All things STOCKS

#16,228
#16,228
Granola said:
What is the best dividend stock in your portfolio? Looking for suggestions. Mine is MO
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It depends on what you’re looking for. The yield alone doesn’t tell the whole story. There’s the basic coverage ratio to consider using earnings and the amount of the dividend.

Dividend payers don’t get to deduct the payouts. Recipients get a tax break, but that’s can always be rescinded.

Cash flow is something else to look at as are the revenues and earnings trends.

WHR pays 7.5%. $7 on $9.67 EPS.

VZ pays 6.6% but the $2.66 paid equals their earnings per share.

UPS pays 5.2% but the dividend is slightly higher than the earnings.

Morgan Stanley only pays 3.9% but earnings are $6.07 and the dividend is $3.70.

Big Oil, Big Pharma, and the Finance sector generally pay pretty good dividends.

I kind of like WHR as they might be bottoming out as a business. There’s a housing shortage and lower interest rates could really help new construction. I think that UPS might be bouncing off of its lows - they took a big hit after their labor deal was completed, but that (uncertainty and a possible work stoppage) won’t come back into play now for several years.

I think that the huge, integrated oil companies will work. XOM. BP. CVX. The pipeline LLPs probably have higher dividend rates, but might not participate as much if the industry takes off.
 
#16,233
#16,233
Thunder Good-Oil said:
I resisted piling in. Getting more conservative I guess.

It took about 3 days to hit the bottom but it went up really fast once it turned.
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I didn’t perfectly time it for sure. Thought I had made a mistake and would just have to stomach it for a bit but it has turned around now.
 
#16,235
#16,235
Buffett is buying Ulta shares. Kind of a weird fit for B-H. But Pilot Travel has a large retail component, so maybe it’s not that crazy.

The airplane parts maker seems more like his type of business. Perhaps BA is bottoming out in Berkshire’s assessment of the plane mfg business and will be helping grow the Heico revenues. Probably a lot of airlines have been cancelling orders and not buying over the last 5 years and the fleets are aging.

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www.reuters.com
 
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#16,236
#16,236
Thunder Good-Oil said:
Buffett is buying Ulta shares. Kind of a weird fit for B-H. But Pilot Travel has a large retail component, so maybe it’s not that crazy.

The airplane parts maker seems more like his type of business. Perhaps BA is bottoming out in Berkshire’s assessment of the plane mfg business and will be helping grow the Heico revenues. Probably a lot of airlines have been cancelling orders and not buying over the last 5 years and the fleets are aging.

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www.reuters.com
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This article suggests that Buffett himself might not have even been involved in these buys. Apparently in the world of B-H, investing about $500M could be delegated to his "small investment" portfolio managers.

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www.reuters.com
 
#16,237
#16,237
SayUWantAreVOLution said:
This article suggests that Buffett himself might not have even been involved in these buys. Apparently in the world of B-H, investing about $500M could be delegated to his "small investment" portfolio managers.

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www.reuters.com
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Buffett has certainly stepped back from those decisions since he’s about 93 or 94 years old and already has his replacement portfolio manager in place. I’d guess WB lets GA do whatever he wants with investments in the high 8 figures and below. Maybe even $100 or $200 million or so. $200 million is only about 1/10th of 1 percent of Berkshire’s cash on hand. $500 million is about 0.25%. But no doubt Greg Abel’s stock picking style fits the framework of Buffett’s investment philosophy and Dodd/Graham’s principles of security analysis.
 
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#16,239
#16,239
I throw symbols into a Buffett/Munger/BH watchlist when I see transactions in various companies. I’m not tracking which positions are new or increased or decreased. Just names that they weee once or still are invested in.

There are a lot of Liberty Media names. I don’t like John Malone.

AIN, NU, and NVR are 3 that I’m not familiar with off the top of my head. Interesting that Davita (DVA) is there. Buffett is underweight healthcare.

Floor and Decor (FND). PARA. AMZN. VRSN. SNOW. Lennar (LEN). DEO. MCO. MA. V. VOO and SPY. KR. KHC. CHTR. LPX. BYD. Plus several of the buy and hold forever stocks (KO, AXP, etc).

DVA and HEI have piqued my interest.
 
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#16,240
#16,240
Published this evening by the Associated Press:

OMAHA, Neb. (AP) — Warren Buffett offered more details Wednesday about the stocks he has been selling lately, including confirming that he sold more than 389 million Apple shares during the second quarter.

Berkshire Hathaway still owns 400 million shares of the iPhone maker, so it remains the biggest position in the conglomerate's stock portfolio, according to the company's latest filing with the Securities and Exchange Commission. The news that Buffett had unloaded a huge chunk of Apple came out in Berkshire's earnings report earlier this month, but the exact number of shares he sold wasn't clear until Wednesday.

In addition to the big Apple sale, Berkshire has also been trimming its investments in Bank of America, Chevron, Capital One, Floor & Decor Holdings, T-Mobile and Louisiana Pacific recently. Berkshire also unloaded its nearly $1 billion Snowflake investment.

As a result of all the selling, Berkshire's already massive cash pile has ballooned to the record level of $277 billion.

But Berkshire did sink more money into the insurer Chubb and oil producer Occidental Petroleum, while revealing smaller new investments in aerospace parts maker Heico Corp. and cosmetics retailer Ulta Beauty.

The quarterly filings don't spell out which moves Buffett made and which actions were taken by one of the two other investment managers at Berkshire, but Buffett typically handles all the biggest investments worth more than $1 billion.

And many investors watch Buffett's actions closely because he has such a remarkably successful track record over the decades.

