The Berkshire Beat: January 26, 2024
The Berkshire Beat: January 26, 2024
All of the latest Berkshire Hathaway news and my must-reads of the week!
Happy Friday and welcome to our new subscribers!
The latest news and notes out of Omaha…
Berkshire Hathaway’s Class A shares ($577,251.69) and Class B shares ($380.99) both soared to new all-time highs this week. It’s still very early, but Berkshire is off to an impressive start through the first few weeks of the new year.
$BRK.A: +6.2%
$BRK.B: +6.8%
S&P 500: +2.7%
Can’t stop, won’t stop: Berkshire added even more Liberty Media SiriusXM tracking stock over the past three days. That includes 438,945 shares of LSXMA 0.00%↑ and 1 million shares of LSXMK 0.00%↑ for a total price tag of $44.7 million.
Earlier this week, the Haslam family sat down with the Knoxville News Sentinel to discuss their decision to sell the remaining 20% of Pilot Travel Centers to Berkshire. One item, in particular, caught my eye: During settlement negotiations, Pilot founder Jim Haslam II and Berkshire CEO Warren Buffett had one final chat — which Haslam termed “a satisfactory conversation” — “that eventually ended up in everything working out”.
Last year, shortly after assuming majority control of the travel center network, Berkshire replaced Pilot’s CEO and CFO — a surprising move from the typically hands-off conglomerate. “[At that point], we realized things were going to be run differently and there were some philosophical differences,” said Jimmy Haslam (the founder’s son). “Listen, it [was] their right. They owned 80% of the company and paid us a lot of money for that 80%.”
“We just thought it was best for our family to go ahead and sell the 20% and move on,” Haslam added. “We certainly wish the company and all its team members nothing but the best of luck.”
The Sentinel was also eager to learn if Berkshire’s 100% ownership — and, perhaps, the acrimonious end to its partnership with the Haslams — meant that Pilot’s HQ would one day move out of town. “Pilot will be staying in Knoxville,” Buffett reassured them via email. “You can bet on that.”
On a conference call with Citigroup managing directors last week, CEO Jane Fraser shared an interesting anecdote. She recently lunched with Warren Buffett — and received encouragement from him to press on with her planned restructuring of the company. “Fraser outlined her latest round of reorganization efforts to simplify the bank,” wrote Reuters. “[Buffett] told her to keep going.”
This reorganization reportedly includes cutting up to 20,000 jobs in an attempt to reduce red tape and increase profits.
“Buffett confirmed the lunch took place, but declined to give more details about the conversation.”
Berkshire owns 2.9% of Citigroup — a position currently valued at $3.0 billion.
Here we go again… The U.S. Federal Trade Commission has requested additional information related to Occidental Petroleum’s $12 billion acquisition of CrownRock. Oxy is not alone: The FTC is also scrutinizing other O&G mega-deals involving Exxon Mobil and Chevron.
BNSF Railway announced that it will spend $3.92 billion on capital investments in 2024. This includes $2.88 billion on maintenance of core network assets, $440 million on equipment acquisitions, and approximately $600 million on expansion projects in Kansas, New Mexico, California, and Illinois.
CNBC’s Alex Sherman reports: “David Ellison’s Skydance Media and its financial backers are exploring a deal to take private all of Paramount Global … Skydance has exchanged preliminary information with Paramount, said people [familiar with the matter], who asked not to be named because the deal talks are private. Full due diligence hasn’t started.”
This month’s annotated transcript “bonus” for paid supporters will come out early next week. And, if I may say so myself, it’s a pretty good one. A Warren Buffett interview that doesn’t get much attention and touches on some unusual topics. If you’ve been on the fence about upgrading to a paid subscription, there’s no time like the present. Plus, you get immediate access to the six annotated transcripts that have already been released.
And, as always, the first 1,500-ish words (counting footnotes) will be available to everyone. I’ve tried to do my best to ensure that no one feels short-changed.
A Slow Read of Poor Charlie’s Almanack
Chapter Two: Remembering — The Children on Charlie
This week’s chapter of Poor Charlie’s Almanack makes one thing abundantly clear: At his core, Charlie Munger was a family man. His favorite time of year came each summer when the whole Munger clan — including his eight children and a whole mess of grandchildren — vacationed together on Star Island in Minnesota.
