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>>> Sirius XM Stock: Buy, Sell, or Hold?
by Dan Victor
Motley Fool
September 18, 2024
https://finance.yahoo.com/news/sirius-xm-stock-buy-sell-134500699.html
Sirius XM Holdings (NASDAQ: SIRI) investors have struggled to lock onto a signal from the satellite radio giant. The stock is down 55% this year amid disappointing results with concerns about whether the company can manage to move the dial toward stronger growth.
The good news is that the company remains a category leader with an audience of over 150 million listeners across its platforms. The potential that Sirius XM finally gets its strategy right highlights the attraction of the stock with a significant opportunity to monetize next-generation audio formats.
Let's discuss what investors should do with Sirius XM stock now.
The case to sell Sirius XM stock now
The way people consume media has rapidly changed in the past two decades. Unfortunately for Sirius XM, the company has been on the wrong side of the audio revolution as satellite radio largely fell behind the rise of streaming-music alternatives.
Recognizing the advantages of a satellite broadcast, particularly compared to terrestrial radio, the technology appears redundant next to the proliferation of broadband-mobile internet. It's been a tough sell for Sirius XM to convert listeners with its premium price point when most people are already connected to the internet via their smartphone device offering access to multiple audio options.
Despite partnering with global-auto manufacturers to feature Sirius XM as an in-vehicle audio option, the company's flagship radio service has been in decline for the last several years. Compared to a record 34.91 million subscribers in 2019, the company last reported 33 million paying users in the second quarter, down 100,000 in the past year.
The trends from the smaller-streaming Pandora segment and other off-platform services haven't been any better. The 6 million paid Pandora subscribers this past quarter was down by 41,000 from a year ago.
Similarly, financials have struggled. Q2 revenue declined by 3% year over year, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were flat compared to 2023. For the full year, the company expects revenue to decline by around 2% with an adjusted EBITDA target for 2024 at $2.75 billion, down 3.2%. These dynamics help explain the fundamental challenges the company faces. Investors skeptical that Sirius XM can orchestrate a turnaround have plenty of reasons to sell the stock.
The case to buy Sirius XM stock
It's easy to get caught up in the poor headlines, but it's also important to consider the strong points of any outlook. Beyond the soft operating trends, Sirius XM remains profitable and generates significant free cash flow, expected to be around $1.2 billion this year.
The plan is to reduce the balance sheet debt position and invest toward growth. On Sep. 9, Sirius XM completed its split-off and merger transaction with Liberty Media which included a 1-for-10 reverse split. This means that shareholders of the stock received one new share for every 10 shares they owned.
The deal, announced last year, simplifies the equity structure and should provide the now independent Sirus XM Holdings Group more strategic flexibility that can hopefully translate into improved shareholder returns. The stock yields 4% through a quarterly dividend that management intends to maintain.
The business isn't growing as expected, but there is a sense of stability supported by a loyal listener base. Instead of attempting to compete with larger players like Spotify Technology for on-demand music streaming, Sirius XM differentiates itself with more curated content that is now available on a stand-alone mobile app separate from the in-vehicle satellite-radio product. The company is betting on a younger demographic growth audience seen as more willing to spend on multiple services.
The bullish case for the stock starts with the company's ability to expand advertising opportunities from its high-profile podcasts along with exclusive live sports broadcasting. With shares of Sirius XM trading at a forward price-to-earnings (P/E) ratio of 8, investors who are confident there are better days ahead can consider buying the stock at what appears to be a bargain level.
Decision time for Sirius XM stock
My prediction is that the number of uncertainties surrounding Sirius XM will keep shares volatile. With the stock already losing more than half its value this year, it's probably too late to sell since many of the negatives are already priced in. The big risk is if conditions deteriorate further. At the same time, it will likely take evidence sales and accelerating subscriber trends for the stock to sustain a big rally. I believe a hold rating makes sense for current shareholders while investors on the sidelines should avoid it for now.
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>>> Berkshire Hathaway’s Jain Sells Over Half of Class A Shares
Bloomberg
by Alexandre Rajbhandari
September 12, 2024
https://finance.yahoo.com/news/berkshire-hathaway-jain-sells-over-143854442.html
(Bloomberg) -- Berkshire Hathaway Inc.’s vice chair of insurance operations, Ajit Jain, sold $139 million worth of his Class A shares in Warren Buffett’s conglomerate.
Jain, one of Buffett’s top lieutenants, disposed of 200 of the Class A shares for about $695,418 each, according to a regulatory filing Wednesday. The disposal means the longterm executive is left with control of 166 such shares, 61 of which he directly owns.
When reached by phone, Jain declined to comment. Berkshire Hathaway didn’t immediately respond to a request for comment.
The move marks a shift for Jain, who added 50 Class A shares to his holding between March 2023 and March this year. Still, he has been trimming his Class B stake in the conglomerate over the years, selling more than 70,000 such shares from March 2020 to March 2024, according to past proxy filings.
The executive joined Berkshire Hathaway in 1986 to work on the conglomerate’s insurance operations, which include car insurer GEICO.
Buffett has long praised Jain, saying in 2017 that he’s probably made more money for Berkshire than Buffett has. In 2018, Jain and Greg Abel were named vice chairmen of the firm, with Abel, who’s a decade younger than Jain, eventually being tapped as Buffett’s successor.
Investors have questioned whether Jain would stick around to help Abel run things once Buffett, now 94, leaves the firm. Jain still owns more Class B shares than Abel.
“We continue to be comfortable that the interests of Mr. Jain and Mr. Abel are aligned with shareholders,” James Shanahan, an analyst at Edward Jones who covers Berkshire Hathaway, told Bloomberg.
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BAC - >>> Warren Buffett Just Sold Another $3.1 Billion Worth of One of Berkshire Hathaway's Largest Holdings. Here's Why.
Decoding Warren Buffett's stake reductions in Apple, BofA
Motley Fool
by Adam Levy
Sep 9, 2024
https://finance.yahoo.com/news/warren-buffett-just-sold-another-220100936.html
Warren Buffett hasn't seen a lot to like in the stock market in quite some time. In each of the last seven quarters, Buffett sold more stock from Berkshire Hathaway's equity portfolio than new purchases. And it looks like he's about to make it a full two years.
Last quarter, Buffett cut his company's massive position in Apple nearly in half. It was, by far, the biggest stock sale in the history of Berkshire Hathaway, amounting to roughly $72.6 billion. This quarter, Buffett has turned his attention to Berkshire's second-largest holding. At least, it used to be.
While we normally have to wait until Berkshire's quarterly filings with the SEC to see what moves the Oracle of Omaha and his team are making in the company's portfolio, there are some special exceptions. When an investor owns more than 10% of a publicly traded company, it must publicly report every stock purchase or sale within three days. That's why we know Buffett's been selling Berkshire's stake in Bank of America.
After selling $3.8 billion worth of the stock between July 17 and Aug. 1, Buffett sold another $3.1 billion in late August and early September. The value of Berkshire's holding has gone from $41.1 billion at the end of the second quarter to about $34 billion today.
Here's why Buffett may be selling Bank of America stock.
Making a bank withdrawal
At last year's Berkshire Hathaway shareholder meeting, Buffett expressed his concerns about the banking industry. This was right after the Silicon Valley Bank collapse, and Buffett expressed the idea that banking has changed substantially over the decades and will continue to change. The Silicon Valley bank run demonstrates that in the digital age, a bank run can happen in a matter of seconds. "If people think that deposits are sticky anymore, they're just living in a different era," he said.
Later, Buffett explained it's impossible to predict how the banking industry will change due to competing incentives from politicians, big bankers, consumers, and practically any other economic actor. But he said he does like one bank — Bank of America. "I like the management," he said.
He added a note about Berkshire's stock holding as well. "I proposed the deal with them, so I stick with it."
It's one thing to stick with a stock because you like the business and the management. It's another to stick with it out of loyalty to a decision made over a decade ago. Perhaps Buffett recognized that fallacy earlier this year as he turned his focus to taking gains on some of his biggest investments
As mentioned, Buffett sold a huge amount of Apple stock earlier this year. His reasoning, as he explained at this year's shareholder meeting, was his expectation that corporate tax rates will increase in the near future. It's better to take the gains now and pay the tax bill.
Of course, that only makes sense if the stock is trading for what Buffett asserts is its intrinsic value (or greater). So, he wouldn't liquidate everything Berkshire holds. He may have sold Bank of America stock this quarter as its valuation has climbed, and he holds a significant gain on the stock. He bought a good portion of Berkshire's Bank of America holdings for just $7.14 per share. The average sales price so far this quarter has been $41.25. On 150 million shares, that's over $5 billion in realized gains.
Should investors sell with Buffett?
Bank of America stock has performed well this year amid expectations that the Federal Reserve will start cutting rates. It looks like those rate cuts are finally coming to fruition, with the Fed expected to announce its first rate cut since 2020 later this month.
The bank suffered amid rising interest rates due to holding bonds on its balance sheet with longer-than-average durations. As such, the value of those bonds declined as the Fed raised rates. Meanwhile, Bank of America was stuck holding low-interest bonds while the market forced it to pay higher short-term interest rates. As a result, net interest income declined considerably.
But management believes it's hit a trough on net interest income, and the metric should start turning around next year. Bank of America should see an outsized benefit from declining interest rates as it still holds many long-duration bonds.
Furthermore, Buffett's concern about how "sticky" deposits are with the bank is less of a factor for Bank of America, considering its one of the biggest banks in the country, making it a Global Systemically Important Bank, G-SIB. That status gives depositors much more confidence in the bank and the systems protecting it.
The stock currently trades around its five-year average price to tangible book value, indicating it's probably fairly valued. Thus, it makes sense for Buffett to take advantage of the currently low tax rate, but investors interested in bank stocks may have a good opportunity to buy a great bank well positioned for declining interest rates.
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OXY, MA, ULTA - >>> 3 Value Stocks to Buy as Berkshire Hathaway Hit an All-Time High on Warren Buffett's Birthday
by Daniel Foelber
Motley Fool
Sep 9, 2024
https://finance.yahoo.com/news/3-value-stocks-buy-berkshire-083000492.html
Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) stock price hit an all-time high on Aug. 30 -- Warren Buffett's 94th birthday -- before proceeding to rise even higher on Sept. 3 despite a 2.1% sell-off in the S&P 500. The shares of the giant conglomerate are now up more than 27% year to date, outperforming both the S&P 500 and Nasdaq Composite by a wide margin.
Its portfolio managers have been on something of a selling spree lately -- making a large reduction in its Apple stake earlier this year and trimming its Bank of America position by 14.5% since mid-July.
However, Berkshire has maintained a sizable holding in oil and natural gas exploration and production company Occidental Petroleum (NYSE: OXY), owns American Express, Visa, and Mastercard (NYSE: MA), and initiated a position in Ulta Beauty (NASDAQ: ULTA) earlier this summer.
Here's why Occidental Petroleum, Mastercard, and Ulta stand out as three top value stocks to buy now.
Oxy can rake in the cash even at mediocre oil prices
Berkshire Hathaway owns 27.3% of Occidental Petroleum -- commonly referred to as Oxy. That stake, Berkshire's sixth-largest public equity holding, is worth more than $14 billion. But Oxy hasn't been a very good investment of late. The stock is hovering around a 52-week low.
Oil prices affect the fortunes of the entire oil and natural gas value chain, but especially exploration and production companies like Oxy that build their businesses around selling hydrocarbons for more than it costs to get those resources out of the ground. Unfortunately for Oxy and its peers, the price of West Texas Intermediate (WTI) crude oil -- the U.S. benchmark -- just fell below $70 a barrel to its lowest level so far this year.
Although Oxy can break even at a much lower oil price, $70 is significant because Oxy has based some of its key decisions around the assumption that prices will be at or above that level. In its fourth-quarter 2023 investor presentation, it used that threshold to predict year-one free cash flow (FCF) from its $12 billion acquisition of CrownRock. The lower the oil price, the lower the FCF, and the worse the acquisition will look -- at least in the short term. The good news is that CrownRock has plenty of acreage where the estimated breakeven levels are below $60 per barrel for WTI.
Oxy has also done an excellent job improving the health of its balance sheet by paying down debt. It's also aggressively investing in carbon capture and storage projects that could have long-term benefits for the company, both from an ESG (environmental, social, and governance) perspective and as a potential revenue stream in the form of carbon credits.
Oxy today trades at a dirt-cheap price-to-earnings (P/E) ratio of 13.5 and a price-to-FCF ratio of 13 -- meaning its earnings and FCF could fall and the stock would still be cheap. Now is a great time to scoop up shares of Berkshire's top energy company on sale.
Mastercard has a powerful moat
Credit card companies have proven to be phenomenal long-term investments. Mastercard and its closest peer, Visa, now have a combined market cap of nearly $1 trillion. And yet, they aren't necessarily overvalued.
Mastercard trades now at a forward P/E ratio of 33.3. That's higher than the S&P 500's trailing P/E ratio of 28.8, so even if Mastercard generates the earnings analysts expect over the next 12 months, it will still be more expensive than the S&P 500. With Mastercard, though, the value isn't just in the earnings, but the quality of the company and its growth trajectory.
Mastercard is an incredibly efficient business, with a 58.6% operating margin. It also has just $8.2 billion in total net long-term debt on its balance sheet, which is very small for a company of its size. Few companies in the S&P 500 can compete with Mastercard's profitability and financial health.
It also benefits from a huge network effect. Mastercard and Visa process the majority of credit card transactions in the U.S., and both are growing internationally. Fees are collected on both the number of transactions and the payment volume of total transactions. The more Mastercard debit and credit cards are in circulation, and the greater the partnerships with financial institutions like banks and credit unions, the more useful the network becomes to all participants, and the more incentive other customers and businesses have to join it.
Mastercard is expanding its value-added services business as consumers and merchants seek fraud prevention tools, better analytics, and cybersecurity solutions. This segment grew faster than Mastercard's core business last quarter.
Add it all up, and Mastercard stands out as a quality company that can continue delivering strong returns for investors.
Ulta is a catch-all way to play a recovery in cosmetics spending
Ulta is a new addition to Berkshire's portfolio. Although the position is valued at about a quarter-billion dollars -- much less than its other holdings -- Berkshire Hathaway now owns 1.5% of the retailer.
Ulta checks a lot of the boxes that Buffett and his team look for when searching for quality value stocks. The stock's valuation is significantly below historical median levels.
As you can see, Ulta's forward P/E ratio is above its current P/E -- meaning that analysts expect earnings to shrink in the next 12 months. There's no sugarcoating that Ulta's second-quarter 2024 earnings call was bleak, with management cutting the outlook for the second time this year. Competition and weak consumer spending were the headline concerns. But taking a step back, a slowdown in Ulta's growth is completely understandable.
The cosmetic industry boomed in recent years. And consumer trends toward more value-focused products -- like those sold by e.l.f. Beauty -- and away from premium-priced products like those sold by Estee Lauder or L'Oreal means lower margins and fewer reasons for customers to shop in its stores, try new products, or use Ulta's salon services.
That all adds up to a sluggish near-term outlook for the retailer. However, for investors with the patience to hold on as they wait for the industry to turn around, Ulta's dirt-cheap valuation and market position make it worth considering now.
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Sirius XM - >>> The Most-Anticipated Reverse Stock Split of the Year Has Arrived -- and This Company Is a Screaming Bargain
by Sean Williams
Motley Fool
Sep 10, 2024
https://finance.yahoo.com/news/most-anticipated-reverse-stock-split-084100466.html
Since 2024 began, hype surrounding the artificial intelligence (AI) revolution has played a major role in lifting Wall Street's three major stock indexes to multiple record-closing highs. But AI isn't the only trend pushing the broader market higher. The euphoria surrounding stock splits has played an equally important role.
A stock split allows publicly traded companies to adjust their share price and outstanding share count by the same factor, without altering their market cap or underlying operating performance. It's a purely cosmetic maneuver that can have important consequences.
There are two varieties of stock splits, with investors decisively favoring one over the other. A reverse-stock split is geared at increasing a company's nominal share price, usually with the goal of ensuring it meets minimum continued listing standards for a major stock exchange. Conversely, a forward-stock split is designed to reduce a company's share price to make it more nominally affordable for everyday investors who can't purchase fractional shares through their broker.
Generally speaking, reverse splits are conducted by struggling businesses whose share price is floundering. Comparatively, companies completing forward splits are typically out-innovating and out-executing their peers. Unsurprisingly, most investors tend to focus on high-flying companies enacting forward splits.
Since late January, 13 prominent businesses have announced or completed a stock split -- 12 of which are of the forward-split variety -- including AI darlings Nvidia, Broadcom, and Super Micro Computer.
But it's the lone high-profile reverse-stock split that deserves the attention of Wall Street and investors today.
The most-awaited reverse-stock split of 2024 is now complete
In mid-December, Sirius XM Holdings (NASDAQ: SIRI) and Liberty Media's Sirius XM tracking stock, Liberty Sirius XM Group (NASDAQ: LSXMA)(NASDAQ: LSXMB)(NASDAQ: LSXMK), announced their intention to merge into a single class of shares. Liberty Media is the majority stakeholder in Sirius XM, and the variance in the price between Liberty Sirius XM Group's three classes of shares and the share price for Sirius XM stock has been head-scratching at times.
Last week, the final exchange ratio for this merger was announced, with Liberty Sirius XM Group stakeholders redeeming their shares "in exchange for 0.8375 of a share of common stock of New Sirius." Liberty Sirius XM Group stopped trading after the close of business yesterday, Sept. 9, which means today, Sept. 10, marks the first day of a single, non-confusing, class of Sirius XM shares.
But there's more to this combination than just getting the exchange ratio correct and ending the confusion of multiple shares classes.
In mid-June, Sirius XM announced that, upon consummation of the merger with Liberty Sirius XM Group, a 1-for-10 reverse-stock split would be conducted. This reverse split, which is now complete, has reduced the company's outstanding share count from well over 3 billion to an estimated 339.1 million shares.
What makes this reverse-stock split so unique is that it's not being executed out of weakness. In other words, Sirius XM was in no danger of delisting from the Nasdaq stock exchange.
Instead, it was enacted to increase its share price from the $3 to $6 range that it's hovered around for years to one that's more likely to attract institutional investors. Some money managers will avoid stocks priced below $5 for fear of increased volatility. Sirius XM's 1-for-10 reverse split eliminates this minor concern and should put the company back on the radar of top-tier money managers.
Sirius XM is a screaming bargain for opportunistic long-term investors
In addition to being Wall Street's only high-profile reverse-stock split of 2024, Sirius XM Holdings is, arguably, the top bargain among the 13 companies to have announced or completed a split this year.
Though I'll get to the figures that qualify Sirius XM as a "screaming bargain" in a moment, let me walk you through a few of the competitive advantages that make it a stock you can safely own for years to come.
To begin with, it's the only licensed satellite-radio operator. While this doesn't mean it's devoid of competition, it does convey that Sirius XM is a legal monopoly. As such, it affords the company exceptional pricing power with its monthly and annual subscriptions.
Another advantage to Sirius XM's operating model is its cost structure. While some of its expenses, such as royalties and talent acquisition, are going to fluctuate from quarter to quarter, transmission and equipment expenses typically don't change, regardless of how many subscribers the company has. If Sirius XM can expand its subscriber base, it should have a clear path to improve its operating margin over time, largely thanks to some of its costs being highly transparent and predictable.
