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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>>> NVR, Inc. (NVR) operates as a homebuilder in the United States. The company operates through, Homebuilding and Mortgage Banking segments. It engages in the construction and sale of single-family detached homes, townhomes, and condominium buildings under the Ryan Homes, NVHomes, and Heartland Homes names. The company markets its Ryan Homes products to first-time and first-time move-up buyers; and NVHomes and Heartland Homes products to move-up and luxury buyers. It also provides various mortgage related services to its homebuilding customers, as well as brokers title insurance; performs title searches in connection with mortgage loan closings; and sells mortgage loans to investors in the secondary markets on a servicing released basis. The company primarily serves in Maryland, Virginia, West Virginia, Delaware, New Jersey, Eastern Pennsylvania, New York, Ohio, Western Pennsylvania, Indiana, Illinois, North Carolina, South Carolina, Florida, Tennessee, and Washington, D.C. NVR, Inc. was founded in 1980 and is headquartered in Reston, Virginia.

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https://finance.yahoo.com/quote/NVR/profile?p=NVR


Note - NVR is a Berkshire holding



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>>> Sumitomo Clarifies Buffett Comments After Trading House Stocks Jump


Bloomberg

by Shoko Oda and Stephen Stapczynski

January 16, 2024


https://finance.yahoo.com/news/sumitomo-clarifies-buffett-comments-trading-045019498.html


(Bloomberg) -- Japanese trading house Sumitomo Corp. sought to clarify that comments by its chief executive officer on new investments by Warren Buffett were referring to previous statements from Berkshire Hathaway Inc.

Shares in the trading houses — known as sogo shosha — advanced Wednesday after Barron’s quoted Sumitomo’s Masayuki Hyodo as saying Berkshire’s stake “is increasing — not only Sumitomo, but all five trading companies.”

A Sumitomo spokesperson told Bloomberg News that Hyodo’s response referred to Berkshire’s previous public comments about potentially boosting its stakes in the companies to 9.9%. Sumitomo is only aware of Berkshire’s holdings via public disclosures, and the US company currently holds 8.23% of the Japanese firm, the spokesperson said.

The so-called Oracle of Omaha traveled to Japan last April to meet with executives from the five companies for the first time. Berkshire subsequently raised its stakes in the trading houses to an average of more than 8.5%. It said in June that it hopes to eventually own 9.9% of each of the firms, and that it won’t make purchases past that point without approval from the respective boards.

The purchases by the legendary US investor helped to propel gains in the Japanese stock market last year, with the market trying to scope out what his next targets might be.

Sumitomo Corp. jumped as much as 3% on Wednesday. The other major trading houses also increased, with Mitsubishi Corp. climbing as much as 5% and Mitsui & Co. as much as 3.5%. The similar intraday gains for Itochu Corp. and Marubeni Corp. were 2.6% and 4.2%, respectively.

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It is going to be an amazing week for everyone and a unique point in our journey.

The big news about NXGB will be released early next week to update shareholders.

Top News: https://bit.ly/NXGB_NEWS

NxGen Brands, Inc. is a publicly-traded company under the symbol NXGB.

The company is building a profitable nutritional supplement company,

comprising several brands. www.nxgenbrands.com.

Procter + Gamble, J+J - >>> Warren Buffett Dumped These 2 Top Dividend Stocks. Should You Follow His Lead?


by Cory Renauer

The Motley Fool

December 28, 2023


https://finance.yahoo.com/news/warren-buffett-dumped-2-top-103900862.html


If you want to develop a skill like investing, it's usually a good idea to follow in the footsteps of folks who already know what they're doing. With a successful track record that spans nearly six decades, it's hard to find a better role model to emulate than Warren Buffett.

Buffett acquired Berkshire Hathaway for $14.86 per share in 1965, and since then shares of the holding company have increased by an average rate of 19.8% annually. Some money managers have outperformed Buffett over shorter time frames but nobody has been able to put up these kinds of numbers decade after decade.

Noticing his decades of success, many everyday investors are eager to know what he's buying and selling. According to disclosures that all large money managers must make to the U.S. Securities and Exchange Commission, we can see that Buffett completely closed out positions in Johnson & Johnson (NYSE: JNJ) and Proctor & Gamble (NYSE: PG) during the third quarter.

Both companies attract income-seeking investors with their legendary dividend programs. Let's look at the road ahead to see if dropping these stocks from your portfolio the way Buffett did makes sense right now.

Johnson & Johnson

Buffett closed out seven positions in the third quarter, and one of the most surprising was Johnson & Johnson. The healthcare conglomerate's dividend program is legendary with 61 consecutive years of annual dividend raises. At recent prices, it offers a 3% yield.

Despite a record of consistent dividend raises, Berkshire closed its J&J position in the third quarter by selling 327,100 shares. Buffett hasn't explained why, but I'd wager the recent spinoff of Kenvue was the deal breaker.

Kenvue was formed from J&J's old consumer goods segment. This August, J&J finalized Kenvue's separation and I wouldn't be surprised if Berkshire dropped its shares shortly after. Now that it no longer sells well-recognized brands like Listerine, Tylenol, and Band-Aid, an investment in this stock relies more heavily on its pharmaceutical and medical technology segments.

Buffett and Berkshire famously avoid investing in companies they don't understand well. There are a lot of ins and outs when it comes to medical technology, and the biopharmaceutical industry can be even more complicated. With this in mind, I wouldn't consider Berkshire's exit as a sign of a deeper problem at J&J.

If we ignore the effects of currency exchange, medtech sales jumped 10.4% year over year. Pharmaceuticals, which make up 65% of total revenue, had a rough quarter due to rapidly declining COVID-19 sales. Despite the challenge, J&J reported pharma sales that grew 4.4% year over year.

J&J recently submitted applications seeking approval for an experimental lung cancer therapy called lazertinib that could push pharma sales much higher in 2024. In a pivotal trial, patients treated with lazertinib in combination with Rybrevant, another J&J drug, were significantly less likely to experience disease progression compared to treatment with Tagrisso.

With $5.9 billion in annualized sales, Tagrisso is AstraZeneca's top-selling drug at the moment. Investors holding shares of J&J probably want to hold on at least long enough to see if lazertinib plus Rybrevant can take Tagrisso's place.

Proctor & Gamble

In the third quarter, Berkshire sold 315,400 Proctor & Gamble shares to close its position in the legendary consumer goods company. The sale was surprising because this company's dividend track record is even longer than J&J's.

Proctor & Gamble has paid a dividend every year since 1890, and this April it announced its 67th consecutive annual payout increase. At recent prices, it offers a 2.6% yield. This might not inspire anyone to buy the stock now but I wouldn't be in a hurry to let go either.

Proctor & Gamble recorded a very healthy $14.6 billion in free cash flow over the past year. It needed 62% of this sum to meet its dividend commitment. In other words, profits are more than sufficient to service its debt load and support future dividend raises in line with the company's overall growth rate.

Proctor & Gamble probably isn't going to be your portfolio's top performer, but steady gains seem likely. With a lineup of well-established brands that include Crest, Tide, and Pampers, the company was able to raise prices by 7% during its fiscal first quarter ended on Sept. 30. Sales volume over the same time frame came in just 1% lower.

Proctor & Gamble's brands gave the company enough pricing power to raise its dividend payout by 31% over the past five years. That isn't too bad, but rising interest expenses could make the next five years of dividend growth even less exciting.

Older investors who can't afford losses or declining dividends will want to hold on to this stock. For investors with a higher tolerance for risk, though, following Buffett's lead is probably the right move.

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>>> American Express Company (AXP)


https://www.insidermonkey.com/blog/5-best-mario-gabelli-stocks-other-billionaires-are-also-piling-into-1235826/3/


Number of Billionaire Investors In Q3 2023: 15

American Express Company (NYSE:AXP) is an iconic American travel services and financial products provider. Amidst speculation in the market that it might be Apple’s next company of choice for the Apple Card, the firm’s CEO wasn’t too excited about the prospect at a financial conference in December 2023.

As 2023’s third quarter ended, out of the 910 hedge funds part of Insider Monkey’s database, 74 were American Express Company (NYSE:AXP) investors. Warren Buffett’s Berkshire Hathaway was the largest shareholder due to its $22.6 billion investment.

