The Berkshire Beat: November 1, 2024
All of the latest Warren Buffett and Berkshire Hathaway news!
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It’s that time again. Berkshire Hathaway will release its Q3 2024 earnings report bright and early tomorrow morning at 8 a.m. ET.
Two big questions spring to mind:
Will Berkshire’s cash mountain eclipse $300 billion?
Did Warren Buffett sell more Apple stock — or stand pat at 400 million shares?
Drop your predictions down in the comments.
And, in the meantime, let’s check in on the latest news and notes out of Omaha…
On Monday, I released an annotated transcript of Buffett biographer Alice Schroeder’s speech at Microsoft in 2008. That got me wondering about what Schroeder is up to these days — as she sorta dropped off the map after writing The Snowball. It’s not much, but here’s at least a crumb of an answer: Fortune Fables over on X discovered that she now serves on the board of directors of Dakota Gold, a gold exploration and development concern based in South Dakota. Oddly enough, though, The Snowball isn’t even mentioned in Schroeder’s official bio on the company’s website.
It’s pretty well known that Buffett and Schroeder’s relationship frayed after she wrote The Snowball — though no one can pinpoint exactly what caused the rift. But, that aside, The Snowball remains an incredible achievement and what most people consider to be the definitive Buffett biography. (There are a couple others in the top tier, too.) If I wrote it, I’d be shouting about it from the mountaintops.
CEO Elon Musk channeled Warren Buffett and Ben Graham’s Mr. Market after Tesla’s stock soared more than 25% last week. “The stock market is wild,” he said, “sort of a roller coaster. Warren Buffett has a lot of good sayings. One of his sayings, I believe, is [that] having a publicly-traded company is like having someone stand outside your house and yell house prices all day — and it’s still the same house! You’re like, ‘Why is this person yelling house prices at me all day long?!?’ That’s what it’s like being in a publicly-traded company. They just yell stock prices at you all day long. And it’s like, ‘Actually, it’s still pretty much the same company as yesterday.’”
I get asked this a lot: Why is Berkshire buying so much Sirius XM stock? I don’t personally have an answer for that, but Whitney Tilson recently featured both the bull and bear case for SIRI 0.00%↑ over in his daily newsletter. Tilson himself is not a fan of the satellite radio and streaming provider, but he also shared a research report from one of his readers that calls Sirius XM “one of the cheapest and most asymmetric set-ups I have ever seen in a liquid, mid-cap stock”. Time will tell on that, I suppose.
And, shortly before this issue went to press, someone at Berkshire bought even more Sirius XM stock: 2.2 million shares at $27.24 a piece for a total price tag of $60.7 million. Berkshire now owns approximately 33.2% of the company.
Calling all Charlie Munger fans! Oxana Dubrovina has very generously offered a free PDF copy of her book, The Art of Being Rational, to all Kingswell subscribers. Mohnish Pabrai calls the book “a remarkable labor of love [that] adds significantly to our understanding of Charlie in a fun way”. Sounds good to me. Thanks Oxana!
Kraft Heinz’s sale of Oscar Mayer is reportedly heating up — with JBS (Brazil) and Sigma Alimentos (Mexico) leading the pack. The price tag could reach $3 billion, with KHC 0.00%↑ aiming for 10x Oscar Mayer’s EBITDA of $290 million. The initial bids are in, but a final decision is “still several weeks away”. This is all part of new CEO Carlos Abrams-Rivera’s push to refocus the company’s product portfolio on healthier foods and those with higher margins.
$4 trillion Apple? Dan Ives of Wedbush Securities, resplendent in a mint green jacket, told CNBC that he expects Apple to win the race to a $4 trillion market cap. “I think the September quarter is going to be better than expected for Apple from an iPhone perspective. I see some others have said the opposite, [but] I believe this is tracking [to] be over 240 million units for the year. That would be Apple’s biggest iPhone unit year ever.”
