> Warren Buffett Blog: June 2017

Wednesday, June 28, 2017

Berkshire subsidiary invests in Home Capital of Toronto, Canada

A subsidiary of Berkshire Hathaway, Buffett's main company, will also also provide a new $2-billion line of credit on better terms than an expensive cash infusion provided to Home Capital by one of Ontario's large pension funds.

"We believe this represents a turning point for Home Capital as we look to restore investor and depositor confidence in the company," said Home Capital interim chief executive Bonita Then.

While the investment from Berkshire Hathaway can be seen as a vote of confidence, it is acquiring its shares in Home Capital at a significant discount from where they are trading today and with certain approvals required.

Under the agreement, it will make an initial investment of $153.2 million for 16 million Home Capital shares at a price of $9.55, representing a 19.99 per cent stake in the company, subject to approval by the TSX.

Berkshire Hathaway has also agreed to make a second investment of $246.7 million for nearly 24 million shares at a price of $10.30, which would take its stake in Home Capital to 38.4 per cent, subject to shareholder approval.

The Berkshire credit facility will charge a slightly lower interest rate than charged by the Healthcare of Ontario Pension Plan.

Monday, June 26, 2017

Warren Buffett buys more REITs

Warren Buffett's firm acquired a nearly 10% stake in a real estate investment trust that controls single-tenant properties.

Berkshire Hathaway invested $377 million in shares of Store Capital, equaling a stake of about 9.8%, the REIT disclosed Monday. Berkshire paid $20.25 a share for 18.6 million shares of the internally managed net-lease real estate investment trust, Store Capital said in a statement. Store Capital shares are down 16% in 2017.

Store Capital owns a stake in more than 1,750 properties in 48 states.

Store Capital CEO Christopher Volk said in a statement.
“An investment in our company from one of history’s most admired investors represents a vote of confidence in our experienced leadership team and an affirmation of our profit-center real estate investment and management approach.”

Tuesday, June 20, 2017

Someone just paid $2.6 million to lunch with Warren Buffett

An anonymous person just bid $2,679,001 in a charity auction to have lunch with billionaire investor Warren Buffett. This years winning bid is down from last year’s winning bid of $3,456,789. 

 Now in its 18th year, the annual auction for lunch with the Berkshire Hathaway Inc. chairman has raised more than $25 million in total for San Francisco charity Glide.

Wednesday, June 14, 2017

US Farming has improved dramatically

I don't really know anything about robots. But I'll put it this way. If you eventually got the world so that one guy could push one button and everything that's being produced now would be produced from him pushing that button, it'd be a better world. Now, you'd have to make sure that guy didn't keep all the output, but the idea of getting more productive, it benefits everybody. And I shouldn't say it benefits everybody. It benefits society. It can hurt individuals in their given industries. But we should long for more productivity. That'll give a fewer hours worked, it'll give more output per capita, it'll give better living for people. And that's what we've done, actually, in this country. 

We saw it dramatically in farming. I mean, it's unbelievable what has happened in farming. And we now have 2 percent of the population working on farms, doing way better than when we had 80 percent. But if we didn't have tools and fertilizer and all those things, we'd be an agrarian economy and we'd be living like we did in 1776.

Monday, June 12, 2017

I dont know what the stock markets will do tomorrow or next year says Warren Buffett

I don't have the faintest idea what the stock market's going to do tomorrow or next week or next month or even next year. I do know that over time – and we'll talk ten years of something of the sort – that equities will do better than bonds, which is the main alternative or bank deposits or whatever it may be. Fixed dollar investments for people. And they're not going to be able to pick the time to come in. I don't know how to pick the time to come in. I bought a lot of stocks in the last couple months. They turned out – the stock market goes down 20 percent or 30 percent. But that won't bother me if I like the businesses I bought.

Wednesday, June 7, 2017

Your kids will live better than you do

The economy is – everything I see has been the same since 2009 – the fall of 2009. It keeps moving ahead at a couple percent a year, which is terrific, incidentally. Not as terrific as 3 percent or 4 percent would be, but if it just stays at 2 percent, you'll add in one generation 19,000 of GDP per capita to our present economy. 

We'll have so much more stuff then than we have now, it'll be fabulous, one generation away. So your kids are going to live better than you do. But people – would rather have 3 percent or 4 percent, and maybe we'll get it. But 2, we're moving forward.

Monday, June 5, 2017

Dont borrow money to buy stocks

You shouldn't borrow money against stocks. And you shouldn't – if you're going to need some money for college or something in a year, you don't want to be in stocks because you don't have any idea what stocks are going to sell for in a year. It's inappropriate. But stocks are safe for the long run and they're very unsafe for tomorrow. 

Berkshire, three times since I took over, has gone down roughly 50 percent. Did I feel poor then? No, not at all. I mean, you know, but I didn't owe it on borrowed money. I knew it was going to be worth more over time. American business is going to be worth more over time. You know, that's what you're buying, is a business. You're not buying a stock, you're buying a piece of a whole bunch of businesses. Are those businesses going to be worth more ten or 20 or 30 years from now? Of course, they are. But if you think you can jump in and out or that you know the time to come in, then I think you're making a mistake.

Thursday, June 1, 2017

Buffett likes Stocks instead of Bonds

I would bet my life that stocks over 30 years outperformed the 30 year bond. I would come close to doing it, betting that over ten years, they'll do better than the ten year bond, versus the one year bond or two year bond. I have, you know, no idea whatsoever. But stock if you look at American equity, basic business of America, American equity earns a tremendous return on tangible net assets. That's what the business is about. That's what the farm is producing. Now, a bond is limited in what it can produce. But when you say reversion to the mean, I'm not sure what the mean is. I mean, the mean is going to be based upon returns on equity, the amount of equity reinvested and reemployed. And I would say there the prospects are so much better than in fixed dollar investments, that, you know, admittedly, I liked stocks a lot better a few years ago. And I've said that on this program. But the stocks versus bonds right now, it's not close. Now, bond yields can change a lot. If bonds go to 15 percent, I may be recommending bonds.