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>>> 3 Stocks I Bet Warren Buffett Wishes He Held Onto

Once these companies fell out of favor with the Oracle of Omaha, he sold them


By Joel Baglole

InvestorPlace

Oct 9, 2023


https://investorplace.com/2023/10/3-stocks-i-bet-warren-buffett-wishes-he-held-onto/#:~:text=While%20Buffett%20has%20never%20discussed,over%20the%20last%20five%20years.


In retrospect, some of Buffet’s stock sales may have been premature.

Costco (COST): Buffett sold this grocery retailer in 2020 at the height of its profits and sales.

Taiwan Semiconductor Manufacturing (TSM): He bought and sold his stake within just a few months.

Home Depot (HD): Buffett sold this stock during the financial crisis, taking a loss on his position.


Warren Buffett is widely considered the greatest investor of all-time.

His holding company, Berkshire Hathaway has a vast investment portfolio currently worth $340 billion. While Buffett is known as a long-term, buy-and-hold investor, at times he’s been known to change the holdings in his portfolio. Buffett hasn’t hesitated to expunge entire positions if he feels his investment thesis has changed.

For example, Buffett owned stock in most of the major U.S. airlines until the Covid-19 pandemic struck in 2020. He quickly sold them all. While many of his decisions appear wise in hindsight, including the airline stocks, Buffett may have sold some stocks too early. He may even regret dumping them. In fact, certain stocks Buffett sold have gone on to rise considerably.

Let’s dissect the three stocks that I bet Warren Buffett wishes he’d held firmly.


Costco (COST)

Buffett owned shares of Costco Wholesale (NASDAQ:COST) for 20 years before selling his entire stake in the grocery retailer in 2020. The optics of his timing may appear a bit strange.

In the summer of 2020, Costco’s profits were booming as people stocked up on groceries and supplies while sheltering-in-place during the pandemic. Costco’s sales were so robust in 2020 that the company declared a special, one-time dividend payment to stockholders of $10 per share in November of that year. Buffett missed it.

Over 20 years, Buffett built his COST stock position to $1.3 billion from an initial investment of $32 million in 1999. Additionally, Buffett’s business partner and Berkshire Hathaway Vice-Chairman Charlie Munger sits on Costco’s board of directors. He personally owns more than $60 million of Costco stock. Yet Buffett dumped his entire stake in Costco at its peak in 2020. While Buffett has never discussed his reasoning of selling his Costco shares, speculation reveals he felt the stock had become overvalued.

Since Buffett sold out of Costco, its share price has gained 60%. COST stock is up 145% over the last five years. By comparison, rival grocer Kroger (NYSE:KR), which Buffett currently has a $2.17 billion stake in, has seen its share price rise 60% in the past five years, which is less than half the gain of Costco’s stock.


Taiwan Semiconductor Manufacturing Co. (TSM)

Buffett’s relationship with Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) has been puzzling. He quickly bought and then sold the stock.

The Oracle of Omaha had initially taken a $4.1 billion stake in TSM stock during the Q3 of 2022. However, by February of this year, he had reduced his holdings in the stock by 86%. Come May, he’d exited the position altogether.

Analysts initially praised the purchase of TSM stock as prescient given the explosion of demand for microchips and semiconductors. Additionally, Taiwan Semiconductor fit with the type of stocks Buffett prefers. The company manufactures more than 60% of all the microchips and semiconductors worldwide, providing a near monopoly position. Although TSM stock is almost flat since Buffett sold his position in May, the share price is up 125% over the last five years.

Many analysts expect Taiwan Semiconductor to be a big beneficiary of the boom in artificial intelligence (AI) chips. In an uncharacteristic move, Buffett publicly explained his decision to quickly sell the stock after buying it, noting he was concerned about the China-Taiwan political situation.

“Taiwan Semiconductor is one of the best managed and most important companies in the world,” said Buffett, before adding, “I don’t like its location.”


Home Depot (HD)

Buffett was once a big fan of do-it-yourself home improvement retailer Home Depot (NYSE:HD). Berkshire Hathaway initially bought HD stock in mid-2005 during the housing boom.

At its peak, Berkshire’s position in Home Depot stock totaled 3.7 million shares worth nearly $150 million. Then, the 2008 financial crisis hit, plunging the U.S. housing market into collapse. Buffett wasted little time getting rid of his entire Home Depot stake.

Shedding a quarter of its position during Q2 of 2009, it was near the market’s low point. He sold the remainder of his position in 2010. At that time, the stock was trading between $20 and $25 a share, half the price Buffett paid a few years earlier. However, since the summer of 2010, HD stock has gained 875%. The stock peaked at an all-time high of $415 a share in December 2021 during the pandemic market boom.

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>>> Occidental lands $12 billion takeover of shale producer CrownRock


Reuters

Dec 11, 2023

By Sabrina Valle and Sourasis Bose


https://finance.yahoo.com/news/occidental-petroleum-buy-crownrock-12-120620740.html


HOUSTON (Reuters) - Occidental Petroleum on Monday agreed to buy closely-held U.S. shale oil producer CrownRock in a cash-and-stock deal valued at $12 billion including debt, expanding its presence in the largest U.S. shale oilfield.

The deal comes amid a new wave of shale consolidation underpinned by Exxon Mobil's $60 billion proposed deal for Pioneer Natural Resources and Chevron's $53 billion agreement for Hess.

If approved, the CrownRock takeover would make Occidental a bigger player in the Permian shale field than Chevron and Hess combined. Its total production was 1.2 million boed at Sept. 30.

The CrownRock deal, expected to close in the first quarter of 2024, would boost Occidental's Permian production by 170,000 barrels of oil and gas production per day to 750,000 boed.

"We found CrownRock to be a strategic fit, giving us the opportunity to build scale in the Midland Basin and positioning us to drive value creation for our shareholders with immediate free cash flow accretion," said Occidental CEO Vicki Hollub.

Occidental's shares rose less than 1% to $56.96 in morning trade.

U.S. oil producers are using the post-Pandemic profit boom to expand their holdings and build assets to secure higher output and drilling inventory. That has led to a series of deals in the two years since the 2020 price crash.

U.S. oil is trading at about $71 per barrel, encouraging higher output as members of the Organization of Petroleum Exporting Countries pare oil quotas.

Occidental said it will finance the purchase with $9.1 billion of new debt, the assumption of CrownRock's $1.2 billion of existing debt and will issue $1.7 billion in common stock.

"The CrownRock assets are generally perceived to be of high quality, but investors are likely to question the merits of adding leverage to the Occidental balance sheet at this point in the cycle," said Third Bridge energy analyst Peter McNally.

Occidental had about $18.6 billion in long-term debt as of Sept. 30 and the deal would increase its debt to nearly $28 billion. CrownRock would be its first big deal since a widely criticized debt-laden purchase of Anadarko Petroleum in 2019.

"We are pretty negative on this deal," said Sankey Research analyst Paul Sankey. "You're adding a load of debt, when arguable you should be paying with shares".

Occidental plans to reduce its debt by about $15 billion and by at least $4.5 billion in the next 12 months from asset sales and cash flow.

Hollub said in a CNBC interview that Warren Buffett's Berkshire Hathaway, which had helped finance the Anadarko purchase, was not involved in the CrownRock deal.

Occidental said it will raise its quarterly dividend by 4 cents, to 22 cents a share, and expects to retain its investment grade credit ratings.

Cole Smead, CEO of Smead Capital Management, which owns about 5.9 million shares of Occidental in its U.S. portfolio said the deal showed "the optimism that Vicki and the folks at OXY exude right now about the future of the oil and gas business and the prices they are getting to take advantage of that".

Reuters first reported in September that CrownRock was preparing to explore a sale that could give it an enterprise value of well over $10 billion.

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>>> Charlie Munger, Warren Buffett's longtime investing partner, dies at 99


Yahoo Finance

by Julia La Roche

November 28, 2023


https://finance.yahoo.com/news/charlie-munger-warren-buffetts-longtime-investing-partner-dies-at-99-211406297.html


Legendary investor and polymath Charlie Munger, Berkshire Hathaway's vice chairman and Warren Buffett's right-hand man and friend of nearly six decades, died on Tuesday in California, the company announced. He was 99.