A third competitive edge Sirius XM holds over traditional radio operators is the path by which revenue is generated. Online and terrestrial radio providers are overwhelmingly reliant on advertising to pay the bills. While this strategy works well during lengthy periods of economic expansion, it can lead to some big question marks when recessions inevitably occur.
Sirius XM has brought in less than 20% of its sales through the first six months from advertising. Comparatively, almost 77% of its revenue can be traced to subscriptions. There's a considerably lower likelihood of satellite-radio subscribers cancelling their service during a recession than there is of businesses cutting their ad spending. This tends to lead to more predictable cash flow for Sirius XM in any economic climate.
With these competitive advantages in mind, let me now address how historically cheap Sirius XM's stock is. Based on where shares closed on Sept. 6, Sirius XM can be scooped up by opportunistic long-term investors for 8.3 times forward-year earnings. This represents a 53% discount to its average forward price-to-earnings (P/E) multiple over the trailing-five-year period, and is a stone's throw away from its lowest forward P/E multiples since going public in September 1994.
Sirius XM is historically cheap relative to its cash flow generation, too. Its multiple of 5.6 times forecast operating cash flow in the current year (2024) equates to a 43% discount to its average price-to-cash-flow multiple over the last five years.
Tack on a sustainable 3.9% yield for good measure, and you have a screaming bargain that also happens to be Wall Street's most-anticipated reverse-stock split of 2024.
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>>> Sirius XM Stock Has a Good Debut as Independent Company. Berkshire Hathaway Becomes Top Shareholder.
Bloomberg
by Andrew Bary
Sept 10, 2024
https://www.barrons.com/articles/sirius-xm-stock-berkshire-hathaway-buffett-ca45b84c
An independent Sirius XM Holdings had an encouraging debut Tuesday, as Berkshire Hathaway emerged as the largest shareholder with an estimated 25% stake—replacing Liberty Media (FWONA) and its control holder, media mogul John Malone.
Sirius XM Holdings stock gained 2.6% Tuesday to $27.38, after trading as low as $24.43 earlier in the session.
A combination occurred late Monday of Sirius XM with Liberty Sirius XM Holdings, a tracking stock that held about 83% of Sirius XM shares. Sirius XM, the satellite radio company, also did a one-for-10 reverse stock split.
The merger caps what has been a poor year for the Sirius XM, which is down about 50% so far in 2024. The stock is off over 10% since the start of September.
The company provided updated financial guidance late Monday in conjunction with the merger. It reduced its projection for 2024 free cash flow by $200 million to $1 billion, reflecting several factors, including higher interest costs and year-to-date cash outflows at Liberty Sirius XM. That amounted to a modest disappointment, although revenue and Ebitda, or earnings before interest, taxes, depreciation, and amortization, projections were unchanged at $8.75 billion and $2.7 billion, respectively.
The combination between the two companies had been sought for years by Malone and Liberty CEO Greg Maffei to simplify Sirius XM’s structure, broaden its investor base to those who couldn’t hold tracking stocks, and potentially pave the way for its entry into some equity indexes.
Berkshire was the largest holder of the Liberty Sirius tracking stock, and now becomes the biggest investor in Sirius XM. The $2.3 billion stake in the company is believed to be managed by Ted Weschler; he is one of two investment managers that works with CEO Warren Buffett, who oversees Berkshire’s $300 billion equity portfolio. There was no immediate comment from Weschler.
Buffett is a fan of the satellite radio service and regularly tunes into its Siriusly Sinatra station that plays American standards when he’s driving in his Cadillac, Maffei said last year. The station plays songs performed by Frank Sinatra, Ella Fitzgerald, Billie Holiday, and others.
Sirius XM bulls point to the company’s low valuation at less than 10 times projected 2024 earnings and a 10% free cash flow yield. The stock yields about 4% based on a dividend of about 27 cents per share quarterly. The company’s share count fell about 12% in conjunction with the merger to 339 million shares.
The merger may wash out arbitragers who had been long Liberty Sirius XM and short Sirius XM to capture a spread that recently stood at more than 20%. In other words, these traders bought the tracking stock and sold short Sirius XM.
That could be a good setup for the stock if fundamental investors emerge to replace them. Free cash flow is expected to be higher in 2025 at $1.5 billion, Sirius has projected.
Negatives are ample debt of about $10 billion, or nearly four times projected 2024 Ebitda. The company’s target leverage ratio is mid-to-low three times. Sirius XM unveiled a $1.2 billion share repurchase program Monday, but said it plans to emphasize debt reduction with free cash flow until it meets its debt ratio goal.
Sirius XM stock has been hit hard this year for several reasons. The company’s revenue was down 5% in the latest quarter while self-paid satellite radio subscribers have fallen about 400,000 in the first half of 2024 to about 31.5 million. That has prompted concerns that the subscriber count will continue to decline and put pressure on the monthly subscription fee.
Weakness in cable TV stocks also has hurt Sirius XM’s valuation, which is now about seven times this year’s estimated Ebitda, in line with the major cable stocks.
Many investors had invested in the Liberty Sirius XM tracking stock because it long traded at a 25% to 40% discount to the value of its Sirius XM stake. But that strategy didn’t pan out well because of the sharp drop in Sirius XM stock this year which offset the discount.
That may have been the motivation for Berkshire’s involvement. It’s unclear what role Berkshire will play with Sirius XM but it usually takes a hands-off approach to its major investments—although it’s possible that Weschler or another Berkshire representative could join the board.
With a cleaner structure and Liberty essentially gone from the picture, Sirius could be in a position to deliver for investors after a tough year.
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Carbon capture - >>> Warren Buffett's Quiet Power Move: Why He's Betting $35 Billion On A 'Yet To Be Proven' Renewable Energy Solution
Benzinga
by Claire Shefchik
Aug 28, 2024
https://finance.yahoo.com/news/warren-buffetts-quiet-power-move-154518849.html
Warren Buffett is at it again, and the financial world is buzzing. He's investing $35 billion into a renewable energy initiative that's still “yet to be proven.” What's surprising is that the famously cautious investor is doubling down on fossil fuels at the same time.
We're not talking pennies here. Chevron is one of the biggest holdings in Berkshire Hathaway's portfolio – almost $19.1 billion. Buffett made his move during the 2020 energy downturn. Although he trimmed his position slightly this year, he remains heavily invested. Chevron's not buying the "fossil fuels are fading" narrative. They've cranked up oil and gas production by 12% and are diving into major projects in the Gulf of Mexico and Israel.
But hold on, there's more. Buffett's got his eye on Occidental Petroleum too. His stake? Close to $15.7 billion. He's been gobbling up shares like they're going out of style. He's even stated that Occidental is one of the few stocks Berkshire would consider holding indefinitely. Under CEO Vicki Hollub, Occidental's making moves, like a $12 billion deal to acquire Crownrock, another oil and gas player.
So, why's Buffett all in on fossil fuels when everyone else is running the other way? It's all about Carbon capture technology. Both Chevron and Occidental are investing heavily in this area. Hollub has even suggested that if carbon capture proves successful, “there’s no reason not to produce oil and gas forever.”
Buffett acknowledges the risk, stating that the “economic feasibility of this technique has yet to be proven." However, Buffett has made risky bets before, and they've often paid off. He's betting that Chevron and Occidental's investments in carbon capture will sustain the oil and gas industry, even as the world shifts toward renewables.
Buffett isn't just focused on short-term gains; he's looking at the long-term potential, particularly with carbon capture technology. If successful, this could transform the industry, making fossil fuels cleaner and more sustainable. That's why he's willing to put so much on the line. Buffett has seen industries change before, and he's positioning himself to be ahead of the curve once again.
In a world where many are following the crowd, Buffett is doing what he does best: going against the grain. Will this gamble pay off? Only time will tell. But if history is any guide, the “Oracle of Omaha” might just be onto something big again.
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Occidental - >>> What Is Carbon Capture and Storage?
Motley Fool
By Matthew DiLallo
May 23, 2024
https://www.fool.com/terms/c/carbon-capture-and-storage/?utm_source=yahoo-host-full&utm_medium=feed&utm_campaign=article&referring_guid=7e55019b-8b30-4cb6-ab10-9be59d85310d
Key Points
Carbon capture and storage captures carbon dioxide emissions for permanent storage or usage.
CCS could play a vital role in reducing global emissions.
The technology could prove to be very lucrative for oil companies.
Carbon capture and storage, or CCS, is a process that captures carbon dioxide gas emissions and safely sequesters them underground. It helps reduce carbon emissions that are harmful to the environment and contribute to climate change. Companies and governments are investing heavily in CCS to make the technology commercially viable so it can contribute to a lower-carbon world.
Understanding carbon capture and storage
Carbon capture and storage is a three-step process:
Carbon dioxide emissions are captured from a source, such as a chemical or steel plant, or directly from the atmosphere.
The captured carbon dioxide gas is transported by pipeline to a sequestration or utilization site.
The carbon dioxide is either injected into a deep underground formation for permanent storage or utilized to produce oil or a higher-value product.
CCS helps reduce carbon emissions by capturing them from the source or the atmosphere. The greenhouse gas is then permanently stored or utilized so that it doesn't cause additional harm to the environment.
What are the types of carbon capture and storage?
There are two main types of CCS technology: point-source capture and direct air capture (DAC).
Point-source capture involves installing carbon capture technology at the emissions source to capture and separate carbon dioxide from flue gas. The pure stream of carbon dioxide gas will then flow through a pipeline to a sequestration or utilization site.
A DAC system is a purpose-built facility that extracts carbon dioxide from the atmosphere. DAC technology uses an engineered mechanical system that pulls in air and extracts carbon dioxide through a series of chemical reactions.
In many ways, DAC is similar to what plants and trees do in photosynthesis, though at a faster pace and with a smaller physical footprint. However, it's a more expensive process than a point-source capture system because carbon dioxide in the air is much more diluted than flue gas from an industrial plant.
Once captured, carbon dioxide flows through pipelines to sequestration or utilization sites. Carbon dioxide is commonly used in enhanced oil recovery (EOR), where oil companies inject carbon dioxide into a legacy oil reservoir to increase pressure and raise production rates.
The process stores the carbon dioxide while boosting oil production. Captured carbon dioxide can also be permanently sequestered in a non-oil-producing underground formation or utilized for industrial applications.
Why carbon capture and storage is important
The Intergovernmental Panel on Climate Change has highlighted the role that CCS could play in reducing carbon emissions and their impact on global warming. The world is investing heavily in renewable energy sources, like wind and solar energy, to help reduce the need for carbon-based fuels.
However, countries will also need to deploy technologies that remove carbon dioxide from the atmosphere to help reduce the impact of hard-to-abate heavy industries, such as steel, cement, chemicals, and other industrial manufacturing.
Energy companies believe CCS can provide them with a dual benefit. They believe it could extend the life of fossil fuels usage while also becoming a very lucrative global market. Oil giant ExxonMobil estimates CCS will grow into a $4 trillion market by 2050. That's about 60% of the global market it sees for oil and gas by that time.
Many energy companies are investing heavily in CCS technologies. For example, Occidental Petroleum has a long history of using carbon dioxide in EOR. It's leveraging that expertise to become an emerging leader in CCS.
The company is building the world's largest DAC site in Texas. It was also an early investor in DAC technology company Carbon Engineering, which it acquired in 2023 for $1.1 billion.
The STRATOS facility will be able to capture 500,000 tonnes of carbon dioxide per year when it comes online in 2025. Occidental is working to commercialize the project by selling carbon credits to companies seeking to achieve their emission-reduction targets.
STRATOS is one of many DAC projects the company hopes to develop. It also plans to license its DAC technology. Occidental believes it could eventually make as much money from CCS as it currently does from its oil and gas production business.
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>>> Berkshire likes Ulta Beauty
https://finance.yahoo.com/news/warren-buffett-buys-beautifully-cheap-123300605.html
One of the more interesting of Buffett’s second-quarter moves was the purchase of 690,000 shares of Ulta Beauty (ULTA) , worth $266 million at the quarter’s end.
Ulta is the country’s largest specialized beauty retailer.
The stock traded at $366 on June 15, up 11% from a day earlier on the Buffett news. It’s still down 25% year to date amid strong competition.
TheStreet Pro columnist Paul Price is another Ulta bull.
The veteran investor, who worked at Merrill Lynch and Wells Fargo, recommended the stock in a column the day before news of Berkshire’s purchase.
Ulta’s 234% shareholder return over the past 10 years represents a 57% discount to its cumulative earnings-per-share growth, he said.
So Ulta’s forward price-earnings ratio stands at 12.4 versus a 10-year average of 25.2.
“That means you can now own this top-quality, proven grower at much less than the market multiple of far inferior companies,” Price said.
Two analysts bullish on Ulta Beauty
Oppenheimer analyst Rupesh Parikh also is an Ulta enthusiast. He was impressed with Buffett’s move and the market’s reaction to it.
“The firm views this development as a vote of confidence for the company’s longer-term prospects and a further validation of Ulta’s significantly discounted valuation,” he wrote in a commentary cited by The Fly.
Parikh rates Ulta as outperform, with a price target of $450.
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>>> Why Occidental Petroleum Is Selling Shares of This 9.5%-Yielding Dividend Stock
Motley Fool
by Matt DiLallo
Aug 15, 2024
https://finance.yahoo.com/news/why-occidental-petroleum-selling-shares-094200259.html
Occidental Petroleum (NYSE: OXY) recently closed its needle-moving acquisition of CrownRock. It paid $12 billion for the fellow oil company, which will significantly enhance its position in the prolific Permian Basin. The acquisition should also boost its annual free cash flow by about $1 billion.
However, the oil stock took on a boatload of debt to close the deal (it issued $9.1 billion of new debt while also assuming $1.2 billion of CrownRock's existing debt). Because of that, the company's near-term focus is on paying down its debt as fast as possible. It recently took another step toward that goal by selling some of its interest in master limited partnership (MLP) Western Midstream Partners (NYSE: WES). That move should come as no surprise and might not be the last time it taps into this source of value.
Choppy progress on its plan
Occidental plans to repay at least $4.5 billion of debt within 12 months of closing its CrownRock deal via its increased free cash flow and the proceeds from asset sales. The oil company aims to raise $4.5 billion to $6 billion from selling assets over the coming years to help repay debt.
The company has already made some progress on that plan. It recently agreed to sell some non-core assets in the Delaware Basin to Permian Resources for $818 million. The company also sold some other non-core assets for $152 million. Those sales will give it $970 million to repay debt.
Occidental was working on an even larger deal. It had agreed to sell a 30% stake in CrownRock to its joint-venture partner in the Permian, Ecopetrol. The deal would have raised $3.6 billion, enabling it to achieve the low end of its target range well ahead of schedule. However, Ecopetrol opted out of that deal.
Despite that sale falling through, Occidental has made solid progress on its overall debt-reduction target. It had already retired $400 million in debt earlier this year. Meanwhile, it plans to make $1.9 billion of debt repayments by the end of this month, most of which it has funded with excess cash flow. The Permian Resources deal will give it another roughly $800 million to repay debt, which it expects to complete by the end of the third quarter. That would push its total debt reduction to $3.1 billion, leaving it about $1.4 billion away from its near-term target.
Trimming a little off the top
With the Ecopetrol deal falling through, Occidental Petroleum is pivoting by selling some of its stake in Western Midstream. Occidental is the largest unitholder of Western Midstream Partners, and until recently, the oil company owned 49.8% of the MLP's outstanding units. In addition, it has a 2% interest in Western Midstream Operating (the company that owns the operating assets). Occidental initially acquired its stake in Western Midstream when it bought Anadarko Petroleum in 2019, which had formed the midstream company to help support its operations.
The oil company has benefited from its relationship with Western Midstream over the years. The MLP has supported Occidental's growth by building additional infrastructure to handle the company's rising production volumes. The MLP has also supplied the oil company with a steady stream of cash flow via its lucrative cash distributions. Western Midstream has increased its base distribution by 52% this year, boosting its current yield to around 9.5%.
Occidental is now using the MLP as an additional source of cash. It recently launched a secondary offering to sell 19 million units. The sale has raised over $658 million in gross proceeds. That will put it even closer to achieving its near-term debt-reduction target.
The company could continue selling down its stake in Western Midstream if it needs additional cash to repay debt. It had reportedly shopped its entire stake in the company earlier this year. It could still sell its remaining interest to another midstream company or a private equity fund. Alternatively, Occidental could launch additional secondary offerings to raise cash when it wants to pay off more debt.
Almost there
Occidental Petroleum borrowed a lot of money to buy CrownRock, which is a concern given the oil sector's volatility (and what happened when it used that approach to buy Anadarko a few years ago). Because of that, the company planned to repay a big chunk of that debt by selling assets. It's now well on its way toward achieving its goals after selling some non-core assets and an interest in its MLP. With the company making progress, it's whittling away at a risk that could have weighed on its stock price if oil prices fall unexpectedly in the future.
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>>> Berkshire Buys Ulta Beauty and Heico Stock, Sells Snowflake in Second Quarter
Barron's
by Andrew Bary
Aug 14, 2024
https://www.barrons.com/articles/berkshire-buffett-ulta-beauty-snowflake-chubb-13f-stocks-9f755841?siteid=yhoof2
Berkshire Hathaway bought small stakes in Heico (HEI) and Ulta Beauty (ULTA) in the second quarter, while adding to its holding in Chubb (CB), according to the company’s quarterly 13-F filing released Wednesday after the market closed.
Berkshire eliminated its holding of 6.1 million shares of Snowflake (SNOW), the software company, which it bought at the time of the company’s initial public offering in 2020. That holding was worth about $1.2 billion at the end of March.
Berkshire bought 690,000 shares of Ulta Beauty that were worth $266 million at the end of the second quarter and just over a million shares of Heico, a supplier to the aerospace industry. That stake was worth $185 million on June 30.
Berkshire also bought about a million shares of insurer Chubb. It held 27 million shares worth $6.9 billion on June 30.
Berkshire trimmed its stake in Capital One Financial by about 2.6 million shares to 9.8 million shares in the second quarter.
Berkshire was a light buyer of stocks in the second quarter, purchasing less than $2 billion, while selling about $77 billion, mostly Apple
That stake fell nearly 50% to 400 million shares and was reported in Berkshire’s recently released 10-Q report for the second quarter.
Ulta Beauty stock was higher in after-hours trading, rising 13% to $371.70. The stock was down about 33% in 2024 as of the close of trading Wednesday and Berkshire appears to have taken advantage of that weakness.
Berkshire CEO Warren Buffett oversees the company’s equity portfolio of more than $300 billion, but he delegates authority over about 10% of it to investment managers Todd Combs and Ted Weschler. They operate independently of Buffett.
The new holdings in Heico and Ulta Beauty could be investments by Combs or Weschler given their small size. Buffett tends to accumulate holdings of at least $3 billion in order to move the needle given the large size of the Berkshire portfolio and Berkshire’s market capitalization of $940 billion.
The Snowflake holding is believed to have been initiated by Combs. At the time of the Snowflake IPO in 2020, the company’s CEO Frank Slootman said most of his Berkshire interactions had been with Combs.
The Snowflake investment likely wasn’t particularly profitable for Berkshire—a demonstration of the dangers of buying richly priced IPOs. Snowflake went public in late 2020 at $120 and its stock price averaged about $150 a share in the second quarter. The stock is below that level now, trading down 1.5% to $125.41 in after-hours action on Wednesday.
