FRI, JAN 19, 2024

WARREN BUFFETT WATCH

Price stays secret as Berkshire completes contested PTC acquisition

The Pilot Corporation, controlled by Cleveland Browns majority owner Jimmy Haslam and his family, and Berkshire Hathaway both announced on Tuesday that Berkshire has acquired Pilot's remaining 20% of Pilot Travel Centers (PTC).

PTC, which does business as Pilot Flying J, is North America's largest travel center operator, with more than 750 locations.

A Pilot Flying J travel center in Channelview, Texas, October 31, Photo: REUTERS/Gary McWilliams

Neither news release said anything about how much Berkshire paid to complete its purchase, but our best guess is somewhere in the very broad neighborhood of $3 billion.

In SEC filings last year, Berkshire listed a liability of $3.23 billion for "redeemable noncontrolling interests," and in a section specifically about PTC, a $3.37 billion liability for "noncontrolling interests, predominantly redeemable."

Putting a price on the remaining 20% was at the center of competing lawsuits in which both companies accused the other of trying to improperly affect PTC's earnings, because under the terms of the original deal the selling price would be roughly 10 times those earnings. Pilot said that around one billion dollars was at stake.

Just under two weeks ago, one day before a Delaware court would have heard arguments on Pilot's suit, the two sides announced a settlement, again with no details, clearing the way for this week's transaction to proceed.

It's possible the price could be disclosed in an upcoming quarterly or annual report SEC filing by Berkshire.

Berkshire's gradual acquisition of PTC began in 2017 with a 38% stake ($2.8 billion) and continued early last year with an additional 42% ($8.2 billion).

One thing we do know: PTC's headquarters isn't leaving Tennessee.

The Knoxville News Sentinel reports Warren Buffett told it in an email, "Pilot will be staying in Knoxville, you can bet on that."

Tech analyst says chart looks bullish for Berkshire

A CNBC Pro contributor says Berkshire Hathaway's stock could be heading higher.

In a piece (subscription) published Thursday, technical analyst Frank Cappelleri, the founder of CappThesis, writes that for the past three decades, Berkshire has "routinely made higher lows, constructed bullish chart patterns, broken out, made new all-time highs and extended after breaking out."

CNBC Pro, StockCharts.com, CappThesis

It's happened five times through 2021, and now that the B shares are still trying to go beyond their 2022 and 2023 highs, it could be "major breakout number six."

While the stock couldn't get beyond the $360-$370 zone late last year, it is "still in an uptrend from the October '22 lows (so) that area remains in the crosshairs.

"Once BRK.B regains its footing, we’ll be looking for new highs and then some."

Berkshire makes small addition to its satellite radio bet

Berkshire has added another $85 million to its wager on Liberty SiriusXM's tracking stocks.

In SEC filings this week, it reported purchases over three days of 1.2 million shares of Class A voting shares for $36.6 million (average price: $30.43) and 1.6 million shares of Class C nonvoting stock for $48.4 million (average price: $30.40).

Berkshire made purchases around the same size over three days earlier this month, so it has spent a total of $167 million so far this year, which is not much by Berkshire standards.

Its holdings in the two stocks total more than $2.1 billion based on today's closing prices, with the A shares up 32.4% since Liberty reclassified its tracking stocks last August and the C shares doing even better with a 37.6% advance.

Barron's suggests Berkshire, and some other bullish investors, expect the tracking stocks to rise ahead of a planned exchange later this year in which holders will get shares of Sirius XM Holdings (SIRI) stock.

It estimates the tracking stocks are trading at a 33% discount to the value of the corresponding SIRI shares but warns that bears think SIRI is overvalued and will fall once the exchange is done.

Sumitomo 'clarifies' after CEO says Buffett is steadily adding to stakes

Sumitomo, one of the five big Japanese "trading houses" favored by Warren Buffett, clarified a comment by its CEO this week after he appeared to say Berkshire has been steadily buying more shares since disclosing increased stakes averaging 8.5% last summer.

Shares of the companies jumped as much as 5% on Wednesday after Barron's quoted Masayuki Hyodo as saying, "Through the information I have, it is increasing -- not only Sumitomo, but all five trading companies. His share is increasing every day."

Later the same day, Bloomberg paraphrased a Sumitomo spokesperson as saying Hyodo had been referring to Berkshire's "previous public comments about potentially boosting its stakes in the companies to 9.9%" and that the company "is only aware of Berkshire's holdings via public disclosures."

BUFFETT AROUND THE INTERNET

Some links may require a subscription

CNBC Pro (subscription): Here’s why Warren Buffett calls airline stocks hazardous to your investment health

Business Insider: Warren Buffett's plane-parts business stands to lose from Boeing's latest blunder

Forbes (opinion): China, Warren Buffett Winning In Japan. Workers, Not So Much

The Hill (opinion): To root out fraud in government, apply Warren Buffett’s wit and wisdom

HIGHLIGHTS FROM THE ARCHIVE

U.S. has “certainly benefited enormously” by immigration (2004)

Warren Buffett and Charlie Munger give their respective views on foreign workers coming to the United States.

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Jan. 19, 2024

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:

Mitsubishi and Mitsui, which are as of June 12, 2023. Tokyo Stock Exchange prices are converted to U.S. dollars from Japanese yen.
Occidental Petroleum, which is as of December 13, 2023.

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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