> Warren Buffett Blog: 2018

Thursday, December 20, 2018

BYD could have an IPO before end of 2022

BYD Co., the electric-car maker backed by Warren Buffett, plans to list its battery business by 2022 to raise funds to expand as the global auto industry transitions away from the traditional combustion engine.

The listing will occur sometime by the end of 2022 and the company hasn’t decided yet where the shares will be trading, Chairman Wang Chuanfu said in an interview with Bloomberg News Wednesday at its headquarters in Shenzhen. BYD, which makes batteries for automobiles and mobile phones, is in the process of spinning off its vehicle-battery operations into a separate company before listing. 

Monday, December 17, 2018

Warren Buffett sells his California home

Warren Buffett's Laguna Beach getaway has sold for almost a $7.4 million profit. The sale price was $7.5 million. Buffett had purchased it for $150,000 nearly half century ago. 

The six bedroom, seven bathroom home features vaulted ceilings, an ocean viewing deck and two private bedroom entrances. The sale price is $3.1 million less than the original asking price.

Wednesday, November 21, 2018

Berkshire exits out of Walmart Shares

Berkshire Hathaway has sold its remaining Walmart Inc. shares, according to the most recent 13F filing. This has ended a relationship that dates back more two decades. The world’s largest retailer was once one of Berkshire’s five biggest equity holdings as recently as 2014, valued at more than $5 billion, but Amazon’s encroachment since then has prompted Berkshire to pare down that stake. Walmart shares have risen 2.8 percent this year, compared with Amazon’s 37 percent boost.

Buffett has long highlighted the vulnerability of iconic retailers, citing Sears, F.W. Woolworth and Montgomery Ward as merchants that lost their dominant positions. More recently, he’s focused on the threat from companies like Amazon that sell everything from food to clothes and electronic gadgets online. While Buffett is known for sticking with stocks like Coca-Cola Co. for decades, he’s not wedded to favorites when circumstances change.

Monday, November 19, 2018

Berkshire buys shares in JPMorgan Chase, PNC Financial, Travelers, Oracle

Berkshire-Hathaway said it bought more than 35 million shares of big bank JPMorgan Chase and 41 million shares of software giant Oracle in 2018. At the time of disclosure Berkshires, JPMorgan stake was worth $4 billion and the Oracle stake was worth $2.1 billion approximately.

Berkshire also said it bought smaller stakes in another bank PNC Financial, as well as insurance company, Travelers. The firm also added to its stakes in Bank of America and Goldman Sachs.

Thursday, November 8, 2018

Berkshire Q3 2018 earnings sky rocket higher

Berkshire released its Third Quarter 2018 earnings, which showed that its quarterly operating profit nearly doubled from Q3 2017 due to stronger insurance results and lower taxes.

Helping the company's massive insurance operations were lower estimated liabilities from property and casualty insurance in prior years and lower taxes.

The year prior included major losses due to three U.S. hurricanes and an earthquake in Mexico. The company added that it had made $928 million in share repurchases in the three-month period.

Operating profit in the second quarter rose to $6.88 billion from $3.44 billion a year earlier, and higher than the $6.11 billion expected by Wall Street.

Tuesday, November 6, 2018

Buffett buys Berkshire stocks

Berkshire Hathaway Inc.'s chairman Warren Buffett poured more money into stock purchases last quarter than he has in more than four years. Buffett also spent $928 million on share buybacks during a few weeks in August, a move he's typically spurned. The repurchases amounted to less than 1 percent of the company's cash.

This year Berkshire's total cash pile has remained near $100 Billion.

Wednesday, October 31, 2018

Warren Buffett on being Frugal

"I bought my house in 1958. I have everything in life I ever wanted. If there were anything I wanted that money could buy, I'd do it this afternoon. I have no problem with that. My life would probably be worse if I had 6 or 8 houses. Having everything you want - you can't have more than that. X is a cutoff, but when you get to 10x or 1000x it just doesn't matter much."