Berkshire eliminated its holding in Paramount Global in the second quarter—a move that Buffett telegraphed at his company’s annual meeting in May.
The company reduced its sizable holding in Chevron by four million shares to about 119 million shares that were worth $18.6 billion on June 30. That move was disclosed in the 10-Q.
Berkshire also bought about 92 million shares of Sirius XM Holdings, the satellite radio company, in the second quarter. It held 133 million shares on June 30, a stake that is now worth about $400 million. Berkshire also is the largest shareholder of Liberty Sirius XM Holdings, a tracking stock for Sirius XM, with a stake of about 30%. The two companies are due to merge in September.
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>>> What Buffett's huge Apple sale really means
The Street
by Charley Blaine
Aug 4, 2024
https://finance.yahoo.com/news/buffetts-huge-apple-sale-really-215832027.html
When Berkshire Hathaway (BRK.B) announced its earnings on Saturday, much was made of a note deep in its detailed filing.
Berkshire has been selling lots of shares of Apple (AAPL) , and the value of its investment had fallen from $174.3 billion on December 31 and $135 billion at the end of the first quarter to $84.2 billion as of June 30. From December to June, that's a decline of about 50%.
Berkshire owned 915.6 million shares of Apple as of Jan. 2, according to Apple's proxy statement. The share count is probably now about 450 million shares, worth around $88 billion as of Friday.
At the company's annual meeting in May, Chairman Warren Buffett had told shareholders that Berkshire was trimming its Apple stake, largely because its investment in the tech giant had done so well it had huge capital gains. Other than that, he said at the time, he loves what Apple does.
(Buffett started investing in Apple in 2016, a late-comer to the tech party. The late Charlie Munger, Buffett's long-time partner, talked Buffett into investing in Apple, telling the Oracle of Omaha it was more a consumer stock than a tech stock.)
A magnificent stock pick
Selling some shares now may also be simple prudence. Selling now reduces Berkshire's risk to a frothy stock market. Either way, Buffett wasn't complaining about the long-term capital gains tax that might hit — about 20% of the profit. But when you've made so much money from one stock, you can afford the taxes.
How big a gain? From the shares bought between 2016 and 2018, the gain would be over 400%. For shares bought between 2022 and the first quarter of 2023, the last time Berkshire was known to add to its Apple position, the gain would be 20% before taxes.
There is a counter-narrative. Some Apple watchers, plus CNBC's Jim Cramer, think there may also be concern about Apple's big China business. Revenue in products and services in China was off 6.5% from a year ago in Apple's fiscal third quarter and off 10% for the fiscal year-to-date.
The political tensions between China and the United States may be a worry, too.
Apple shares holding their own in market turmoil
Apple investors seem more confident about the company now. The stock was up 23.6% in the second quarter of 2024, after a 10.9% loss in the first quarter. It's up 3.9% in the third quarter.
Moreover, in a week where Amazon.com (AMZN) fell 8%, Microsoft (MSFT) dropped 4%, and Nvidia (NVDA) fell 5.1%, Apple was up 1%. It is up 14.2% this year.
Apple has returned to being the most valuable company in the world with a market capitalization of $3.37 trillion. That is still a bit pricey: Its forward price-earnings ratio is about 30. The Standard & Poor's 500's forward p/e is about 22, down from 22.72 as stocks were peaking.
So, what has Berkshire and Buffett done with the cash realized by these gains? Mostly put them in cash and Treasury bills. An easy source of cash to pay the capital gains taxes — if Berkshire can't find a way to shelter the gains.
More importantly, Buffett and Berkshire are waiting.
Remember, Buffett (and Berkshire Hathaway) is a classic value investor who doesn't chase the hot stock. Buffett and Berkshire look for great companies appropriately priced. (Munger had weaned Buffett off just buying cheap stocks.)
So, like a lot of investors, Buffett and his investment management team are watching the stock market's current volatility to run its course. In other words, looking for good buys at better prices. They have the cash.
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Apple - >>> Why Warren Buffett’s Berkshire Dumped 55.8% Of Its Apple Stock
Forbes
by Peter Cohan
Aug 3, 2024
https://www.forbes.com/sites/petercohan/2024/08/03/why-warren-buffett-dumped-56-of-berkshires-apple-stock/
Warren Buffett dumped 55.8% of Berkshire Hathaway’s holdings of Apple stock in the first six months of 2024, according to Reuters.
Since the end of 2023 Berkshire has sold 505 million Apple shares — 115 million in the first quarter and another 390 million in the second quarter. As of June 30, that represents a 55.8% reduction in Berkshire’s Apple holdings since the beginning of the year, Reuters noted.
Why did he sell so much Apple stock? Should other investors follow suit?
I do not know why Buffett sold such a huge chunk of Berkshire’s Apple stock. However, Apple’s tepid growth rate and high valuation suggest the famed investor may have concluded the stock’s prospects are not great.
While Apple’s AI offerings could give consumers a reason to upgrade, the iPhone maker’s declining revenues in China, its regulatory woes, and the absence of a compelling growth vector — particularly if Apple Intelligence does not prove to be a killer app — could mean Apple will be lucky to achieve low single digit revenue growth.
I suspect other investors will take a cue from Buffett.
Apple has been a good investment. Since Buffett began buying he iPhone maker’s stock in 2016, Berkshire has spent roughly $40 billion. Apple shares have delivered a total return of nearly 800% since Berkshire first disclosed its stake, noted the Financial Times.
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Bank of America - >>> Warren Buffett Just Sold $1.5 Billion of Berkshire Hathaway's Second-Largest Holding. Here's Why.
Motley Fool
by Adam Levy
Jul 24, 2024
https://finance.yahoo.com/news/warren-buffett-just-sold-1-081700022.html
Warren Buffett keeps selling stocks. The Oracle of Omaha has been a net seller of equities for his company's portfolio in each of the last six quarters, as reported by Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B). The odds are good he'll make it seven in a row when Berkshire reports next month, and now he's going for eight with another major stock sale.
A recent filing with the U.S. Securities and Exchange Commission (SEC) revealed that Buffett sold $1.5 billion of Berkshire Hathaway's second-largest equity holding, Bank of America (NYSE: BAC). The sale represents just a 3.3% reduction in Berkshire's stake in the bank but could be just the start.
There's no doubt Bank of America has been a very successful investment for Buffett and Berkshire Hathaway shareholders. And Buffett is famously quoted as saying his favorite investment holding period is "forever." So why is he selling shares now?
There are a few reasons Buffett might have sold Bank of America stock.
After the stock's strong performance over the last eight months, shares are currently trading at levels unseen since the start of 2022. Despite the strong financial and operational performance underlying that price appreciation, Buffett may believe the shares are now fully valued, so he's taking money off the table as a result.
Another reason may have less to do with the current valuation and more to do with locking in gains at a favorable tax rate. Buffett's cost basis on those Bank of America shares is just over $14, on average. That means over two-thirds of the proceeds from Buffett's sales are taxable gains.
Buffett hasn't been shy about taking gains on some of his favorite stocks lately. He sold billions worth of Apple (NASDAQ: AAPL) shares in the fourth and first quarters.
When asked why he sold Apple shares at the annual shareholder meeting in May, Buffett explained that he was happy to pay taxes at the current favorable tax rate of 21%. He expects the rate will increase in the future. However, he said he expects Apple to remain Berkshire Hathaway's largest equity holding for some time.
The same factors may have led him to take the tax hit on Bank of America shares now. That may suggest Buffett still likes the business and the stock but doesn't see it growing as quickly as it has in the recent past — at least not enough to justify paying higher taxes on the gains later.
Should you buy or sell Bank of America stock?
Bank of America saw its shares fall in price as interest rates climbed. That's because the bank has high exposure to longer-duration bonds, which currently carry low interest rates. As a result, the bank missed out on opportunities to buy securities with higher coupons as interest rates climbed.
Bank of America's decision to invest in longer-duration bonds has an outsized effect on a metric called net interest income (NII). That's the difference between the revenue generated by the bank's interest-bearing assets and the expense it pays on interest-bearing liabilities. Since the bank holds long-term bonds but has to pay market rates, NII declined as interest rates increased.
But management says NII has hit its trough. It's forecasting growth in the third and fourth quarters this year, reaching $14.5 billion in the fourth quarter.
The good news is Bank of America is poised to do well, relative to its peers if the Fed cuts interest rates (as it is expected to later this year). The knife cuts both ways, so to speak.
With a price-to-book value of 1.25, Bank of America's shares look fairly priced. Buffett's sale appears to be more about taxes than anything specific about the company or its stock.
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Insurance sector - >>> The U.S. is about to get slammed by a ‘very active’ hurricane season—but the carnage could be good news for these five insurance stocks, analyst says
Fortune
by Will Daniel
Jun 26, 2024
https://finance.yahoo.com/news/u-slammed-very-active-hurricane-180403861.html
Forecasters are expecting another devastating hurricane season this year. Colorado State University’s Department of Atmospheric Science warns a “very active” season could bring 11 total hurricanes, including five “major” hurricanes (category 3 to 5), and 23 named storms, compared with an average of 14.4 between 1990 and 2020. Meanwhile, the University of Pennsylvania’s Department of Earth and Environmental Science is forecasting an even more dire 33 named storms this year, citing high ocean surface temperatures in the Gulf of Mexico.
For most insurance companies, it’s a nightmare outlook that will lead to soaring costs as catastrophe claims spike—but for some, the carnage may perversely provide opportunity.
“If this grim forecast comes to fruition, it will likely buoy pricing for many lines of property-casualty insurance and reinsurance, providing certain underwriters’ shares with a catalyst,” CFRA Research analyst Catherine Seifert argued in a recent note.
Seifert described how some insurance providers and brokers that aren’t heavily exposed to hurricane-related catastrophe claims are benefiting from the strong pricing environment in the industry. Many insurers have been raising premiums by 10% to 25% (“or more”) each year as a result of rising catastrophe losses.
There has been increased damage to property from hurricanes, wildfires, floods, and difficult-to-forecast non-hurricane “supercell” storms in recent years, Seifert explained. “Once considered a ‘Florida problem,’ hurricane and coastal flood risk has broadened considerably,” she added, noting that nearly 7.6 million homes are now vulnerable to storm surges from a category 4 hurricane.
To her point, Pew Research found the frequency and cost of hurricanes has soared over the past two decades. Between 1983 and 2002, there were 96 major hurricanes that caused $546.3 billion in damage, but between 2003 and 2022, 244 similar disasters caused more than $1.95 trillion in damage.
Despite this rise in catastrophic property damage and a grim outlook for the trend to continue, property and casualty insurance companies have done quite well this year. The S&P 500 Property-Casualty Sub-Industry Index is up more than 17% year to date, outperforming the broader blue-chip index, which is up roughly 15% over the same period. And Seifert expects more good times ahead for some of these insurance providers.
The analyst highlighted five insurance companies that are “well positioned to benefit from the likely ongoing industrywide pricing power, or from other company-specific catalysts, while having a manageable level of exposure to catastrophes.” But she reminded investors to be cautious when selecting insurance stocks, as the hurricane season could be “disruptive and volatile” for some home and commercial-property insurers.
American International Group (AIG)
The insurance giant AIG is best known for its struggles during the Global Financial Crisis, but the company has transformed itself over the past 15 years. The new AIG is a much “more focused” property-casualty insurer, having separated from its life insurance and retirement business, Seifert noted.
The analyst went on to argue that AIG will benefit from rising insurance premiums and investment income, particularly after reengineering its property-casualty book to have a “lower risk profile and reduced exposure to catastrophes.”
CFRA has a “buy” rating and a $90 12-month price target for shares of AIG, representing a 20% potential return for investors.
Arch Capital Group
Arch Capital Group provides insurance and reinsurance (think: insurance for insurance companies) and was formed in the wake of the Sept. 11 terrorist attacks, when insurance coverage was difficult to obtain. Today, the company has a wide variety of offerings, from property-casualty insurance to professional-liability insurance, and is known for its nimble business model that allows it to shift to the most profitable insurance segments.
“We expect Arch to leverage favorable market and pricing conditions and produce operating revenue growth of more than 20% in 2024 and about 15% to 20% in 2025, about double the rate of the broader insurance and reinsurance industry,” Seifert wrote.
CFRA has a “buy” rating and a $107 12-month price target for shares of Arch Capital Group, representing a 7% potential return for investors.
Arthur J. Gallagher & Co.
Arthur J. Gallagher (AJG) is a leading commercial-insurance broker and risk-management firm that has been growing rapidly through acquisitions for decades. The company makes 87% of its revenues through its wholesale- and retail-insurance brokerage business, which is benefiting from rising insurance premiums and brokerage commissions.
CFRA expects 7% to 10% organic revenue growth in 2024 and 2025 from AJG, and noted that the company acquired 50 firms in 2023, contributing $826 million in revenue. “Revenue growth in 2024 and 2025 could likely top our forecast if pricing trends remain intact and AJG’s acquisition strategy remains on course,” Seifert wrote.
CFRA has a “buy” rating and a $272 12-month price target for shares of Arthur J. Gallagher & Co., representing a 7% potential return for investors.
Berkshire Hathaway
Warren Buffett’s mega-conglomerate Berkshire Hathaway may also benefit from rising insurance premiums. Berkshire owns the leading auto insurer, Geico, and offers reinsurance through its subsidiaries, General Re Corp. and National Indemnity Co. Buffett’s company also expanded its presence in the insurance space with its $11.5 billion acquisition of Alleghany Corp. in October 2022.
“Thanks mainly to the acceleration in reinsurance top-line growth, we expect all of Berkshire Hathaway to post operating revenue growth of between 10% and 15% in 2024 and between 12% and 15% in 2025,” Seifert wrote, noting that “these growth forecasts exclude the impact of any acquisitions, which we believe remain central to Berkshire’s overall strategy.”
CFRA has a “buy” rating and a $472 12-month price target for shares of Berkshire Hathaway, representing a 15% potential return for investors.
The Progressive Corp.
The Progressive Corp. is one of the largest insurers globally, with $62 billion in written premiums. The company focuses on auto insurance, and Seifert argued that rising premiums coupled with falling claims as the post-pandemic driving surge slows should boost its profitability.
Seifert also highlighted Progressive’s usage-based insurance product called Snapshot, labeling it an “industry-leading product” that widened the company’s competitive advantage over its peers.
“We forecast operating revenue growth of 15% to 20% in 2024, reflecting our view that net earned premiums will rise by between 15% and 20%, net investment income will rise by at least 10%, and fee income will rise by 15% to 18%,” she added, noting that “these rates of growth are nearly double those of the industry average.”
CFRA has a “buy” rating and a $235 12-month price target for shares of Progressive, representing a 14% potential return for investors.
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Coca-Cola, Apple - >>> The Best Warren Buffett Stocks to Buy With $500 Right Now
byJohn Ballard
Motley Fool
Jul 13, 2024
https://finance.yahoo.com/news/best-warren-buffett-stocks-buy-113200963.html
Warren Buffett is one of the greatest investors of all time. His investing skills have earned incredible returns for Berkshire Hathaway shareholders over the last 50 years, so it's a smart idea to consider what he is buying (or selling).
Let's look at two of Buffett's largest stock holdings that an investor with $500 can buy right now.
1. Coca-Cola
One of the common themes in Buffett's stock picks throughout his career is a preference for profitable companies that benefit from strong consumer brands, and Coca-Cola (NYSE: KO) is a prime example. People consume 2.2 billion servings of one of the company's beverage products every day. It's for this reason that Buffett has not sold a single share of Coke stock for more than 30 years.
Investors are not going to buy Coke stock for high growth. The stock has delivered a return of 105% over the last 10 years (including dividend reinvestment), trailing the S&P 500's return of about 240%. Buffett has stuck with Coca-Cola because it's a profitable business that enjoys consistent sales every year, and importantly, the stock pays a dividend that provides Berkshire passive income of $776 million per year.
However, there are a few reasons Coca-Cola could see accelerating growth. The business has experienced momentum in international markets. Management is directing more investment in marketing, innovation, and digital initiatives to capture this substantial growth opportunity. Statista projects worldwide revenue in the soft drink market to grow 9.5% annually through 2029.
Another factor that could juice shareholder returns is margin expansion. Coca-Cola has been refranchising its bottling operations, which has helped reduce operating costs and boost margins and earnings growth. Last year, the company's adjusted earnings grew a solid 15% on a currency-neutral basis.
Wall Street analysts expect Coke's earnings to grow at an annualized rate of 6%, but that could prove to be conservative. If Coke continues to report earnings growth above those estimates, the stock could offer attractive returns.
The shares are very reasonably priced at a forward price-to-earnings (P/E) ratio of 22, and with the share price sitting at around $62, Coke stock is affordable for any investor to buy today. Throw in an above average dividend yield of 3%, and shareholders could be looking at a nice return on investment.
2. Apple
Apple (NASDAQ: AAPL) has to be considered one of the best Buffett stocks to buy right now, since Buffett said at the 2023 annual shareholder meeting that Apple was a better business than any Berkshire owned, and it's not short of growth opportunities. Berkshire trimmed its position in the stock in the first quarter but still owned a massive stake worth $135 billion based on Apple's share price at the end of March.
The upcoming update to iOS will finally see Apple bring substantial artificial intelligence (AI) features to its devices that could drive strong growth and great returns for shareholders.
Buffett likes Apple for similar reasons as Coca-Cola. Apple is a strong consumer brand with more than 2.2 billion active devices in customers' hands. This gives Apple a large pool of customers to which it can cross-sell additional services, such as apps and subscriptions. Revenue from services grew 14% year over year last quarter to nearly $24 billion, comprising one quarter of the business.
With so many customers spending money on device upgrades and services every year, Apple has grown into a highly profitable business. It generated $101 billion in free cash flow over the last year and should continue to grow that total over time. The upcoming Apple Intelligence feature for iOS could drive higher iPhone sales, as the stock recently surged to new highs following the announcement.
Of course, Buffett is also drawn to companies that have shareholder-friendly capital return policies. The growth in free cash flow is paving the way for years of dividend payments to shareholders. Apple offers a small yield of just 0.43%, but based on Apple's current payout, Berkshire should receive $789 million in dividend payments over the next year.
Apple stock trades at an expensive-looking forward P/E of about 35, but analysts are expecting accelerating earnings growth over the next few years based on the growing demand for AI-enabled devices. With shares currently priced at $228, an investor with less than $500 can buy one share of Apple and invest the rest in Coca-Cola for more passive income.
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>>> Warren Buffett Just Bought $435 Million of This Stock and Plans to Hold It Forever
by Adam Levy
The Motley Fool
Jun 26, 2024
https://finance.yahoo.com/news/warren-buffett-just-bought-435-085000603.html
Lately, there aren't a lot of stocks Warren Buffett has found interesting enough to add to Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) $385 billion portfolio. Buffett, through Berkshire, has made only a handful of purchases during the current bull market.
Truth be told, Buffett has sold more stocks than he's bought in each of the last six quarters. Some of his biggest sales last quarter included a portion of his top holding, Apple, as well as all of Berkshire's position in Paramount Global stock and the rest of Berkshire's stake in HP. But he's been consistently adding to some positions in 2024, including one of his biggest holdings.
So far in June, Buffett spent another $435 million on Occidental Petroleum (NYSE: OXY) to make it Berkshire's sixth-largest position.
More recent Securities and Exchange Commission filings reveal purchases of Occidental Petroleum between June 5 and June 17. Buffett has been snapping up shares of Occidental when it trades around $60 per share, and investors may want to follow his lead.
