transactions and cost about $44 million, Berkshire said in a regulatory filing. The share purchases come nearly a week after Berkshire bought 9.6 million Occidental shares.

Berkshire, the largest individual shareholder in Occidental, now owns about 153.5 million shares worth about $9.04 billion, based on Occidental's Monday close.

Occidental's share prices are currently up nearly 90% this year, as the company benefited from Berkshire's purchases and an oil price surge following Russia's invasion of Ukraine.

The company also owns options to buy another 83.9 million Occidental shares, which if exercised, would bring its stake to more than 25%.

More details in https://www.reuters.com/markets/deals/bu...022-06-28/

I guess it is "show (up) with your money".

Greg Abel’s Bet on Berkshire Hathaway

When most companies talk about aligning incentives between management and shareholders, they do so by granting executives restricted stock or options. There are a number of problems with this approach starting with the fact that such grants are often made in addition to extremely generous cash compensation. Additionally, option grants typically do not adjust for simple retention of earnings that make a fixed-price stock option more valuable without any skill on the part of the manager.

But perhaps most importantly, there is a major psychological difference between taking your own hard-earned cash sitting in your brokerage account and actually buying shares on the open market versus being given equity as part of your compensation. By purchasing his stock on the open market, Mr. Abel did what any of us could do and is literally in the same boat we are in as Berkshire shareholders.

https://rationalwalk.com/greg-abels-bet-...-hathaway/

Buffett's Berkshire boosts stakes in Japan's five biggest trading houses

By Makiko Yamazaki and Noriyuki Hirata
November 21, 202211:14 AM GMT+7

TOKYO, Nov 21 (Reuters) - Berkshire Hathaway Inc (BRKa.N), run by billionaire Warren Buffett, has raised its stakes in each of Japan's five biggest trading houses by at least 1 percentage point to more than 6%, regulatory filings showed on Monday, sending shares higher.

The move is line with Berkshire's statement in 2020 that its investments in the Japanese trading houses were for the long term and the stakes could rise to 9.9%.

Berkshire's stakes have increased to 6.59% from 5.04% in Mitsubishi Corp (8058.T), to 6.62% from 5.03% in Mitsui & Co Ltd (8031.T), to 6.21% from 5.02% in Itochu Corp (8001.T), to 6.75% from 5.06% in Marubeni Corp (8002.T) and to 6.57% from 5.04% in Sumitomo Corp (8053.T).

The news boosted shares of the five trading houses, led by Mitsubishi and Marubeni, which were up about 2% against a nearly flat benchmark Nikkei (.N225) average.

Takashi Hiroki, chief strategist at Monex, said he was not surprised that Berkshire had bought more shares.

"Trading companies' high stock prices are associated with high commodities prices, but there's much more to their businesses than that," he said. "Their earnings are good and shareholder returns are strong."

More details in https://www.reuters.com/markets/deals/bu...022-11-21/

After faithfully reading years of BH shareholders' letters, I find the themes actually keep repeat.

But somehow the lessons always keep ringing in. I guess I am a slow learner who needs a lifetime to learn and internalize  this treasure cove of wisdom. As the saying goes, it is simple but not easy.

To the Shareholders of Berkshire Hathaway Inc.:

Charlie and I are sh***less. Last year, at our first shareholder get-together in three years, we greeted you with our usual commercial hustle.

From the opening bell, we went straight for your wallet. In short order, our See’s kiosk sold you eleven tons of nourishing peanut brittle and chocolates. In our P.T. Barnum pitch, we promised you longevity. After all, what else but candy from See’s could account for Charlie and me making it to 99 and 92?

https://berkshirehathaway.com/2022ar/2022ar.pdf

Their insurance business is one of the key pillars of their success. Their property and casualty business provided low cost capital and enabled them to grow. It is interesting to note how they managed it. Besides very stirct underwriting standards, how the time lag between premiums collected and payment of claims enabled them to have additional funds and not need emergency cash. The same case cannot be said for many other insurers. They have also cautioned that large claims CAN and WILL occur.