Ives calls this the beginning of a super-cycle — driven by Apple Intelligence — that will lift AAPL 0.00%↑ to $4 trillion. “[AI] is now going to be in hundreds of apps — built on Apple Intelligence — which is going to give you an incremental $10 billion, $15 billion, $20 billion of Services revenue. That is the key to this renaissance growth from Cupertino.”
Most of Berkshire’s owned businesses don’t exactly move the needle for the conglomerate as a whole. That’s just a fact of life for a $1 trillion company. But, from time to time, I do want to shine a light on some of the smaller and unheralded cogs in the Berkshire machine. After all, Warren Buffett and Charlie Munger saw something special in each and every one of them.
MedPro — part of Berkshire Hathaway’s Primary Insurance Group — celebrates its 125th anniversary this year. Berkshire acquired the medical malpractice insurer in 2005 from General Electric, offering it a much-appreciated forever home. “Being part of one of the most respected, admired companies in the world is hugely beneficial,” said vice president Andrew Booth. “Berkshire gives us an incredible amount of stability. Obviously, the financial strength is important. It’s certainly important in insurance.”
The insurer seems to be thriving under the Berkshire umbrella. “Consistently earning financial strength ratings of A++ (AM Best) and AA+ (Standard & Poor’s), MedPro also holds a 90% national trial win rate and an 80% rate of claims closed without payment.”
FlightSafety International recently promoted Barbara Telek to president. She is a tried-and-true Berkshire veteran — serving as FlightSafety CFO since 2023 and holding executive positions at NetJets before that.
One of my most anticipated books of the year, Buffett’s Early Investments by Brett Gardner, comes out next week. Gardner has thoroughly researched and analyzed ten of Warren Buffett’s earliest investments (hence the title) and traced how these successes and failures paved the Oracle’s way to greatness.
I’m particularly jazzed to read more about Buffett’s investment in Disney back in 1966. (The very first article I ever wrote here on Kingswell was about Buffett’s meeting with Walt Disney out in Burbank before pulling the trigger on that investment.)
Preorder the book here. This isn’t an affiliate link or anything. I just think Buffett’s Early Investments is going to be a really good read.
And, as you might expect, Gardner is a Charlie Munger fan, too. In fact, he recently shared his experience of meeting with Charlie (two months before he passed away) over on X. I love reading these firsthand accounts of Charlie because they, almost without exception, mention how kind, funny, and giving he was.
That runs somewhat counter to the steely exterior that he wore in public.
“He was way funnier than you can imagine,” writes Gardner. “He has these surprising, quick turns of phrase that he bluntly states that are hysterical. Incredibly nice, as well. The gruff statements at the annual meeting are a little bit of a show — although he was definitely blunt and didn’t mince words.”
A few more highlights from Gardner’s meeting with Munger…
✨ “He mentioned how painful it was to be down in 1973 and 1974 (31.9% and 31.5% respectively) before closing his fund after a 73.2% return in 1975. The stocks kept going down even though they were trading at 50% of liquidating value. It gave his partners a lot of anxiety and he wished he explained the situation better to them. He mentioned this a couple of times: the fiduciary gene and sense of obligation towards his partners was obvious.”
“People think of Warren and Charlie as these perfectly rational beings, but it was obvious [that] this period stressed him out just like it would the rest of us. Not because he thought he might be wrong, but because his partners were anxious.”
✨ “[He] also mentioned how rare great investment opportunities are. You only get a few opportunities… and you really only need one in your lifetime to get rich.”
✨ “I asked him what his fanboys miss. He said, ‘I don’t get bogged down in every little detail.’”
I’ll hazard a prediction: $0 of repurchases in Q3.
Thank you for sharing your notes. It inspired me to do some googling where I found Alice Schroeder's AMA from 11 years ago. It includes some nice tidbits for the hardcore fans.
https://www.reddit.com/r/investing/comments/2550vq/hi_im_alice_schroeder_author_of_the_snowball/