Warren Buffett: Waiting patiently for the right pitch

Cash is piling up faster than Warren Buffett can invest it

Excerpt:

Warren Buffett has the kind of money problem most people would envy: a growing mountain of cash. Nearly $73 billion piled up at Berkshire Hathaway by mid-summer, more than Buffett's conglomerate has ever held before.

And the total continues growing every day Buffett doesn't make a major investment because Berkshire's 90-odd businesses generate roughly $1.5 billion in cash every month. ...

Buffett compares investing to baseball, except that investing is a game where the hitter can stand at the plate indefinitely waiting for the right pitch.

"The stock market is a no-called-strike game. You don't have to swing at everything," Buffett said in "The Warren Buffett Way." ''The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!' "

Comment: Investment tip. Have some cash for a down day! Image source (cropped) (Carl Yastrzemski)

Minneapolis Real Estate Heavyweights

Fazendin Realtors, state's largest independent firm, passes to new generation

Excerpt:

The Twin Cities, however, is dominated by two firms, Coldwell Banker Burnet and Edina Realty, that were once family-run but now are affiliates of national firms. Edina Realty, for example, was founded by Emma Rovick, a housewife from south Minneapolis who started selling real estate to help raise money to buy her daughter a piano. The company is now an affiliate of Berkshire Hathaway’s HomeServices of America. Together, those two companies closed nearly 50,000 transaction sides (the listing and selling sides of a home sale) last year, according to Real Trends, a national real estate trends firm. The next biggest is ReMax Results, which had 16,165 transaction sides. Fazendin doesn’t report its transaction volume. Steve Murray, editor of Real Trends, said that Fazendin is one of only a few companies that have been owned and managed by the same family for three generations. Among all U.S. small businesses, fewer than 3 percent of them make it to the third generation.

Comment: We bought through Counselor Realty almost 19 years ago. We have been working with Ray Klotz of Edina Realty. Other realtor sites mentioned: Fazendin Realtors, Coldwell Banker Burnet, and ReMax Results . Our "go to" site for researching real estate is Edina. Image above is screen snip from website.

Celebrating Kathee's Birthday

BERKSHIRE HATHAWAY INC.

A special day for Kathee ... and I gave her some shares of Berkshire Hathaway. By the way .... I love their retro style website! A shares or B shares? Well the A shares are trading at nearly $ 157,000. So you can probably guess! (A shares, B shares). Interesting Wiki on List of assets owned by Berkshire Hathaway

Berkshire Hathaway to acquire H.J. Heinz

Buffett’s Ketchup Bet: Unlikely Another Bidder Emerges
Excerpt:

H.J. Heinz Co., which agreed to be acquired by Buffett’s Berkshire Hathaway BRKB +0.91% and private-equity firm 3G Capital for $72.50 a share, or more than $23 billion. The deal is seen as the largest-ever in the food industry.

Shares recently rose 20% to $72.50 on heavy trading volume.

Heinz is a packaged-foods company known for its iconic ketchup brand but recently has been battling weaker North American sales.

Comment: We bought HNZ 2 years ago for about $ 50 . ... sold today at $ 72.505. Replacing with Church & Dwight Co. Inc. and Danone. Warren is ready for another acquisition.

What Warren Buffett is buying .... selling

Buffett's Berkshire Sells Most of J&J and GE Stakes

Selling

• Johnson & Johnson (JNJ)
• General Electric (GE)
• Ingersoll-Rand (IR)
• Dollar General (DG)
• CVS Caremark (CVS)

Buying

• Deere & CO. (DE)
• Precision Castparts (PCP)
• Wabco Holdings (WBC)
• Wells Fargo (WFC) - Up 11,504,300 shares to 422,549,545 (+3%)
• IBM (IBM)

Berkshire Hathaway portfolio tracker

CNBC: Berkshire Hathaway portfolio tracker

After my power nap (Des Moines trip ... pervious post), I listend to CNBC for several hours (on Sirius XM.) They mentioned their CNBC: Berkshire Hathaway portfolio tracker. It's worth a look. Above are Berkshire Hathaway's top holdings. The online chart is sortable. A good resource for investors!

Berkshire Hathaway's 15 Biggest Stock Holdings

Berkshire Hathaway's 15 Biggest Stock Holdings

Comment: The top 10 wouldn't be a bad place to start. If you had 10 shares of each, it would be a $ 7,000 investment with a divident yield of 2.6%.