A stock Buffett plans to hold forever
Buffett originally invested in Occidental in 2019, when he purchased $10 billion of preferred shares directly from the company for Berkshire Hathaway. That $10 billion investment helped finance Occidental's acquisition of Anadarko, strengthening its position in the Permian Basin.
While that acquisition left Occidental laden with debt just ahead of a tough period for the energy market that nobody could have predicted (the COVID-19 pandemic), management admirably navigated through the challenging environment. It suspended its dividend and strategically sold off assets to deleverage its balance sheet, and it's once again on solid footing.
Buffett has since added to his position in Occidental. With the most recent $435 million purchase, Berkshire Hathaway now owns about 28.8% of shares outstanding -- a stake worth about $15.9 billion. It also still owns about $8.5 billion of preferred shares, which include warrants to buy more of the company's common stock at $59.62 a share (it currently trades around $62.90).
In his most recent letter to Berkshire shareholders, Buffett praised Occidental CEO Vicki Hollub, saying the energy stock is a holding he plans to maintain indefinitely. "Under Vicki Hollub's leadership, Occidental is doing the right things for both its country and its owners," Buffett wrote. "We particularly like its vast oil and gas holdings in the United States, as well as its leadership in carbon-capture initiatives."
Occidental will add to its leading position in the Permian Basin this year with its $12 billion acquisition of CrownRock, which is set to close in the third quarter. Hollub will likely follow the same playbook as with the much larger Anadarko acquisition, selling off non-essential assets to reduce the amount of debt on Occidental's balance sheet. It's already exploring a sale of Permian assets worth over $1 billion, according to a report from Reuters in May.
A big bet on oil prices
While Occidental is an integrated energy company, the bulk of its revenue and income comes from drilling. It's in the business of acquiring land and separating oil from rock. That means that its profits depend heavily on the price of oil.
When it announced the CrownRock acquisition at the end of last year, it estimated it could generate an additional $1 billion in annual free cash flow assuming oil prices remain above $70 per barrel.
Hollub now expects oil prices to remain in the $80 to $85 range through 2025. Oil prices took a hit after the members of OPEC+ agreed earlier this month to a plan that would extend their production cuts into 2025, but that would also allow eight member nations to start easing back from their voluntary cuts beginning in October. However, crude prices quickly recovered to around $80.
Buffett took the opportunity to buy Occidental when oil prices came down, and he has already benefited from the slight recovery. Even if oil prices remain relatively stable, Occidental is well-positioned to generate significant cash flow for its shareholders.
Should investors follow Buffett's lead?
As mentioned, Buffett is buying Occidental shares practically any time they dip below $60. At that price, the stock trades at around 14 times forward earnings. That puts it firmly in the value stock territory, but it's not as attractive a valuation as some other oil producers and integrated energy companies carry.
But Occidental, under Hollub, is far more aggressive at growing its bottom line via acquisition and cost-cutting. That could result in far better profit growth over the long run, especially if oil prices consistently move higher. Her strategy brings with it considerable risk, but it also comes with much more potential growth in the long run. In the meantime, the company is certainly stable enough, generating plenty of cash to continue growing its operations while paying a nice dividend.
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Re-post - >>> Warren Buffett loves $OXY! Berkshire Hathaway just loaded up again with a purchase of 1,750,308 shares worth approximately $105.5 million
By: Barchart | June 13, 2024
• Occidental Petroleum Insider Trading Alert
Warren Buffett loves $OXY! Berkshire Hathaway just loaded up again with a purchase of 1,750,308 shares worth approximately $105.5 million
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174592860
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Buffett's 'mystery stock' is Chubb -
>>> Buffett’s Berkshire Reveals $6.7 Billion Stake in Insurer Chubb
Bloomberg
by Annie Massa
May 15, 2024
https://finance.yahoo.com/news/buffett-berkshire-reveals-6-7-203349962.html
(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. unveiled a $6.7 billion stake in insurer Chubb Ltd., ending months of suspense over its mystery position in a financial firm, previously kept concealed in regulatory filings.
Berkshire disclosed the holding in a filing on Wednesday, reflecting its positions at the end of the first quarter.
The conglomerate has been building the stake since 2023 but it hadn’t previously been reported because the Securities and Exchange Commission allowed Berkshire to keep it confidential. Still, separate quarterly filings reflected that Berkshire’s equity stakes in banks, insurance and finance companies were growing, while the firm was pulling back in other industries including consumer products.
“Millions of people follow what Buffett does,” said David Kass, a finance professor at the University of Maryland‘s Robert H. Smith School of Business, explaining why Berkshire wants confidentiality while it amasses big positions. “Warren Buffett would be more sensitive to the issue than others.”
Chubb stock jumped in after-hours trading, adding as much as 9.9%.
Buffett’s Berkshire is deeply familiar with the insurance industry, owning a range of companies including Geico and National Indemnity. The billionaire investor has called Berkshire’s property-casualty insurance operation the “core” of the conglomerate, helping generate “float” that can then be reinvested.
The conglomerate has also invested in other businesses in the insurance industry. Berkshire owns a stake in Aon Plc, a major broker, and has previously bet on rivals including Marsh & McLennan Cos.
Cash Pile
Chubb is one of the biggest property-casualty insurers in the US and operates in 54 countries globally. Its chief executive officer, Evan Greenberg, is the son of Maurice “Hank” Greenberg, who led American International Group Inc. for many years. Evan Greenberg built Chubb through the 2016 merger of Ace Ltd. and Chubb Corp., which created a massive insurer that covers a range of risks including cyber attacks and marine shipping.
Chubb insured Baltimore’s Francis Scott Key Bridge, which collapsed when a cargo ship slammed into it in late March. It’s reportedly set to pay out $350 million to the state of Maryland.
Buffett already revealed a few recent changes to his company’s holdings at Berkshire’s annual meeting in Omaha earlier this month. It trimmed a stake in Apple Inc. to $135.4 billion at the end of the first quarter, as the iPhone maker faces a range of struggles including an antitrust fine, sliding sales in China and a failed car project.
The billionaire investor heaped praise on the tech giant at the meeting — which Apple CEO Tim Cook attended — and said it will remain Berkshire’s largest investment barring any dramatic changes.
The cash pile at Berkshire reached a record $189 billion at the end of March. Buffett said at the annual meeting that it was “a fair assumption” that it will hit $200 billion by the end of this quarter.
Funds with more than $100 million must file disclosures about their holdings within 45 days of the end of each quarter, providing a glimpse into the holdings of secretive money managers including hedge funds and large family offices.
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Shiller P/E ratio - >>> The Oracle of Omaha's $56 billion silent warning foreshadows potential trouble for Wall Street
https://finance.yahoo.com/news/warren-buffetts-56-billion-silent-092100169.html
Although Warren Buffett has consistently shied away from offering negative takes on the U.S. economy and/or stock market during his nearly six-decade tenure as CEO of Berkshire Hathaway, $56 billion of net-equity security sales over an 18-month stretch speaks volumes without the Oracle of Omaha having to say a word.
The culprit for this consistent net-selling activity looks to be a historically pricey stock market and the irrational behavior of some of its participants.
In Buffett's annual letter to shareholders that was released in February, he had this to say about the "casino-like behavior" he wants no part of:
Though the stock market is massively larger than it was in our early years, today's active participants are neither more emotionally stable nor better taught than I was in school. For whatever reasons, markets now exhibit far more casino-like behaviors than they did when I was young. The casino now resides in many homes and daily tempts the occupants.
At the end of the day, Warren Buffett and his team want a fair deal on a great business, and they aren't willing to waiver from this ideal. As the S&P 500's Shiller price-to-earnings (P/E) ratio shows, there simply aren't many good deals at the moment.
The Shiller P/E ratio, which is also known as the cyclical adjusted price-to-earnings ratio (CAPE ratio), is based on average inflation-adjusted earnings from the last 10 years. This differs from the traditional P/E ratio which only examines trailing-12-month earnings. The beauty of the Shiller P/E averaging earnings over a 10-year period is that it minimizes the impact of one-off events (e.g., the COVID-19 lockdowns).
As of the closing bell on May 3, the S&P 500's Shiller P/E stood at 34.05. This is nearly double its average reading of 17.11 when back-tested to 1871, and it's the third-highest reading during a bull market in over 150 years.
Perhaps the bigger concern is what's historically followed the five previous instances where the Shiller P/E ratio surpassed 30 during a bull market rally. Following all five prior instances, the S&P 500 or Dow Jones Industrial Average went on to lose between 20% and 89% of their respective value. Though the Shiller P/E ratio isn't a timing tool -- i.e., stocks can stay pricey for multiple quarters, if not years -- readings above 30 tend to be a precursor to big moves lower in the stock market.
The lack of desire by Buffett and his team to buy stocks during an 18-month stretch suggests they expect valuations to contract.
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Bar, I'll respond over here since I'm still limited to 1 post / day on the Awesome Stocks board, due to past transgressions. Too many 'political posts' they said. Btw, they also said I could post the political stuff IF it was a premium board, and IF I become a paid subscriber to I-Hub, lol. So I guess as in most other aspects of life --> 'money talks', or in this case money gets to talk..
You are 100% right about the wisdom of sticking to conservative stocks and broad indexes with the bulk of one's stock allocation. Other less conservative areas might have a limited place, but in very small amounts. I have most of the stock allocation in the S+P 500, and the individual stock portion is spread among a lot of conservative stocks with nice long term charts. Only a couple stocks with limited track records, but tiny positions ($350 / stock limit), and these are meant to be LT buy / holds, not for trading.
Anyway, with the Aerospace sector, it's fun to follow out of general interest. I come from an aviation family via my dad, and grew up around airplanes. We had a Cessna Skylane 182, and travelled all over the country, Grand Canyon, Tetons, etc. But truth be told, pilots tend to have a few loose screws lol -
>>> Apple Inc. (NASDAQ:AAPL) -- 14-day RSI: 32.14
https://finance.yahoo.com/news/11-oversold-blue-chip-stocks-195219274.html
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is a leading technology company focused on the designing, manufacturing, and marketing of smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services. It released worldwide the latest version of its flagship smartphone titled iPhone 15, on September 22 last year.
The quarterly revenue of Apple Inc. (NASDAQ:AAPL) increased by 2% on a y-o-y basis in the quarter ended December 30. The company posted a revenue of $119.6 billion and a net income of $33.9 billion, which translated to an adjusted EPS of $2.18.
As of Q4 2023, Apple Inc. (NASDAQ:AAPL) shares were held by 133 of the 933 hedge funds tracked by Insider Monkey, the highest on our list of 11 oversold blue chip stocks to buy right now. Warren Buffett’s Berkshire Hathaway was its biggest shareholder with ownership of 905.6 million shares valued at $174 billion.
In its Q4 2023 investor letter, Wedgewood Partners, an investment management firm, made the following comments about Apple Inc. (NASDAQ:AAPL):
“The Company's services segment revenue growth accelerated to +16% over last year, one of the fastest growth rates since Covid-19 lockdowns, helping drive +11% growth in earnings per share. The strength in the Company's services segment was aided by over 1 billion paid subscribers across Apple's media platforms. We estimate that there are more than 2 billion iOS devices in Apple's global installed base, which still represents a very large addressable share of their current subscriber count. Apple also continues to innovate across its hardware portfolio, with custom silicon for nearly all its device form factors. More recently, the Company launched its new line of Mac computers, which included their M3 family of chips, including the M3 Max, which contains up to an astonishing 92 billion transistors. Apple's long-term strategy of creating products with customized hardware and software should continue to differentiate their products and help drive solid revenue growth and expense leverage across the Company's ecosystem.”
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>>> Berkshire Hathaway Energy
https://en.wikipedia.org/wiki/Berkshire_Hathaway_Energy
Company type Subsidiary
Predecessor MidAmerican Energy Holdings Company
Headquarters Des Moines, Iowa
Key people
Greg Abel (Chairman)
William J. Fehrman (CEO & President)
Revenue Increase $25.15 billion (2021)[1]
Operating income Increase $4.25 billion (2012)[2]
Net income Increase $2.57 billion (2012)[2]
Owner Berkshire Hathaway (92%)
Walter Scott Jr. family (8%)
Parent Berkshire Hathaway
Website www.brkenergy.com
Berkshire Hathaway Energy (previously known as MidAmerican Energy Holdings Company until 2014) is a holding company and subsidiary of Berkshire Hathaway, which owns 92% of the company. Berkshire has owned a controlling stake since 1999.[3] The company also controls power distribution companies in the United Kingdom and Canada.[4] The remaining 8% is owned by the family of Walter Scott Jr.[5]
Greg Abel serves as chairman. Scott W. Thon is president and CEO. David L. Sokol was CEO until 2008.
Until 2014, it was known as MidAmerican Energy Holdings Company from its root as MidAmerican Energy Company; it took on the name of its parent to reflect the diversity of its portfolio.[6]
As of 2019, BHE "serves 4.9 million retail customers, generates 29 gigawatts of power and transports 8.2 billion cubic feet of natural gas per day over 16,400 miles of regulated pipeline."[4]
In 2023, a jury ordered BHE subsidiary PacifiCorp to pay $70 million in punitive damages to 17 homeowners negatively impacted by wildfires that afflicted Oregon in 2020.[7]
Subsidiaries & investments
Berkshire Hathaway Energy owns the following companies:
- MidAmerican Energy Company
- MidAmerican Renewables[8] (Renewable Energy/Wind Energy)
- PacifiCorp, purchased for $9.4 billion in 2005[9]
- Northern Powergrid (formerly CE Electric UK)
- Integrated Utility Services UK
- CalEnergy Generation
- Imperial Valley Geothermal Project
- Kern River Gas Transmission Company[10]
- Kern River Pipeline
- Northern Natural Gas Company (Omaha)[11]
- BYD Company (19.92% of outstanding shares)[12]
- NV Energy (electricity and natural gas in most of Nevada)
- Metalogic Inspections Services[13] (Oil and Gas, Power Generation, Fabrication, Pipeline, Services)
- Intelligent Energy Solutions[14] (Heat Pumps, Solar Panels, and Biomass Boilers)
- AltaLink (Electric Utility in Canada) for C$3.24 billion in 2014 [15]
In 2017, BHE's proposed acquisition of Oncor Electric Delivery Company LLC[16] was terminated after BHE was outbid by Sempra.[17][18]
BHE investigates producing up to 90 thousand tonnes of lithium carbonate per year (and other minerals) from its 350 MW geothermal power plants in the Lithium Valley next to the Salton Sea in California.[19][20]
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Bar, I see NOBL has beaten VYM by a fair margin over time, but both have lagged the S+P 500. NOBL does have a 0.35% expense ratio, vrs 0.08 for VYM, and the div yield is only 2.0% vrs 3.0% for VYM (approx).
But either way, I figure having something in a Dividend ETF for the safety aspect helps create a conservative 'vibe' for the portfolio to help set the tone :o) And it sure beats messing with stuff like BABYF. I have to thank you for getting me into a much more virtuous mindset when it comes to investing :o)
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Interesting article.
The indexes/ETFs I follow are: DIA, IWC, IJR, IJH, QQQ, RSP, SPY, IWM. I also follow NOBL, the S&P 500 Dividend Aristocrats' ETF which is owned by one of my sons. (He bought it without asking me. NOBL did great during Covid, but not so great afterward).
I've seen articles praising equal weight ETFs like RSP but never bought one. I fall back on the advice John Bogle (1929 - 2019) gave in a magazine article before he died, that sticking with a cheap, plain jane S&P 500 ETF is likely to be the best course of action over the long run. I've never gone wrong taking John Bogle's advice.
I don't own any small cap ETFs such as IJR or IWC because i don't want to own small caps if the SHTF. Capital preservation is important to me.
Bar, These 'equal-weight' index ETFs look interesting (article below). I joined you in owning a mid-cap index ETF (VO), and also have one covering small caps (VB), but the equal weight ETF approach could accomplish the same goal, albeit with a higher expense ratio (0.20%), though the RSP does have a slightly higher div yield than VO or VB -
>>> Equal-Weight RSP Boxing Out SPY, Mag 7
ETF.com
by Jeff Benjamin
March 20, 2024
https://finance.yahoo.com/news/equal-weight-rsp-boxing-spy-160000389.html
While riding a handful of stocks that have been driving market indexes can be exhilarating, there is also a time for tapping the brakes, whether to reduce risk or diversify a portfolio.
That’s the premise behind ETFs like the Invesco S&P 500 Equal Weight ETF (RSP), which has risen more than 3% over the past month.
The fact that RSP has been running evenly with the market-capitalization-weighted SPDR S&P 500 ETF Trust (SPY) over the past 30 days has drawn the attention of both savvy market watchers and trigger-happy traders as a sign that the influence of the Magnificent Seven stocks is waning slightly.
“The broadening of market breadth may make financial advisors feel a bit more at ease,” said Nicholas Codola, senior portfolio manager at Omaha, Neb.-based Orion.
“Generally, it’s a sign of a stronger, more resilient market when the majority of the stock market returns are not explained by seven-to-10 names,” he added. “We’ve all heard the old adage that diversification is the only free lunch.”
RSP's Implications for Long-Term Investors
Indexes weighted to the largest and fastest growing companies have historically had a huge upside, as has been evident recently.
Last year, SPY’s 26.2% gain was nearly double the 13.7% gain by RSP. And so far this year that trend has continued with SPY up 8.2% and RSP up 4.5%.
But longer term, where most retail class investors live, RSP has been a powerful force.
Since its inception, 21 years ago, RSP has produced a cumulative return of 542%, which compares to a 458% cumulative return over the same period for SPY, according to Morningstar.
On an annualized basis, according to Invesco, RSP's index, the S&P 500 Equal Weight Index, has generated an 11.5% gain since inception, which compares to a 10.8% annualized return for the S&P 500 Index over the same period.
“Advisors can tell clients that if and when the rest of the 490-plus companies in the index begin to catch up, investors will be more exposed to those gains with an equal weight approach,” said Jeff Schwartz, president of Markov Processes International in Summit, N.J.
“Additionally, equal-weighted indices have an important quirk where the average or mean return of the portfolio is slightly above the median,” he added. “This means that the investor should expect to have a return that is slightly better than half the companies in the portfolio.”
Paul Schatz, president of Heritage Capital in Woodbridge, Conn., sees equal-weight indexes as the start of a longer-term story.
“The Mag Seven has struggled lately and at the same time the New York Stock Exchange advance-decline line has been chugging higher, which is expressed in RSP finally trying to hold its own against SPY,” he said.
Chuck Etzweiler, senior vice president of research at the advisory firm Nepsis in Minneapolis, said equal-weighted and factor-based indexes are part of the nuance that can make indexed investing “quite confusing to even the most intuitive investor.”
“Equally weighted indexes not only provide a greater level of diversification as they lower concentration risk, (but) their methodology allows for a greater number of companies down the market-cap stream to be included, such as mid and small cap companies,” he said. “And anytime an equal-weight process begins to outperform it usually shows a broadening out of companies achieving higher price appreciation and suggests a near term healthy economic environment."
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Apple - >>> Justice Department files antitrust suit against Apple
Yahoo Finance
by Daniel Howley and Alexis Keenan
March 21, 2024
https://finance.yahoo.com/news/justice-department-files-antitrust-suit-against-apple-145514025.html
The US Justice Department filed an antitrust lawsuit against Apple (AAPL), alleging that the maker of the iPhone illegally maintains its dominance over the smartphone market by boxing out competing apps and devices.
