University of Maryland Students Meet With Warren Buffett – November 15, 2013

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Nov 182013
 

Waren Buffett Nov. 15, 2013 Photo-2

Twenty MBA and MS Finance students from the Robert H. Smith School of Business at the University of Maryland were accompanied by finance professor David Kass on a trip to Omaha, Nebraska to meet with Warren Buffett on November 15, 2013.  Students from seven other schools were also present for this meeting.  Mr. Buffett responded to 16 student questions, two from each of the eight schools, over a two hour period.  A wide range of topics were discussed which included Mr. Buffett’s investment approach, career advice for students, the financial crisis, his political views, and his biggest investment mistake.

Warren Buffett also treated the students to lunch at his favorite restaurant, Piccolo’s.  During the rest of the day, the students received guided tours of several Berkshire Hathaway owned companies: Nebraska Furniture Mart, Borsheim’s Jewelry, and Oriental Trading Company.

 Posted by at 3:16 pm

Berkshire Hathaway Adds $3.8 billion Stake in Exxon Mobil During Q2 and Q3

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Nov 172013
 

Berkshire Hathaway’s SEC 13F filing for the quarter ending September 30, revealed a stake of 40.1 million shares of Exxon Mobil (XOM) that is currently valued at $3.8 billion at XOM’s closing price of $95.27 on November 15.  The majority of these shares were purchased by Warren Buffett during the second quarter of 2013, with the balance being added in the third quarter.  Berkshire Hathaway had previously received permission from the SEC (confidential treatment) to withhold its investment in XOM from its second quarter 13F filing.

Berkshire also reported a 44% reduction in its position in ConocoPhillips (COP) during the third quarter.  It sold 10.6 million shares of COP which are currently valued at $745 million at COP’s closing price of $73.30 on November 15.

I am quoted in a Bloomberg article discussing Berkshire’s investment in Exxon Mobil:

Exxon Mobil “is undervalued, in his opinion, and pretty much being ignored by the market,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who has taken students to meet Buffett in Omaha. “He knows the company. He knows it well.”

Buffett could have been drawn to Exxon because he hasn’t been able to find a big acquisition recently, causing cash to accumulate at his company, said the University of Maryland’s Kass. The investment also could be beneficial if it’s still in the portfolio after Buffett’s no longer leading the company.

Stock in the energy company “certainly does a lot better than sitting in U.S. Treasury bills,” Kass said. “This is a conservative, safe stock — a nice position for whenever a successor takes over.”

The entire article is available at:

http://www.bloomberg.com/news/2013-11-15/berkshire-adds-3-7-billion-exxon-mobil-stake.html

 Posted by at 4:04 pm

Berkshire Hathaway Invests An Additional $204 Million In DaVita HealthCare Partners

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Nov 102013
 

In an SEC Form 4 filing after the market closed on Friday, November 8, Berkshire Hathaway reported a $204 million increase in its investment in DaVita HealthCare Partners.  Berkshire purchased 3.7 million additional shares in the kidney dialysis company on November 6, 7, and 8, at an average price of $55.14.   Berkshire now owns 35.1 million shares of DaVita, which are currently valued at $2 billion, and equal 16.5 percent of DaVita’s outstanding shares.

Berkshire has been building its position in DaVita throughout 2012 and 2013,  since Ted Weschler was hired by Warren Buffett as a portfolio manager for Berkshire.  DaVita was one of Ted Weschler’s largest investments over the preceding 10 years in his hedge fund, Peninsula Capital Advisors.  Ted Weschler has been closely following, and investing in, the kidney dialysis industry for almost 30 years.  In 1984 he worked on the acquisition of National Medical Care Inc., a large provider of kidney dialysis services, for his employer, W.R. Grace.  Apparently Ted Weschler has been purchasing these shares for Berkshire Hathaway.  The 5% drop in DaVita’s shares on November 6 after the release of its third quarter earnings provided Ted Weschler with an opportunity to add to Berkshire’s stake at an attractive price.

Berkshire previously agreed not to acquire more than 25 percent of DaVita.  Its shares closed at $56.30 on November 8, and their 52 week price range is $52.23 – $65.67.

 

 

 Posted by at 8:39 pm

Berkshire Hathaway’s Third Quarter Operating Earnings Increase by 8 Percent

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Nov 022013
 

Berkshire Hathaway reported an increase of 8 percent in its third quarter operating earnings as compared to the corresponding quarter last year.  Its net income increased by 29 percent as a result of sales and redemptions of investments and derivative gains.  Its non-insurance businesses, led by Burlington Northern Railroad and Mid-American Energy, increased their operating income by 12 percent.  However, its insurance (underwriting and investment income) operating earnings declined by 8 percent primarily due to an increase in the frequency and severity of claims at Geico and losses at General Re.  Berkshire’s cash and cash equivalents totaled $42 billion on September 30.  Warren Buffett, Ted Weschler, and Todd Combs invested an additional $3 billion in equity securities during the third quarter.

Berkshire’s book value (Class A equivalent shares) was $126,766 on September 30.  At Berkshire’s closing price of $173,122 on November 1, it is currently trading at 1.4 times book value, which is below its average price to book value ratio of 1.6 from 1985-2012.  Warren Buffett has previously announced that he would buy back shares at prices below 1.2 times book value.  Buffett believes that Berkshire’s book value is a good, but understated, proxy for its intrinsic value.

I am quoted in an Omaha World-Herald article on this topic:

“There were no major hurricanes or natural disasters,” said David Kass, a Berkshire shareholder and University of Maryland finance professor, “but pricing can be very competitive in the insurance industry.”

“Buffett, shareholder Kass said, likes to keep about $20 billion on hand at all times.”

“He certainly has room for another large acquisition in the range of $15 billion,” Kass said.

The entire article is available at:

http://www.omaha.com/article/20131101/MONEY/131109747/1697#berkshire-hathaway-3q-profits-up-29-percent

 

 

 

 Posted by at 2:17 am