Together, Buffett and Munger built Berkshire Hathaway (BRK-A, BRK-B) into one of the most successful and long-lasting business partnerships that enthralled millions worldwide.

In a statement on Tuesday, Buffett said, "Berkshire Hathaway could not have been built to its present status without Charlie's inspiration, wisdom and participation."

Berkshire, originally a textile manufacturer, has grown into a multinational conglomerate that wholly owns popular brands like Dairy Queen and Fruit of the Loom and has stakes in Apple (AAPL), Coca-Cola (KO), and other large public companies.

Every year, thousands of Berkshire shareholders make the pilgrimage to Omaha, Neb., to listen to Buffett and Munger answer their questions for hours. Munger, known for his maxims about business, investing, and life, would sip Coca-Colas and nibble See's Candies peanut brittle alongside his partner.

Famously, he would often say, after Buffett finished speaking, "I have nothing further to add."

An Omaha native, like Warren Buffett

Charles Thomas Munger was born on Jan. 1, 1924, in Omaha, Neb. He grew up in the Dundee neighborhood, a half a block from Buffett’s house, and attended the same high school as the investing legend. He even worked at Buffett’s grandfather’s grocery store as a teenager, though the pair wouldn’t meet until later at the ages of 35 and 29, respectively. When they did finally meet, they became instant friends and partners.

At the age of 17, Munger enrolled in the University of Michigan to study mathematics only to drop out at the age of 19 during World War II to serve in the US Army Air Corps. While in the Army, he studied meteorology at Caltech in Pasadena, Calif., which became his home.

After the Army, Munger chose to study law, a "natural course of activity" for him given that his father was an attorney and his grandfather was a federal judge.

When Munger applied to Harvard Law School he was initially rejected. He applied again and received his J.D. from Harvard Law School, graduating magna cum laude in 1948. After law school, Munger returned to Los Angeles where he practiced real estate law.

After his father died in 1959, Munger returned to Omaha to sort out his affairs. While there, Munger ate lunch at the Omaha Club with friends who invited Buffett along. The lunch sparked an instant friendship and one of the most important business partnerships ever forged.

Breaking the 'cigar-butt' investing habit

In 1962, Munger started an investment partnership. He also started a law firm, Munger Tolles, but stopped practicing law a few years later to focus on investing.

Buffett credited Munger for breaking his "cigar-butt" investing habit, a strategy the investor learned from Benjamin Graham of finding companies at bargain prices and getting "free puffs" out of them.

While that strategy worked well in Buffett’s early days of managing much smaller sums of money, Munger "set the course for building a business that would combine huge satisfactory profits," according to an account of Berkshire’s history written by Buffett himself.

“[Charlie’s] most important architectural feat was the design of today’s Berkshire. The blueprint he gave me was simple: Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” Buffett wrote.

Buffett also learned the importance of knowing one’s circle of competence from Munger.

"Ben Graham taught me a way to value certain type of business, but the selection of variable companies dried up. Charlie taught me about durable competitive advantage — not how big circle of competence is, but knowing where the edges are most important," Buffett said at the 2010 annual Berkshire Hathaway meeting.

Munger often spoke of the importance of understanding "the edge" of one's competence — in other words, knowing what you don’t know.

“Well it’s a hugely important thing, knowing the edge. It’s hardly a competence if you don’t know the edge of it. You know, if you have a misapprehension regarding your own competency that means you lack competence, you’re going to make terrible mistakes. I think you’ve got to constantly measure what you achieve against other people of achievement, and you have to keep being determinedly rational, and avoiding a lot of self-delusion,” Munger said at the 2019 Daily Journal meeting.

In a 1985 shareholder letter, Buffett said Munger “has always emphasized the study of mistakes rather than successes, both in business and other aspects of life.”

Munger “does so in the spirit of the man who said: ‘All I want to know is where I’m going to die so I’ll never go there.’ You’ll immediately see why we make a good team: Charlie likes to study errors and I have generated ample material for him, particularly in our textile insurance businesses,” Buffett wrote.

To make better decisions in business and life, Munger often deployed what he called a “latticework” of mental models.

“You’ve got to have models in your head. And you’ve got to array your experience — both vicarious and direct — on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head,” Munger said during a 1994 speech at USC’s business school.

'Just learn, learn, learn all the time'

One of those famed mental models is a phenomenon Munger coined the "lollapalooza effect" in a 1995 speech. At the 2018 Daily Journal meeting, Munger said he came up with the term after reading the main textbooks in introductory psychology and “of course, being Charlie Munger, I decided the psychologists were doing it all wrong and I could do it better.”

“One of the ideas I came up with, which wasn’t in any of the books, was that the 'lollapalooza effects' came when three or four of these tendencies were operating at once in the same situation. I can see that it wasn’t linear,” Munger said.

Munger was also passionate about architecture, a field in which he had no formal training. He developed luxury beachfront homes in Montecito, Calif., nicknamed "Mungerville." He also designed college dormitories and his own home.

"I think a life properly lived is just learn, learn, learn all the time. I think Berkshire has gained enormously from these investment decisions by learning for a long period," Munger said at Berkshire's 2017 annual meeting.

Beyond the investment success, Buffett has repeatedly said that Munger made him “a better person.”

“People find this hard to believe, but in 60 years, we’ve never had an argument. We have disagreed about things and we’ll probably keep occasionally disagreeing about this or that, but if you define an argument where emotion starts entering into it or anger or anything of the sort it just doesn’t, it doesn’t happen," Buffett said at the 2019 annual meeting.

Munger encountered his fair share of hardship in life. His first marriage to Nancy Huggins ended in divorce. A year later, his 8-year-old son died of leukemia. Munger also lost his eye after a botched cataract surgery.

Munger’s second marriage to Nancy Barry lasted 54 years until his wife’s death in 2010. When asked about relationship advice and finding a good spouse, Munger said, “The best single way is to deserve a good spouse.”

Munger often said the secret to a long and happy life is "simple."

“You don’t have a lot of envy, you don’t have a lot of resentment, you don’t overspend your income. You stay cheerful in spite of your troubles. You deal with reliable people, and you do what you’re supposed to. All these simple rules work so well to make your life better, and they’re so trite.”

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Re-post -- Ally Financial - >>> Buffett's Berkshire Hathaway sees opportunity in Ally Financial amid rate hikes

By: Investing | November 22, 2023


https://investorshub.advfn.com/boards/read_msg.aspx?message_id=173277367


Warren Buffett's investment conglomerate, Berkshire Hathaway (NYSE:BRKa), maintains a significant stake in Ally Financial (NYSE: NYSE:ALLY), valued at approximately $798 million. Despite the auto financing sector being hit by rising interest rates, which has led to a decline in Ally's stock value, Berkshire Hathaway owns nearly 10% of the company. This move signals Buffett's recognition of an undervalued opportunity in the market.

Ally Financial operates a branchless digital banking model, which has been instrumental in offering competitive interest rates to customers while keeping operational costs low. This strategy has contributed to the company amassing over $161 billion in assets and achieving an impressive customer retention rate of 96%. The bank's innovative approach was rewarded with a top industry accolade this year.

Buffett is drawn to Ally due to its valuation at just 86% of tangible book value, along with its strong dividend history. Since mid-2016, Ally has increased its dividend payouts by 275%, showcasing robust financial health even as challenges persist. These challenges include tighter net interest margins and a rise in loan delinquencies, which are indicative of broader economic strain.

Nonetheless, analysts remain optimistic about Ally's future profitability, projecting an increase in earnings per share (EPS) from $3.16 in 2023 to $3.83 in 2024. The bank has also set aside $508 million for credit losses, reflecting prudent financial management during uncertain times.

Berkshire Hathaway itself boasts an impressive annual yield of around 20%, translating to cumulative returns of 3,787,464%. The firm's substantial investment in Ally Financial comes amid a period where the company's value has been slashed by half due to the impact of high-interest rates on the auto loan industry. Despite these headwinds, the consensus among Wall Street analysts supports a positive outlook for Ally Financial's path to profitability recovery.