Tuesday, October 30, 2018

Short term stock market moves are hard to predict

“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”

Friday, October 12, 2018

Why anyone can be a GREAT investor

"Though markets are generally rational, they occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals. A willingness to look unimaginative for a sustained period — or even to look foolish — is also essential."

Wednesday, October 10, 2018

Blood on the streets

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

"Nobody buys a farm based on whether they think it's going to rain next year. They buy it because they think it's a good investment over 10 or 20 years."

Monday, September 10, 2018

My skills fit a capitalistic free market economy

Warren Buffett in an interview to CNN's Poppy Harlow

"If this was a sports economy, I'd starve to death. You could give me six hours of training every day and I could practice at night… And I wouldn't be any good. My skills fit a market economy. Not everybody's do. We want a market economy, but a rich family does not leave people behind." 

Click here if the above video does not play

Monday, September 3, 2018

Buffett buys more Airline stocks - Delta and Southwest

Berkshire has increased its stake in Delta Airlines by 18.8 percent and Southwest by 18.7 percent, a recent filing said, and it added another 6.7 percent to its Teva stake, which it had doubled in the first quarter of this year.

Berkshire cut its holdings in Phillips 66 by 24 percent, Wells Fargo by 1 percent, and Charter Communications by 8.7 percent, as of the end of June. It also cut shares in American Airlines by 2.8 percent, and United Continental by 3.7 percent.

Thursday, August 30, 2018

Berkshire increases investments in Goldman Sachs

Berkshire has increased its ownership of shares in Goldman Sachs by 21 percent according to a recent SEC filing.

Berkshire added to Goldman in the second quarter of 2018 as the stock had fallen nearly 10 percent. Goldman recently announced that Lloyd Blankfein, its CEO for the last 12 years, will step down from that role in September and retire at the end of the year, to be succeeded by David Solomon.

The company first made its first bet on Goldman Sachs in 2008 after the collapse of Lehman Brothers. 

Monday, August 13, 2018

Warren Buffett now owns more than $50 billion worth of Apple shares

A regulatory filing recently filed showed that Berkshire Hathaway has now owns nearly $50 billion as of June 30, 2018. Berkshire Hathaway owned approximately 246.5 million shares at the time, or 5.1% of the company's outstanding shares. This represents the single biggest stake of a Berkshire owned company.

Buffett's stake certainly received a boost recently as Apple became the first US company to top $1 trillion in market cap. Berkshire Hathaway is the third-largest shareholder in Apple, behind Vanguard and BlackRock.

Earlier this year, Buffett told CNBC that he would "love to own 100 percent" of Apple. He added, "we like very much the management, and the way they think, and the way they act."

Monday, June 25, 2018

Warren Buffett exits USG position

Warren Buffett is finally getting closure on a long-held investment he recently called disappointing.

USG agreed to a $7 billion buyout by Germany's Knauf after Buffett's Berkshire Hathaway threw its support behind a shareholder uprising. Berkshire is USG's biggest shareholder, with a stake of 31 percent, and had said earlier this year it would vote against USG's four director nominees after the company rebuffed an earlier Knauf bid.

Knauf is USG's second-largest shareholder. Chicago-based USG makes building materials such as drywall. Berkshire began acquiring the shares 18 years ago but the company has been troubled with bankruptcy and asbestos claims.

It emerged from bankruptcy in 2006 with Berkshire's help. But when the mortgage crisis hit, it needed a $300 million bailout from Berkshire in a deal that gave Buffett's conglomerate the chance to convert notes into shares.

In March, Berkshire said in a securities filing it offered its stake in USG to Knauf for $42 a share. The deal, announced Monday, values Berkshire's stake at $1.9 billion.

At last year's annual shareholder meeting, Buffett called the investment "disappointing." And last month, Buffett told CNBC it was the first time he can remember Berkshire voting against a director slate at one of its holdings. He said the directors "didn't represent our interests" about the decision to take that stance. "For 18 years, it has not worked out that well," he said.