In addition to the nearly $300 billion stock portfolio, Berkshire owns several major insurers, including Geico, one of the nation's largest railroads in BNSF, a collection of big utilities and an assortment of manufacturing and retail companies. Its holdings include well-known brands like Dairy Queen, Helzberg Diamonds and NetJets.
 
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#16,242
#16,242
Where exactly does one park $277 billion dollars?

A $25B CD ladder for a year?

A money market account? Let's see with $277B balance your complimentary gift is your choice of the country of Tonga or Palau.
 
#16,243
#16,243
About 75% of Berkshires “cash” is in short term US Treasuries.

The total national debt equals $35 trillion.

$35 trillion x 1% equals $350 billion.

Berkshire owns a huge percentage of short term US debt.
 
#16,244
#16,244
Thunder Good-Oil said:
About 75% of Berkshires “cash” is in short term US Treasuries.

The total national debt equals $35 trillion.

$35 trillion x 1% equals $350 billion.

Berkshire owns a huge percentage of short term US debt.
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I've always heard there was a per year limit on buying short term T bonds that was low, in the thousands.

I was really being comical knowing B-H isn't buying CDs or tossing it all in a money market account, but that's a wad of cash to park.
 
#16,245
#16,245
SayUWantAreVOLution said:
I've always heard there was a per year limit on buying short term T bonds that was low, in the thousands.

I was really being comical knowing B-H isn't buying CDs or tossing it all in a money market account, but that's a wad of cash to park.
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I’m not that familiar if there are certain rules of cash management on that scale. There very well could be limits on how much a single entity can purchase when newly issued by the government. But I doubt that extends to the secondary markets. Also the US government would want the most possible demand on the debt that they issue in order to raise the most money for the Treasury and at the lowest rate possible.

Buffett isn’t going to walk into a bank branch and set up a bunch of CDs, but I’d assume that parking billions with various banks is what also happens. Maybe not so much with the thousands of small banks (it would overwhelm their balance sheets), but somebody at Berkshire is picking up the phone and calling Goldman, JP Morgan, Citi, Wells, and even the banks that B-H has big stakes in. They in turn lend out that money to business and governments and consumers (especially mortgages) in need of that capital.

It’s interesting to speculate what Buffett does with the hundreds of billions of extra cash lying around and how that all works. I really zoned out in those types of finance classes that I took decades ago. Now I’m really fascinated with how it all fits together in our capital system. Even the communists in China have a big role - they compete with Berkshire finding places to stash their cash.
 
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#16,246
#16,246
Thunder Good-Oil said:
I’m not that familiar if there are certain rules of cash management on that scale. There very well could be limits on how much a single entity can purchase when newly issued by the government. But I doubt that extends to the secondary markets. Also the US government would want the most possible demand on the debt that they issue in order to raise the most money for the Treasury and at the lowest rate possible.

Buffett isn’t going to walk into a bank branch and set up a bunch of CDs, but I’d assume that parking billions with various banks is what also happens. Maybe not so much with the thousands of small banks (it would overwhelm their balance sheets), but somebody at Berkshire is picking up the phone and calling Goldman, JP Morgan, Citi, Wells, and even the banks that B-H has big stakes in. They in turn lend out that money to business and governments and consumers (especially mortgages) in need of that capital.

It’s interesting to speculate what Buffett does with the hundreds of billions of extra cash lying around and how that all works. I really zoned out in those types of finance classes that I took decades ago. Now I’m really fascinated with how it all fits together in our capital system. Even the communists in China have a big role - they compete with Berkshire finding places to stash their cash.
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There's few investors I watch and Buffett is the main one. I have to say his "cash heavy" stance right now does not make me comfortable about the market.

He pulled back hard on Apple, which isn't a dog and he still owns a lot of, and seems to be in no hurry to really lower his big cash stack. I just don't see Warren Buffett as the kind of investor who likes sitting on a historically big pile of cash, usually, and it's not like he needed to be desperate to sell and get that favorable tax rate. He shouldn't have been "under the gun" nor should he have had trouble selling Apple.

I just can't see how having that much cash is better than just holding Apple. I'm like that gif of the guy poking with a stick: Okay, do something.
 
#16,247
#16,247
SayUWantAreVOLution said:
There's few investors I watch and Buffett is the main one. I have to say his "cash heavy" stance right now does not make me comfortable about the market.

He pulled back hard on Apple, which isn't a dog and he still owns a lot of, and seems to be in no hurry to really lower his big cash stack. I just don't see Warren Buffett as the kind of investor who likes sitting on a historically big pile of cash, usually, and it's not like he needed to be desperate to sell and get that favorable tax rate. He shouldn't have been "under the gun" nor should he have had trouble selling Apple.

I just can't see how having that much cash is better than just holding Apple. I'm like that gif of the guy poking with a stick: Okay, do something.
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AAPLE was 50% of Berkshires’ public stock holdings, so I wouldn’t read too much negative into that sale. I think half of B-H’s market cap is made up of the public holdings, so 25% in one company as their total value carries a huge amount of risk. No matter how good that company (that Berkshire does not manage) happens to be.

Also, tax rates could very well be higher if the Dems keeps the POTUS and has control of both the House and Senate. Taxing the biggest US companies would almost certainly happen.

It’s also not a bad move to be cash rich as interest rates are expected to fall by almost 50% within 18 months. That cash will appreciate in the near term.

Berkshire is also shifting to more of energy sector in their mix. Buying pipelines and refineries could go through a couple hundred billion pretty quickly.
 
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#16,249
#16,249
Certainly a "danger" if you could call it that. I noticed yesterday that option prices were way up and I sold a half dozen myself. Still safe right now though.
 
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