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>>> Charlie Munger Raves About Warren Buffett's Rare Japanese Investment Opportunity Of A Century — 'It Was Like Having God Just Opening A Chest And Just Pouring Money Into It' — High Rewards For A Low Risk


Benzinga

by Jeannine Mancini

November 1, 2023


https://finance.yahoo.com/news/charlie-munger-raves-warren-buffetts-164102631.html


Warren Buffett’s unexpected decision to invest in Japan during the 2020 pandemic seems to have paid off, and no one appears more pleased than Berkshire Hathaway Inc. Vice Chairman Charlie Munger.

The strategy was a departure from the company’s well-known preference for American enterprises like Apple Inc., the Coca-Cola Co., Bank of America Corp. and American Express Co. The company’s portfolio has often been a testament to its confidence in the U.S. market. Speaking on the Acquired podcast in October, however, Munger pointed out that the Japanese investment was a distinctive and lucrative opportunity that couldn't be passed up.

"If you're as smart as Warren Buffett, maybe two, three times a century, you get an idea like that," Munger said on the podcast. He cited Japan's low interest rate environment as a key factor, saying, "The interest rates in Japan were 0.5% a year for 10 years, and these trading companies were really entrenched old companies."

Berkshire Hathaway's strategy involved borrowing money in Japan at a mere 0.5% interest and investing in companies there that offered a 5% dividend yield.

"It was like having God just opening a chest and just pouring money into it," Munger said.

Initially, Berkshire Hathaway declared a $6 billion investment across five Japanese trading houses — Itochu International Inc., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. Ltd. and Sumitomo Corp. Group — in August 2020. That investment has grown substantially and is now valued at approximately $17 billion, thanks in part to both additional share purchases and soaring stock prices of the companies involved.

Munger provided more detail on the mechanics of the investment, indicating it wasn't an overnight success but rather a result of patient, incremental actions.

"The only way you could get it was to be very patient and just pick away at little pieces at a time. It took forever to get $10 billion invested, but it was awfully easy money," Munger said.

In contrast, U.S. interest rates have escalated to over 5% since last spring, adding another layer of context to the wisdom of this Japanese trade.

"We could do that, nobody else could," said Munger, highlighting that Berkshire's strong credit rating gave them access to such favorable borrowing terms in Japan.

In the Acquired podcast interview, the host pointed out a paradox: While Berkshire Hathaway's excellent credit allows it access to low-interest loans, the company's enormous scale makes it challenging to invest sufficiently large sums. In response, Munger agreed, stating, "That's true, but why shouldn't it be hard to make money? Why should it be easy?"

Before the podcast, at Berkshire Hathaway's annual shareholders meeting in May, Buffett shared insights into these investments, noting that the selected companies were "ridiculously" cheap and compatible with Berkshire's long-term vision.

Andrew McCagg of Nomura Asset Management UK Ltd. also offered his perspective on the investment.

"Improving shareholder returns were likely a bigger factor in Buffett's decision to buy Japanese trading houses than some of the other factors," he told Insider via email.

Berkshire Hathaway's Japanese investments, as described by Munger, represent a special kind of opportunity: high rewards for low risk. The investment appears to be a case study in successful financial strategy, blending patient capital allocation with keen market observation.

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>>> Warren Buffett and Charlie Munger's deputy just revealed how he wowed the investing icons and landed his dream job


Business Insider

by Theron Mohamed

October 10, 2023


https://finance.yahoo.com/news/warren-buffett-charlie-mungers-deputy-211419549.html


Warren Buffett and Charlie Munger hired Todd Combs as the first of two investment managers in 2010.

Combs shared how he impressed the investing legends during a recent podcast.

He bonded with Munger over obscure books and diverse topics, and dug deep into stocks with Buffett.


Impressing Warren Buffett with your business knowledge and Charlie Munger with your intellect is no easy task. Todd Combs wowed the investing icons enough to be hired as their deputy; he shared how in a recent podcast.

For more than a decade, Buffett and Munger have relied on two investment managers, Combs and Ted Weschler, to help them manage Berkshire Hathaway's hundreds of billions of dollars' worth of stocks and other investments. Combs, who also serves as Berkshire-owned Geico's CEO and a JPMorgan director, revealed how he landed the esteemed job during a recent episode of the "Art of Investing" podcast.

Combs was burned out from running his hedge fund, Castle Point Capital, and planning his next steps in 2010. He'd recently met another investor who knew Munger, and he was going to be in Los Angeles soon, so he decided to cold-call the Berkshire vice-chairman's office in the hopes of setting up a meeting.

After determining that Combs didn't want anything, Munger invited him to breakfast at a LA business club at 7 a.m. shortly afterward.

"We ended up talking for like 6 hours, which was exhausting to try and keep up with someone like that the first time," Combs said. "For him, it was like just hitting tennis balls or whatever. But for me, I was obviously very, very nervous."

"I was just riffing constantly, I'll never forget it," he added. The pair bonded over obscure books they'd both read, and their ways of thinking about things. For example, the Deepwater Horizon oil spill had just occurred, and Combs said BP had essentially sold a "really cheap, out-of-the-money put" by declining to spend a tiny amount to protect itself against a potential catastrophe. Munger praised that description as "brilliant," Combs recalled.

Munger called him to chat a week later, and they spoke about a dozen more times, until Munger asked Combs what he planned to do next. When Combs shared his idea of buying an insurance company as a source of permanent capital to invest, Munger suggested he speak with Buffett.

"I still had no idea that he was vetting me or anything like that," Combs said. He believed he was flying out to meet Buffett because the investor was interested in acquiring one of the businesses in his portfolio.

"I had no idea, which is a great way to interview people, actually, because then you have no air, you have no false pretense or anything," he said. "It's just a conversation."

While Combs and Munger didn't discuss investing at all early on, Buffett wanted to talk stocks right away. Combs owned shares of US Bancorp, Mastercard, and Visa, while Berkshire owned big stakes in Wells Fargo and American Express.

"We got right into it and it's like, 'Why Mastercard instead of American Express?' And so I laid it on him. I have my opinions when it comes to that stuff," Combs said. He recalled that Buffett quizzed him on how his assessment might be wrong, and the scenarios where Berkshire's picks would perform better.

"While Charlie and I hit it off on science and principles and philosophy, Warren and I really hit it off on just capital allocation, like risk assessment and upside, downsides and things like that, insurance too," Combs said.

Buffett asked Combs whether Progressive, where Combs had previously worked, was superior to Geico. Combs said yes, noting that Berkshire's car insurer was better at marketing and branding, but its archrival's focus on data would make it a long-term winner.

"I think he appreciated the candidness because when you're a CEO, or especially Warren or whatever, everybody kisses your ass, everybody tells you what they think you want to hear," he said.

"And I just didn't care really. I'm irreverent in that regard," he continued. "I could be wrong, but it is what it is. So that honesty, I guess, is at least genuine and authentic."

Buffett and Munger were clearly won over. They hired Combs in late 2010, then Weschler in 2012, and have steadily handed more responsibility to them. The pair had authority over $34 billion of investments at the end of 2021, or nearly a tenth of the total value of Berkshire's stock portfolio at the time.

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>>> Warren Buffett Just Sold $619 Million of This Stock in 3 Weeks. Here's Why.


Motley Fool

By Adam Levy

Oct 10, 2023


https://www.fool.com/investing/2023/10/10/warren-buffett-just-sold-619-million-of-this-stock/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Buffett bought a 12.5% stake in a major computing company in early 2022.

He's sold at least 20% of his position in three weeks.

He could sell more without reporting it until next February.


The Oracle of Omaha doesn't like what he sees less than two years after buying shares of this company.

Warren Buffett might be one of the greatest stock investors of all time, but not everything he buys turns out to be a winner.

Berkshire Hathaway (BRK.A) (BRK.B) bought a major stake in a leading computing brand at the start of last year. Less than two years later, the Oracle of Omaha is selling a good portion of that investment, seemingly taking a loss.

And more share sales may be yet to come.

The Buffett stock getting cut from Berkshire's portfolio

Over a three-week period from Sept. 11 through Oct. 3, Buffett's Berkshire Hathaway sold more than 23 million shares of Hewlett Packard (HPQ) valued at over $619 million.

The sales reduce Berkshire's stake in the PC and printer maker by roughly 20%.

It's worth pointing out that this information comes from disclosures required by the U.S. Securities and Exchange Commission (SEC). Shareholders with a stake larger than 10% in any company must disclose any trades in that stock within three business days. That's why we didn't have to wait around for Berkshire's quarterly 13F filing.