The Berkshire Hathaway investment dates back to 2001, when Buffett helped the company out of bankruptcy with a loan that was later converted to a stake in the company’s equity so large that a wholesale acquisition of the entire company remained one of the few ways for Berkshire to exit the investment without pushing down the share price.

Thursday, June 7, 2018

Berkshire purchases Dallas Texas company - Ebby Halliday

Warren Buffett’s HomeServices of America Inc. had sealed the deal for the purchase of Ebby Halliday Cos.

But the 83-year-old CEO, who’s spent 60 years of her life at the Dallas-based residential real estate company, wasn’t just celebrating a big payday.

By one industry expert account, the Minneapolis-based real estate arm of Berkshire Hathaway might have paid as much as $100 million in an all-cash deal to expand its Texas spread in a bold way.

But even more important to Burleson was that she’d landed a buyer who promises to stay true to Ebby form.

“I’m an Ebby girl. I want what’s best for this company,” says Burleson, who started as Ebby’s part-time secretary in 1958.

“We used to have our management meetings around her dining room table — the three of us,” she says, referring to the late-great Ebby and Ron Burgert, Ebby Halliday’s chief financial officer, who’s sitting next to Burleson in a cramped meeting room of the iconic Little White House. “I want to keep her legacy alive.”

With the acquisition of the Ebby Halliday portfolio, HomeServices has nearly 42,500 real estate professionals operating in nearly 900 offices across 30 states, including Dallas-based Allie Beth Allman & Associates, which was acquired in 2015.

Tuesday, June 5, 2018

Too much corporate transparency may not always be a good thing

Warren Buffett shares his views on human weakness and how good intentions of transparency can end up hurting companies

"It's very seldom that publishing compensation accomplishes much for the shareholders. American shareholders are paying a significant price for the fact that they get to look at that proxy statement each year and see how much those top five officers are earning."

Buffett recalled the time he ran Salomon Brothers: "At Salomon, virtually everybody was dissatisfied with what they were getting paid, and they were getting paid enormous amounts of money. They were disappointed, not because of the absolute amount — they were disappointed because they looked at somebody else in the place and it drove them crazy."

"I would put it this way. Corporate CEOs, as a group, would be being paid a lot less money if proxy statements hadn't revealed how much other people were getting paid. It is only human to look at a bunch of proxy statements and say, 'Well, I'm worth more than that guy.' … No CEO looks at other proxy statements and comes away thinking, 'I should get paid less.'"

Monday, May 7, 2018

More Apple purchases and possibly more to come

Berkshire has purchased an additional 75 million AAPL shares during the first quarter of this year 2018. Buffett says he wants to buy even more of Apple shares.

Speaking at the annual Berkshire Hathaway shareholder meeting, Buffett praised Apple for creating “extremely sticky” products that bring customers into its ecosystem.

Furthermore, Buffett said that he would love to see Apple go down in price so Berkshire Hathaway could further increase its ownership. The conglomerate is currently the third largest Apple shareholder:
“We would love to see Apple go down in price.” 

Thursday, May 3, 2018

BYD has been very profitable to Buffett even with recent market weakness

The rout in BYD Co, a Chinese electric vehicle manufacturer shares is nearing $9 billion as investors desert what was the world’s top stock only months ago.

Investors and analysts alike are losing faith in BYD’s ability to thrive with fewer government subsidies and growing competition, with the company last week predicting first-half profit may tumble as much as 83 percent. It’s among the year’s worst performing Chinese companies in Hong Kong, and has given back almost all of the gains triggered by last year’s euphoria over China’s plan to get rid of fossil-fueled cars.

Buffett’s investment in BYD has been quite profitable since a unit of Berkshire Hathaway first bought 225 million shares in September 2008, paying a discounted HK$8 apiece. The billionaire, known for his long-term investing style, held on to the stake even as prices soared to HK$80.45 last October. He once told a Chinese state broadcaster that he “loved” the shares.

