Q3 Earnings on Nov 5

Q3 earnings to be released on Nov 5, a week earlier than I expected.

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My notes:

Q3 Berkshire Report
IV estimates per B (Q2)

5 groves $320 ($320)
Book value $207.10 ($209.39)
Book + Float $275 ($276)
Current price to book 1.39
Price to peak book 1.25

Notes on Q3
Repurchases
Repurchases $1bn (Q2 $1bn) Average price (per B) $287
Total repurchases in 2022 $5.2bn (2020 $25bn, 2021 $27bn)

Equities
In 2022 Bought $66bn, sold $17bn.
Equities value down $10bn?? in Q3
Apple stock price up 6% in Q3
OXY using equity method. Earnings not included (1 qtr lag).

Insurance
Ian $2.7bn after tax.

BNSF
“After-tax earnings of our railroad, BNSF, declined 6.2% in the third quarter and increased 4.0% in the first nine months of 2022 compared to 2021. The comparative changes in earnings in 2022 reflected higher revenue per car/unit, lower overall freight volumes and higher fuel and other operating costs.”

MSR
“Results were mixed among our various businesses. While customer demand for products and services was relatively good in 2022, demand began to weaken in the third quarter at certain of our businesses. We continue to experience the negative effects of higher materials, freight, labor and other input costs.”

Thoughts

  • Disappointing repurchase activity…what does that tell us?
  • Cash now $105bn (was $101). $75bn available for deployment.
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Hasn’t aged well though

Oct 28th: $156
Oct 31st: $154
Nov 4th / Friday: $135-138

A drop of >10%+ this week

A drop of >12% at weekly lows

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Sure. My point: Q3 equities value down $10bn?? and it wasn’t Apple that done it.

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Is 66bn a typo? (extra characters)

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How else can this be interpreted other than WEB is bearish? Not buying back his own stock aggressively around $260? Not deploying cash aggressively? Pls do not tell me he does not time the market. Of course he does and is signaling things are going to get a LOT worse? Prove me wrong. Actions not words.

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Sorry, my bad. Getting quarter and year mixed up.

In 2022 Bought $66bn, sold $17bn.
I fixed my original post. Thanks.

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I agree.

01234567890

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I’m having trouble getting to the equities drop number.

CNBC:
Berkshire Hathaway Q3 earnings BRK (cnbc.com)
"Berkshire suffered a $10.1 billion loss on its investments during the quarter, bringing its 2022 decline to $63.9 billion. The legendary investor told investors again that the amount of investment losses in any given quarter is “usually meaningless.”

I’d thought it was more, but I might not be seeing the effect of OXY moving to the “equity method”. I really need to get my head around the equity method. It’s getting significant.

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I don’t particularly see any bearishness in his actions. Cash was at $105b out of which $11.6b was spent on Alleghany 19 days after the quarter finished. A year ago cash was at $144b. So in the last 12 months, he has deployed about $50b of cash in addition to the Alleghany purchase. The free cash generated during that time is in the order of $25b so there has been an uptick in general investment activity which is not like the battern down the hatches and build cash mindset we saw from Buffett in 2020.

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Why no buybacks of SIGNIFICANCE in the wretched Qtr for stocks? Why no $30B adds of a Mega Cap stock -30%?

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Maybe he had other private businesses and/or public aquisitions being worked on where the cash would be better deployed than buybacks. Without knowing the universe of options he is evaluating, it’s impossible to know and Berkshire does not provide quarter by quarter commentary of this sort and it never has. The bottom line is that in the last year he has been more active than recently, this is a year where he has managed to tuck in a decent insurance business perhaps shifting the emphasis from the heavy buybacks last year. It doesn’t bother me as part of the thesis with berkshire is whether you trust their judgement to be superior than my own over the long term, all this considered

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I’m not surprised by the quarterly results. Having $60 billion or so on hand right now for deployment is not huge. Maybe enough for one decent elephant sized acquisition and a handful of quality equities on sale, a few buybacks with the leftovers, and then rebuild the coffers with ongoing cash flow. We very well may be entering a recession next year as things begin to bite, so another leg down in this market is not altogether off the table at this point. We’ll be glad to have that cash ready to go when that happens. Patience grasshopper.

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The Old mystery private deal trick or is the sucking our thumbs joke. STOP. Clearly he is hyper bearish. He understands this is the biggest credit bubble in global financial history bursting. WAY BIGGER than 2008-2009 and pls spare me the banks are in better shape BS

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Good to see a serious BRK discussion on the new board. Keep it up, everyone!

I too believe Uncle Warren is currently very cautious.

I also think he’s keeping the checkbook close by…just in case.

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BRK had two cash deals coming up, Alleghany and Pilot in Q1 2023. He is also getting 4.1% on a 13 week treasury bill so that must be a pleasant change from the five (taxable!) basis points that security was paying him this time last year.

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Agree, I totally trust their judgement of risk and what are the most logical allocation options during these crazy times. We also bought out Greg’s BHE stake in August and may be buying Walter’s BHE shares soon ($7B?)after the estate is settled. We could also buy Walter, Sandy or Tom’s huge position of A shares. Who knows? Interesting, we only bought back A shares this quarter but realize it was only $1B.

OXY and CVX are up 135% and 54% YTD and are gushing FCF-so glad we own them in size. How can demand not rise in the short-moderate time frame?!

I have been adding BRK and GOOGL in recent weeks although certainly could be more pain ahead.Would not be surprised if we added to AAPL down here esp. with their very consistent and large buybacks. Enjoy all the posts and really nice to see you back ppant!

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Probably wanted to focus on deploying capital into oil stocks vs buybacks as an inflation hedge which in itself supports the stock price.

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Pls expound on you GOOGL buys

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Owned and added since 2005 (never sold a share), love the business, been adding more since it hit 115 over the Summer and been averaging down, solid mgt showing more discipline, great divisions/moats, P/S 4 (avg. 6.5) in recent years, P/E 16.5, ROE 26%, great balance sheet, 116B cash, great FCF, 70B approved in buybacks, belief in digital ad spending /cloud/ YouTube will resume growth, off 43% from 52 week high, willing to be patient beyond this doom and gloom, Jim and others have provided insightful and provided optimistic data and opinion. Who knows, but I know I ain’t selling!

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