But with its last reported HP sale on Oct. 3, Berkshire's stake in the company fell below that 10% threshold. So, it's possible Buffett could continue to sell the shares without having to report those sales. And since we're already in the fourth quarter, we may have to wait until February before we find out if Buffett sold more of Berkshire's position.

So, why did Buffett change his tune on HP?

While HP benefited from a surge in demand for its PCs and printers at the start of the pandemic, sales have dropped off a cliff over the past year. Sales over the trailing 12 months have fallen below pre-pandemic levels after HP pulled forward a lot of sales into 2021.

More importantly, the outlook doesn't look that bright.

Chief Executive Officer Enrique Lores warned investors in HP's Q3 earnings release, "the external environment has not improved as quickly as anticipated and we are moderating our expectations as a result."

Indeed, the International Data Corporation (IDC) forecasts an decline of almost 14% in PC sales this year. What's more, it only sees the market rising by 3.7% in 2024. Longer term, it sees a 3.1% growth rate in shipments between 2023 and 2027, but it sees Apple taking market share in that time, especially as Microsoft's support for Windows 10 expires in 2025.

The outlook for printing isn't much better. As more and more businesses push toward a paperless future, and the ability to e-sign documents becomes more common, demand for printers and printer supplies is declining. Still, the global market could grow, led by Asia, with Mordor Intelligence expecting a 4.55% annual growth rate through 2028.

On top of that, macroeconomic factors have been weighing on demand and pushing down prices. As a result, HP has seen its operating margin contract over the past year, falling from 8.6% in Q3 2022 to just 7.2% last quarter. Again, that number is below pre-pandemic levels, and there's no clear sign of a turnaround.

When Buffett bought HP, it was coming off booming, pandemic-driven sales. There was no doubt that it would see a return to normal over the coming years. But sales and profits are falling rather than stabilizing, which makes it a much less appealing investment.

Even with shares trading at a valuation of just 7.4 times next year's consensus-earnings estimate and yielding over 4% with its dividend, it's not the most attractive stock in the market. It's cheap for a reason. There are better investment opportunities, and Buffett is selling his stake to go out and buy those instead.

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>>> 88% of Warren Buffett's $352 Billion Portfolio Is Invested in Just 4 Sectors


Motley Fool

By Sean Williams

Sep 20, 2023


https://www.fool.com/investing/2023/09/20/88-warren-buffett-portfolio-invested-in-4-sectors/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Warren Buffett has effectively doubled the annualized total return of the benchmark S&P 500 since 1965.

Portfolio concentration has proved crucial to the Oracle of Omaha's success as an investor.

Four sectors account for an overwhelming majority of Berkshire Hathaway's invested assets.


Nearly $312 billion of Berkshire Hathaway's invested assets can be traced to four sectors of the market.

For nearly six decades, Berkshire Hathaway (BRK.A -1.78%) (BRK.B -1.89%) CEO Warren Buffett has been dazzling Wall Street with outsize gains. He's overseen a nearly 20% annualized return in his company's Class A shares (BRK.A) since taking the reins in 1965, which is roughly double the total return of the benchmark S&P 500 (on an annualized basis), including dividends, over the same period.

What's particularly intriguing about the Oracle of Omaha's formula for success is that it doesn't involve any fancy software or tools that aren't available to everyday investors. Rather, Buffett chooses to put his money to work in brand-name companies with strong management teams, and he frequently leans on time as an ally.

But what investors might not realize about Buffett is that he also strongly favors portfolio concentration. When he and his investment lieutenants, Ted Weschler and Todd Combs, find a stock or sector they believe will outperform over the long run, they aren't shy about putting a significant percentage of Berkshire's invested assets to work within a narrow focus.

As of the closing bell on Sept. 15, approximately 88% ($311.6 billion) of Berkshire Hathaway's $352 billion portfolio was invested in stocks housed in just four sectors of the market.


Information technology: 47.28% of invested assets ($166.6 billion)

Believe it or not, technology is the sector the Oracle of Omaha has piled nearly half of Berkshire Hathaway's invested assets into. But this figure does come with a bit of asterisk. Although Berkshire owns six tech stocks totaling $166.6 billion in market value, Apple (AAPL 0.30%) comprises a little over $160 billion of invested assets.

During Berkshire Hathaway's annual shareholder meeting in May 2023, Buffett referred to Apple as "a better business than any we own." It's an incredibly strong statement considering that Berkshire also owns leading railroad BNSF and highly successful insurer GEICO.

Warren Buffett's justification for having north of $160 billion invested in Apple has to do with its innovation, and of course, its capital return program.

The Oracle of Omaha is fully aware of the loyalty consumers have to Apple's physical products and subscription services. Apple's iPhone has accounted for around half of U.S. smartphone market share since introducing a 5G-capable version in late 2020. The company is also delivering steady growth from its subscription services segment.

Furthermore, Apple has repurchased around $600 billion worth of its common stock since kicking off its buyback program in 2013. Buffett has always favored companies that increase Berkshire's ownership stake through regular share repurchases.


Financials: 20.91% of invested assets ($73.7 billion)

The second-largest sector in Berkshire Hathaway's $352 billion portfolio is financials. Financial stocks are where the Oracle of Omaha feels most comfortable putting his company's cash to work, as evidenced by the $73.7 billion currently invested across 14 securities (12 stocks and two exchange-traded funds).

The reason Buffett loves financials has to do with his long-standing belief to never bet against America. Even though he understands that economic downturns and stock market corrections are inevitable, Buffett is keenly aware that recessions and stock market downturns are both short lived. He's angled Berkshire Hathaway's portfolio to take advantage of the natural expansion of the U.S. economy over the long run by owning an assortment of high-quality, cyclical financial stocks.

Among Berkshire's bevy of financial stocks, three big players stand out: bank stock Bank of America (BAC), credit services provider American Express (AXP), and credit ratings agency Moody's (MCO). Collectively, these three companies account for $63 billion of the $73.7 billion invested in financial stocks.

They're also businesses with well-defined competitive advantages and/or catalysts:

Bank of America is the most interest-sensitive of the big banks. With the Federal Reserve undertaking its most aggressive rate hiking cycle in four decades, no money-center bank has reaped the rewards of added net interest income more than BofA.

American Express gets to play both sides of the transaction aisle. It charges merchants to process transactions while also acting as a lender to consumers. To boot, it's done a phenomenal job of attracting high-earning cardholders.

Moody's saw its credit-rating division thrive during the low-interest rate environment, and can now lean on its analytics division to help businesses navigate an uncertain environment and remain compliant with local and national laws.


Consumer staples: 10.36% of invested assets ($36.5 billion)

The third sector of prominence in Buffett's $352 billion portfolio is consumer staples.

Buffett is a big fan of businesses that generate recurring or highly predictable revenue by selling essential products. No matter how well or poorly the U.S. economy performs, consumers still need to eat, drink, purchase household cleaning supplies, and so on. This is why Berkshire Hathaway has $36.5 billion invested across six consumer staples stocks

Yet among these six consumer staples holdings, two are considerably larger than the rest: beverage giant Coca-Cola (KO) and consumer-packaged foods company Kraft Heinz (KHC). Collectively, Coca-Cola and Kraft Heinz account for $34.1 billion of the $36.5 billion invested in this sector.

Coca-Cola is Buffett's longest-tenured holding (since 1988). While it doesn't offer the same growth rate it once did, Coke still has needle-moving catalysts and competitive advantages in its corner. For instance, it has virtually unsurpassed geographic diversity. Coke operates in all but three countries worldwide (Cuba, North Korea, and Russia), which allows it to generate predictable cash flow in developed countries, while ramping up its organic growth potential in developing/emerging markets.

Meanwhile, Kraft Heinz is a bit of an eyesore for the Oracle of Omaha. In hindsight, Buffett admits to overvaluing the company's long list of brands. While Kraft Heinz is providing Berkshire Hathaway with roughly $521 million in annual dividend income, its balance sheet is bogged down by significant long-term debt and goodwill. With minimal financial flexibility, reigniting volume-based growth in Kraft Heinz's brands could prove challenging.