Apple "has maintained its power not because of its superiority, but because of its unlawful exclusionary behavior," Attorney General Merrick Garland said at a press conference Thursday.
Apple said it would fight the lawsuit, which it said "threatens who we are and the principles that set Apple products apart in fiercely competitive markets. If successful, it would hinder our ability to create the kind of technology people expect from Apple."
A victory for the US in this case "would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology," Apple added in its statement.
Apple's stock fell more than 4% following news of the lawsuit, which the Justice Department filed with 16 state attorneys general.
The filing sets up yet another confrontation between the US government and a Silicon Valley icon as the Biden administration tries to rein in Big Tech's power.
The Department of Justice is suing Google (GOOG, GOOGL) over antitrust allegations, while the Federal Trade Commission is suing Amazon (AMZN) and Facebook (META) alleging they also violate antitrust laws.
The new DOJ lawsuit filed Thursday poses a major new threat to Apple's various revenue streams.
Apple generates the bulk of its cash through the sale of its wildly popular iPhone, which accounted for $200.6 billion of the company's $383.3 billion in total revenue in 2023. But Apple's services and hardware that tie into the iPhone are also incredibly lucrative.
The company's wearables, home, and accessories business, which includes its Apple Watch and AirPods sales, generated $39.8 billion last year, while its growing services business, which includes subscriptions for things like Apple Music+ and App Store sales, brought in $85.2 billion.
The DOJ's suit comes just weeks after the European Commission (EC) fined Apple $2 billion for allegedly breaking competition laws in the bloc. The EC alleged the company illegally wielded its dominance to the detriment of its rivals in the market for the distribution of music streaming apps.
The Justice Department suit is just the latest headache for Apple, which is off to a rough start in 2024.
Shares of Apple are down 7% year to date as the company struggles with slowing iPhone sales in China, its third-largest market. Apple also lost its title as the world's most valuable company to rival Microsoft (MSFT).
How Apple allegedly wields power
At the center of the DOJ’s lawsuit is the iPhone, Apple’s most recognizable product.
The company harms consumers by making it more difficult for iPhone users to switch to a competing product and to access competing services, according to the government. The complaint also says Apple harms app developers by imposing restrictions on app creation and distribution.
That includes everything from text messaging to digital wallets to apps that reduce user dependence on the iPhone.
Garland, for example, characterized Apple’s iMessage as anti-competitive, saying that when it is used to text with a Google Android device, the iPhone user’s response is in green rather than blue. (whoopee)
That, he said, "limits functionality." The videos sent via text, Garland added, can also be pixelated and grainy.
He then quoted Apple’s CEO responding to a complaint from a user who said he couldn’t send his mom certain videos: "'Buy your mom an iPhone.'"
Apple, the suit alleges, also makes it more difficult for smartphone users to access competing digital wallets by blocking developers from using tap-to-pay functionality in their apps. And it prevents the Apple iWatch from working with Android smartphones while making it more difficult for someone with an iPhone to use a rival’s smartwatch. (too bad)
"Apple repeatedly responded to competitive threats," said Assistant Attorney General Jonathan Kanter, "by making it harder to leave, then making it more attractive to stay. The antitrust laws have something to say about that."
Apple, according to the suit, also suppresses cloud streaming gaming apps and denies consumers access to so-called super apps, which allow users access to a broad range of functionalities from a single interface.
The wide-ranging suit is "about the core unfair practices of Apple," Case Western Reserve University antitrust expert and law professor Anat Alon-Beck said.
"Apple systematically excludes rivals from the Apple ecosystem. By doing that, Apple is hurting so many startup businesses, stakeholders, customers, and, in my opinion, its shareholders."
As a result, she predicts that Apple's stock will "see more downward movement."
Apple's Epic battle
This is just the latest antitrust battle Apple has had to contend with in the US.
The last was in 2020, when "Fortnite" maker Epic Games sued the company and accused it of violating antitrust law by prohibiting third-party app developers from offering their own payment methods within their apps —as opposed to using Apple's payment service.
Justice Department lawyers were permitted to present arguments in that high-stakes dispute. It focused attention on Apple’s App Store — the only place consumers can download apps for iPhones and iPads, which generally charges app developers a 30% commission on paid app purchases made through the platform.
Apple scored a victory in that case when the appeals court upheld a California trial court's ruling that said Apple did not hold a monopoly in the market for mobile app stores.
However, in a minor win for Epic, the appeals court also upheld the trial court's ruling that said Apple must allow app developers to offer more ways for users to pay for purchases.
Both companies tried to take their fight to the Supreme Court, though the high court declined to take up either appeal.
Following that decision, Apple said it will allow developers to offer third-party payment options through their apps. However, the company said developers would still have to pay fees of either 12% or 27%, a move Epic CEO Tim Sweeney called "anticompetitive."
Apple is in the midst of reconfiguring its App Store payment system in the European Union. Under the EU's new Digital Markets Act (DMA), the company must allow EU customers the option to download third-party app stores and get access to third-party payment options.
Apple said it would address the measure and allow third-party downloads and payments, but will still charge developers a fee of 50 euro cents for each download if they cross the 1 million download threshold in a year.
Both Epic and Spotify objected to the measure, with Spotify CEO Daniel Ek calling the new rule "hostile."
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Concerning Buffett's 'mystery stock', it could be more than one stock, in which case the 'over $100 bil market cap' assumption would be incorrect. The unaccounted-for $5 billion in Q3 + Q4 last year might be divided between two or more stocks.
Another key data point noted is the lack of the required SEC filing when Berkshire accumulates over 5% of a company. The reason could be the same as above --> the unaccounted-for $5 bil could be split among two or more stocks. For example - $2.5 in one $60 bil company, and another $2.5 bil in another $60 bil company. So neither would reach the 5% threshold, therefore no required SEC filing.
The third data point they cite is that Berkshire's "banks, insurance, and finance" category grew by $2.38 bil during Q4-23, which occurred despite Berkshire selling their last holdings of Markel and Globe Life (which by my inexact math would have yielded in the $325 mil range). But this entire 3rd data point is fuzzy, since some of that $2.38 bil growth was presumably due to changes in the market value of Berkshire's already existing stock positions. So how much of the $2.38 bil was due to that, and how much due to the new 'mystery stock' purchases? So the numbers are fuzzy, but at minimum we can say that Berkshire likely bought a big chunk (maybe $2 bil range) of something in Q4 and it is in the 'banks, insurance, finance' sector. But again, that ~ $2 bil could have been divided among several different stocks.
So.. the mystery stock's $100 bil market cap assumption seems bogus, at least based on the currently available info. Also, the assumption that Buffett wants to fully acquire the mystery stock has not been established, and he may merely be looking for a sizable chunk of one or more companies.
Anyway, the mystery continues.. :o)
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Re-post - >>> New Clues Strongly Suggest This Is the "Confidential Stock" Warren Buffett Has Been Buying
By: The Motley Fool | March 18, 2024
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174063446
• Berkshire Hathaway is secretly building up its stake in one or more companies. New clues and details point to one very specific stock.
For nearly 60 years, Berkshire Hathaway (BRK.A -0.04%) (BRK.B 0.07%) CEO Warren Buffett has captivated the attention of professional and retail investors by running circles around Wall Street many times over. Since becoming CEO in the mid-1960s, he's overseen an aggregate return of 4,938,103% in his company's Class A shares (BRK.A), as of the closing bell on March 14. For the sake of comparison, this is 146 times greater than the aggregate total return of the S&P 500, including dividends paid, over the same period.
Even though the affably named "Oracle of Omaha" won't be right all the time, his track record suggests he has a knack for finding value that's hiding in plain sight. That's why investors wait so anxiously for Berkshire Hathaway's Form 13F filings with the Securities and Exchange Commission (SEC).
Berkshire Hathaway's 13F is a powerful tool for investors
A 13F is a required filing each quarter for institutional money managers who are overseeing at least $100 million in assets under management. As of March 14, Buffett and his team had $366 billion of invested assets spread across 45 stocks and two index funds.
What makes 13Fs valuable is they allow investors to easily see what Wall Street's brightest and most successful money managers have been buying, selling, and holding. These filings can provide valuable insight into what stocks and trends are piquing the interest of Wall Street's top investors.
For example, Berkshire Hathaway's 13Fs have shown that Warren Buffett and his investing aides, Todd Combs and Ted Weschler, have been actively adding to their positions in two energy stocks: Chevron (CVX -0.09%) and Occidental Petroleum (OXY 0.88%). Though energy stocks have historically not accounted for a sizable percentage of Berkshire's invested assets, the combination of Chevron and Occidental comprise nearly 10% of the aforementioned $366 billion portfolio.
Having this much capital put to work in two integrated oil and gas stocks is a pretty clear message that Berkshire Hathaway's brightest minds expect the spot price of oil to remain above historic norms, if not head even higher. Years of capital underinvestment during the COVID-19 pandemic has led to tight global oil supply, which is helping to lift the spot price of crude.
Being able to track the investments Warren Buffett makes has allowed investors to ride his coattails to potentially life-changing returns.
New clues emerge about the "confidential stock" Warren Buffett is buying
However, Berkshire Hathaway's 13F isn't telling the full story in more ways than one. In addition to Warren Buffett's company having a $621 million "secret" portfolio, Berkshire Hathaway has also been granted an exemption by the SEC for confidential treatment regarding one or more of its holdings.
In other words, Buffett and his team are building a position in one or more companies, and they don't want the cat to be let out of the bag while doing so. Since investors tend to pile into the stocks Buffett and his aides purchase, this confidential treatment allows Berkshire to, presumably, build its stake at a lower cost basis.
Berkshire's last two quarterly 13Fs have come with this confidential treatment disclosure, which means the Oracle of Omaha and his aides have been purchasing shares of a stock, or multiple stocks, from perhaps July through December. Though I've previously thrown a dart at which mystery stock this might be, new clues point to a very specific company as Warren Buffett's "confidential stock."
While there are genuinely thousands of publicly traded companies that Buffett could, in theory, be putting his money to work in, three clues quickly narrow down the field. First, we can examine how much Berkshire Hathaway spent purchasing equity securities during the third and fourth quarters and compare this figure to the rough value of the stocks purchased during those respective quarters, as listed in Berkshire's 13Fs. In the neighborhood of $5 billion in equity security purchases is unaccounted for on a combined basis over the second-half of 2023.
What's interesting about this figure is that Berkshire Hathaway would be required to file with the SEC once it's reached at least a 5% stake in a publicly traded company. Since there's currently no filing, it intimates that the company Buffett and his team are secretly buying has a market cap of $100 billion or more. That eliminates all but 120 publicly traded companies in the U.S.
Secondly, Berkshire Hathaway's fourth-quarter operating results show that the company's cost basis for equity securities held in "banks, insurance, and finance" grew by $2.38 billion to $27.14 billion from the September-ended quarter. This cost basis grew despite Buffett and Co. selling stakes in insurers Markel Group and Globe Life. This is something my Foolish colleague Adam Levy pointed out two weeks ago, and all but ensures that Buffett's confidential stock hails from the financial sector.
There are only 24 stocks with a $100 billion or greater market cap found in the financial sector.
The third clue is that Warren Buffett loves a good deal and will stubbornly sit on his hands until he gets one. This means any stock with a relatively high forward price-to-earnings (P/E) ratio is off the table. Setting the forward P/E cap at 15 reduces the number of candidates to just 13.
Here's the confidential stock Berkshire Hathaway is likely buying
Among the 13 remaining financial stocks are a handful of companies Berkshire already owns, including Bank of America, American Express, and Citigroup, as well as companies that were sold within the past few quarters or years, such as JPMorgan Chase, Goldman Sachs, and Wells Fargo. It's highly unlikely Buffett would reenter JPMorgan Chase, Goldman Sachs, or Wells Fargo on a confidential basis, and we'd see buying activity via the 13F if it was the former three stocks Berkshire currently owns.
This leaves seven possible choices:
Morgan Stanley (MS -0.47%)
HSBC Holdings
Royal Bank of Canada
Mitsubishi UFJ Financial Group (MUFG 1.57%)
Toronto Dominion Bank
Chubb
UBS Group
Having followed Buffett's trading activity for so long, I can't recall a time when he's shown much, if any, interest in Canadian banks. Furthermore, while the Oracle of Omaha is willing to go to bat for a reclamation project in the U.S. (e.g., Bank of America in 2011), European banks aren't his cup of tea. This likely eliminates HSBC, UBS, Toronto Dominion, and Royal Bank of Canada from the discussion.
To go one step further, Berkshire's investment team just purged its portfolio of Markel and Globe Life, meaning there's probably not a big desire to pile into an internationally based insurer like Chubb.
This leaves two companies that meet what Warren Buffett is looking for: Morgan Stanley and Mitsubishi UFJ Financial Group, which is better known as "MUFG."
Morgan Stanley can't be ruled out as Berkshire's potential "secret" buy. It's valued at 12 times forward-year earnings and generates a substantial portion of its sales and profits from the company's wealth management division. In theory, wealth management should help insulate Morgan Stanley from inevitable downturns in the U.S. and global economy.
In Warren Buffett's recently released annual letter to shareholders, he described the small group of companies he values as core holdings that will be held "indefinitely." While Coca-Cola and American Express unsurprisingly made the list, the Oracle of Omaha touted Occidental Petroleum and the five Japanese trading houses -- Mitsubishi, Mitsui, Itochu, Sumitomo, and Marubeni -- as companies he'd never sell. In fact, Buffett has upped his company's stake to around 9% in each of these Japanese trading houses. Berkshire's investment team have not hidden their belief that Japan's economy can outperform over the long run.
MUFG is the largest bank by assets in Japan. More importantly, it's trading at a reasonably low forward P/E ratio of less than 12, and is valued modestly below its reported book value. High-quality banks trading below their book value have often been a lure that's attracted Buffett. Comparatively, Morgan Stanley is valued about 60% above its book value.
Furthermore, MUFG is actually riding Morgan Stanley's coattails to massive profits since the financial crisis more than 15 years ago. Mitsubishi UFJ Financial Group purchased $9 billion worth of preferred stock in Morgan Stanley following the collapse of Lehman Brothers. This stake in Morgan Stanley has consistently generated between 30% and 40% of MUFG's annual profits in recent years.
Why buy Morgan Stanley stock when Buffett can get exposure to Morgan Stanley via Mitsubishi UFJ Financial Group at a fraction of the cost? I strongly believe MUFG to be the confidential stock Warren Buffett is buying at Berkshire Hathaway.
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Re-post - >>> Berkshire Buys More Liberty Sirius XM, Now Owns $2.2 Billion of Tracking Stock
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173993547
By: Barrons | March 7, 2024
Berkshire Hathaway purchased about 3.7 million shares of Liberty Sirius XM Holdings, the tracking stock for Sirius XM Holdings, in recent days, bringing its stake in the tracker to almost 76 million shares, according to filings late Wednesday.
Berkshire now holds $2.2 billion of Liberty Sirius XM Holdings, a roughly 23% stake in the company. Berkshire purchased both the voting Class A shares an d nonvoting Class C shares for a total of more than $100 million from Monday through Wednesday of this week. Sirius XM operates a satellite radio network with over 32 million paying subscribers.
This continues intermittent purchases of the tracking stock so far this year by Berkshire. The Liberty Sirius XM voting A stock ended Wednesday at $29.38, down 0.1% while the nonvoting C shares finished at $29.25, off 0.2%.
Berkshire appears to be looking to capitalize on the spread between the value of the Sirius XM stock that will be received by Liberty Sirius XM shareholders under a deal reached in late 2023 and the current price of the tracking stock.
Sirius XM ended Wednesday at $4.19, up 0.5%. Liberty Sirius XM holders are due to get 8.4 shares of New Sirius XM for each share of the tracking stock. That's worth about $35, allowing Sirius XM holders to make about 20% ($6 a share divided by the current tracker stock price). The deal is due to close in the third quarter. Current Sirius XM holders will get the new stock on a share-for-share basis.
The spread has narrowed so far in 2024 as Sirius XM stock has come down from a price of about $5.50 in late December. The spread could narrow further as the closing date approaches and after the transaction closes — assuming the deal occurs. Liberty Media owns over 80% of Sirius XM and that stock could start hitting the market once the deal closes.
Some investors have bought the tracking stock and shorted Sirius to capture the spread, but that can be difficult to do now given the thin float in Sirius, high short interest in the stock, and high borrowing costs to short it.
Some Berkshire watchers think the company's Liberty Sirius XM holding is overseen by Ted Weschler, one of two Berkshire investment managers who run about 10% of the roughly $350 billion equity portfolio. CEO Warren Buffett oversees the rest. Weschler is believed to be close to Liberty Media CEO Greg Maffei.
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>>> Warren Buffett's Latest $2.1 Billion Buy Brings His Total Investment in This Stock to More Than $74 Billion in Under 6 Years
by Sean Williams
Motley Fool
Mar 4, 2024
https://finance.yahoo.com/news/warren-buffetts-latest-2-1-100600894.html
For nearly six decades, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has been putting on a clinic for Wall Street. Whereas the benchmark S&P 500 has delivered a total return, including dividends, of a little north of 33,000% since the "Oracle of Omaha" took over as CEO in the mid-1960s, Berkshire's Class A shares (BRK.A) have galloped higher by an aggregate of more than 5,000,000% as of the closing bell on Feb. 28, 2024! An outperformance of this magnitude is going to get you noticed by professional and retail investors.
Warren Buffett's phenomenal track record is a big reason why there's a buzz surrounding Berkshire Hathaway every time the company files Form 13F with the Securities and Exchange Commission (SEC). A 13F gives investors an over-the-shoulder look at what Wall Street's greatest money managers have been buying and selling, and is a required quarterly filing for institutions and investors with at least $100 million in assets under management.
Warren Buffett has been adding to a core position and building up his stake in a value stock
Throughout 2023, the Oracle of Omaha and his investment aides, Todd Combs and Ted Weschler, were very selective about their purchases. One core holding that's continued to see somewhat regular additions is energy stock Occidental Petroleum (NYSE: OXY).
Accounting for Berkshire's latest share purchases during the first week of February, Buffett's company has gobbled up more than 248 million shares of Occidental Petroleum since the start of 2022. That's a roughly $15 billion position, with $34 billion, in total, devoted to energy stocks, including Berkshire's position in Chevron.
Having 9% of Berkshire's invested assets tied up in two integrated oil and gas stocks is a pretty clear message that the company's brightest minds anticipate crude oil prices will remain elevated for an extended period. With the global supply of oil remaining tight following years of capital underinvestment tied to the COVID-19 pandemic, there's a real possibility the spot price of crude oil heads even higher.
What makes Occidental Petroleum an intriguing investment in the energy arena is its revenue breakdown. Despite being an integrated operator that generates some of its revenue from downstream chemical plants, Occidental derives the lion's share of its sales from drilling. If the spot price of crude oil climbs, it'll benefit more than virtually any other integrated oil and gas company.
Beyond Occidental, we've also seen Warren Buffett and his team piling back into satellite-radio operator Sirius XM Holdings (NASDAQ: SIRI). Though radio operators are often highly dependent on advertising revenue to keep the lights on, Sirius XM has an assortment of competitive advantages working in its favor that should help it navigate any economic climate better than terrestrial and online radio companies.
