I think its just that stock to business transactions are a good trade for Berkshire. With stock, there's 14% tax on dividends and capital gains tax if sold. With a business, not only do you get to direct capital but you don't have the dividend tax. That and you can generally make these trades without a premium or shareholder vote.
For example, with duracell we traded $4.7 billion worth of appreciated stock for $1.7 billion cash and a business that earns $950 million a year, that's a very good trade.
Well only 80% of oil is hedged for the next 18-24 months and then there's no protection. And there's $3 billion in debt to consider.
Definitely a good way to add value. Unfortunately the biggest holdings like coca cola, Wells fargo and amex don't really have many non-core businesses so not much you can do there. Definitely some other possibilities though. There would be some options with Dow, who seems key to shed business lines. This would be more likely if they can ever force conversion but maybe a deal could be reached even before then.
Well first of all, BNSF is only about 20% of Berkshire's economic earnings. Secondly, petroleum is only about 12k carloads out more than 200k carloads each week (counting intermodal). Thirdly, I dont think its clear just how much petroleum is going to decline.
Well we'll see once they see how expensive that debt will be. Even prior to today their convertible preferred was yielding 10% and with common stock upside above 3.50 or so. New debt here will be very pricey if they can get it
Well perhaps poor choice of words but it is a big headwind. The sacroc field alone is about $800 million of DCF this year the vast majority of the co2 EOR segment that is 17% of of earnings before DD&A. That amount will start declining soon but in 2021 is when the big drop in earnings occurs and within 2 years from that approaches zero. The katz field is similar.
Is bankruptcy really that impossible for halcon? its barely profitable as it is and with $3 billion in debt, I dont see it as an impossibility.
I domt see what the problem is, those are the companies own projections. Im very aware of what they do and im still long but considering lightening my position
yeah as far as I know the only thing that he said about it was that he didn't think 6% was the right number anymore for margins but he didn't elaborate.
You'll drive yourself crazy if you kick yourself for every stock you sell that then goes up. Same thing could happen to you, even at $148
Definitely hasn't happened in Europe yet where they're seeing below average margins. Low rates are still sort of a new thing for much of Europe. Maybe thats the next trade to make.
2015 dividend of $2 per share with 10% increases for 5 years equals a 2020 dividend of $3.22 per share with a small amount of coverage. And that's prior to the drop in earnings in 2021 from the oil well going dry, which is a significant part of earnings. And the corporate formation does put KMI at a cost of capital disadvantage. All things considered it doesnt seem like the current price of more than 13x 2020 dividends is very attractive.
I didnt get in until may of 2012, but its been a nice ride up from 81. I still got another 40 years to go, so we'll see how it works out.
Hussman seems very focused on low interest rates being the main reason for high valuations and certainly its a part of it but high profit margins are the primary cause. Profits have stayed above 10% of GDP for the last 3 years now and its been nearly a year and a half since Hussman said that lower profits are "baked in the cake" due to lower deficits and will be realized after a 4 quarter lead. I dont doubt that we will probably see lower profit margins but the short term movement of them are very difficult to predict, so its not surprising to me that investors tend to take profits at face value.
Yes, definitely agreed. I do prefer the no dividend policy for now. Howard definitely seems much more willing to start paying dividends, so I do expect that once Warren is gone.
I do think its a better way to pay for performance, particularly when you have such a large group of businesses. Compensation, however, is not low. Greg Abel generally makes about $12 million a year (bonus depends on results with highest possible bonus at $40 million). BNSF doesn't disclose to my knowledge but I would estimate it was somewhere in the 15-20 million range for Matt Rose and probably similar now that Carl Ice has taken over.
those bonds have value now, use them to exercise the warrants. Sears could use the small reduction to its debt and I doubt the warrants will trade at this sort of premium for long.