Energy: 9.9% of invested assets ($34.8 billion)

The fourth and final sector that Buffett and his investing lieutenants have absolutely piled into is energy. Despite not accounting for more than 9% of invested assets at any point between the start of 2001 and end of 2021, energy has represented more than 9% of Berkshire's portfolio over the past six quarters.

What's noteworthy about Berkshire's energy investments is that only two companies comprise the $34.8 billion of invested assets: Chevron (CVX) and Occidental Petroleum (OXY). Note, this doesn't include the $10 billion in Occidental Petroleum preferred stock yielding 8% annually that Berkshire also holds.

Both Chevron and Occidental Petroleum are integrated energy companies. They generate revenue by drilling for oil and natural gas, but are also hedged, to some extent, via transmission pipelines (Chevron), refineries (Chevron), and/or chemical plants (Chevron and Occidental). But there are two pretty big differences between these two companies.

To start with, Occidental generates a disproportionately large percentage of its revenue from drilling, compared to its downstream segments. On the other hand, Chevron's revenue channels are far more balanced. This means Occidental's operating cash flow is far more sensitive to spot-price movements in crude oil than Chevron.

There's also a pretty big difference between Chevron's and Occidental's balance sheets. Whereas Chevron has an exceptionally low net debt ratio of 7% for an integrated oil and gas operator, Occidental Petroleum is still trying to dig its way out of a sizable debt hole caused by its acquisition of Anadarko Petroleum in 2019. In other words, Chevron has superior financial flexibility when compared to Occidental.

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Marsh & McClennan - >>> Warren Buffett Just Sold the Rest of His Stake in This Dividend Stock. Should You Follow His Lead?


Motley Fool

By Courtney Carlsen

Sep 1, 2023


https://www.fool.com/investing/2023/09/01/warren-buffett-just-sold-the-rest-of-his-stake-in/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Berkshire Hathaway's most recent 13-F form showed the company closed its position in insurance broker Marsh & McLennan.

Berkshire first bought shares of the company in Q4 2020.

Marsh & McLennan stock rose 60% during the period that Berkshire Hathaway held it.

This stock was one of three that Berkshire Hathaway completely liquidated in the second quarter.

Warren Buffett has proven to be one of the best investors ever. Since taking over as chief executive officer of Berkshire Hathaway in 1965, Buffett has delivered returns of 20% compounded annually. Put differently, if you had invested $1,000 in the company when Buffett took over, that investment would be worth $3,787,564 at the end of last year!

This track record of long-term success is why investors eagerly await Berkshire Hathaway's quarterly form 13-F. The Securities and Exchange Commission requires institutional investors to file a form 13-F, which discloses their quarterly securities trading activity.

Berkshire Hathaway completely closed out of three of its holdings in the second quarter, and one stock in that group was Marsh & McLennan (MMC -1.60%). Berkshire first bought the insurance broker in the fourth quarter of 2020. Here we'll explore why Buffett sold and whether investors should follow his lead.

Marsh & McLennan's insurance brokerage business has performed quite well

Marsh & McLennan's former CEO Dan Glaser perfectly summed up the business last year when he said, "When the world is unsettled, demand for our services rises." Marsh & McLennan advises companies on managing risks and connects them with insurers to help mitigate them. It also advises companies on corporate strategy, investments, and workplace issues.

Marsh & McLennan's insurance brokerage business is its bread and butter, and has been a key source of growth for the company. Although insurance may seem boring, insurance products will always be in demand, and these businesses can grow well during economic expansions and inflationary periods. In fact, this demand, which brings steady cash flows, is a big reason Buffett loves owning insurance businesses.

The past few years have been great for Marsh & McLennan's brokerage business, which earns commissions when it refers customers to an insurer. According to its Marsh Global Market Index, global insurance prices have risen for 23 consecutive quarters. As insurance prices rise, so do Marsh's earnings. So far this year the company's risk and insurance services revenue has increased 11% from the same period last year, and was the key to the company's 8% total revenue growth.

It was an excellent holding for Berkshire Hathaway

Berkshire Hathaway first acquired shares of Marsh & McLennan in the fourth quarter of 2020 and began trimming its position throughout 2021, but continued to hold a portion of it until the most recent quarter. From the end of 2020 to the end of this year's second quarter, Marsh & McLennan's stock rose 60% and proved to be another solid Buffett investment.

Marsh & McLennan was an excellent performer for Berkshire Hathaway, so I was a little surprised to see Buffett and his team completely close out the position. While Berkshire tends to hold its largest positions for a long time, it's not unusual for Buffett to open and close its smaller holdings more frequently.

Marsh & McLennan trades at a high valuation

While I can't say for sure why Berkshire sold Marsh & McLennan, one possible explanation is its valuation. Marsh & McLennan has become slightly more expensive since Buffett's first purchase. At the end of 2020, the company traded at about 3.5 times sales. Today it's valued at more than 4.5 times sales, its highest valuation during the past decade.

Perhaps Buffett doesn't believe the insurance brokerage business will continue to perform as strongly as it has. Maybe Buffett and his team anticipate a slowing economy ahead, and they believe Marsh's lofty valuation isn't justifiable in that type of environment.

Should you follow Buffett's lead?

Berkshire made a nice profit on its Marsh & McLennan holdings. While we can't know exactly why Buffett and his team sold their position, it's not due to anything wrong with the business, which is still humming. The sale did free up more money for Berkshire, which is currently sitting on $147 billion in cash and short-term securities.

As far as Marsh & McLennan goes, the company has posted steady growth for years, currently has a 1.4% dividend yield, and has raised its payout for 14 years. So while Berkshire trimmed its stake in the company, Marsh & McLennan remains a solid stock to hold in the long term.

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KO, AAPL, PG - >>> 3 Warren Buffett Stocks You Can Buy in September and Hold Forever


Motley Fool

By Stefon Walters

Sep 23, 2023


https://www.fool.com/investing/2023/09/23/3-warren-buffett-stocks-you-can-buy-in-september/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Coca-Cola's dividend yield is more than double the S&P 500 average.

Apple's services segment is becoming a larger part of its revenue.

Procter & Gamble has increased its dividend for 67 straight years.


These blue-chip companies have a history of growth and stability that investors can feel comfortable with.

Warren Buffett is one of the most famous investors of all time. His success -- both personally and through his company, Berkshire Hathaway -- speaks for itself. Much of Buffett's success owes to just how clear and simple his investing philosophy is. One thing he constantly preaches is the importance of keeping a long-term mindset when investing. He's the poster child for the buy-and-hold strategy.

For investors looking to mimic Buffett's long-term investing approach, here are three Buffett stocks you can buy and feel comfortable holding on to forever.

1. Coca-Cola

Coca-Cola (KO) is Berkshire Hathaway's fourth-largest holding, making up 6.5% of its stock portfolio. Berkshire Hathaway first started buying Coca-Cola in 1988 and has since accumulated 400 million shares of the beverage giant.

Thanks to its flagship soda, Coca-Cola may be the most recognizable brand worldwide. One of its greatest accomplishments is how much distribution it's managed to achieve globally (and profitably). It has more than a 43% market share for non-alcoholic beverage sales globally.

Coca-Cola has always been a cash cow, but it's seen a significant improvement in its financials in the past three years. Revenue and net income are up over 38% and 46%, respectively, and it's managed to increase its dividend while lowering its payout ratio consistently.

Coca-Cola's dividend is a selling point for investors. It's as reliable as it comes, having been increased for 61 consecutive years. Coca-Cola's trailing-12-month dividend yield of around 3.2% is more than double the S&P 500 average.

One thing you don't have to question about Coca-Cola is its commitment to innovation and adjusting to consumer preferences. It has continuously shown a willingness to expand its product line and adapt to market trends. That's a recipe for sustained success.

2. Apple

You don't get the esteemed title of the world's most valuable public company by accident. It takes decades of innovation, vision, and execution -- and that's exactly what Apple (AAPL) has done.

Berkshire Hathaway owns over 50 stocks, but none carry as much weight as Apple. It accounts for over 46% of the portfolio. While that's not a strategy recommended for the typical investor, it's worked well for Berkshire Hathaway, especially considering Apple stock is up around 600% since Berkshire's first investment in Q1 2016.

