He is selling and selling. Sold BAC, sold AAPL, sold BYD, sold CVX.
I think he is wrong to sell. Mr. Market will be higher a year from now.
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So whatever he said during the annual meeting for selling AAPL is obfuscation. As of 2Q Filing date he sold 50% of AAPL holding, and who knows how much more since then. Berkshire may very well raise $300 B cash pile
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The question is - what do you do with the cash ? Fed will likely reduce the interest rate. There are $T sitting on the sidelines waiting to be deployed.
I don’t know. WEB is not afraid or shy of holding cash. Will be interesting to see what he does with that cash.
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My guess is that he is leaving BRK in a highly liquid position for Greg.
Maybe buyback BRK in case of a BRK sell off after he hangs it up and protect current investors.
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$300 B buyback?? No way. I don’t know what is Berkshire’s plan for the cash, but they don’t need $300 B for buyback.
My guess is he thinks the entire market is too rich and he’s doing what he can where he can to prepare for the inevitable downturn, at which time there will be elephants everywhere.
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This is something we heard all the way from 2010… Buffett himself clarified on post 2020, they are not looking for cheap markets.
Instead of buying, he was a big seller in 2020 when the market dipped 40% during the pandemic.
He did not buy anything in 2008/2009 and ended up buying BNSF later.
He has gotten much more risk averse now. Unlikely that he will swing.
My faulty memory says the deal to buy BNSF was announced in 2009 and completed in early 2010.
They don’t need $300B for a regular buyback. But they may need $100B+ if they intend to buyback all/most of the shares that end up in the foundation after Warren dies. And he will die, everyone does. And there may be a few other long time holders of Berkshire that will die soon (like David Gottesman recently did).
It is possible that the foundation will want to largely diversify away from holding only Berkshire to holding a variety of things.
For me it is bit difficult to imagine that the foundation wants to liquidate all the Berkshire shares at once. That could lead to Change of control at Berkshire. I was expecting the Foundation will hold the shares and sell them over the years, and of course if Berky declares dividend they can use the dividend and continue its work.
So far, A-shares are not trading at significant premium to B-shares, but that should change and the voting rights should have higher value.
Having said, it is a reasonable speculation that all of Buffett’s shares are purchased by the company in a buyback. But that would be very unusual.
One interesting thing I noticed is, $235 B is in short-term treasury bills, i.e, bills are treasury instruments that have less than a year to mature. So, Buffett is not locking in long term rates. That is, if you are expecting the rates to go down, buying long-term bonds makes more sense, as the bonds will increase in value as rates drop and you are locking in higher rates now. Looks like Berkshire is not loading up the bond portfolio.
It is also interesting Berkshire is selling only BAC, and $APPL and looks like not touched other long-term holdings.
There were huge equity losses in the press release, but I can’t figure out which stocks went down to have a $28 billion loss in the quarter. Can someone help me?
Isn’t the very point of Berkshire buying back A shares to prevent outsiders from accumulating them to potentially gain control? It could still happen as the float of A shares gets smaller and smaller, but there’s no way to prevent that after death of A share holders.
One of the ways to do that is, Buffett’s A-shares goes into the foundation and never sold!! That way foundation controls Berkshire.
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In the last annual meeting he said, he is happy to keep them in treasury bills and doesn’t care whether the rates are 5% or 2%.
I also observed there is no tax liability in the income statement. I mean there has to be considerable tax on the APPL sales. May be they are waiting for all the sales to complete and it will reflect on the annual statement.
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If the shares are never sold, then the foundation has no money.
That is easy to fix it. Berkshire starts paying dividend and can pay one time hefty dividend to seed the foundation.
A $10 dividend on B-share or $15000 on A-shares would produce easily $4 Billion annual dividend for the foundations. Also a one time $50 dividend will seed the foundation with $20 B. This dividend will keep growing overtime. The foundation can do lot of meaningful work with that kind of money.
That won’t work either. First of all, the foundation would have to sell about 5% of them each year to use for distributions/spending on their goals. Second of all, how would that even help? Others will eventually run the foundation and then THEY might change the character of Berkshire. Third, the foundation, for prudence, may need to diversify its holdings.
LOL. One of the main reasons many people hold Berkshire, and hold it “forever” is because of the lack of dividends, and god forbid a special dividend (shudder!!!) Add a regular dividend, and you might see all sorts of A share holders dumping them left and right.