FRI, SEP 01, 2023

WARREN BUFFETT WATCH

Berkshire's big Florida insurance exposure survives Idalia

At the May shareholders meeting, Berkshire Hathaway insurance chief Ajit Jain reported premiums for catastrophe reinsurance had "zoomed" up that spring, prompting the company to become "very heavily exposed to property catastrophe," especially in Florida, by writing policies to share the potential burden of paying out claims with primary insurers.

"What that means is if there's a big hurricane in Florida, we will have a very substantial loss ... as much as $15 billion. And if there isn't a loss, we'll make several billion dollars as profit."

So far, three months into the Atlantic hurricane season, which runs through the end of November, it's looking like a good bet.

Hurricane Idalia, the first major storm to hit the state this year, brought flooding to Florida's western coast this week, damaging homes and businesses.

An American flag is seen amidst the wreckage of a home after the arrival of Hurricane Idalia in Horseshoe Beach, FL, August 31, 2023. REUTERS/Cheney Orr

But, as The New York Times reports, the damage "could have been far worse" because the Category 3 storm came ashore in a "marshy and thinly populated" area southeast of Tallahassee. It quickly weakened to Category 1.

According to Reinsurance News, initial estimates of insurance industry losses from the storm are below $10 billion, "lower than previously feared."

Last year, Hurricane Ian hit a much more densely populated area in southwestern Florida, generating between 50 and 65 billion dollars in insured damages, the second-largest total on record after 2005's Hurricane Katrina.

Lots of positive BYD headlines ... and no Berkshire sales since June

BYD has been generating a lot of headlines lately, but they haven't involved Berkshire Hathaway selling more shares of the Chinese electric carmaker.

Since it disclosed its first reduction just about one year ago, Berkshire has reduced the 225 million share stake it first bought in 2008 for $230 million by more than 56%.

There have not, however, been any new filings since June 19 when it reported owning 98.6 million shares, which is just under 9% of BYD's outstanding shares.

A disclosure is required whenever the stake percentage moves above or below a whole number, so if it continues to sell, the next filing would be triggered by a decrease of around 10.8 million shares to 87.7 million shares, a stake of just under 8%.

If Berkshire had maintained its 2023 selling rate, that would have occurred in mid-July.

We don't know if the slowdown is a temporary blip or something more significant.

And we still don't know exactly what's been driving the sales. Buffett has only said, in an April interview with CNBC, that BYD is an "extraordinary company," but "I think that we'll find things to do with the money that I'll feel better about."

We do know that that BYD has been getting a lot of positive press lately, with headlines like "China's BYD H1 profit triples as deliveries break record" (Reuters), "BYD Confident of Hitting 3 Million Sales Despite China Weakness" (Bloomberg), and "BYD and Tesla Are Set to Win the EV Race. Here’s Who’s Likely to Lose Out" (Barron's).

Berkshire subsidiary closes deal to control Maryland LNG facility

Berkshire Hathaway Energy's deal to buy half of Cove Point LNG in Maryland for $3.3 billion closed today, giving BHE a controlling 75% limited partnership in one of the seven facilities in the United States that can export liquefied natural gas.

Photo: Berkshire Hathaway Energy

In a news release, a company official said the facility "plays an important role in Berkshire Hathaway Energy’s delivery of clean, low-cost and sustainable energy solutions to customers and communities."

BUFFETT AROUND THE INTERNET

Some links may require a subscription

CNBC.com: Warren Buffett, who turns 93, is at the top of his game as he pushes Berkshire Hathaway to new heights

CNBC Pro (subscription): Warren Buffett at 93: All of the big moves from the still-active investing legend in the past year

Barron's (subscription): What’s Ahead for Berkshire Hathaway as Warren Buffett Turns 93

Investor's Business Daily: Warren Buffett Keeps Getting Older. Berkshire Hathaway Stockholders Are Getting Uneasy

Investor's Business Daily: Warren Buffett Bets His Fortune On One Of 9 'Can't Lose' Stocks

Fortune on MSN: From ‘swimming naked’ to the ‘manic-depressive’ market to the billionaires whose inner jerk came out, here are Warren Buffett’s best quotes from the last 93 years

Reuters (commentary): With housing, Buffett chooses a great location

Reuters: Berkshire's Geico must face privacy lawsuit over driver's license disclosures

Markets Insider on MSN: Warren Buffett's energy division has had a negative income tax rate for 5 years straight - as it's received clean-energy credits worth billions

HIGHLIGHTS FROM THE ARCHIVE

Why Buffett doesn’t recommend buying Berkshire stock (2021)

Warren Buffett explains why he doesn’t recommend that people buy Berkshire Hathaway stock, and reveals what he tells them to do instead.

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Sep. 1, 2023

Berkshire's top holdings of disclosed publicly-traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today's closing prices.

Holdings are as of June 30, 2023 as reported in Berkshire Hathaway’s 13F filing on August 14, 2023, except for:

Mitsubishi and Mitsui, which are as of June 12, 2023. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)

If you aren't already subscribed to this newsletter, you can sign up here.

Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website.

-- Alex Crippen, Editor, Warren Buffett Watch

900 Sylvan Avenue, Englewood Cliffs, NJ 07632

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