People may point to slowing and inconsistent iPhone sales as a cause for caution, but Apple has been taking steps to be less reliant on it. The iPhone still accounts for 48% of Apple's revenue, but its services segment has steadily become a more significant revenue stream. That helps with diversification and Apple's margins because services typically have much higher margins than hardware products.

Apple's entrance into different services, like financial (Apple Card) and health (Health app), should be encouraging because those are industries with large total addressable markets due for disruption. And who better to do it than Apple, which has more resources than arguably any other company?

3. Procter & Gamble

Procter & Gamble (PG) (P&G) may not be the most recognizable name, but its collections of brands are sure to be. P&G is a conglomerate that owns household products like Tide, Old Spice, Gain, Crest, Pampers, and plenty more. It's one of Berkshire Hathaway's smaller holdings, representing just over $48.5 million worth of shares.

P&G is in a great position because it sells products that consumers buy regardless of the economy. When money is tight, it's relatively easy to choose generic-brand soda over name-brand soda or delay getting the new iPhone model. With P&G's countless brands covering baby care, feminine care, home care, and personal healthcare, it's much harder to eliminate these products from the budget.

Investors shouldn't buy P&G expecting double-digit percentage growth each year (organic sales increased 7% from its fiscal 2022 to 2023), but they can be sure the dividend won't be going anywhere. P&G has 67 straight years of dividend increases and 133 years of dividend payments in general. There's a reason it's a blue-chip stock.

P&G isn't quite "cheap" by many metrics, but if you're buying and holding on to the company for the long term, you shouldn't give much thought to it.

Sometimes, it's as simple as asking yourself, "Is this company selling something that people will always buy?" If that answer is yes and the company has a track record of growth and stability -- like P&G does -- then rarely can you go wrong.

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Chevron - >>> Got $500? 1 Warren Buffett Stock to Buy Emphatically


Motley Fool

By Reuben Gregg Brewer

Sep 22, 2023


https://www.fool.com/investing/2023/09/22/got-500-1-warren-buffett-stocks-to-buy-emphaticall/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

Oil and natural gas are vital energy sources used the world over.

Despite a global push to increase the use of non-carbon energy sources, oil and natural gas will remain important for decades.

Financially strong Chevron will be there to provide it while paying an attractive dividend.

The world will need oil for decades, and Chevron is well positioned to provide it while rewarding investors with dividends along the way.


Warren Buffett's portfolio contains a number of energy companies, including both utilities and oil and natural gas production companies. It's an admission of the important role that energy plays in the modern world. If you are looking at Buffett's portfolio at Berkshire Hathaway (BRK.B -0.86%), one energy company that even conservative investors with as little as $500 might want to add to their portfolios is Chevron (CVX 0.66%). Here are some key reasons why.

1. Oil demand is not going away

According to the Energy Information Administration, the International Energy Agency, and OPEC, demand for carbon fuels will continue to be robust through at least 2050. The biggest shift will be a trend away from coal, the dirtiest of the major carbon fuels, and toward natural gas, the cleanest. Oil demand will be higher, too, but it will not grow as quickly as natural gas. All in, neither oil nor natural gas is going away, largely thanks to a still-growing world population.

With this backdrop, it is clear that oil and natural gas companies are going to be important providers of energy. Chevron is an integrated energy giant with a market cap of over $300 billion. It has been producing oil and natural gas for a very long time and has highly efficient operations. If there is a need for oil and/or natural gas, it is well positioned to produce the fuels.

2. Chevron is financially strong

There are a lot of energy companies in the world, however, even some very large ones that rival Chevron in scale. But one thing that separates Chevron from similar peers is its impressive financial strength. To put a number on that, Chevron's debt-to-equity ratio is roughly 0.14 times. That would be low for any company.

But Chevron's debt-to-equity ratio also happens to be the lowest in its direct peer group, as the chart above shows. This is important because oil and natural gas are commodities prone to dramatic and often swift price swings. Excessive debt reduces a company's strategic options when times get tough. Chevron, given its financial strength, has more choices during the inevitable industry downturns it will face. That's something conservative investors should greatly appreciate.

3. Chevron has a strong playbook

Just having choices isn't enough, however; a company has to show that it knows what to do. And Chevron did just that during the oil downturn spurred by the economic shutdowns used to slow the spread of the coronavirus in 2020.

As the graph above shows, when oil prices declined in 2020, crimping Chevron's earnings, it took on more debt and increased its leverage. That cash was used to keep the business going and to continue paying dividends to investors (more on this in a second). Just as important, when energy prices recovered, Chevron reduced leverage so it would be prepared for the next industry weak spot. So not only does Chevron have a strong financial foundation, but it has proven willing to use that strength when needed.

4. Chevron puts investors first

As noted, one of the things Chevron did during the last downturn was support its dividend. The company's earnings dipped into the red, so it could have easily justified a dividend cut. It did not, though, preferring instead to increase the dividend just like it has every year for over three decades. Through good energy markets and bad ones, Chevron has continued to increase its dividend annually. This is notable for a couple of reasons.

First, it shows that the company knows how to navigate a highly volatile industry. Second, and perhaps more importantly, it proves that the company places a high value on the needs and desires of its shareholders. There are other energy stocks out there, some with dividend policies that effectively rise and fall along with oil prices. However, the board of Chevron is well aware that conservative income investors buy its stock because they expect a consistent and slowly growing dividend. And that is what they have made sure shareholders get.

An all-around great energy stock for conservative income investors

There are other things to like about Chevron, like its growing production profile and the current guidance that it will continue to improve the returns on the capital it invests. It's also working to improve its own environmental footprint. Such things will ebb and flow over time.

The bigger picture is what Buffett generally looks at. And from that perspective, Chevron operated in an industry that is out of favor but will remain important for years. It has a large and financially strong business. It has proven it can use its financial strength to muddle through difficult times. And it continues to put investors first with a steadily increasing dividend. If that sounds like a good combination of traits, then you might just be channeling your inner Warren Buffett.

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>>> Charlie Munger Handed Over His Family Fortune To The 'Chinese Warren Buffett' Who Flipped It into Half A Billion Dollars — 'We Made Unholy Good Returns For A Long, Long Time'


Benzinga

by Jeannine Mancini

September 11, 2023


https://finance.yahoo.com/news/charlie-munger-handed-over-family-172951450.html


In the early 2000s, Berkshire Hathaway Inc. Vice Chairman Charlie Munger made a daring yet calculated financial move. He entrusted a significant portion of his family’s fortune — $88 million — to Li Lu, often referred to as the Chinese Warren Buffett.

This bold investment, though carrying its share of risk, not only remained secure but also experienced substantial growth. It is now estimated at approximately $400 million.

“We made unholy good returns for a long, long time,” Munger said. “That $88 million has become four or five times that.”

Their first encounter took place at a mutual friend’s residence in Los Angeles shortly after Li’s college graduation. Munger initially came across as somewhat reserved, absorbed in his thoughts rather than fully immersed in conversation. Despite this initial impression, their discourse was imbued with Munger’s concise yet profoundly insightful words of wisdom.

It wasn’t until seven years later, during a Thanksgiving lunch in 2003, that Munger and Li engaged in what Li described as a “long heart-to-heart conversation.” Impressed by Li’s prowess in the realm of investments, Munger backed him with personal funds when Li embarked on a new fund venture in 2004.

Li’s investment track record boasts notable achievements, including Kweichow Moutai, a liquor brand that has surged in value over the past two decades and ranks among China’s largest listed companies. It’s even been named China’s national liquor.

Despite being amid the pandemic, Kweichow Moutai had a fantastic year. In 2020, its stock on the Shanghai Stock Exchange rose by about 70%. The company, which is partly owned by the government and partly publicly traded, is China’s most valuable business outside of the tech sector. It’s worth more than the country’s four largest banks.

Munger commended Li’s astute decision-making, noting, “It was real cheap, four to five times earnings, and Li Lu just backed up the truck, bought all he could and made a killing.”

The investment strategy Li employed hinges on his knack for identifying undervalued prospects. This approach underscores that sometimes, it is the less conventional investments that harbor the greatest potential for substantial growth. Li’s ability to recognize opportunities when companies are undervalued has allowed him to unlock exceptional value over time.

