FRI, NOV 17, 2023
Munger: Not the 'slightest chance' Buffett is doing something 'deeply evil
to make money for himself'
Charlie Munger is defending Warren Buffett after ProPublica accused the Omaha billionaire of hypocrisy, saying leaked IRS records show that on three occasions over two decades he sold stocks from his personal portfolio that Berkshire Hathaway held, bought, or sold around the same time.
Buffett has said many times, as he did in 2012, "I can't be buying what Berkshire is buying."
This week, "Squawk Box" aired an excerpt from a longer interview Munger taped with CNBC's Becky Quick ahead of his 100th birthday in January:
"I don't think there's the slightest chance that Warren Buffett is doing something that's deeply evil to make money for himself.
"He cares more about what happens to Berkshire than he cares about what happens to his own money. He's given his own money away. He doesn't even have it anymore.
"And, showing how little he thinks of it ... he gave away the last hundred million he has on earth.
"And, having done that, they say, 'What a dirty son of a bitch, he's taking advantage of Berkshire to make money.'
"It's not a plausible argument. It's one more ridiculous thing that's said about Berkshire."
On Thursday's program, "Squawk Box" co-anchors Andrew Ross Sorkin, Becky Quick, and Joe Kernen discuss ProPublica's report on Warren Buffett's personal stock sales. (CNBC screen grab)
In an on-air discussion following the clip, Quick noted that Munger had not read the ProPublica story when she asked him about it.
She expects that Buffett "is going to be asked about this at some point. It is something that is going to come up," although she has not personally discussed the details of the ProPublica report with him.
Berkshire itself has not made any statement or commented publicly.
"Squawk" co-host Andrew Ross Sorkin dismissed the notion that Buffett might have been taking advantage of his inside knowledge of what Berkshire would buy or sell in the future to make a profit on his personal stock sales, which were extremely small in comparison to the Berkshire shares that make up the vast bulk of his fortune.
He thinks the issue is "much more around what he said publicly around the idea that he doesn't trade in the stocks that Berkshire owns, and clearly, and empirically, it appears, at least, that he did."
(In his interview with Quick, Munger did not address whether Buffett was hypocritical about his personal stock holdings.)
Sorkin hopes "there is a very plausible and reasonable explanation for it," raising the possibility that Buffett trades in his own account "the way [co-anchor] Joe [Kernen] plays [the sports betting site] DraftKings, just for fun."
Berkshire has a big secret (again)
The most intriguing aspect of Berkshire's quarterly 13F filing this week is what wasn't in it.
The SEC disclosure lists all the publicly traded U.S. stocks in the company's portfolio as of September 30, but with a major exception.
A line in the filing says, "Confidential Treatment Requested. (The Manager has omitted from this public Form 13F one or more holding(s) for which it is requesting confidential treatment" from the SEC.)"
That indicates Berkshire is building a position over more than one quarter and it is concerned that its interest in the stock would encourage others to buy it as well, raising its price.
Berkshire has received SEC permission to keep a secret several times in the
past, including when it started building its ill-fated IBM stake in 2011 and began accumulating both Verizon and Chevron at the end of 2020. (It sold out of Verizon last year and has been reducing its Chevron stake in recent quarters.)
Andrew Bary at Barron's says his "best guess is that assuming Berkshire bought just one stock, the target may be Morgan Stanley, BlackRock, or Chubb."
That's based on his observation that Berkshire said in its 10-Q report earlier this month that the amount of money it has spent to buy financial stocks went up by $1.2 billion during the third quarter.
Based on his assumption that Berkshire would only want one of the top 25 financial firms by size, he whittled down the list by eliminating stocks Berkshire already has, like American Express, Bank of America, and Citigroup, or has bought and then sold in the past, like JPMorgan, Goldman Sachs, and Wells Fargo.
The secret will probably be revealed when Berkshire files its next 13F in mid-February, if not before.
Berkshire's blue chip housecleaning
Berkshire was doing more selling than buying during the third quarter, trimming several positions and entirely eliminating six of them, including several well-known names.
After shedding more than half of its General Motors stake during the first two quarters of the year, Berkshire finished the job in the third quarter, selling its remaining 22 million shares, which would have been valued at $725 million at the end of the quarter.
REUTERS/Rebecca Cook/File Photo
Also after two straight quarters of selling, a stake of Celanese worth approximately $675 million was eliminated. With the first purchases coming in last year's first quarter, it had a relatively brief stay in the portfolio.
Berkshire eliminated smaller stakes in Johnson & Johnson ($51 million), Procter & Gamble ($46 million), Mondelez ($40 million), and UPS ($9 million).
Activision Blizzard is also gone from the portfolio. Berkshire sold most of the stake in the second quarter before the stock price soared in July when a judge ruled against a government bid to temporarily block its acquisition by Microsoft.
The remaining shares were apparently sold before the deal closed last month.
Several positions were reduced including Chevron (-10%, $2.2 billion), HP (-15%, $474 million), Markel (-66%, $461 million), Globe Life (-67%, $183 million), AON (-5%, $76 million), and Amazon (-5%, $70 million).
The Chevron and HP sales were previously disclosed.
Buffett did not decide now is a good time to own a baseball team
Of the four additions to the portfolio, one in particular got more attention than it probably deserved.
The filing listed 223,645 shares of Atlanta Braves Holdings Class C, currently valued at a bit more than $8 million.
Especially given Buffett's long-standing interest in baseball (he once was part-owner of Omaha's minor league team), their appearance generated some headlines citing his new "bet" on professional sports with his "purchase" of the shares.
Atlanta Braves right fielder Ronald Acuña Jr., unanimously selected this week to be the National League's Most Valuable Player, hits a double in the NLDS on Oct. 11 in Philadelphia. (Photo: Bill Streicher-USA TODAY Sports)
But neither Buffett nor anyone else at Berkshire proactively decided to add the position.
It is the result of Liberty Media's "split-off" in July of its interest in the team and an associated real estate development project into a separate company with its own stock.
It included the distribution of 0.028960604 of a share of the new Braves stock for each share of Liberty Formula One common stock held.
Berkshire has 7,722,451 of them, so it got (7722451*0.028960604=223646.8453) Braves shares, apparently rounded down to 223,645.
They represent approximately 0.002% of Berkshire's $350 billion-plus equity portfolio, so they may not be getting a lot of thought in Omaha, but we'll see what happens to them.
The other three additions are also related to Liberty.
Berkshire received a total of around $500 million of the company's new Live Nation tracking stocks.
And after a six-quarter absence, Sirius XM Holdings returned with a $44 million stake, contributing to one-week gain of almost 10% for the stock.
In September, Liberty proposed a merger of its 83% stake in SiriusXM with the radio company to create a publicly-listed company that it would control.
BUFFETT AROUND THE INTERNET
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BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Nov. 17, 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 September 30, 2023 as reported in Berkshire Hathaway’s 13F filing on November 14, 2023, except for:
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
Please send any questions or comments about the newsletter to me at email@example.com. (Sorry, but we don't forward questions or comments to Buffett himself.)
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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
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