Warren Buffett buys high-tech

Berkshire buys 5 pct of IBM

Excerpt:

Warren Buffett said Monday that his company has spent $10.7 billion to buy more than 5 percent of IBM's stock this year, a surprising move by the billionaire investor who has long shied away from investing in high technology companies.

Berkshire Hathaway also revealed several other new investments made during the turmoil of the third quarter. Besides the new IBM investment, Berkshire added much smaller stakes in Intel Corp., DirecTV, General Dynamics Corp. and CVS Caremark Corp.

Most of the details emerged from the quarterly update Berkshire filed with regulators on its $59 billion U.S. stock portfolio. Buffett disclosed some details in interviews earlier in the day.

Monday's filing doesn't offer a full picture of Berkshire's holdings, however, because the Securities and Exchange Commission allowed the Omaha-based company to keep some of its investments confidential.

Buffett has long refused to invest in high-tech companies because he has said it's too difficult to predict which technology businesses will prosper in the long run.

But he said he recently realized his view of IBM was wrong based on what he read in the company's annual reports and what he learned by talking to information-technology departments at Berkshire subsidiaries. He said he should have realized years sooner that hardware is no longer the heart of IBM's business.

"Now they're very much a services company, and they're very intertwined with their customers," Buffett said. And he said IBM's customers are reluctant to change once they start working with IBM.

So Berkshire has bought about 64 million shares since March, or about 5.5 percent of IBM. Buffett says he believes IBM has a sound plan for the future.

Comment: We bought into IBM earlier this year and it has been our most positive stock of the year. Just starting to buy INTC

"One gloriously capitalistic weekend"

Live-Blogging the Berkshire Annual Meeting

Excerpts:

(10:11 a.m.) It's the cast of "The Office," with Michael Scott (Steve Carrell) telling Dunder Mifflin about a possible replacement. Enter Warren Buffett.

...
(12:08 p.m.) Buffett says that America is still a good place for banks to lend money, and singles out Wells Fargo and US Bancorp as two particularly well-run firms.

...

(12:21 p.m.) Buffett says that if you collect all the gold in the world and melt it together, you could form a cube with 67 feet on each side.

Here's what you could do with it: "You could get a ladder and climb on top of it and say I'm sitting on top of the world. You could fondle it, you could polish it, you could stare at it."

But Buffett's kicker is this: You can't do anything with it. It has no inherent value. Buying into gold is betting that someone else will come along and pay more for it -- who then is hoping that someone else will pay even more for it down the line.

...

(3:05 p.m.) Buffett says that growing up rich could rob children of crucial drive and enterprise. And if a child of privilege grows up unproductive, it's a matter of parenting.

"If your kids grow up rich and without incentive, I don't think you should point the finger at them," he says. "You should point it at yourself."

...

(3:35 p.m.) Don't question Buffett's commitment to nuclear power. He views it as essential to helping fill the United States' energy needs.

"I think some people misinterprted my interview when I said that it had suffered a major setback," he said. "That does not change my view that nuclear power is important for the world."

...

Comment: My Brother-in-Law went last year! Quote in title is at 9:36 a.m.

Berkshire extends holdings in Wells Fargo

Berkshire Hathaway & Warren Buffett Add More Wells Fargo Shares

Excerpt:

Buffett grew his holdings in Wells Fargo & Co. (NYSE: WFC) yet again and that position was reported as now being some 358,936,125 shares… This means that he again grew his holdings even from the end of 2010 as he recorded that figure as more than 342 million shares and it was over 336 million at the end of Q3-2010.

Comment: Wells is Buffet's favorite bank stock. Full list here

Name dropper Sokol - I know people like this ....

A Conspicuous Absence at Berkshire Meeting

Excerpt:

But people who worked for Mr. Sokol saw a side of him that Mr. Buffett perhaps did not. His brass-knuckled approach alienated some Berkshire employees, as when he suggested that people with an illness or other personal problems were problematic and when he unceremoniously fired a top executive and made him leave the office that day.

Flashes of his management style can be found in some earlier litigation as well. In one civil case, a judge rebuked Mr. Sokol for tampering with his company’s numbers so that a joint-venture partner would get a smaller payout. In another case, Mr. Sokol sued to find out which employees at a Berkshire unit were disparaging him.

