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- Manlobbi
Halls of Shrewd'm / US Policy
No. of Recommendations: 7
No. of Recommendations: 2
I heard that on CNBC and had to check that it was not April Fools! I recall WEB traveled to China and Europe years ago to also to promote, build relationships and plant the seeds for future opportunities. It seems like they may have only added $2-3B most recently to the trading houses.
Gotta love nearly 93yo WEB traveling halfway around the world with Greg (and Becky). Seems to tell us all a lot about his health, mind, energy, foresight and passion for BRK and eagerness to optimize the passing of the baton to Greg. It may be a while!
No. of Recommendations: 9
No. of Recommendations: 0
No. of Recommendations: 2
"Let me tell you about the very rich. They are different from you and me..." -F. Scott Fitzgerald
Yes, they have better jets.
No. of Recommendations: 2
I have to think that this is not a casual visit. To make the trip at his age, Buffett must be looking at a serious investment. We'll see tomorrow.
No. of Recommendations: 0
Idle speculation...
Maybe one of the Japanese trading companies wants to buy something big, and it needs money from Berkshire to make the deal. How about an announcement around 8:00AM Tokyo time, which would be 4:00PM today New York time?
I really need to get a life :(
No. of Recommendations: 0
8:00AM Tokyo time would be 7:00PM today New York time. I don't just need to get a life; I need to get a brain.
No. of Recommendations: 2
No. of Recommendations: 0
5% in each trading house...now upped to 7.4% if i heard Becky correctly
Captain Obvious says that is a 50% increase. Pretty aggressive.
Something is up....something more than could be satisfied with a Zoom meeting?
Spin up the 'speculation' wheel? Where does it land?
m
No. of Recommendations: 0
Thanks, ciao8. I was expecting some more consequential news given that Buffett is making this arduous trip and that he is having an interview on CNBC tomorrow. There is still time for Berkshire to make some announcement before Buffett's interview tomorrow morning, but if there is something significant pending, they're being mum about it.
No. of Recommendations: 12
I don't think he is there to announce any big deals. I think he is there to once again suggest to the 5 companies and their management that Berkshire is available to co-invest in large global projects. Greg is the only one that needed to go, but the respect and honor involved for the big man to make the trip at 92 goes a long way. And don't forget, Berkshire is in the middle of marketing and gathering bids for a Yen bond issue. Right this very moment. It certainly can't hurt the size and terms you can get to do this highly publicized tour and blessing of the sogo shosha. He definitely wants to borrow the yen to make the investment in additional shares. It has worked out very well since he started in 2020.
No. of Recommendations: 0
Buffett told Nikkei in an interview that he is "very proud" of the investments that were first disclosed in August 2020, when Berkshire (BRK.B) acquired just over 5% in each company. The increased stakes signal that Buffett is turning his focus back to Japan.
In addition, the 92-year-old said he would consider taking stake in other Japanese companies or partnering with any of the trading houses if they are in need of an investor for a future finance deal.
'We don't think it's impossible that we will partner with them at some point in the future in a specific deal,' he told Nikkei. 'We would love if any of the five would come to us ever and say, 'We're thinking of doing something very big or we're about to buy something and we would like a partner or whatever.''
https://seekingalpha.com/news/3955708-warren-buffe...
No. of Recommendations: 1
Early take away... Warren and Greg acknowledge that Abel will be more of an "enforcer" than Buffett ever was.
Some of the subsidiary CEO's may not be keen to work for Greg after working with "hands off" Buffett for decades. Look for some subsidiary CEO departures following Warren's departure.
Other thoughts?
No. of Recommendations: 0
Buffett has always been a non confrontational personality unless you really, upset him. I loved that hour of Greg, a great choice for brks future.
No. of Recommendations: 0
some of the more immaterial businesses may be sold off.
heresy I know
No. of Recommendations: 17
I did not find or learn anything earth shattering, but I did really enjoy the interview. I thought Becky did well. Warren looked great for 92yo imo. He seemed 'steady as she goes' and Never seems to be rattled about anything going on in the outside world and the daily noise. It seems like the managers of our businesses are feeling a slow down relative to where they thought they would be six months ago but Insurance and BHE are holding steady.
I thought Greg was professional, direct and honest and seemed very confident in his BRK knowledge and role, now and going forward. I liked how they structured the interview with them both their hour one and then Warren alone the last two hours. Also thought it was funny how Warren said that Greg is tougher and one to hold the managers a bit more accountable with more guidance and tangible goals although still giving them autonomy. However, Greg also seems to be more hands-on with respect to speaking with managers, encouraging dialogue and seeing them in person from time to time. It sounds like Greg also feels the same way about letting Todd and Ted make totally independent investing decisions. No doubt, we are in great hands imo.