To start with the obvious, Sirius XM is the only licensed satellite-radio operator. While this doesn't mean it's free of competition for listeners, it does give the company reasonably strong subscription-pricing power.
What's arguably even more important with Sirius XM is how the company generates revenue. Whereas terrestrial and online radio providers are reliant on advertising revenue, only 20% of Sirius XM's sales came from advertising in 2023. Meanwhile, a whopping 77% of Sirius XM's revenue can be traced to subscriptions. Subscribers are less likely to cancel their service during an economic downturn than businesses are to meaningfully pare back their advertising budgets.
Sirius XM is also historically cheap. Shares are currently trading for a multiple of 13 times forward-year earnings, which is a 32% discount to its average forward-year earnings multiple over the trailing five-year period.
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>>> Warren Buffett: Charlie Munger was the 'architect' of the modern Berkshire Hathaway
Yahoo Finance
by Myles Udland
Feb 24, 2024
https://finance.yahoo.com/news/warren-buffett-charlie-munger-was-the-architect-of-the-modern-berkshire-hathaway-145356261.html
Warren Buffett's annual letter to Berkshire Hathaway (BRK-A, BRK-B) shareholders published Saturday morning marked the first missive sent to his investors since his longtime right-hand man, Charlie Munger, died last November at 99 years old.
To begin his letter to Berkshire shareholders, Buffett reminded readers of the role Munger played in creating what is now the country's largest conglomerate. A conglomerate, Buffett wrote Saturday, that has "by far...the largest GAAP net worth recorded by any American business."
"In reality, Charlie was the 'architect' of the present Berkshire, and I acted as the 'general contractor' to carry out the day-by-day construction of his vision," Buffett wrote.
"Charlie never sought to take credit for his role as creator but instead let me take the bows and receive the accolades. In a way his relationship with me was part older brother, part loving father. Even when he knew he was right, he gave me the reins, and when I blundered he never — never — reminded me of my mistake."
"In the physical world, great buildings are linked to their architect while those who had poured the concrete or installed the windows are soon forgotten," Buffett wrote.
"Berkshire has become a great company. Though I have long been in charge of the construction crew; Charlie should forever be credited with being the architect."
'I made a dumb decision'
Buffett and Munger both grew up in Omaha, where Berkshire is still headquartered. The two, however, didn't meet until 1959, when Buffett was 29 and Munger 35.
A lawyer by trade and a founding partner at the law firm Munger, Tolles, & Olson which bears his name, Munger was named vice chairman at Berkshire Hathaway in the late '70s.
But Munger and Buffett's investing relationship began long before this formal engagement, with Buffett writing Saturday it was Munger who told him in 1962, "that I had made a dumb decision in buying control of Berkshire."
At the time, Berkshire Hathaway was a struggling textile manufacturer in New England. Textile operations later ended, but the Berkshire Hathaway of today still bears the company's name.
Buffett wrote Saturday that, "Charlie, in 1965, promptly advised me: 'Warren, forget about ever buying another company like Berkshire. But now that you control Berkshire, add to it wonderful businesses purchased at fair prices and give up buying fair businesses at wonderful prices. In other words, abandon everything you learned from your hero, Ben Graham. It works but only when practiced at small scale.' With much back-sliding I subsequently followed his instructions."
Elsewhere in his letter to shareholders, Buffett wrote, "Our goal at Berkshire is simple: We want to own either all or a portion of businesses that enjoy good economics that are fundamental and enduring."
But Buffett noted the advice from Munger offered nearly 60 years ago to only buy "wonderful businesses purchased at fair prices" means the days Buffett and Berkshire Hathaway had plenty of investment opportunities to choose from are "long behind us."
"This combination of the two necessities I've described for acquiring businesses has for long been our goal in purchases and, for a while, we had an abundance of candidates to evaluate," Buffett wrote.
"If I missed one — and I missed plenty — another always came along. Those days are long behind us; size did us in, though increased competition for purchases was also a factor."
Berkshire purchased insurance company Alleghany for $11.6 billion 2022 and took full control of rest stop operator Pilot earlier this year. Prior to these deals, the company hadn't made a sizable acquisition since its 2015 purchase of Precision Castparts for $37 billion.
"There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others," Buffett continued.
"Some we can value; some we can't. And, if we can, they have to be attractively priced. Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance."
A 'severe' disappointment
Buffett also touched on the struggles at Berkshire's railroad and utilities businesses in 2023, with the latter serving as a "severe earnings disappointment last year."
In Buffett's view, a shifting regulatory outlook in some states has "broken" a model that relied on private investment backed by what Buffett called a "fixed-but-satisfactory-return" for these operators. Agreements that were made on a state-by-state basis.
"Whatever the case at Berkshire, the final result for the utility industry may be ominous: Certain utilities might no longer attract the savings of American citizens and will be forced to adopt the public-power model," Buffett wrote. "Nebraska made this choice in the 1930s and there are many public-power operations throughout the country. Eventually, voters, taxpayers and users will decide which model they prefer.
"When the dust settles, America’s power needs and the consequent capital expenditure will be staggering. I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so."
'Berkshire is built to last'
As he does most years, Buffett also took extensive time in this year's letter to write about his overarching investment philosophy and how it impacts the current iteration of Berkshire Hathaway.
For aspiring investors looking to Buffett for insights on how to manage their own portfolios, these passages are the main draw.
The modern Berkshire Hathaway, in Buffett's view, is built to both protect against and take advantage of the inevitable seizures and panics that have, and will again, gripped markets.
"Indeed, markets can — and will — unpredictably seize up or even vanish as they did for four months in 1914 and for a few days in 2001," Buffett wrote. "If you believe that American investors are now more stable than in the past, think back to September 2008. Speed of communication and the wonders of technology facilitate instant worldwide paralysis, and we have come a long way since smoke signals. Such instant panics won't happen often — but they will happen."
In turn, Berkshire holds a pile of cash and highly-liquid Treasury bills that Buffett called "far in excess of what conventional wisdom deems necessary."
Berkshire also does not pay dividends — a preordained cash outlay for companies — and makes no commitment on the size of any future stock buybacks. Buffett runs Berkshire Hathaway in a manner that keeps cash on hand for the sake of keeping cash on hand, not for some planned future deployment.
"During the 2008 panic, Berkshire generated cash from operations and did not rely in any manner on commercial paper, bank lines or debt markets," Buffett wrote. "We did not predict the time of an economic paralysis but we were always prepared for one.
"Extreme fiscal conservatism is a corporate pledge we make to those who have joined us in ownership of Berkshire."
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Bar, >> huge decline on the main stock boards <<
There's a decent chance that 'Latoria' was put up by I-Hub itself in order to boost the daily posting numbers for I-Hub. Lower posts means lower ad revenues.
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Her posts are pleasant, Very pleasant. That's the first the giveaway that it's fake. I'll contact the mods when I get time and have her booted.
"I hear that posting activity on I-Hub has been on the decline." Yes, in huge decline on the main stock boards.
Bar, Yes, Latoria appears to be an Ai bot of some kind. Her posts are pleasant, but basically just a restatement of whatever info is in the post she is responding to. It could be a bot put up by I-Hub itself, to increase overall daily postings, and thus increase what I-Hub can charge for running ads on the site. I hear that posting activity on I-Hub has been on the decline.
Either way, Latoria's picture looks a little like a porn star, so maybe we can call her 'Clitoria' lol. I see there actually is a real porn star called 'Loretta Clitoria', so maybe that inspired the moniker 'Latoria'.
https://www.imdb.com/name/nm1010892/
>>> Loretta Clitora
Actress
Loretta Clitora was born on 25 June 1982 in Brooklyn, New York City, New York, USA. She is an actress.
Born June 25, 1982
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GFP: Two things about "CEO" Litoria who just posted. Her overly wordy post about BRK seems to have been written by AI and I notice that most of her other IHUB posts arrive in the middle of the night US time suggesting they come from very far away.
Wow, Latoria, I see your company makes no-credit-check loans. Is that correct?
It's impressive to see how well Berkshire Hathaway (BRK) has performed despite carrying such a significant cash position. A 14.1% year-to-date increase and a remarkable 32% surge over the past year are indeed noteworthy achievements. With $72 in cash per share, BRK's ability to generate returns speaks volumes about Warren Buffett's investment philosophy and the company's diversified portfolio. It's a testament to the power of smart investing and strategic decision-making, even in the face of market uncertainties.
"According to my Finviz, BRK is up 14.1% YTD." and up 32% for the past one-year which is stunning when you think of all of BRK's cash, $72 in cash per share.
BRK is moving up some lists while trendier stocks such as TSLA are lagging or even falling. What a great year BRK is having! According to my Finviz, BRK is up 14.1% YTD.
There used to be a guy on IHUB who would cherry pick from Buffett's holdings, something like two or three stocks at any time. Problem was they were usually Buffett's worst dogs.
I'm thrilled that I own BRK, especially when he picks oddball, obscure, non correlated investments like those five Japanese trading companies. In that way BRK is something like a hedge fund, only with vastly lower costs. Not many hedge fund CEOs work for $100,000 a year! Especially those with 80 years experience.
Bar, Will do, although that poster 'Discover Gold' will probably announce the mystery stock within a millisecond of it being reported on the quarterly report :o) I think he must work for a stock advisory service or something.
Btw, this board 'Long Term Stocks' I originally wanted to call 'Berkshire Buffett', but that name was nixed by I-Hub since there is already a Berkshire board. But I use this board to store Berkshire related articles and stock lists.
I bought a lot of the Berkshire owned stocks (highlighted in red on the lists), but was surprised when Buffett sold a bunch of these great long term stocks over the past year, including -- Johnson & Johnson, Marsh & McLennan, Mondelez Intl, Procter + Gamble, and he also sold some AON. Fwiw, I decided to keep all of those, although only small positions.
Fwiw, I've become reluctant to buy most the new Berkshire picks since I figure these small positions are likely from the new guys, Weschler and Combs. They may turn out to be fine stock pickers, but it's still early compared to Buffett's proven track record. But I also don't understand the appeal of some of Buffett's long time holdings, but then he's the Oracle.
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Oh, be sure to let me know when BRK's "mystery stock" is identified.
>>> Warren Buffett's Berkshire Hathaway Sold $7 Billion Worth of Stock Last Quarter but Bought 1 Mystery Stock
Motley Fool
By Adam Levy
Nov 20, 2023
https://www.fool.com/investing/2023/11/20/buffett-berkshire-hathaway-mystery-stock/
KEY POINTS
Berkshire Hathaway sold $7 billion worth of stock last quarter and bought $1.7 billion.
Buffett trimmed several big positions and completely liquidated six small stock holdings.
We only have a few clues as to what Buffett and his team's big purchase was last quarter.
The SEC let Buffett and his team keep this one a secret.
Warren Buffett doesn't have a big appetite for a lot of stocks lately. Berkshire Hathaway's (BRK.A) (BRK.B) most recent quarterly report indicated that Buffett and his team sold $7 billion worth of equities and bought just $1.7 billion of stocks. Meanwhile, Buffett now oversees a record cash pile of $157 billion, the vast majority of which he's put to work in short-term U.S. Treasuries.
While investors already knew some of what Buffett and his team have been selling in Berkshire's portfolio based on the company's third-quarter report and other filings with the Securities and Exchange Commission (or SEC), we finally got a glimpse of the exact changes they made last quarter with its 13F filing disclosing the company's holdings as of the end of September.
Well, almost all of the changes.
Berkshire Hathaway requested confidential treatment for at least one stock purchase last quarter, and the SEC granted it. So there's one mystery stock Warren Buffett and the team have been buying despite selling off a big chunk of stocks.
The big sales in Buffett's portfolio
The biggest changes in Berkshire's portfolio were already known.
Sold 10% of its stake in Chevron. We learned this from disclosures in the third-quarter earnings report. The portfolio held $18.6 billion worth of the company as of the end of September.
Sold 15% of its stake in Hewlett Packard. We learned this from Form 4 disclosures requiring Berkshire to disclose changes in ownership for companies in which it holds a greater-than-10% stake. It ended September with $2.6 billion worth of shares but continued to reduce its position in October.
Sold 100% of its position in Activision. While investors knew Berkshire no longer held Activision following its acquisition by Microsoft, it appears Buffett sold the remaining shares before the deal closed in October.
The 13F also revealed several positions where Berkshire completely closed out its positions in General Motors, Celanese, Johnson & Johnson, Procter & Gamble, Modelez, and United Parcel Service.
And some positions were trimmed, including:
66% of its Markel shares, leaving the company with shares worth $233.7 million at the end of the quarter
67% of Globe Life, leaving it with shares worth $185.4 million at the end of the quarter
5% of Amazon, leaving it with shares worth $1.3 billion at the end of the quarter.
5% of Aon, leaving it with shares worth $1.3 billion at the end of the quarter.
The portfolio also got a shakeup from Liberty Media's Atlanta Braves spin-off and reclassification of its tracking stocks.
It's worth pointing out that all of these newly revealed sales are relatively small. Berkshire didn't make any wholesale changes in its portfolio. After all, it only sold $7 billion worth of total stock out of a portfolio valued at $318 billion.
What is Buffett buying?
There was just one truly new stock Berkshire reported with its 13F. It bought 9.7 million shares of Sirius XM (SIRI).
The stake was worth about $44 million as of the end of the quarter, representing about 0.01% (1/10,000) of the total portfolio value. So this was not a big purchase by any means.
The vast majority of Berkshire's $1.7 billion in stock purchases last quarter went toward the new mystery stock(s) it's not disclosing.
We can get some clues from Berkshire's third-quarter earnings report. The company disclosed that the cost basis for its investments in banks, insurance, and finance equity securities increased by approximately $1.2 billion. Its sales of Globe Life, Markel, and Aon would knock that figure down somewhat, as well, so that lines up with the $1.7 billion in purchases.
One reason Berkshire might have requested that its newest holding remain confidential is that it wants to continue buying shares in the company. Since changes to its portfolio are so widely followed, any disclosures have the potential to send the price of shares much higher. Sirius XM shares notably climbed as much as 15% the day after Berkshire filed its 13F.
In other words, if you can figure out what Buffett and his team were buying last quarter, you could be able to invest ahead of the Oracle of Omaha.
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>>> Berkshire Hathaway's Mystery Stock: Have Buffett and Munger Finally Bought the Stock They Can't Stop Praising?
Motley Fool
By Courtney Carlsen
Nov 24, 2023
https://www.fool.com/investing/2023/11/24/berkshire-hathaways-mystery-stock-have-buffett-and/
KEY POINTS
Berkshire Hathaway requested confidentiality on some third-quarter stock purchases of $1.7 billion. It frequently uses such measures when accumulating large positions, to avoid being front-run by market participants.
The purchase is likely a stock in the banking, insurance, or financial sector, based on its quarterly earnings report.
The conglomerate is quietly accumulating over $1 billion in stock in a mystery company. Could it be this longtime competitor?
Berkshire Hathaway's (BRK.A 0.51%) (BRK.B 0.63%) legendary performance is undeniable. Since CEO Warren Buffett took over the failing textile business in 1965, the stock has returned investors 20% compounded annually -- doubling the S&P 500's average annual return in the same period.
This track record of success is why investors eagerly await Berkshire Hathaway's quarterly form 13-F, a required filing by the Securities and Exchange Commission (SEC) that discloses institutional investors' investing activity during the period. In the third quarter, Berkshire Hathaway purchased $1.7 billion in stock. However, a sizeable chunk of that amount is in a mystery stock on which Berkshire has requested confidential treatment.
Buffett and his team at Berkshire occasionally request confidentiality when they accumulate a stock position and don't want to tip off the markets until they finish buying. The company last requested confidentiality when building stakes in Chevron and Verizon Communications in 2020.
The move has investors speculating over what could be the next big position for Berkshire Hathaway. One company that could be on the short list has previously earned high praise from Buffett and Berkshire Hathaway Vice Chairman Charlie Munger. Here's what that stock is and why it could be the next stock in Berkshire's $354 billion portfolio.
Is this the mystery stock that Berkshire Hathaway bought in the third quarter?
In the third quarter, Berkshire Hathaway sold off part of its holdings in Globe Life, Markel, and Aon, all insurance companies within the financial sector. However, in its third-quarter earnings report, the conglomerate reported that its cost basis for investments in banks, insurance, and finance stocks increased by about $1.2 billion.
There are numerous potential investments that Buffett and his team could've bought. One intriguing stock that the conglomerate could have added during the period is Progressive (PGR). Progressive is the second-largest auto insurance company in the U.S., trailing only State Farm. The third-largest auto insurance company is Berkshire Hathaway's own GEICO, which it acquired in 1996.
When it comes to future leaders in the industry, Buffett sees it as a two-horse race between Progressive and GEICO. During Berkshire’s 2019 annual shareholder meeting, Buffett said
I have always thought for a very long time [that] Progressive has been very well run. They have an appetite for growth. Sometimes they copy us. Sometimes we copy them. And I think that will be true five years from now, ten years from now.
Even Munger sang Progressive's praises, saying, "In the nature of things, every once in a while, somebody is a little better at something than we are."
Progressive's underwriting discipline makes it a top dog in a highly competitive industry
To understand Progressive's stellar performance, you have to go back to 1965, when Peter B. Lewis, son of one of the co-founders, Joseph Lewis, took over the company. At the time, insurers commonly accepted that they would break even on their policies, and the actual returns would come from their investment portfolios. Lewis rejected this notion and instead set a goal that Progressive would earn an underwriting profit on its policies, even if it meant forgoing drivers who wanted lower-cost policies.
When it went public in 1971, the company prioritized achieving a combined ratio of 96, meaning it would earn $0.04 of profit for every dollar of premium earned. This philosophy has been core to Progressive's disciplined underwriting and is a big reason for the insurer's massive success.
You can analyze Progressive's disciplined underwriting by looking at its loss ratio. This ratio is one component of the combined ratio (the expense ratio being the other) and calculates the percentage of losses to premiums earned. Good companies can control losses and keep loss ratios in check, which Progressive has done exceptionally well. Over the last eight years, Progressive's loss ratio has averaged 72%, an excellent number in the highly competitive auto insurance industry. GEICO, also a solid underwriter, averaged 83% over that period.
Berkshire Hathaway's head of insurance had this to say about Progressive's outperformance
Ajit Jain is Berkshire Hathaway's Vice Chair of Insurance Operations and is also on the board of directors. Jain has worked for Berkshire since 1986 and has extensive knowledge about its insurance operations. Buffett has showered Jain with praise, mentioning in his 2012 annual letter to shareholders: "Ajit insures risks that no one else has the desire or the capital to take on. His operation combines capacity, speed, decisiveness and, most important, brains in a manner unique in the business."
Jain appreciates Progressive's underwriting performance and has credited its outperformance to several factors, including its use of telematics. Telematics uses driver data like mileage driven, speed, and braking time and personalizes rates for drivers based on this information.
When it comes to pricing models, more data helps Progressive make more informed decisions, manage its risk well, and keep loss ratios low. In 2019, Jain said that GEICO is working on its telematics program and hoped to catch up to Progressive over time. However, as you can see above, Progressive continues to outperform on the important loss ratio metric.
A stellar stock to own, regardless of whether Berkshire is buying it
It's possible that Berkshire Hathaway sees Progressive's ongoing outperformance and decided to add shares to its $354 billion portfolio. Progressive's long history of collecting driver data is one part of its stellar underwriting performance, and maybe Buffett and his team caved and wanted a piece of the action.
