The Berkshire Beat: September 6, 2024
The Berkshire Beat: September 6, 2024
All of the latest Warren Buffett and Berkshire Hathaway news! Including updates on Berkshire billionaires, Buffett at 94, Bank of America, RC Willey, Chubb, and more...
Happy Friday and welcome to our new subscribers!
Special thanks, too, to those who recently became paid supporters! ❤️
Berkshire Hathaway — fresh off joining the ranks of the Trillion Dollar Club — roared out of the holiday weekend with new all-time highs on both Tuesday and Wednesday. Yesterday was a different story, though, as Class A shares dipped 2.7% and Class B shares dropped 2.8%. I guess you can’t win ‘em all.
Let’s kick off this issue with the latest news and notes out of Omaha…
Berkshire Hathaway continues to unload Bank of America stock. On six consecutive trading days between August 28 and September 5, Warren Buffett sold 39.8 million more shares for $1.61 billion. Berkshire now owns 11.1% of BAC 0.00%↑. In all, Buffett has sold over 168 million shares of Bank of America — for nearly $7 billion — since July 17.
Reminder: If (or when) Berkshire’s stake drops under 10%, we will no longer get regular updates on any further sales. That is still a ways off, but something to keep in mind.
Howard Marks of Oaktree Capital Management paid tribute to Warren Buffett on his 94th birthday. “His record is a testament to the power of compounding at a very high rate for a very long period of time uninterrupted,” Marks told CNBC. “He never took a leave of absence.” Buffett’s joie de vivre, even after 75 years in the money game, inspires the Oaktree co-chairman to aim for similar professional longevity. “He says that he skips to work in the morning. He tackles investing with gusto and joy. I still haven’t retired and I hope never to do so — following his example.”
In other Buffett birthday news, Josh Funk of the Associated Press shared a happy update about the birthday boy on X. “Shareholders can rest assured,” he wrote. “His son, Howard, told me recently that Warren is just as sharp as ever with a great sense of humor. And, of course, he has no plans to retire.”
With Berkshire now a $1 trillion company, what’s next? “I think $1 million per Class A share is the next major milestone,” writes
, author of The Complete Financial History of Berkshire Hathaway. “It’s not as far off as one might think. With 1.4 million [Class A equivalent] shares outstanding, that’s a $1.4 trillion market cap. I could see that happening within the next two or three years, perhaps five at the latest. News organizations had trouble when shares hit the $100,000 mark as the 6th digit caused issues keeping it within the narrow column. What will an extra zero and an extra comma do?!”Liberty Media and Sirius XM Holdings announced the final exchange ratio for next week’s split-off and combination. After the closing bell on September 9, Liberty will redeem each share of its SXM tracking stock for 0.8375 of a share of “New Sirius XM”. Likewise, each share of Sirius XM Holdings will become 0.1 of a share of “New Sirius” common stock. If my napkin math is correct, Berkshire will own 101.4 million shares of the new entity’s 339.1 million shares outstanding. That’s good for a 29.9% stake in “New” Sirius XM.
Occidental Petroleum hit new 52-week lows on Wednesday and Thursday. If this plunge down under $54 per share spurred Buffett to start buying again, we should find out later tonight via SEC filing. Stay tuned.
It’s been a banner year for RC Willey president Jeff Child. Back in March, he won the Home Furnishing Association’s 2024 Trailblazer Award — and, now, he’s been named one of Furniture Today’s Titans. Jeff started out in the family biz by waxing the home furnishing store’s warehouse floors as a teenager. (His uncle, Bill Child, sold RC Willey to Berkshire in 1995 and inspired the book How to Build a Business Warren Buffett Would Buy.)
Under Jeff Child’s leadership, RC Willey’s annual sales volume has surged from almost $200 million in 2001 to over $1 billion today.
“Jeff is extremely good at keeping his team focused on serving the customer,” said Martin Ploy of AICO. “He’s a quiet guy, but when he speaks the room gets even quieter. The company has very low turnover and sustained its business very well through ups and downs. He understands if you treat people with the respect they deserve, that leads to confidence, loyalty, and a high level of commitment.”
Dividend checks keep rolling into Omaha. This week alone, Berkshire collected $20.9 million from Moody’s, $16 million from Kroger, $4.3 million from Visa, and $1.6 million from Louisiana-Pacific.
Could the recent trims of Apple and Bank of America be a precursor to Berkshire acquiring Chubb? Jim Sloan makes the case for such a deal over at Seeking Alpha — and even ties in Markel CEO Tom Gayner’s cryptic comments at the Omaha Brunch, too. “It would be a very major acquisition,” writes Sloan, “perhaps the most brilliant of his career. If he retired the day after it closed, Buffett could exit triumphant and leave his successors in a splendid position with time to work out what they wanted to do next.” (h/t
)
In the Spotlight: Berkshire Billionaire Stewart Horejsi
Berkshire Hathaway’s staggering success over the past six decades has created many happily ever afters for investors.
And, with Berkshire now a $1 trillion company, I’ve been thinking a lot about those men and women who saw something special in Warren Buffett back before he was a household name.
It kind of boggles my mind how making just one wise decision — to entrust your money to Buffett — can result in generational wealth.
For many people, it was Buffett’s star turn in John Train’s The Money Masters (1980) that inspired them to invest in Berkshire for the first time. (Oddly enough, Train himself admitted that he had the chance to join Buffett’s partnership back in the ‘60s, but chose not to because of Buffett’s secretive investing process. Yikes.)
One Money Masters reader who jumped in with both feet was Stewart Horejsi. “[The book] just really reached out and grabbed me,” he told Bloomberg TV’s Betty Liu in 2013. “It just made a lot of sense.”
Horejsi started buying at $265 per share — and kept on going even as Berkshire’s price climbed higher and higher. “It’s hard for me to spend more for something than I have paid previously,” he said, “but every time I got some cash, I kept buying it.”
Impressed by Buffett’s integrity and common-sense approach, Horejsi became a regular at Berkshire annual meetings back when they were much more modest affairs. When Buffett — and later Munger — mingled with shareholders afterwards and knew many on a first-name basis. Before concert-sized crowds necessitated moving the meetings to a cavernous arena.
Horejsi will never forget his first Berkshire AGM in 1980. “I think there were twelve of us,” he said, “and we were seated on metal folding chairs in the cafeteria at National Indemnity insurance. Most of the people were from Omaha and were friends of Warren’s and they asked two or three questions and the meeting ended. So, in the future, I took friends to the meeting and I planted questions so that we could keep him talking.”
For someone who invested in Berkshire based on Buffett himself, you might think that Horejsi would be nervous about the Oracle’s eventual exit. But that’s not the case. “I’ve never worried about [the post-Buffett era] too much,” he told Liu. “People have asked that question at the annual meetings through the years and Charlie Munger says, ‘I think if we have a guy that was smart enough to build this business, that he’s smart enough to choose a successor.’”
And, like Buffett, Horejsi thinks any dip in price after Buffett’s death should be seen as a buying opportunity — not a harbinger of disaster. “The companies are really solid companies and they’re all independently managed,” he said. “As Warren says, they’re probably not going to sell fewer boxes of See’s candy or fewer Dairy Queen [Dilly Bars] whether he’s there or not.”