The Berkshire Beat: December 29, 2023
All of the latest Berkshire Hathaway news and my must-reads of the week!
Happy Friday and welcome to our new subscribers!
Special thanks, too, to those who recently became paid supporters! ❤️
The latest news and notes out of Omaha…
Last call for anyone interested in reading the annotated transcript of Charlie Munger’s Q&A at the Redlands Forum before it goes back behind the paywall. On January 1, it will be re-locked.
If you enjoy reading annotated transcripts such as this one — and want immediate access to five more — there’s no better time than now to become a paid subscriber. (I’m within spitting distance of my 2023 goal for paid subs and just need a few more before New Year’s…)
Over the holiday weekend, the Wall Street Journal published an interesting profile of Greg Abel, the man who will — one day — succeed Warren Buffett as CEO of Berkshire Hathaway. Though, not surprisingly, the media-shy Abel is not quoted in the story. He typically prefers to stay out of the spotlight and let his managerial record do the talking. Nevertheless, there’s a lot of good stuff here.
“Greg will be more successful than I have been,” Buffett told the WSJ. “If I said otherwise, my nose would grow.”
Buffett has reportedly tasked Abel with handling Berkshire’s legal dispute over Pilot’s valuation with Jimmy Haslam and family. Seems like a smart move to me. Buffett’s time is better spent far away from that drama.
“[Greg] is still a numbers guy and understands the language of business as well as anyone,” said Berkshire director Ron Olson. “He loves to learn.”
Olson added: “He’s no Warren Buffett — but neither is anyone else.”
Speaking of the Haslams… In a hearing last week, Berkshire’s attorney told Vice Chancellor Morgan Zurn (Delaware Court of Chancery) that Jimmy Haslam made a “stunning” admission during a recent deposition. One that supposedly corroborates allegations of secret side payments to Pilot executives and inflated earnings. According to Bloomberg, Berkshire’s attorney claimed that “Haslam … acknowledged he had promised to reinstate his own ‘executive compensation plan’ and would make payments to 24 [Pilot] executives after he sells his final 20% stake.” The judge also approved Berkshire’s request to take additional deposition testimony from Haslam.
“Pilot continues to deny the false allegations in Berkshire’s counterclaims,” a spokesperson for the Haslam family later told Pro Football Talk. “The assertion of Berkshire’s counsel at Thursday’s court hearing that Mr. Haslam admitted Berkshire’s baseless allegations in his deposition is a gross mischaracterization of Mr. Haslam’s testimony.”
🤑 Today is another big dividend day for Berkshire — with over $378 million rolling into Omaha from two of the conglomerate’s largest holdings. Berkshire will receive $247.9 million from Bank of America and $130.2 million from Kraft Heinz. That’s a lot of capital to allocate, but something tells me that Warren Buffett is up to the challenge.
I really enjoyed’s recent article (“Only Pessimists Pick Bottoms”) which juxtaposes Buffett’s famous New York Times op-ed in 2008 — in which he preaches patience and optimism in American business — with a more panicked piece from another financial writer.
Buffett’s op-ed remains one of my favorites. A clear-eyed distillation of his investing philosophy and the emotional discipline needed to successfully play the money game.
A few months after publishing the op-ed, Buffett told CNBC: “I have no idea what the stock market is going to do tomorrow or next week or next month or next year. I actually said [this] twice in the article. The editor said, ‘You’re not supposed to say things twice.’ I said, ‘I want to say this twice [because it’s so important].’”
The Apple Watch Series 9 and Ultra 2 are back on sale after a federal appeals court temporarily paused an ITC ban. “We are thrilled to return the full Apple Watch lineup to customers in time for the new year,” the Cupertino-based tech giant said in a statement. “Apple’s teams have worked tirelessly over many years to develop technology that empowers users with industry-leading health, wellness, and safety features and we are pleased the U.S. Court of Appeals for the Federal Circuit has stayed the exclusion order.”
Sales of the Series 9 and Ultra 2 were halted shortly before Christmas after the ITC ruled that the blood oxygen sensor in these particular devices infringed upon Masimo’s patents. Both models should now remain available until at least mid-January. Apple is reportedly preparing a software update that it hopes will appease the ITC.
The Daily Journal Corporation released its 10-K yesterday and, unsurprisingly, made several references to the late Charlie Munger. Until the very end, he managed the Daily Journal’s stock portfolio — worth $303.1 million as of September 30, 2023. (And was concentrated in just eight companies.) It will be interesting to see what — if any — changes are made to the portfolio by Charlie’s eventual replacement. Anyway, here’s what the 10-K had to say…
“Although the Board will work to ensure that the portfolio remains well-managed, it’s impossible to ever replace Mr. Munger. Given the loss of Mr. Munger, the Company does not expect the future financial performance of its marketable securities portfolio to rival its past performance.”
“Given the passing of Mr. Munger, the Company does not expect its holdings of marketable securities to generate gains in the future consistent with the past. The Company’s goal is simply to continue to develop a successful and profitable software business, while continuing to enjoy the benefit of its Traditional Business (legal newspapers) for as long as possible.”
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Kingswell: 2023 in Review 🥳🎉
It has been something of a banner year here at Kingswell. The total subscriber base increased by a whopping 420% (Elon Musk would be proud) to nearly 5,000 in all. Which just boggles my mind considering that it took over six months to get more than thirty subscribers when I first started out. 🤯
Thank you, as always, to everyone who supports this newsletter in any way! Every click, like, share, and comment means the world to me.
Most Popular Posts of 2023:
Here’s to an even better 2024! (I’ve got big plans…)
Other awesome things that I read this week…
“In the absence of a track record of accomplishment, you should take a CEO’s plans as hopeful intent. That doesn’t mean they are lying, just that we really don’t necessarily know what they can or cannot do. There is a particular danger if they use language that resonates with you. More than once in my investment career did I fall for someone who said all the right things, except that they hadn’t done them — in the past, or as it turned out, in the future.”
Why Berkshire Hathaway Should Do Just Fine in 2024 (Andrew Bary || Barron’s)
“The case for Berkshire starts with what CEO Buffett calls a ‘Fort Knox’ balance sheet, with over $150 billion in cash, or about 20% of the company’s market value. Earnings are growing, too, with Berkshire’s after-tax operating profits up nearly 20% so far in 2023. They could hit $40 billion this year, powered by higher interest income on Berkshire’s cash and strong insurance underwriting results, helped by a turnaround at GEICO. Berkshire’s equity portfolio, led by Apple, is having a great year.”
“Munger intensely advised people to ‘learn the great ideas’. Big theories in physics, biology, chemistry, statistics, [and] psychology provide lenses through which we can see the world. The latter is a very complex system. It seems rather stupid to think one could be capable of correctly dealing with its infinite complexity with only one mental model, one framework for analysis. Disciplines do not operate in isolation.”
How To Have Better Habits in 2024 (Ryan Holiday)
“It always takes longer than you want. So, one of the most important habits is the habit that makes all other habits possible: patience. It doesn’t matter if it’s writing a book, opening a small business, getting in shape, establishing a reading or meditation practice — it always takes longer than you expect … But, if you can practice delayed gratification, if you can understand that all good things take time, that it’s a process, you’re almost always going to be more successful.”