However, investors can't know for sure if Berkshire is buying Progressive until the company posts its fourth-quarter filing (assuming the purchase is not still marked as confidential), which won't come out until mid-February. Regardless, Progressive has been an excellent long-term performer for investors, and even if Berkshire isn't buying it, it can make an excellent addition to your portfolio today.
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Kroger - >>> 4 Warren Buffett Stocks to Buy After Berkshire Hathaway’s Latest 13F Filing
Plus, the stocks Berkshire bought and sold last quarter.
Morningstar
by Susan Dziubinski
Feb 14, 2024
https://www.morningstar.com/stocks/4-warren-buffett-stocks-buy-after-berkshire-hathaways-latest-13f-filing
Kroger -
Morningstar Rating: 4 stars
Morningstar Economic Moat Rating: Narrow
Morningstar Capital Allocation Rating: Exemplary
Industry: Grocery Stores
Berkshire Hathaway owns about 7% of Kroger’s outstanding shares. Kroger and rival Albertsons have announced merger plans, though regulatory hurdles persist. We think Kroger has carved out a narrow economic moat and is run by a management team that has done an exemplary job of allocating capital. Kroger stock trades 14% below our $53 fair value estimate.
Here’s Morningstar senior analyst Dan Wasiolek’s take on Kroger’s business strategy and outlook:
Of the traditional grocers, we believe Kroger’s scale, partnerships, private-label fare, and data capabilities uniquely position the company to defend its returns against competition that should intensify as Amazon, mass merchandisers, and hard discounters continue to price aggressively to boost volume. We contend that Kroger still benefits from enduring intangible assets and cost advantages, even if its acquisition of Albertsons is derailed by regulators.
Grocers use price as a primary lever to drive traffic, necessitating efficiency and cost leverage to deliver returns. We expect this environment to endure as the industry changes, with an omnichannel experience likely to prevail as customers use a combination of deliver-to-home, click-and-collect, and in-store shopping, particularly since most American consumers drive past grocers on their commutes and home delivery can be inconvenient for buyers with uncertain schedules (although the COVID-19 pandemic likely accelerated delivery adoption in the long term). In physical retail, we anticipate shoppers will choose sellers based on convenience, price, and breadth of assortment, demanding high value as well as a compelling store environment.
Kroger should be able to capitalize on the changing landscape. We maintain that its local market scale allows it to derive cost leverage that fuels competitive pricing and the investments needed to build on its presence in the emerging channels. Its progress should be accelerated by partnerships (with Ocado, Walgreens, Microsoft, and others) that we do not believe are available to smaller rivals because they cannot deliver the same value to counterparts.
Nearly all Kroger's transactions are derived from its loyalty database, providing consumer insights that should play a large role in its digital transformation, fueling promotional efforts and customer engagement while informing assortment and providing salable insights as nongrocery revenue streams. We expect data to play a key role in efforts to drive traffic, efficiency, and conversion that few can match.
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>>> 4 Warren Buffett Stocks to Buy After Berkshire Hathaway’s Latest 13F Filing
Plus, the stocks Berkshire bought and sold last quarter.
Morningstar
by Susan Dziubinski
Feb 14, 2024
https://www.morningstar.com/stocks/4-warren-buffett-stocks-buy-after-berkshire-hathaways-latest-13f-filing
Warren Buffett’s Berkshire Hathaway BRK.A BRK.B has released its fourth-quarter 2023 13F. The report indicates that Berkshire wasn’t a big buyer of stocks last quarter. That’s not surprising, given that stocks skyrocketed during the period: The Morningstar US Market Index was up about 12% during the fourth quarter.
Here’s a look at some of the stocks that Warren Buffett and his team bought and sold during the fourth quarter, as well as several of the most undervalued Buffett stocks to buy in Berkshire Hathaway’s portfolio today.
What Stocks Berkshire Hathaway Bought Last Quarter
Chevron CVX
Add to Existing
3 stars
Occidental Petroleum OXY
Add to Existing
3 stars
Sirius XM Holdings SIRI
Add to Existing
5 stars
Berkshire Hathaway’s fourth-quarter 13F didn’t indicate that Buffett added any new names to the publicly traded portfolio. According to the report, Berkshire simply added to existing positions in Chevron CVX, Occidental Petroleum OXY, and Sirius XM Holdings SIRI.
Berkshire Hathaway 13F Filing: More Sells Than Buys in Quieter Q4
However, it’s what Berkshire Hathaway didn’t report that has the financial media abuzz. Explains Morningstar strategist Greggory Warren:
“The SEC occasionally permits confidential treatment for new stock purchases by large portfolio managers, exempting them required disclosure in quarterly 13F filings when ‘such action is necessary or appropriate in the public interest and for the protection of investors or to maintain fair and orderly markets.’ Berkshire received an exemption last quarter (much as it has at different times in the past), as well as for the third quarter of 2023, and now its biggest stock purchase during the third and fourth quarters remains a mystery to investors. Eventually, the company will disclose the stock (or stocks) that they have been buying.”
What Stocks Berkshire Hathaway Sold Last Quarter
Apple AAPL
Scaled Back
2 stars
D.R. Horton DHI
Sold Entirely
3 stars
Globe Life GL
Sold Entirely
3 stars (Quantitative Rating)
HP HPQ
Scaled Back
3 stars
Markel Group MKL
Sold Entirely
3 stars
Paramount Global PARA
Scaled Back
4 stars
StoneCo STNE
Sold Entirely
4 stars (Quantitative Rating)
Notably, Berkshire trimmed its position in Apple AAPL during the quarter. But despite the haircut, Apple stock remains Berkshire’s top holding—by a landslide. Buffett and his team slashed their positions in HP HPQ and Paramount Global PARA. Berkshire entirely sold out of its positions in D.R. Horton DHI, Globe Life GL, Markel Group MKL, and StoneCo STNE.
4 Warren Buffett Stocks to Buy Now
Many of the publicly traded stocks held by Berkshire Hathaway are fairly valued or overvalued today, according to Morningstar’s metrics. Here are some of the stocks among its holdings in the latest quarter that looked undervalued as of Feb. 13, 2024.
Charter Communications CHTR
Citigroup C
Kraft Heinz KHC
Kroger KR
Here’s a little bit about why we like each of these stocks at these prices, along with some key metrics for each. All data is as of Feb.
Charter Communications
Morningstar Rating: 5 stars
Morningstar Economic Moat Rating: Narrow
Morningstar Capital Allocation Rating: Standard
Industry: Telecom Services
Berkshire Hathaway owns about 2.6% of Charter Communications’ stock. The company is the result of a 2016 merger of three cable companies: legacy Charter, Time Warner Cable, and Bright House Networks. We think the company has carved out a narrow economic moat, thanks to its efficient scale and cost advantage. Charter Communications stock currently trades a whopping 47% below our $550 fair value estimate.
Here’s what Morningstar director Mike Hodel had to say about the stock after the company’s fourth-quarter earnings release:
Ugly headline numbers marred Charter’s fourth-quarter results. While we don’t see much reason to change our long-term view of the firm, the next couple of years are shaping up to be more challenging than we had expected. We are trimming our fair value estimate to $550 from $580, but we believe the market has overreacted to current weakness.
Customer metrics were very weak, especially given Charter's emphasis on volumes over price. The firm lost 61,000 net broadband customers during the quarter, far worse than the 105,000 added a year ago and the first loss since the second quarter of 2022. Management didn’t flag any recent changes in the competitive environment. Fixed-wireless customer gains and fixed-line results from AT&T and Verizon were generally consistent with recent performance. Charter also claims that it hasn’t seen an impact on broadband customer losses as Spectrum One bundle discounts expire. We agree with management that small changes in customer wins and losses get undue attention when net customer growth is near zero, but those changes haven’t gone in Charter’s favor recently.
Average revenue per residential broadband customer increased only 2.2% year over year, as Spectrum One bundle discounts are allocated between broadband and wireless revenue. Total revenue per residential customer was roughly flat versus a year ago, with television losses offsetting wireless and broadband gains. Residential revenue was flat year over year and total revenue increased 0.3% on modest business services growth, largely offset by a sharp drop in political ad revenue.
Management provided capital spending expectations through 2027 to shed more light on the firm’s investment plans. Charter expects annual spending in 2024 and 2025 to be above $12 billion, about $1 billion more in total than we had forecast. The firm believes spending will drop sharply in 2027, excluding any additional subsidized project wins, to $8 billion, which we suspect is overly aggressive.
Mike Hodel, Morningstar director
Citigroup
Morningstar Rating: 4 stars
Morningstar Economic Moat Rating: None
Morningstar Capital Allocation Rating: Standard
Industry: Banks—Diversified
Citigroup isn’t Berkshire Hathaway’s favorite bank: That honor goes to Bank of America BAC, which is one of the top holdings in Berkshire’s publicly traded portfolio. But Citigroup stock is more attractive from a valuation perspective today, according to Morningstar. Citigroup stock currently trades 20% below our $66 fair value estimate.
Here’s what Morningstar analyst Suryansh Sharma has to say about the stock after the company’s fourth-quarter earnings release:
Citigroup posted a disappointing set of numbers in the fourth quarter with a loss of $1.8 billion, or $1.16 per share. The quarterly loss was primarily due to various nonrecurring charges, including $1.7 billion for an FDIC special assessment charge for uninsured deposits of certain failed banks during the banking turmoil, $0.8 billion for restructuring charges related to organizational simplification, $0.9 billion to account for the impact of Argentina currency devaluation, and $1.3 billion in transfer risk related to Russia and Argentina. Citi’s earnings per share is estimated to be $0.84 after excluding the nonrecurring charges.
While the quarterly results were lackluster, 2024 guidance was encouraging. Management guided for 2024 revenue of $80 billion to $81 billion, up 4% from the full-year 2023 level. Management expects net interest income to be down modestly in 2024 due to lower interest rates. Management’s 2024 guidance for net interest income assumes mid-single-digit loan growth driven by the card business and modest deposit growth. The noninterest income implied from the company guidance points to strong results in Treasury and Trade Solutions and a rebound in the investment banking and wealth businesses.
The company has expectations for $53.5 billion to $53.8 billion in expenses for full-year 2024, down around 1% from $54.3 billion in 2023. Citi’s management has also set a medium-term expense target of $51 billion to $53 billion, which we think is ambitious but achievable. Citi announced a major 20,000 headcount reduction program to reach its medium-term expense reduction target. For context, this is approximately 10% of its 2023 workforce. Expense reduction will continue to be a key deliverable for management and is instrumental in achieving higher returns. Citi remains a complex turnaround story with substantial execution-related uncertainties. We do not plan to materially change our $66 fair value estimate as we incorporate fourth-quarter results.
Suryansh Sharma, Morningstar analyst
Kraft Heinz
Morningstar Rating: 5 stars
Morningstar Economic Moat Rating: None
Morningstar Capital Allocation Rating: Standard
Industry: Packaged Foods
Berkshire Hathaway owns more than 26% of Kraft Heinz’s stock. The packaged-foods manufacturer has revamped its road map and is now focused on consistently driving profitable growth. We think Kraft Heinz stock is worth $53 per share, and shares are trading at a 32% discount to that fair value today.
Here’s what Morningstar director Erin Lash thinks of Kraft Heinz’s fourth-quarter results:
The market soured on no-moat Kraft Heinz following mixed fourth-quarter marks, sending shares down by a mid-single-digit percentage. While its adjusted gross margin popped 260 basis points to 34.8%, organic sales slipped 0.7% on a 4.4% degradation in volume. This shortfall was particularly acute on its home turf (around three fourths of its total sales), where organic sales fell 3% on a 5.5% downdraft in volumes. Beyond a few one-time factors (related to trade timing and retail inventories, which compressed sales by 150 basis points), management was also forthright that consumers are struggling under the weight of higher interest rates and a reduction in SNAP benefits.
The combination of Kraft Heinz’s fiscal 2023 results, the outlook for fiscal 2024 (flat to 2% organic sales growth—which squares with our forecast—and a 1%-3% uptick in adjusted earnings per share, slightly outpacing our profit estimates), and time value should warrant a low-single-digit percentage bump to our $53 fair value estimate. With shares trading around a 30% discount to our valuation, while offering a 4% dividend yield, we think investors should stock up.
We surmise Kraft Heinz is working vigorously to thwart looming challenges. For one, it boosted spending on research and development—wedded in data and analytics—by 15% last year while raising marketing spending at a commensurate rate, which we applaud. The fruits of these efforts were realized in a stabilizing share position across a host of categories (qualitatively referenced) and 150 basis points of shelf space gains (including through club and dollar stores) over the past year. We don’t expect Kraft Heinz will back down from these pursuits; we think it will expend more than 6% of sales annually on its brands while investing around 3.5% of sales to enhance its capacity and digital competence. Further, we’re encouraged by management’s assertion that it doesn’t intend to squander resources on unprofitable promotions, which we see as judicious.
Erin Lash, Morningstar director
Kroger
Morningstar Rating: 4 stars
Morningstar Economic Moat Rating: Narrow
Morningstar Capital Allocation Rating: Exemplary
Industry: Grocery Stores
Berkshire Hathaway owns about 7% of Kroger’s outstanding shares. Kroger and rival Albertsons have announced merger plans, though regulatory hurdles persist. We think Kroger has carved out a narrow economic moat and is run by a management team that has done an exemplary job of allocating capital. Kroger stock trades 14% below our $53 fair value estimate.
Here’s Morningstar senior analyst Dan Wasiolek’s take on Kroger’s business strategy and outlook:
Of the traditional grocers, we believe Kroger’s scale, partnerships, private-label fare, and data capabilities uniquely position the company to defend its returns against competition that should intensify as Amazon, mass merchandisers, and hard discounters continue to price aggressively to boost volume. We contend that Kroger still benefits from enduring intangible assets and cost advantages, even if its acquisition of Albertsons is derailed by regulators.
Grocers use price as a primary lever to drive traffic, necessitating efficiency and cost leverage to deliver returns. We expect this environment to endure as the industry changes, with an omnichannel experience likely to prevail as customers use a combination of deliver-to-home, click-and-collect, and in-store shopping, particularly since most American consumers drive past grocers on their commutes and home delivery can be inconvenient for buyers with uncertain schedules (although the COVID-19 pandemic likely accelerated delivery adoption in the long term). In physical retail, we anticipate shoppers will choose sellers based on convenience, price, and breadth of assortment, demanding high value as well as a compelling store environment.
Kroger should be able to capitalize on the changing landscape. We maintain that its local market scale allows it to derive cost leverage that fuels competitive pricing and the investments needed to build on its presence in the emerging channels. Its progress should be accelerated by partnerships (with Ocado, Walgreens, Microsoft, and others) that we do not believe are available to smaller rivals because they cannot deliver the same value to counterparts.
Nearly all Kroger's transactions are derived from its loyalty database, providing consumer insights that should play a large role in its digital transformation, fueling promotional efforts and customer engagement while informing assortment and providing salable insights as nongrocery revenue streams. We expect data to play a key role in efforts to drive traffic, efficiency, and conversion that few can match.
More About Warren Buffett Stock Picks
Warren Buffett has said that he doesn’t consider himself to be a stock-picker; instead, he’s a company-picker. That comment pretty much encapsulates how he thinks about stocks: They’re parts of businesses.
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Charter Communications (CHTR) - >>> 4 Warren Buffett Stocks to Buy Now
Many of the publicly traded stocks held by Berkshire Hathaway are fairly valued or overvalued today, according to Morningstar’s metrics. Here are some of the stocks among its holdings in the latest quarter that looked undervalued as of Feb. 13, 2024.
Charter Communications CHTR
Citigroup C
Kraft Heinz KHC
Kroger KR
Here’s a little bit about why we like each of these stocks at these prices, along with some key metrics for each. All data is as of Feb.
Charter Communications
Morningstar Rating: 5 stars
Morningstar Economic Moat Rating: Narrow
Morningstar Capital Allocation Rating: Standard
Industry: Telecom Services
Berkshire Hathaway owns about 2.6% of Charter Communications’ stock. The company is the result of a 2016 merger of three cable companies: legacy Charter, Time Warner Cable, and Bright House Networks. We think the company has carved out a narrow economic moat, thanks to its efficient scale and cost advantage. Charter Communications stock currently trades a whopping 47% below our $550 fair value estimate.
Here’s what Morningstar director Mike Hodel had to say about the stock after the company’s fourth-quarter earnings release:
Ugly headline numbers marred Charter’s fourth-quarter results. While we don’t see much reason to change our long-term view of the firm, the next couple of years are shaping up to be more challenging than we had expected. We are trimming our fair value estimate to $550 from $580, but we believe the market has overreacted to current weakness.
Customer metrics were very weak, especially given Charter's emphasis on volumes over price. The firm lost 61,000 net broadband customers during the quarter, far worse than the 105,000 added a year ago and the first loss since the second quarter of 2022. Management didn’t flag any recent changes in the competitive environment. Fixed-wireless customer gains and fixed-line results from AT&T and Verizon were generally consistent with recent performance. Charter also claims that it hasn’t seen an impact on broadband customer losses as Spectrum One bundle discounts expire. We agree with management that small changes in customer wins and losses get undue attention when net customer growth is near zero, but those changes haven’t gone in Charter’s favor recently.
Average revenue per residential broadband customer increased only 2.2% year over year, as Spectrum One bundle discounts are allocated between broadband and wireless revenue. Total revenue per residential customer was roughly flat versus a year ago, with television losses offsetting wireless and broadband gains. Residential revenue was flat year over year and total revenue increased 0.3% on modest business services growth, largely offset by a sharp drop in political ad revenue.
Management provided capital spending expectations through 2027 to shed more light on the firm’s investment plans. Charter expects annual spending in 2024 and 2025 to be above $12 billion, about $1 billion more in total than we had forecast. The firm believes spending will drop sharply in 2027, excluding any additional subsidized project wins, to $8 billion, which we suspect is overly aggressive.
Mike Hodel, Morningstar director
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Occidental - >>> Warren Buffett Just Added $246 Million to 1 of Berkshire Hathaway's Top Holdings
by Adam Levy
Motley Fool
February 12, 2024
https://finance.yahoo.com/news/warren-buffett-just-added-246-100100988.html
While Warren Buffett hasn't seen a whole lot to like in the stock market recently, there's one stock he seemingly can't get enough of.
Over the last couple of years, he's built up a 28% stake in Occidental Petroleum (NYSE: OXY) for Berkshire Hathaway. That makes it one of Berkshire's top holdings, just behind fellow oil and gas company Chevron (NYSE: CVX).
The Oracle of Omaha has added to his Occidental position on three separate occasions since the start of December. His most recent purchase for Berkshire Hathaway's portfolio amounted to about $246 million. That follows purchases of about $589 million and $312 million in December. Meanwhile, Berkshire still owns about $8.5 billion worth of preferred shares in Occidental, which pay an 8% dividend.
Here's why Occidental has become Buffett's favorite energy stock and could soon top Chevron as Berkshire's biggest investment in the industry.
A big bet on oil prices
Occidental and Chevron are both integrated oil and gas companies. However, where Chevron makes most of its money from downstream operations like refineries and chemical plants, Occidental is heavily invested in drilling oil out of the ground. As a result, Occidental's business is much more closely tied to the price of oil.
Its strong position in the Permian Basin gives it a cheap source of oil production. It strengthened that position with the acquisition of Anadarko, supported by Berkshire's $10 billion investment in the company. More recently, it added CrownRock last December, when Buffett started buying up shares again.
