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The Berkshire Beat: April 7, 2023
The latest Berkshire Hathaway news and my must-reads of the week!
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The latest news and notes out of Omaha…
🤑 It was another busy week of cashing dividend checks over at Berkshire Hathaway. Warren Buffett and co. received $184 million from Coca-Cola, $31.75 million from HP, and $23.4 million from Paramount Global.
Buffett in his latest annual letter: “The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.”
Buffett’s right about the KO 0.00%↑ dividend continuing to grow. Earlier this year, Coca-Cola flexed its Dividend King muscles and raised the quarterly dividend by 4.6%. Berkshire will now receive $736 million in dividends from the soft drink giant in 2023.
On Wednesday, Berkshire filed to sell more yen-denominated bonds in Japan. The proceeds from these unsecured notes will be used for general corporate purposes — which includes refinancing existing yen-denominated debt coming due this year. Nikkei Asia, though, thinks this could be “a potential sign of further investments in Japanese stock”.
I’ve always considered Charlie Munger’s work with the Daily Journal investment portfolio to be at least vaguely Berkshire-adjacent, so I’m gonna include this here.
Early bird: Munger and DJCO 0.00%↑ once again filed the company’s 13F (for Q1 2023) more than a month ahead of the deadline — and ***drumroll*** he made no domestic moves in the quarter. The US-exchange portion of the portfolio ($161 million) remains unchanged: Bank of America (41%), Wells Fargo (37%), Alibaba (19%), and U.S. Bancorp (3%).
Singer-songwriter Jimmy Buffett made Forbes’ Billionaires List for the first time in 2023. And, while he’s not related to Warren, he does own shares in Berkshire Hathaway. Warren told Forbes: “I wish there were more Jimmy Buffetts, but there aren’t. Tell Jimmy to keep me in his will!”
Countdown to the Annual Meeting
T-minus one month until Berkshire Hathaway’s annual shareholder meeting in Omaha on May 6, 2023.
The official Shareholders Guide contains plenty of pertinent information for attendees, but the part that really caught my eye is Warren Buffett’s “A Message from Your Chairman” on page six.
Long story short, he knows that last year’s Q&A session did not cover as much ground as usual — and he promises to pick up the pace this year.
We will alternate between Becky [Quick] and the audience and, all told, will likely handle about 60 questions. Last year, I made a mistake by spending too much time on a few subjects. Consequently, we answered far too few questions. I won’t go astray this year.
Greg Abel and Ajit Jain will be available to answer questions during the morning session, but not in the afternoon. After lunch, it’s 100% The Warren & Charlie Show.
And, for anyone hoping to get their question answered, Buffett also lays out the only rules that will be enforced during the Q&A session:
Do not ask what we are buying or selling. Even if the information is public, we do not discuss how we arrive at our decisions. We also will not discuss politics. Any other subjects are fair game.
The four of us will not get so much as a clue about the questions to be asked. We know you and Becky will pick some tough ones and that’s the way we like it.
One of my low-key favorite things about the annual meeting is Berkshire’s list of “approved” books for sale through The Bookworm. It’s nice to know which Berkshire-related publications get the Buffett and Munger imprimatur.
While the full list for 2023 has not yet been released, The Bookworm revealed two items making their debut on the list this year:
The Essays of Warren Buffett: Lessons for Corporate America (8th Edition) by Larry Cunningham
Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy by James B. Stewart and Rachel Abrams
No surprises here. Cunningham’s The Essays of Warren Buffett is a time-tested classic. The new edition will, no doubt, uphold its fine legacy.
Likewise, Unscripted is a must-read for any Paramount aficionado. Berkshire owns 15.3% of the media giant’s non-voting Class B shares.
Other awesome things that I read this week:
Why Buffett’s Berkshire Will Win From Market Crash (Business Insider // Theron Mohamed)
“Buffett’s first job is to ensure Berkshire survives. Only then does he look to thrive. I’d expect more opportunities to come Berkshire’s way in the future, absent a check-wielding Fed stepping in and lending directly to more companies.”
“In his Lettres Provinciales, French philosopher and mathematician Blaise Pascal famously said: ‘I would have written a shorter letter, but I did not have the time.’ Some people pride themselves on verbosity; I used to.”
“I often wonder what owning shares of Berkshire Hathaway decades ago felt like and offer that owning shares of Constellation Software, today a company in its third decade, also lead by a business iconoclast, as an answer. Owning Berkshire was a bet on Buffett whereas owning Constellation is a bet on a system designed to allow acquisition activity to scale.”
“Michael Barr, the Fed’s vice chairman for supervision, has blamed the failure of Silicon Valley Bank on bad management. But it’s part of the job of regulators to assume that private actors will behave badly. Because we know that some of them will. Yes, it was the height of recklessness on the part of SVB to bet that interest rates would remain quiescent. But it was virtually guaranteed that someone would be exposed to the long end of the borrowing curve. The inflation caused by imprudent deficit spending and, for too long, an overly accommodative Fed, was bound to upset somebody.”
“Streaming is currently unprofitable and consumes massive amounts of cash. To keep people subscribing, Disney needs to continually generate new content, which is extremely expensive. It’s also not clear if this content is going to be as profitable as the old model of having box office hits and then selling a lot of DVDs.”
Inside Amazon Studios: Big Swings Hampered by Confusion and Frustration (The Hollywood Reporter // Kim Masters)
“Last September, [The Lord of the Rings: The Rings of Power] began with a bang, delivering the biggest debut ever on the streamer in what Amazon Studios chief Jennifer Salke called ‘a very culturally defining moment’ for the company. But when season one wrapped, the show was less defining than hoped, falling short of being the breakout hit that Amazon had envisioned. While Amazon, like other streamers, provides only limited data … sources confirm that The Rings of Power had a 37% domestic completion rate (customers who watched the entire series). Overseas, it reached 45%. (A 50% completion rate would be a solid but not spectacular result, according to insiders.)”