I have seen a few events in my lifetime where certain unforeseen large scale unfavorable events that is covered by insurers have crippled and bankrupt an insurer. To do well in insurance especially in Property/Casualty over many decades is not easy.

One other business that have some favorable characteristics similar of bershire's P&C insurance business is Sheng Shiong.
Sheng Shiong collects Cash up front from customers at its supermarkets. Suppliers are paid very much later. if sheng shiong is able to make use of thie 'float' money, it can become a Bershire Hathaway, just need to find Singapore verison of Warran and Charlie.

(28-02-2023, 03:14 PM)Big Toe Wrote: Their insurance business is one of the key pillars of their success. Their property and casualty business provided low cost capital and enabled them to grow. It is interesting to note how they managed it. Besides very stirct underwriting standards, how the time lag between premiums collected and payment of claims enabled them to have additional funds and not need emergency cash. The same case cannot be said for many other insurers. They have also cautioned that large claims CAN and WILL occur.

I have seen a few events in my lifetime where certain unforeseen large scale unfavorable events that is covered by insurers have crippled and bankrupt an insurer. To do well in insurance especially in Property/Casualty over many decades is not easy.

One other business that have some favorable characteristics similar of bershire's P&C insurance business is Sheng Shiong.
Sheng Shiong collects Cash up front from customers at its supermarkets. Suppliers are paid very much later. if sheng shiong is able to make use of thie 'float' money, it can become a Bershire Hathaway, just need to find Singapore verison of Warran and Charlie.

The payout to insured for the float money given to Berkshire can be many years to a decade long. Sheng Siong the "float" it can hold i think is a mere 6 mths?

Yes that is true for P&C insurance in general. In the 1990s I accidently saw a large and active claim in a P&C local insurer dating back to the 1970s. Large workplace accident. After the claims and lawyer fees are settled. the next legal battle is for the interest acrued.

Float maybe for a brief period but a brief period of extraordinary large amount of money is better than no period. ( I own 0 shares of SS) Sheng shiong is a free cash generating machine. Consider the other usual/ more common retail businesses. Some of which will need to pay 6-12 month advance for the goods. And take another 12-24 months to sell.

@Bibi,
From ShengSiong's latest FY22:
Working Capital needs = inventory + receivables - payables
FY22: 101+19-197 = -77mil
FY21: 98+11-212 = -103mil

We can confidently say that ShengShiong's business is perpetual in nature due to its sales of FMCG essentials. Just looking at this 2 FY account closing for simplicity sake (yes, FY closing are just snapshots, not reality itself), the float of ~77-103mil can be classified as "permanent float" in nature due to its business sales product type.

@BigToe,
Both WB and CM have often said that the best decision they made for BH was to hire Ajit Jain. Mix Ajit's insurance sense with WB's investing acumen on the float - there is probably no other such "lethal" combination in any other insurance firms (whether life, P&C)

Completely agree that having that combo Ajit + Warran/Charlie is the secrect sauce to their immense success. The other local firm with excellent free cash generating ability is Venture Mfg. They listed @ 24cents if my memory serves me correct, now through the years increased their dividends to 75cents. Somewhat similar to coke.

During their formative start up years, it is said that venture is not even willing to buy dustbins for staff, and used empty cartons instead, it was not an eesential part of business and the cost was considered excessive. This prudent mentiality has enabled them to grow and thrive. Compare this to the unicorn start ups of today, offering all the perks one can dream of, with profitability nowhere in sight and burning billions annually. One even hired a politician... not sure what value that politician brings to the table. Shore up Lobbying efforts? In any case, you get my point.

But investment beyond venture's core competence is completely lacking, as they invested in sub-prime mortgages and messed up, thanks to bad advice from bankers.

The annual report seems shorter than normal

It was widely expected that he would talk about TSMC, which is another huge cash generating machine that has capex that probably shocked Berkshire. Looks like we will have to wait for the AGM why such a short “trade”