Occidental's big investments in the Permian Basin have put pressure on its balance sheet. The company now holds a significant amount of debt. Management plans to divest non-core assets to accelerate the paydown of that debt. It did something similar following the Anadarko acquisition in 2019 and the subsequent drop in oil prices in 2020.
The moves to add more cheap sources of oil make sense in light of Occidental CEO Vicki Hollub's extreme bullishness on the price of the commodity. For one, she said the CrownRock acquisition will generate an additional $1 billion in cash flow in its first year as long as oil prices remain above $70. That was exactly the spot price of oil at the time of the acquisition, and it's only climbed to the mid-70s since.
More recently, Hollub has noted the potential for an oil supply shortage as soon as 2025. A production cut from OPEC combined with growing demand from China will push oil prices higher, she says. As a result, she sees oil climbing to $80 per barrel by the end of the year.
Buffett has a lot of confidence in Hollub. He called her "an extraordinary manager" at Berkshire's 2023 Shareholder meeting in May. After managing the company through the depressed oil prices of 2020 right after acquiring Anadarko, she seems to be up for almost any task.
Should you follow Buffett into Occidental?
Shares of Occidental have gotten off to a poor start in 2024. While Chevron shares have climbed about 2% since the start of the year, Occidental is down about 3.5%.
Moreover, the valuation for Occidental is extremely attractive. Shares currently trade for an enterprise value/earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of just 5x. By comparison, Chevron trades for a 6.6x multiple.
That said, there's a lot more risk in buying Occidental than competing oil and gas companies. For one, it's heavily reliant on the price of oil. As explained, the bulk of its revenue comes from drilling, not downstream operations. Moreover, Occidental's balance sheet includes substantial levels of debt following the CrownRock acquisition. That leverage puts added pressure on management if oil prices decline in the future, making it less profitable to drill.
It's important to note that while Buffett is very confident in the future of Occidental, it's still less than 4% of Berkshire's equity portfolio and an even smaller percentage of the conglomerate's total holdings when you include its cash position and wholly owned subsidiaries. So, remaining diversified is key.
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>>> Warren Buffett Says Steve Jobs Once Called Him Asking For Advice On How To Invest Apple's Cash — Then He Completely Ignored The Advice
Benzinga
by Jeannine Mancini
February 12, 2024
https://finance.yahoo.com/news/warren-buffett-says-steve-jobs-192312997.html
Warren Buffett shared a look into a conversation with Steve Jobs about Apple Inc.'s financial strategy during a 2012 appearance on CNBC’s “Squawk Box.”
In the "Ask Warren" segment, Buffett said, “It was an interesting conversation because I hadn’t talked to him in a long time. He said, ‘We’ve got all this cash. What should we do with it?’ So we went over the alternatives. It was kind of interesting.”
This dialogue between two titans of industry sheds light on the decision-making process at one of the world’s most valuable companies.
Jobs, known for his transformative role in making Apple a global technology leader, reached out to Buffett to seek advice on the company’s cash-management strategies. Buffett, a legendary investor and chairman of Berkshire Hathaway Inc., outlined the four primary options available for deploying cash: stock buybacks, dividends, acquisitions or holding onto it.
Despite Jobs’s acknowledgment that Apple’s stock was undervalued, indicating that buybacks could be a wise choice, he ultimately decided against taking any action, preferring to maintain the company’s cash reserves.
“I went through the logic of each thing. He told me they would not have the chance to make big acquisitions that would require lots of money," Buffett said. "And then I asked him the question, I said, ‘I would use it for buybacks if I thought my stock was undervalued.’ And I said, ‘How do you feel about that?’ The stock was 200-and-something. He said, ‘I think my stock is very undervalued.’ I said, ‘Well, what better to do with your money?’"
Jobs liked having the cash and that was what he ultimately decided was his best option. Buffett added that Jobs interpreted their conversation as Buffett endorsing his decision to hold onto the cash. "I later learned that he said I agreed with him to do nothing with the cash," Buffett said.
The conversation between Jobs and Buffett highlights a cautious approach to financial management, contrasting sharply with the actions taken by Jobs’s successor Tim Cook. Under Cook’s leadership, Apple has aggressively pursued stock buybacks, spending over $500 billion on them in the last decade. According to Business Insider, this expenditure surpasses the market capitalization of major corporations like Visa Inc., JPMorgan Chase & Co., and ExxonMobil Corp., underscoring the scale of Apple’s commitment to repurchasing its shares.
Apple’s buyback strategy has enhanced shareholder value and increased the stake of Berkshire Hathaway in the tech giant without additional investment. Berkshire Hathaway, owning nearly 6% of Apple, has seen its ownership stake grow as a result of these buybacks.
Buffett has publicly supported Apple’s repurchase efforts, noting in his 2021 letter to shareholders the positive impact of the buybacks on both Berkshire’s holdings and Apple’s broader ecosystem.
“Much of what the company retained was used to repurchase Apple shares, an act we applaud,” Buffett wrote. “Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
While Jobs exhibited a preference for liquidity and financial flexibility, Cook has leveraged Apple’s financial strength to actively manage its capital structure, reinforcing the company’s position as a leader in the technology sector and delivering value to its shareholders and stakeholders alike.
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>>> Is Hershey Warren Buffett's Kind of Business?
Motley Fool
By Brett Schafer
Jun 30, 2021
https://www.fool.com/investing/2021/06/30/is-hershey-warren-buffetts-kind-of-business/
The Oracle of Omaha may be going after the candy giant.
Last week, a report came out that Hershey's (HSY) corporate jet recently flew to Omaha, Nebraska, where Warren Buffett's conglomerate Berkshire Hathaway (BRK.B) is headquartered. It's unknown what the jet was doing in Omaha, but analyst Don Bilson of Gordon Hackett's research team speculated that the Oracle of Omaha may be looking to acquire the chocolate company.
Bilson has been right with these reports in the past, predicting Berkshire's financing of Occidental Petroleum's takeover of Anadarko Petroleum after tracking the company's jet back in 2019. What would a Hershey deal mean for Berkshire Hathaway? Let's take a look.
What Hershey owns
Milton Hershey founded the Hershey Chocolate company more than 125 years ago. In 1900, the first Hershey bar was sold, and the company hasn't looked back since.
Hershey's still sells its famous chocolate bars around the globe but has bought and incubated many other candy and snack brands over the years. Its current portfolio includes popular brands like Hershey bars and kisses, Reese's, Twizzlers, and Ice Breakers. It also has new, health-focused brands like Skinny Pop, which have helped the company grow, as well.
The business is as steady as it comes
Chocolate and candy bars may be considered simple or even "boring" by many investors, but Hershey's stock has put up fantastic returns over the long haul. Since 1972, shares have gone up 14,000%, while the S&P 500 has "only" grown 4,000% over that time span. And those returns don't include the consistent dividend Hershey pays out to shareholders, which currently yields 1.84%.
Why has Hershey's stock done so well over the long term? There are many factors, but the main reason is that it has consistently grown its free cash flow. Before 2000, Hershey generated well below $500 million in free cash flow a year. Over the last 12 months, it generated over $1.6 billion in free cash flow. Couple that with the fact Hershey's share count has gone from 360 million in 1992 down to 206 million today, and you can see why the stock has done so well over the decades.
What it could mean for Berkshire Hathaway
Hershey has all the makings of a Berkshire Hathaway subsidiary. Buffett already owns junk-food companies like Sees Candies and Dairy Queen, while also owning large chunks of Coca-Cola and McDonald's stock. He loves businesses that are incredibly predictable like candy, which is why investors speculate he would love owning Hershey under the Berkshire umbrella. And while many governments are cracking down and regulating sugar consumption around the world, people will likely be consuming chocolate 50 years from now, just as they did 50 years ago.
On top of being a Buffett-style business, Hershey's may only have one suitor -- Berkshire. The Hershey Trust Company has over 80% of the voting rights of Hershey stock and likely doesn't want a buyer that would interfere with the business operations. Berkshire Hathaway famously has a hands-off approach with its subsidiaries, which could help in negotiations with Hershey shareholders.
One thing Buffett may not like is the price he would have to pay to acquire the Hershey company. The stock currently trades at a market cap of $36 billion, giving it a price-to-free-cash-flow (P/FCF) of 22.5. This doesn't look expensive on a trailing basis, but Buffett hates to overpay for a business and would likely need to offer a decent premium to Hershey's current market cap to convince the Hershey Trust to sell.
With over $145 billion in cash on its balance sheet, Berkshire has plenty of ammo to do a Hershey deal. Unless he can get it at a reasonable price, however, Buffett's unlikely to pull the trigger and buy the Hershey company.
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#N/A | ATVI | 52,717,075 | 6.7% | #N/A | ||
#N/A | ALLY | 29,800,000 | 9.9% | #N/A | ||
Amazon.com, Inc. | AMZN | 10,666,000 | 0.1% | $105.45 | $1,124,729,700 | #N/A |
American Express Company | AXP | 151,610,700 | 20.4% | $161.34 | $24,460,870,338 | #N/A |
#N/A | AON | 4,396,000 | 2.1% | #N/A | ||
#N/A | AAPL | 915,560,382 | 5.8% | #N/A | ||
#N/A | BAC | 1,032,852,006 | 12.9% | #N/A | ||
#N/A | BK | 25,069,867 | 3.2% | #N/A | ||
BYD Co. Ltd | BYDDF | 119,730,142 | 10.9% | #N/A | ||
#N/A | CE | 9,710,183 | 8.8% | #N/A | ||
#N/A | CHTR | 3,828,941 | 2.3% | #N/A | ||
#N/A | CVX | 167,353,771 | 8.8% | #N/A | ||
#N/A | C | 55,244,797 | 2.8% | #N/A | ||
#N/A | KO | 400,000,000 | 9.2% | #N/A | ||
#N/A | DVA | 36,095,570 | 39.8% | #N/A | ||
#N/A | DEO | 227,750 | 0.0% | #N/A | ||
Floor & Decor Holdings Inc | FND | 4,780,000 | 4.5% | $99.34 | $474,845,200 | #N/A |
#N/A | GM | 50,000,000 | 3.6% | #N/A | ||
#N/A | GL | 6,353,727 | 6.6% | #N/A | ||
#N/A | HPQ | 120,952,818 | 12.3% | #N/A | ||
Itochu Corporation | ITOCF | 98,380,800 | 6.2% | #N/A | ||
#N/A | JEF | 433,558 | 0.2% | #N/A | ||
#N/A | JNJ | 327,100 | 0.0% | #N/A | ||
#N/A | KHC | 325,634,818 | 26.5% | #N/A | ||
#N/A | KR | 50,000,000 | 7.0% | #N/A | ||
#N/A | LILA | 2,630,792 | 5.9% | #N/A | ||
#N/A | LILAK | 1,284,020 | 0.7% | #N/A | ||
#N/A | FWONK | 7,722,451 | 3.7% | #N/A | ||
#N/A | LSXMA | 20,207,680 | 20.6% | #N/A | ||
#N/A | LSXMK | 43,208,291 | 19.8% | #N/A | ||
#N/A | LPX | 7,044,909 | 9.8% | #N/A | ||
#N/A | MKL | 471,661 | 3.5% | #N/A | ||
#N/A | MMC | 404,911 | 0.1% | #N/A | ||
#N/A | MA | 3,986,648 | 0.4% | #N/A | ||
#N/A | MCK | 2,855,514 | 2.1% | #N/A | ||
#N/A | MDLZ | 578,000 | 0.0% | #N/A | ||
#N/A | MCO | 24,669,778 | 13.4% | #N/A | ||
#N/A | NU | 107,118,784 | 2.3% | #N/A | ||
#N/A | OXY | 211,707,119 | 23.6% | #N/A | ||
#N/A | PARA | 93,637,189 | 15.3% | #N/A | ||
#N/A | PG | 315,400 | 0.0% | #N/A | ||
#N/A | RH | 2,360,000 | 10.7% | #N/A | ||
#N/A | SNOW | 6,125,376 | 1.9% | #N/A | ||
#N/A | SPY | 39,400 | 0.0% | #N/A | ||
StoneCo Ltd | STNE | 10,695,448 | 3.3% | $12.32 | $131,767,919 | #N/A |
#N/A | TSM | 8,292,724 | 0.2% | #N/A | ||
#N/A | TMUS | 5,242,000 | 0.4% | #N/A | ||
#N/A | UPS | 59,400 | 0.0% | #N/A | ||
#N/A | USB | 8,098,178 | 0.5% | #N/A | ||
#N/A | VOO | 43,000 | 0.0% | #N/A | ||
#N/A | VRSN | 12,815,613 | 12.3% | #N/A | ||
#N/A | V | 8,297,460 | 0.2% | #N/A | ||
TOTAL | #N/A |
Symbol | Holdings | Stake | Mkt. price | Value | Pct of portfolio | |
---|---|---|---|---|---|---|
Activision Blizzard, Inc. | ATVI | 74,187,400 | 9.5% | $80.49 | $5,971,343,826 | 1.7% |
Ally Financial Inc | ALLY | 8,969,420 | 2.9% | $32.58 | $292,223,704 | 0.1% |
Amazon.com, Inc. | AMZN | 10,666,000 | 0.1% | $140.80 | $1,501,772,800 | 0.4% |
American Express Company | AXP | 151,610,700 | 20.2% | $157.51 | $23,880,201,357 | 6.7% |
Aon PLC | AON | 4,396,000 | 2.1% | $287.53 | $1,263,981,880 | 0.4% |
Apple Inc | AAPL | 911,347,617 | 5.7% | $165.35 | $150,691,328,471 | 42.5% |
Bank of America Corp | BAC | 1,032,852,006 | 12.9% | $33.96 | $35,075,654,124 | 9.9% |
Bank of New York Mellon Corp | BK | 74,346,864 | 9.2% | $43.50 | $3,234,088,584 | 0.9% |
BYD Co. Ltd | BYDDF | 225,000,000 | 7.7% | $36.75 | $8,268,750,000 | 2.3% |
Celanese Corporation | CE | 7,880,998 | 7.3% | $110.85 | $873,608,628 | 0.2% |
Charter Communications Inc | CHTR | 3,828,941 | 2.4% | $462.98 | $1,772,723,104 | 0.5% |
Chevron Corporation | CVX | 159,178,117 | 8.1% | $153.64 | $24,456,125,896 | 6.9% |
Citigroup Inc | C | 55,244,797 | 2.9% | $51.66 | $2,853,946,213 | 0.8% |
Coca-Cola Co | KO | 400,000,000 | 9.2% | $63.38 | $25,352,000,000 | 7.2% |
Davita Inc | DVA | 36,095,570 | 39.5% | $85.68 | $3,092,668,438 | 0.9% |
Diageo plc | DEO | 227,750 | 0.0% | $188.37 | $42,901,268 | 0.0% |
Floor & Decor Holdings Inc | FND | 4,780,000 | 4.5% | $92.92 | $444,157,600 | 0.1% |
General Motors Company | GM | 62,045,847 | 4.3% | $36.06 | $2,237,373,243 | 0.6% |
Globe Life Inc | GL | 6,353,727 | 6.4% | $97.88 | $621,902,799 | 0.2% |
HP Inc | HPQ | 121,092,418 | 11.7% | $33.58 | $4,066,283,396 | 1.1% |
Itochu Corporation | ITOCF | 81,304,200 | 5.6% | $27.37 | $2,225,295,954 | 0.6% |
Johnson & Johnson | JNJ | 327,100 | 0.0% | $171.11 | $55,970,081 | 0.0% |
Kraft Heinz Co | KHC | 325,634,818 | 26.6% | $37.57 | $12,234,100,112 | 3.5% |
Kroger Co | KR | 57,985,263 | 8.1% | $47.25 | $2,739,803,677 | 0.8% |
Liberty Latin America Ltd Class A | LILA | 2,630,792 | 5.6% | $7.24 | $19,046,934 | 0.0% |
Liberty Latin America Ltd Class C | LILAK | 1,284,020 | 0.7% | $7.16 | $9,193,583 | 0.0% |
Liberty Media Formula One Series C | FWONK | 7,722,451 | 3.8% | $62.89 | $485,664,943 | 0.1% |
Liberty Sirius XM Group Series A | LSXMA | 20,207,680 | 20.4% | $41.08 | $830,131,494 | 0.2% |
Liberty Sirius XM Group Series C | LSXMK | 43,208,291 | 19.6% | $40.96 | $1,769,811,599 | 0.5% |
Markel Corporation | MKL | 424,343 | 3.1% | $1,167.94 | $495,607,163 | 0.1% |
Marsh & McLennan Companies, Inc. | MMC | 404,911 | 0.1% | $165.60 | $67,053,262 | 0.0% |
Mastercard Inc | MA | 3,986,648 | 0.4% | $357.51 | $1,425,266,526 | 0.4% |
McKesson Corporation | MCK | 2,921,975 | 2.0% | $346.69 | $1,013,019,513 | 0.3% |
MONDELEZ INTERNATIONAL INC Common Stock | MDLZ | 578,000 | 0.0% | $63.77 | $36,859,060 | 0.0% |
Moody’s Corporation | MCO | 24,669,778 | 13.4% | $311.07 | $7,674,027,842 | 2.2% |
Nu Holdings Ltd | NU | 107,118,784 | 2.3% | $4.49 | $480,963,340 | 0.1% |
Occidental Petroleum Corporation | OXY | 181,684,791 | 19.5% | $59.01 | $10,721,219,517 | 3.0% |
Paramount Global Class B | PARA | 68,947,760 | 11.3% | $24.26 | $1,672,672,658 | 0.5% |
Procter & Gamble Co | PG | 315,400 | 0.0% | $144.72 | $45,644,688 | 0.0% |
RH | RH | 2,170,000 | 8.8% | $286.87 | $622,507,900 | 0.2% |
Royalty Pharma plc | RPRX | 1,496,372 | 0.2% | $42.45 | $63,520,991 | 0.0% |
Snowflake Inc | SNOW | 6,125,376 | 1.9% | $165.53 | $1,013,933,489 | 0.3% |
SPDR S&P 500 ETF Trust | SPY | 39,400 | 0.0% | $413.47 | $16,290,718 | 0.0% |
StoneCo Ltd | STNE | 10,695,448 | 3.3% | $11.07 | $118,398,609 | 0.0% |
Store Capital Corp (acquired) | STOR | 14,754,811 | 5.3% | $27.90 | $411,659,227 | 0.1% |
T-Mobile Us Inc | TMUS | 5,242,000 | 0.4% | $144.56 | $757,783,520 | 0.2% |
United Parcel Service, Inc. | UPS | 59,400 | 0.0% | $196.76 | $11,687,544 | 0.0% |
US Bancorp | USB | 144,046,330 | 9.7% | $47.39 | $6,826,355,579 | 1.9% |
Vanguard 500 Index Fund ETF | VOO | 43,000 | 0.0% | $379.98 | $16,339,140 | 0.0% |
Verisign, Inc. | VRSN | 12,815,613 | 11.9% | $198.70 | $2,546,462,303 | 0.7% |
Verizon Communications Inc. | VZ | 1,380,111 | 0.0% | $44.95 | $62,035,989 | 0.0% |
Visa Inc | V | 8,297,460 | 0.4% | $215.87 | $1,791,172,690 | 0.5% |
TOTAL | $354,252,534,978 | 100.0% | ||||
Berkshire Cash as of 31 Mar 22: $106.3 billion |
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