Im not sure but the costco stake is fairly trivial as its only worth $600 million compared to the $14 billion amex stake. Berkshires locked into the amex stake because of the tax consequence of selling and hasnt bought any since the mid 90s. I expect at this point, he favors dividend increases to buybacks despite the tax. The effect to amex is certainly a negative compared to the prior relationship but so would be accepting onerous terms.
yes it would have but only in hindsight. Generally if you have to pay a 35% tax to sell something to then buy something else you won't come out ahead most of the time
reasonable enough perspective although perhaps a little too dramatic. At least Bill recommends shorting a market that can't theoretically go down much. Certainly seems less risky than Hussmans shorting the market through a staggered strike. He seems to miss that the majority of the gains he references are not due to the great bull market thats created massive overvaluation but in fact due to the nature of the market. Sure, maybe the market suffers a 40% loss this year, but that end to the supercycle doesnt take away from the majority of its gains. Equities are the best place to be over time so don't stay away for too long but sometimes the market does get a little ahead of itself and recessions will inevitably occur. Reminds me of a buffett quote "Periodically, financial markets will become divorced from reality … you can count on that. … Never forget that 2+2 will always equal 4. And when someone tells you how old-fashioned that math is, zip up your wallet, take a vacation and come back in a few years to buy stocks at cheap prices."
Republican on the production side, democratic on the distribution side
Here's my headline: "Stocks fall because sometimes stocks do that"
heard these arguments a hundred times. Hard to know exactly what buffet did during partnership years but I doubt it was much hedging. The tax argument seems to be the weakest, regardless of what tax rates should be everyone acts to minimize their own taxes and in the case of Berkshire, its an obligation. As far as buffett being an activist, that one has some merit but it was a long time ago and very different from the type of activism practiced now
Well Bill Gates is smart enough to live in Washington, so fortunately he only has the 20% qualified dividend tax and now the 3.8% medicare investment surcharge. If he lived here in california, he would be hit by an additional 13.3% state income tax
If you can buy for close to the 1/1500 ratio, you'll do very very slightly better in a class A share as A can convert to B and tends to do so when markets are less than efficient. As a result, the A share count continues to drop with only ~826,000 shares outstanding down from 938,000 3 years ago, so soon A shares may be rare company indeed. For now A and B are both about 50% of market cap. You do lose a little bit of liquidity but A is still pretty liquid and you always have the option to convert.
However, there are quite a few advantages to B shares too. If you own in within a taxable account its much easier to control gains on sale to minimize taxes. Some people are in tax brackets with no long-term capital gains (for married people up to taxable income of ~$93k) and if you're going to sell at some point it will be much easier to control the sale of B shares to still not incur federal taxes. In the case of a tax loss its also much easier to realize with B shares.
Another thing to consider is that you're also increasing your position significantly, nearly quadrupling it to a $222,000 position. Thats a big decision to make, and almost certainly a bigger decision than whether you go A or B
But in all reality, it was never IBM over brk. It was IBM over sitting on even more cash
yeah its definitely come down a bit here, seems like a reasonable play. Of course, like BNSF capex regularly exceeds depreciation although lately not nearly in as significant in a way considering whats been going on with BNSFs network. But it certainly affects true earnings. Although partially offsetting that is the deferral of income taxes which is a liability that regularly increases benefiting true cash flow. Net cash flow has been about $3.5 billion lately, probably not materially different this year as capex has remained at 4.3 billion. So that makes $90 billion seem pretty expensive at about 25 times cash flow but if you can finance capex at low interest rates and the business continues to grow, then it could still work out quite well. That's essentially the BNSF model, issue debt for any capex over depreciation and return net income to shareholders.
Its not a bad play, I haven't looked at HOG for a long time. They definitely have some struggles right now but I think their death has been greatly exaggerated.
yeah, i was a bit surprised to see an add to WFC, he hadn't touched it for awhile. Starting to get close to that 10% threshold now
Investment income last quarter: $875 million, total operating earnings $4.244 billion
And yet they still have significant sales. As long as you can cut costs agressively as 3g has done with heinz and not have sales fall of a cliff, you should do just fine
you have to search the title. He's referring to an article by bill gates called 50 years of Warren Buffett's wisdom
It sucks to see a CEO that seems to be overcompensated, especially if performance starts to drag. The truth though is, even if Rometty does get somewhere around $15 million a year, that's still well under 1% of IBM's annual earnings and it is reasonably tied to performance.