This chapter features short vignettes from his children that grant readers a rare peek at Charlie Munger the father. Each one presents a different side of their multi-faceted father and illustrates the rich relationship that he had with all of them — from encourager to disciplinarian to teacher to provider to playmate.
In the interests of keeping this section to a manageable length, I won’t delve into each child’s recollection. I have, instead, picked out a few for special mention.
Charles Jr. tells of the time that he and his father were returning a borrowed Jeep while on a family ski trip in Sun Valley, Idaho. Despite the fact that they were already running late, Charlie the Elder insisted that they stop off at a gas station and top off the tank. When his son pointed out that it was still half full, Charlie said: “When you borrow a man’s car, you always return it with a full tank of gas.” Charlie refused to let his standards slip, even for a simple nicety like this. It’s a lesson that his son never forgot.
Wendy remembers the countless morality plays and downward spiral cautionary tales that her father told over the dinner table. Charlie relished the chance to use these memorable stories of virtue and catastrophe to impart important life lessons to his children. “He used such extreme and horrific examples that we were often simultaneously groaning and laughing by the time he finished,” she said. “He’s in a league of his own when it comes to describing negative outcomes and the lessons to be learned from them.”
Molly, meanwhile, credits her father’s level-headed and rational approach with helping her to avoid the activist attitudes that swept through her generation. “When I went to college in 1966, I was very lucky to have been thoroughly steeped in Daddy’s influence. In an angry and radical era, I would buy The Wall Street Journal or Fortune at the subway kiosk just outside the college gates, tuck it under my Oxford-cloth arm, and stride off to economics and business classes. People were occupying the dean’s office [and] going to jail. I was in the basement of the Lamont Library learning how to read a balance sheet.”
My favorite thing about this chapter, though, is how the children offhandedly mention so many little details about Charlie’s day-to-day life. Like…
He liked to eat Zingers pickles — “so spicy-hot a bite will bring a laugh” — and peanut-butter-and-mustard sandwiches.
If you were playing bridge with Charlie — and doing so rather poorly — he might hit you with this insult: “You played that [hand] like a plumber.”
At Christmas, the kids would always receive a Brooks Brothers gift card — “perfectly timed for the winter sale”. And, sometimes, Charlie would even play fashion critic. One year, after Philip bought pleated trousers, his father took one look and asked him: “Do you want to look like a jazz drummer?” 🤣
More Must-Reads
Other awesome things that I read (and listened to) this week…
🎧 Tom Gayner: Short-Term Patience, Long-Term Results (Farnam Street)
“My dad used to tell me, ‘Any time you can do a favor for somebody, do it. Just do it.’ Life is long and you never know how those things [will] come back over time. The idea of always trying to be helpful, always trying to add value, always trying to do favors for people, always just trying to make them glad that they interacted with you — that’s a pretty good central organizing principle. If you do that consistently — day after day, month after month, year after year — you find that the world is kinda rooting for you.”
“The ‘you only live once’ or ‘YOLO’ culture advocates spending now, often for ‘experiences’, because the future remains unknown and we should enjoy life while we can. It is obvious that no one can be sure of even reaching old age, so there is a kernel of truth in the ‘YOLO’ mentality, but all too often it is extrapolated in dysfunctional ways.”
Building an Investment Checklist
“Do I have an interest in the company/industry? This is another major area I see investors overlook. If I’m just not excited about an industry I probably shouldn’t put myself in a situation where I’m going to half-ass the analysis, no matter how exciting the prospects seem from the outset.”
The Negative Checklist: Reducing Errors (Novel Investor)
“Joel Tillinghast’s negative checklist inverts the problem. Instead of looking for great companies, great management, and so on, the checklist avoids the worst of the worst of them. Don’t understand the company? Skip it. Horrible management? Nope. Overpriced stock with no sales? Pass. Product with no pricing power or brand loyalty? Not interested.”
Charlie's comment about always returning a borrowed car with a full tank of gas is something I always remembered. Since I don't own a car and sometimes borrow one, I've faithfully followed Charlie's advice.
Loved this week‘s edition - the „always return a car with a full tank“ advice resonated deeply as I have always held the same conviction and extended it to all aspects of life - always fill the kettle you have just emptied, never leave the car on almost empty, always ensure that there is a new loo roll in the lavatory : simple courtesies that ensure that you are mindful of those coming after you and practicing „stewardship“ of even the smallest and simplest of assets.