BYD has a habit of whipsawing investors. The Hong Kong shares have been either oversold or overbought -- and often both -- every year since its 2002 initial public offering in the city. The company’s mainland-listed shares tumbled 7 percent on Wednesday, the steepest loss among China’s 50 largest firms, as onshore equity traders caught up following a two-day holiday.

Monday, April 9, 2018

Warren Buffett praises Jack Bogle of Vanguard

"Jack Bogle has done probably more for the American investor than any man in the country. Jack Bogle many years ago, he wasn’t the only one talking about an index fund, but it wouldn’t have happened without him. I estimate that Jack, at a minimum, has saved, left in the pockets of investors without hurting them overall in terms of performance, gross performance, he’s put tens, and tens, and tens, of billions into their pockets. And those numbers are going to be hundreds and hundreds of billions over time." 

Thursday, March 22, 2018

Should the wealthy invest in Index Funds ?

In many aspects of life, indeed, wealth does command top-grade products or services. For that reason, the financial 'elites' ... have great trouble meekly signing up for a financial product or service that is available as well to people investing only a few thousand dollars. Both large and small investors should stick with low-cost index funds.

Tuesday, March 20, 2018

Warren Buffett salary is just $100,000

Berkshire Hathaway Inc.’s Warren Buffett is scoring particularly well on a new rule requiring companies to disclose the ratio of a chief executive officer’s pay to that of the median employee.

His annual compensation of $100,000 was just 1.87 times the median employee’s pay of $53,510, a figure calculated from a sample of about two-thirds of Berkshire’s total employees, according to a filing released Friday. He also gives back about $50,000 to the company “for minor items such as postage or phone calls that are personal,” meaning his take-home pay would be less than that median figure.

Wednesday, March 14, 2018

Stocks more attractive than bonds at the moment

If you buy a 30-year government bond, it has a whole bunch of coupons attached. In the old days it does, now it's all electronic. But it has a whole bunch of coupons. And the coupon pays 3%, or whatever it may say. And you know that's what you're going to get between now and 30 years from now. And then they're going to give you the money back. What is a stock? A stock is the same sort of thing. It has a bunch of coupons. It's just they haven't printed the numbers on them yet. And it's your job as an investor to print those numbers on it. If those numbers say 10% and most American businesses earn over 10% on tangible equity. If they say 10%, that bond is worth a hell of a lot more money than a bond that says 3% on it. But if that government bond goes to 10%, it changes the value of this equity bond that, in effect, you're buying.

When you buy an interest in General Motors or Berkshire Hathaway or anything, you are buying something that, over time, is going to return cash to you. Maybe a long time in terms of Berkshire, but it'll be bigger numbers. And those are the coupons. And your job as an investor to decide what you think those coupons will be because that's what you're buying. And you're buying the discounted value. And the higher the yardstick goes, and the yardstick is government bonds, the less attractive these other bonds look. That's just fundamental economics. 

So in 1982 or '83, when the long government bond got to 15%, a company that was earning 15% on equity was worth no more than book value under those circumstances because you could buy a 30-year strip of bonds and guarantee yourself for 15% a year. And a business that earned 12%, it was a sub-par business then. But a business that earns 12% when the government bond is 3% is one hell of a business now. And that's why they sell for very fancy prices.

Monday, March 12, 2018

Apple VS IBM | I was wrong on IBM

Well I was wrong on at least I felt I was wrong on IBM. Now, I may have been wrong when I sold it, too. But I certainly was wrong when I bought it. And I've felt that Apple has an extraordinary consumer franchise. 