And he irritated colleagues at two of Berkshire’s subsidiaries, Johns Manville and NetJets, by frequently invoking Mr. Buffett’s name to burnish his own image inside the company.

Some people at Berkshire were puzzled over why Mr. Buffett favored him so much, as when he credited Mr. Sokol for a turnaround of Johns Manville even though the unit’s profits fell sharply after he took over.

Comment: Frankly I've been guilty of this myself (probably more in my younger days!) - The name dropper type.  I've seen it in business (typically goes like this ... "Mr Big Wig and I were discussing that and he agreed ...) ... and in churches (Pastor and I were talking about this and we agreed ....).

Can't afford Berkshire Hathaway?

Try BRK-B

Berkshire Hathaway class B stock is cheaper, but that's all

Excerpt:

The class B shares were first offered in 1996 to ward off efforts by third parties to create mutual funds that would buy Berkshire stock.

Comment: Pays no dividends ... all earnings retained for investment.

Having loads of liquidity, though, lets us sleep well.

Excerpt:

Borrowers then learn that credit is like oxygen. When either is abundant, its presence goes unnoticed. When either is missing, that’s all that is noticed. Even a short absence of credit can bring a company to its knees.
In September 2008, in fact, its overnight disappearance in many sectors of the economy came dangerously close to bringing our entire country to its knees.

Charlie and I have no interest in any activity that could pose the slightest threat to Berkshire’s wellbeing. (With our having a combined age of 167, starting over is not on our bucket list.) We are forever conscious of the fact that you, our partners, have entrusted us with what in many cases is a major portion of your savings. In addition, important philanthropy is dependent on our prudence. Finally, many disabled victims of accidents caused by our insureds are counting on us to deliver sums payable decades from now. It would be irresponsible for us to risk what all these constituencies need just to pursue a few points of extra return.

A little personal history may partially explain our extreme aversion to financial adventurism. I didn’t meet Charlie until he was 35, though he grew up within 100 yards of where I have lived for 52 years and also attended the same inner-city public high school in Omaha from which my father, wife, children and two grandchildren graduated. Charlie and I did, however, both work as young boys at my grandfather’s grocery store, though our periods of employment were separated by about five years. My grandfather’s name was Ernest, and perhaps no man was more aptly named. No one worked for Ernest, even as a stock boy, without being shaped by the experience.

On the facing page you can read a letter sent in 1939 by Ernest to his youngest son, my Uncle Fred. Similar letters went to his other four children. I still have the letter sent to my Aunt Alice, which I found – along with $1,000 of cash – when, as executor of her estate, I opened her safe deposit box in 1970.

Ernest never went to business school – he never in fact finished high school – but he understood the importance of liquidity as a condition for assured survival. At Berkshire, we have taken his $1,000 solution a bit further and have pledged that we will hold at least $10 billion of cash, excluding that held at our regulated utility and railroad businesses. Because of that commitment, we customarily keep at least $20 billion on hand so that we can both withstand unprecedented insurance losses (our largest to date having been about $3 billion from Katrina, the insurance industry’s most expensive catastrophe) and quickly seize acquisition or investment opportunities, even during times of financial turmoil.

Comment: From the Berkshire Hathaway annual report pages 22-24. Image above is a screen shot of a portion of page 23.

Warren Buffett as your stock picker

5 Buffett-Style Dividend Stocks to Own

Excerpt:

Coca Cola (KO), for example, makes up roughly 20% of Warren Buffett's stock holdings

...

Stock markets today are volatile, and many investors who don't want to own bonds here for somewhat obvious reasons (for one, Bill Gross is shorting them) may look to the following five high-yielding dividend payers which appear to be exceptional long term-values, based on cash flows and earnings. All five of the following pay out solid dividends to their investors, and are all owned by investment gurus who make a living by holding stocks for incredibly long periods of time.

A handful of the stocks Berkshire Hathaway owns:

• Coca Cola (KO)
  
• Johnson and Johnson (JNJ)
  
• Procter and Gamble (PG)
  
• Wal-Mart (WMT)
  
• Wells Fargo (WFC)
  
• US Bank (USB)
  

Comment: Image snapshot from the Berkshire Hathaway Annual Report. Available here.