WEB loves and trusts Powell but thinks we are printing and distributing too much money & politicians always focusing on power and Re-election, Not what may be best for the citizens and country long term. He seemed very loyal to our BAC and Moynihan and wisely trimmed other financials pre-crisis. Risk management and maintains tons of cash equivalents seem as important as ever. I did like how he felt that poorly managed banks that make bad loans should pay the price of their poor judgement and should not be bailed out as this is a known part of banking. He seems to think it very reasonable to guarantee depositors and has faith in FDIC's current and future role although bank fees for adequate coverage will surely rise. He thought that the poor quality bank CEOs that made poor decisions should be personally penalized severely and financially with their gross mismanagement.
Interesting, Greg said that our 12 largest businesses provide 86% of the revenue. WEB said each day the market is open $100M is coming in the door! Amazing thought! I always feel better being a shareholder partner after watching these interviews or the meetings. Looking forward to Omaha and hopefully a few more Q&A than last year!
No. of Recommendations: 18
Also thought it was funny how Warren said that Greg is tougher and one to hold the managers a bit more accountable with more guidance and tangible goals although still giving them autonomy. However, Greg also seems to be more hands-on with respect to speaking with managers, encouraging dialogue and seeing them in person from time to time.
I suspect there have been a lot of business improvements put in place since Warren turned over the management of operations to Greag and Ajit. Anyone one else remember the leaked memo about Gen Re that Ajit sent them after he took over? Warren had praised the management - his style. Ajit told them their costs were out of control and had to be improved. My read on Greg is that the same is going on with the non-insurance businesses - not making waves but a much closer eye and clearer targets for results.
While the results are not being broken out, I believe Berkshire is becoming a much tighter operating ship that it was under Warren.
I remember when Lee Raymond became CEO of Exxon and set out to reduce costs and streamline the corporation. When told to reduce operating budgets by 20%, managers protested that they were already running a tight ship and that wasn't possible. Lee then explained that if they couldn't do so, he would find managers that could. Once the mindset changed, people found even more efficiencies than the 20% target. And, driven by the pandemic, Darren Woods (and other CEO's) have taken similar steps to streamline Exxon and reduce cost while still operating efficiently and safely.
I'm not expecting change to that extent after Warren is gone. But I do expect moves in those directions. The earlier observation by WEBspired caught my attention: "Interesting, Greg said that our 12 largest businesses provide 86% of the revenue."
One key issue will be if conflict breaks out between the Buffett family members that control the corporation and Able about these type moves not fitting the "Berkshire culture." That potential issue is really the only one that's concerned me in succession planning.
Greg seems to me to be the kind of CEO that can navigate any such choppy waters. I hope he doesn't have to do so.
No. of Recommendations: 15
A transcript of todays CNBC talk in Tokyo with Warren Buffet & Greg Able,
https://www.cnbc.com/2023/04/12/full-transcript-be..........................
BECKY QUICK: So, how do you two work together? And what'
WARREN BUFFETT: He does all the work, and I take the bows ' it's exactly what I wanted.
.......................
BECKY QUICK: So, what's an example? If he's tougher on you than things, what's one example where he's been tougher than you would have been? Either of you could answer that.
GREG ABEL: Well, I think one, Warren, Warren grew up with all the businesses. He acquired 'em or they're already there. So, when I came in, I had the opportunity to start from scratch. I had to learn the businesses and their industries, which means there's going to be an active dialogue with the managers. And that helps immediately, that I was able to at least have that dialogue. And then associated with that, because I'm learning the business, I had the opportunity to discuss their businesses and expectations around it. And I would say just even communicating around how they allocate their capital, how they're using it. And I wouldn't say giving 'em the absolute requirements but providing direction in those areas has been beneficial, I think, both for Berkshire but for them. They like that type of input.
...................
ciao
No. of Recommendations: 2
Thank you!
If anyone in Shrewd'm becomes aware of a full-length (e.g. YouTube) link of the whole interview, I would be obliged. (CNBC offers a half-dozen five-minute excerpts - insert eyeroll emoji here)
--sutton
(who spends his video budget on Netflix DVDs* and not TV streaming)
(*yes, they still exist, although I suspect they're retiring/not replacing worn-out or nonreturned discs)
No. of Recommendations: 6
Enjoyable interview, but little news. Buffett did say that many of his business managers were reporting that their businesses were not doing as well as they had expected six months ago, with the exception of GEICO and the utilities. I take this as a near term caution on the economy, stocks and Berkshire.
No. of Recommendations: 7
No news is good news. He's compos mentis, he's talking, he's traveling. He's engaged. Greg Abel is talking. They're happy. It's like old times.
I needed that.