Apple's a different kind of business than IBM. They're both tech, obviously, in a major way. And they even have a joint venture, you know, on some things. But I think I understand consumer behavior perhaps better than I do the tech business. It wouldn't take much to beat it. And I liked it, I like Tim Cook very much. I like their policies. I see how strong that ecosystem is. It's to an extraordinary degree. I mean, I look at my grandchildren, my great grandchildren and everybody in the office, I mean, their families. I talk to the people at the Furniture Mart when the ten hadn't arrived, nobody goes over to, you know, buy an Android. 

I mean, you are very, very, very locked in at least psychologically and mentally, to the product you're using. I mean, you got all kinds of stuff up on there. It's a very sticky product.

Monday, February 26, 2018

Warren Buffett 2017 Shareholder letter

Berkshire has just released its shareholder letter for 2017.

Berkshire’s gain in net worth during 2017 was $65.3 billion, which increased the per-share book value of both our Class A and Class B stock by 23%. Over the last 53 years (that is, since present management took over), per share book value has grown from $19 to $211,750, a rate of 19.1% compounded annually.

The format of that opening paragraph has been standard for 30 years. But 2017 was far from standard: A large portion of our gain did not come from anything we accomplished at Berkshire.

The $65 billion gain is nonetheless real – rest assured of that. But only $36 billion came from Berkshire’s operations. The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code. (Details of Berkshire’s tax-related gain appear on page K-32 and pages K-89 – K-90.)

After stating those fiscal facts, I would prefer to turn immediately to discussing Berkshire’s operations. But, in still another interruption, I must first tell you about a new accounting rule – a generally accepted accounting principle (GAAP) – that in future quarterly and annual reports will severely distort Berkshire’s net income figures and very often mislead commentators and investors.

Read the full 2017 Share holder letter here.

Wednesday, February 21, 2018

Teva shorts run to cover | Berkshire buys Teva stake

It has been revealed that Warren Buffett's Berkshire Hathaway made a $358 million investment in Israel-based drug company Teva Pharmaceutical Industries.

Since the drug industry has not traditionally been a big focus for Berkshire, it suggests the investment is led by Combs, 47, and 55-year-old Weschler, the younger generation of stock pickers to which the 87-year-old Buffett has been giving more power over Berkshire's giant portfolio of stock bets, said Lawrence Cunningham, author of Berkshire Beyond Buffett: The Enduring Value of Values.

Monday, February 19, 2018

Buffett buys more Apple stock and Sells IBM

Warren Buffett has increased his stake in Apple by adding 31 million Apple shares in the last three months of 2017, while drastically cutting his stake in International Business Machines Corp. (IBM), according to new 13F SEC filings.

Buffett’s investment firm, Berkshire Hathaway, ended the year with 165.33 million Apple shares, collectively worth some $27.6 billion. Berkshire Hathaway is now Apple’s fourth-largest institutional investor. The firm began buying Apple stock in early 2016.

Meanwhile, Berkshire Hathaway sold off around 35 million shares of IBM in the fourth quarter, and entered 2018 with just 2.05 million shares. The firm began buying up IBM stock in 2011, and at one point held more than 80 million shares.

Monday, February 12, 2018

BlackRock to launch a Buffett style Berkshire Fund

BlackRock is planning to launch a fund designed to replicate the private equity approach of Warren Buffett’s firm Berkshire Hathaway.

It is understood the new fund, which is set to be called the BlackRock Long-Term Private Capital fund, will buy and hold stakes in companies and will be the firm's first direct-investment vehicle.

The launch was first reported by the Wall Street Journal which stated that BlackRock Long-Term Private Capital fund will aim to raise $10 billion (£7.2 billion) from sovereign wealth funds, pensions and other big investors.

The global head of active equities at the firm Mark Wiseman, who is also chairman of BlackRock Alternative Investors, is set to take charge of the new strategy.

Wednesday, January 17, 2018

Cryptocurrencies will come to a bad ending

"In terms of crypto-currencies, generally, I can say with almost certainty that they will come to a bad ending. When it happens or how or anything else, I don't know. If I could buy a five-year put on every one of the crypto-currencies, I'd be glad to do it but I would never short a dime's worth."