Li’s most renowned investment is in BYD Co. Ltd., a manufacturer of batteries and electric vehicles. Li initially invested in BYD in 2002, a move that laid the groundwork for both Buffett and Munger to follow suit six years later.

Munger, acknowledging the extraordinary success, described the early investment in BYD as a “miracle.” In a CNBC interview, he said that BYD has outpaced Tesla Inc. in China, a statement that contrasts with Buffett’s views on the electric vehicle industry. Buffett has expressed concerns about excessive competition.

While Munger placed immense trust in Li, considering him the sole outsider he has ever entrusted with his finances, he also predicted that Li would eventually assume a significant role at Berkshire Hathaway.

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>>> 10 Stocks Warren Buffett Just Bought and Sold

Buffett made some new bets on housing construction to capitalize on rising demand.


US News Money

by Wayne Duggan

Aug. 16, 2023


https://money.usnews.com/investing/stock-market-news/slideshows/stocks-warren-buffett-just-bought


What stocks has Warren Buffett bought and sold lately?

Each quarter, all fund managers with at least $100 million in assets must publicly disclose their stock holdings to the U.S. Securities and Exchange Commission via form 13F, giving investors a rare peek behind the curtain of some of the world's largest and most successful hedge funds.

One of the most anticipated quarterly filings comes from Buffett and his $781 billion company Berkshire Hathaway Inc. (ticker: BRK.A, BRK.B).

Here's a look at 10 of the biggest changes the Oracle of Omaha made to Berkshire's portfolio in the second quarter:


STOCK Q2 CHANGE IN SHARES % CHANGE

Activision Blizzard Inc. (ATVI) -34,781,660 -70%

Chevron Corp. (CVX) -9,287,475 -7%

McKesson Corp. (MCK) -2,289,864 Sold all

D.R. Horton Inc. (DHI) +5,969,714 New holding

Occidental Petroleum Corp. (OXY) +12,422,073 +5%

General Motors Co. (GM) -18,000,000 -45%

NVR Inc. (NVR) +11,112 New holding

Marsh & McLennan Cos. Inc. (MMC) -404,911 Sold all

Lennar Corp. (LEN.B) +152,572 New holding

Vitesse Energy Inc. (VTS) -51,026 Sold all

Sold: Activision Blizzard Inc. (ATVI)


In 2022, Microsoft Corp. (MSFT) announced a $68.7 billion buyout deal for video game publisher Activision Blizzard at a price of $95 per share. Berkshire had purchased about $1 billion of Activision Blizzard shares at an average price of about $77 just weeks before the deal was announced. Antitrust regulators in the U.S. and U.K. have since sued to block the deal, and Buffett doesn't seem up for the legal battle. Berkshire reduced its position by 70% in the second quarter and now holds about 14.7 million shares of ATVI stock worth about $1.2 billion.

Sold: Chevron Corp. (CVX)

Buffett first invested in U.S. oil major Chevron in the fourth quarter of 2020. Buffett sold Chevron shares in the first and second quarters of 2021, but a global energy crisis and Russia's invasion of Ukraine sent crude oil prices soaring to 13-year highs in 2022. In response, Buffett added to his Chevron investment in the first three quarters of 2022 but pivoted again and has been dumping Chevron ever since. In the second quarter, Berkshire sold more than 9.2 million CVX shares, but it still holds 123.1 million shares worth about $19.4 billion.

Sold: McKesson Corp. (MCK)

McKesson is one of the largest distributors of pharmaceuticals and medical-surgical supplies in the U.S. Buffett was active in the health care sector early in the COVID-19 pandemic, taking large stakes in companies like AbbVie Inc. (ABBV), Bristol-Myers Squibb Co. (BMY), Pfizer Inc. (PFE) and Merck & Co. Inc. (MRK). However, Buffett quickly reversed course and sold off those positions. He took a new 2.9 million-share stake in MCK stock in the first quarter of 2022, but he began selling that stake just three quarters later. Berkshire sold all its remaining shares of MCK stock in the second quarter to completely exit the position.

Bought: D.R. Horton Inc. (DHI)

D.R. Horton is one of the largest publicly traded U.S. homebuilders by market capitalization, homes delivered and revenue. The biggest surprise from Buffett in the second quarter was his aggressive push into the homebuilder market, and D.R. Horton was his largest new stake. Homebuilder stocks are a classic Buffett value play, and D.R. Horton shares trade at just 9.2 times forward earnings. A lack of U.S. housing inventory has created an attractive environment for homebuilders. Berkshire has acquired roughly $6 million shares of DHI stock worth about $726.5 million.

Bought: Occidental Petroleum Corp. (OXY)

Occidental Petroleum is one of the largest U.S. oil and gas companies, and oil and gas stocks have been top market performers since the beginning of 2022. Buffett has held a stake in Occidental since Berkshire helped fund Occidental's $38 billion acquisition of Anadarko Petroleum back in 2019. Berkshire's Occidental stake has grown to about 224.1 million shares worth about $13.2 billion, making OXY stock Buffett's sixth-largest stock holding. Berkshire also reportedly holds $9.5 billion of Occidental preferred stock and warrants to buy $5 billion of OXY shares at $59.62 each.

Sold: General Motors Co. (GM)

Priced at just 4.7 times forward earnings, legacy automaker General Motors is exactly the type of value stock Buffett typically targets. Berkshire first bought shares of GM way back in the first quarter of 2012, a little over a year after it completed its initial public offering following its bankruptcy restructuring. Buffett has been steadily selling GM stock since the second quarter of 2022. Berkshire dumped 18 million shares in the most recent quarter, reducing its stake by another 45%. After the latest selling, Berkshire's remaining GM stake is down to 22 million shares worth about $848.3 million.

Bought: NVR Inc. (NVR)

NVR is one of the five largest U.S. homebuilders and is one of the three new homebuilder stocks Buffett acquired in the second quarter. Throughout Berkshire's long history, Buffett has often taken large stakes in several companies competing in the same market, such as railroads, airlines or banks. Sometimes, he has chosen to maintain those positions for diversification, while other times he later chose to focus his investments in one or two of his favorites and dump the rest. Berkshire bought 11,112 shares of NVR stock in the second quarter, a stake that's worth about $70.6 million.

Sold: Marsh & McLennan Cos. Inc. (MMC)

Buffett first invested in insurance broker Marsh & McLennan in the fourth quarter of 2020. Buffett has always loved the insurance business, and Berkshire has its own sizable core insurance business. At one point in 2020, Berkshire owned more than 5 million MMC shares, and the stock has more than tripled the return of the S&P 500 since the beginning of 2021. However, Buffett began trimming his Marsh & McLennan stake in the second quarter of 2021 and has continued selling ever since. In the most recent quarter, Berkshire sold its remaining 404,911 shares of MMC, completely exiting the position.

Bought: Lennar Corp. (LEN.B)

Lennar is another one of the largest U.S. homebuilders, and it rounds out the trifecta of homebuilder stocks Buffett was buying in the second quarter. Rising interest rates have made mortgages more expensive for homebuyers, but Buffett may be looking ahead to a potential perfect storm of low housing inventory and lower mortgage rates in 2024 and beyond. The homebuilder stakes are relatively small by Buffett's standards, but investors should watch to see if he continues buying in coming quarters. Berkshire currently holds 152,572 shares of Lennar's Class B preferred stock worth about $17.2 million.

Sold: Vitesse Energy Inc. (VTS)

Vitesse Energy is a small oil and gas company founded in 2022 that specializes in acquiring non-operating working and royalty interest ownership of properties primarily in the core Bakken Formation in Montana and North Dakota. Berkshire presumably acquired shares of Vitesse when it was spun off from parent company and Berkshire holding Jefferies Financial Group Inc. (JEF) in January 2023. Apparently, Buffett isn't a fan of the standalone oil and gas company, which pays a sizable 8.2% dividend. In the second quarter, Berkshire sold its entire stake of 51,026 shares of VTS stock and completely exited the position.

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It will be exciting to follow how the process will develop!

Today, the best stocks for long-term are considered the following:
Enterprise Product Partners LP (EPD)
Welltower Inc. (WELL)
Southern Copper Corp. (SCCO)
Cubesmart (CUBE)
Digital Realty Trust Inc. (DLR)
Corning Inc. (GLW)
The Clorox Co. (CLX)