No. of Recommendations: 8
"Buffett did say that many of his business managers were reporting that their businesses were not doing as well as they had expected six months ago, with the exception of GEICO and the utilities. I take this as a near term caution on the economy, stocks and Berkshire."From yesterday's interview:
"BECKY QUICK: Warren, let me just ask you about the economy. We have heard recently from Jamie Dimon in his annual letter at JP Morgan, he says, 'A recession is much more likely now.' Janet Yellen was just speaking I think in the last 24 hours, although it's hard to track from here when things are happening, has just said in the last 24 hours I think that, 'The U.S. is in better shape now than it was six months ago.' Which of those camps would you put yourself in?
WARREN BUFFETT: Well, I know what a lot of different businesses are doing. And I just got report from one of them that happens to be in the retail-related business. And in any event, you know, it was -22% in February from a year ago.
BECKY QUICK: In sales?
WARREN BUFFETT: They didn't think that was going to happen.
BECKY QUICK: Sales, you mean or in profit?
WARREN BUFFETT: In sales. Profits are down a lot more than that. On the other hand, some of our businesses are still doing fine, but they all are reporting that the new, you know, some of them are living off of orders that were placed months earlier, and that sort of thing. But it's a tougher world out there in a great many businesses. Not in the insurance business. Insurance business should be better this year than last year. That doesn't mean it will be because we can't predict how everything happens. But on a probability basis, it should be better than last year. And the railroad business is down in carloads carried. I mean, it isn't dramatic and, of course, we've got a utility business and that doesn't read very much with things. So but overall, I think people that run our businesses that do have any sensitivity to the economy are surprised at where they are now compared to where they felt they were going to be six months ago. That doesn't mean the world is coming to an end or anything because ' 58 years I've been running Berkshire, I mean, we've run into all kinds of problems. But that's what business is about. And we run our business so that we don't depend on everything being hunky-dory always. We run it so that we will be the last man standing. And that's the way, if millions of people are going to give me their money and tell me to take care of it, we're going to try and take care of it. And if we don't make as much money as we might've if we'd leveraged more or done other policies, so be it.
BECKY QUICK: But you think a recession is more likely now than maybe you would have said six months ago?
WARREN BUFFETT: Well, I think most of our management would say that they are surprised at where they are now, compared to how they thought they were going to feel six months ago at this point."So, not everything "hunky-dory" at Berkshire.
Full transcript of interview:
https://www.cnbc.com/2023/04/12/full-transcript-be...
No. of Recommendations: 5
I take the comments to mean, everything is not hunky dory in the economy , not only "at Berkshire".. and he reinforced my reason for investing so heavily in BRK (to the horror of many financial advisors over the years !) " we will be last man standing "
That is a most valuable perspective.
No. of Recommendations: 0
"I take the comments to mean, everything is not hunky dory in the economy , not only "at Berkshire".. and he reinforced my reason for investing so heavily in BRK (to the horror of many financial advisors over the years !) " we will be last man standing "
Fair enough. Agreed.
Interesting to me that he interjected the "last man standing" comment. Should we interpret that to mean that Buffett sees difficult times ahead for the economy?
No. of Recommendations: 2
I take it more as figure of speech for the long term....ie Fortress Berkshire. Thats how I regard my very overweight position for a very modest portfolio.
No. of Recommendations: 7
'And I just got report from one of them that happens to be in the retail-related business. And in any event, you know, it was -22% in February from a year ago.'
That rhymes with what I continue to see in my employer's retail consumer related products (my view is mainly limited to North America only). Nearly all higher ticket consumer related products are down significantly this year compared to last. Any products with sales correlating to housing starts are likely down more than -40% from same time last year. I expect the Q1 comps for the 'R' in the MSR part of the business to look awful, but they were at unsustainable levels in Q1 2022. I think 'MS' should continue to do well at least through the end of the year as they likely work through their supply chain related backlogs.
On the positive side, interest rates are coming down after a blip up during the bank failures in March which might start to help. We will likely start to see companies putting more marketing dollars to low rate loan offers to customers to get them back in the shopping mood. I would guess most companies are like my employer and starting to see supply chain costs coming down and they will start putting more dollars towards promotions to drive sales volume while maintaining or giving back a bit of margin. The North American consumer is addicted to low rates and most companies will spend heavily on zero or near zero rates as inventories recover.
One interesting note from the March bank failures. At my employer we never saw the liquidity premiums for our funding spike during the month for any of our debt funding. It seemed to indicate no one in the market was all that concerned. During March/April of 2020 we saw those liquidity premiums more than double as the credit funding markets became extremely nervous and even that was less than what we saw in 2008/9 when they essentially stopped all together for a period of time. I was surprised but found it a little reassuring there didn't seem to be panic.
Jeff
No. of Recommendations: 5
'I never go to bed worried about Berkshire.'-WEB
Simple & heartfelt words but so telling. And if HE (and CTM) never worry with 99.9% of their assets in BRK & knowing every nook and cranny for 60 years, why shouldn't we partners be well positioned to keep our heads?