Monday, January 8, 2018

America will continue to grow and provide a decent life for all

Excerpts from Warren Buffett's letter published in Time.com

I was born in 1930, when the symbol of American wealth was John D. Rockefeller Sr. Today my upper-middle-class neighbors enjoy options in travel, entertainment, medicine and education that were simply not available to Rockefeller and his family. With all of his riches, John D. couldn’t buy the pleasures and conveniences we now take for granted.

Two words explain this miracle: innovation and productivity. Conversely, were today’s Americans doing the same things in the same ways as they did in 1776, we would be leading the same sort of lives as our forebears.

Replicating those early days would require that 80% or so of today’s workers be employed on farms simply to provide the food and cotton we need. So why does it take only 2% of today’s workers to do this job? Give the credit to those who brought us tractors, planters, cotton gins, combines, fertilizer, irrigation and a host of other productivity improvements.

To all this good news there is, of course, an important offset: in our 241 years, the progress that I’ve described has disrupted and displaced almost all of our country’s labor force. If that level of upheaval had been foreseen–which it clearly wasn’t–strong worker opposition would surely have formed and possibly doomed innovation. How, Americans would have asked, could all these unemployed farmers find work?

We know today that the staggering productivity gains in farming were a blessing. They freed nearly 80% of the nation’s workforce to redeploy their efforts into new industries that have changed our way of life.

You can describe these develop-ments as productivity gains or disruptions. Whatever the label, they explain why we now have our amazing $59,000 of GDP per capita.

This game of economic miracles is in its early innings. Americans will benefit from far more and better “stuff” in the future. The challenge will be to have this bounty deliver a better life to the disrupted as well as to the disrupters. And on this matter, many Americans are justifiably worried.

Let’s think again about 1930. Imagine someone then predicting that real per capita GDP would increase sixfold during my lifetime. My parents would have immediately dismissed such a gain as impossible. If somehow, though, they could have imagined it actually transpiring, they would concurrently have predicted something close to universal prosperity.

Instead, another invention of the ensuing decades, the Forbes 400, paints a far different picture. Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold–from $93 billion to $2.7 trillion–while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.

In 1776, America set off to unleash human potential by combining market economics, the rule of law and equality of opportunity. This foundation was an act of genius that in only 241 years converted our original villages and prairies into $96 trillion of wealth.

The market system, however, has also left many people hopelessly behind, particularly as it has become ever more specialized. These devastating side effects can be ameliorated: a rich family takes care of all its children, not just those with talents valued by the marketplace.

In the years of growth that certainly lie ahead, I have no doubt that America can both deliver riches to many and a decent life to all. We must not settle for less.

Monday, January 1, 2018

Warren Buffett just won a $1 million bet made 10 years ago

Nearly a decade ago, in the midst of the global financial crisis, Ted Seides, the former CIO of Protege Partners, placed a very public, million-dollar bet on behalf of his firm. His counterparty in that bet was none other than Warren Buffett. Seides wagered that over the course of the subsequent decade, a bespoke portfolio of 5 funds of funds, would outperform a low-cost Vanguard index fund selected by Mr. Buffett.

When he placed the bet a decade ago Buffett said he would hand over any proceeds from the victory to charity. The charity he chose was his local Girls Inc. affiliate, The Wall Street Journal reports. The charity provides after-school care as well as summer programs for girls ages 5 to 18.

Buffett officially “won” the wager last week, but said throughout 2017 that he was confident that he would win. Over the course of the bet the S&P 500 index fund returned 7.1% compounded annually, significantly more than the basket of funds selected by an asset manager at Protégé Partners. That basket only returned an average of 2.2%.

Both Buffett and Protégé Partners originally put around $320,000 into bonds for the bet that was expected to appreciate to $1 million over the course of the 10 years. The bonds ended up appreciating faster than either party expected, and in 2012 the duo decided to purchase Berkshire B shares, which are now worth $2.22 million.