6 ms·

They actually did not buy any AAPL stock. Rather it came from Allegheny's (company they acquired recently) portfolio which they liquidated aside from AAPL. - Be

They actually did not buy any AAPL stock. Rather it came from Allegheny's (company they acquired recently) portfolio which they liquidated aside from AAPL. - Berkshire nerd.

philip1209 4y ago
If you want to be pedantically technical, the Depository Trust Company still technically owns all the shares anyways! https://en.wikipedia.org/wiki/Depository_Trust_Company https://en.wikipedia.org/wiki/Depository_Trust_Company
- plonk 4y ago
  Someone read the latest Matt Levine email :)
- nabla9 4y ago
  If you want to be pedantically technical, Cede & Co. owns all of the publicly issued stock in the United States.
  - OnlineGladiator 4y ago
    Only if you're using a broker. You can use a transfer agent and direct register your shares.
  - astrange 4y ago
    This doesn't seem to be true; the sentence in the Wikipedia article that says it (https://en.wikipedia.org/wiki/Cede_and_Company https://en.wikipedia.org/wiki/Cede_and_Company) links to an article that says something else (https://www.bloomberg.com/opinion/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares https://www.bloomberg.com/opinion/articles/2015-07-14/banks-...). They do own all the digital stock, but not the paper stock.
mvid 4y ago
Is there any realistic difference?
- ericmay 4y ago
  Yes because the company the acquired may have purchased the stock at a price that fit with Berkshire’s previous purchase prices based on their own internal financial assessments.
  - strangemonad 4y ago
    Why is this being downvoted? It’s a simple explanation of Berkshire’s value investing approach
    - Dylan16807 4y ago
      To me it seems like a very strange explanation. Part of it is: If you wouldn't buy a stock at the current price, why wouldn't you sell the stock at the current price? Shouldn't the band where you do neither be very narrow? But the bigger part is: Why do you care what someone else paid? All that should matter is what you are paying for this acquisition, especially if you're only keeping the AAPL.
      - ericmay 4y ago
        > If you wouldn't buy a stock at the current price, why wouldn't you sell the stock at the current price? Taxes, portfolio position, longer-term price horizons, etc. Many business factors could potentially be at play. Why pay $150/share on the open market today for something you want to hold if you can get it for much cheaper? The fact that they added to that position though demonstrates that the considerations are not just today's price.
        Dylan16807 4y ago
        > Why pay $150/share on the open market today for something you want to hold if you can get it for much cheaper? Did they pay much cheaper? If so, why wasn't someone else bidding up Allegheny? But that still doesn't explain why you wouldn't sell if you think it's worth significantly less than $150. Even if you only paid $2! But if you think it's close to $150 then the other factors make sense. Either way, I don't see how it matters what Allegheny paid for the stock.
MuffinFlavored 4y ago
Does Berkshire have any tricks from a 'cunning investor' perspective other than 1. Buy AAPL 2. Use their size as an advantage to bully distressed companies into giving them access to basically "sweetheart" deals?
- Tuna-Fish 4y ago
  As a gigantic insurance company, a lot of the money they invest is not money they own, but insurance premiums that have not been paid out as claims yet. I think this has some favorable tax implications for them.
- dkural 4y ago
  Berkshire is not unique in its ability to buy what you call "distressed" companies. The companies it buys are not usually distressed, but just undervalued by rest of the market. It's entrance into tech is fairly recent. Overall strategy is simple to state but hard to execute over time consistently: 1) Actually read financial reports. Buy what you truly understand. 2) Don't buy stuff during bubbles or when overvalued (which is a lot of the time) and be happy with just sitting on your accumulated reserves, 3) Buy when you spot companies/stock that is undervalued relative to the market 4) Mostly HOLD forever. The reason tech came relatively late is it failed Rule #1 of "buy what you understand", and vast majority of the time it fails Rule #2. What not to do: Time Warner-AOL merger was worth $350 Billion. In 2015, Time Warner got sold for $78 billion.
- richardw 4y ago
  They have many. In a lot of cases the original creator of the company stays on to run it, which would be extremely weird if they were forced into the situation. Why would you force someone into a bad situation and then let them run your newly bought company? It's like kicking them in the knee and then handing them a knife. Why would they take up the offer, except if they thought it was net positive for them? Why do many continue to run the business for many years, rather than cashing out and running? If you have a distressed company, that's not his fault. You create the situation, he merely offers you one of 100 options, you can choose that one or absolutely any other from the other people knocking on your door, who would presumably pay a premium for the company Buffett has just said is worth the money by virtue of having offered you a price.

They actually did not buy any AAPL stock. Rather it came from Allegheny's (company they acquired recently) portfolio which they liquidated aside from AAPL. - Berkshire nerd.

philip1209 4y ago

If you want to be pedantically technical, the Depository Trust Company still technically owns all the shares anyways! https://en.wikipedia.org/wiki/Depository_Trust_Company https://en.wikipedia.org/wiki/Depository_Trust_Company

plonk 4y ago
Someone read the latest Matt Levine email :)
nabla9 4y ago
If you want to be pedantically technical, Cede & Co. owns all of the publicly issued stock in the United States.
- OnlineGladiator 4y ago
  Only if you're using a broker. You can use a transfer agent and direct register your shares.
- astrange 4y ago
  This doesn't seem to be true; the sentence in the Wikipedia article that says it (https://en.wikipedia.org/wiki/Cede_and_Company https://en.wikipedia.org/wiki/Cede_and_Company) links to an article that says something else (https://www.bloomberg.com/opinion/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares https://www.bloomberg.com/opinion/articles/2015-07-14/banks-...). They do own all the digital stock, but not the paper stock.

mvid 4y ago

Is there any realistic difference?

ericmay 4y ago
Yes because the company the acquired may have purchased the stock at a price that fit with Berkshire’s previous purchase prices based on their own internal financial assessments.
- strangemonad 4y ago
  Why is this being downvoted? It’s a simple explanation of Berkshire’s value investing approach
  - Dylan16807 4y ago
    To me it seems like a very strange explanation. Part of it is: If you wouldn't buy a stock at the current price, why wouldn't you sell the stock at the current price? Shouldn't the band where you do neither be very narrow? But the bigger part is: Why do you care what someone else paid? All that should matter is what you are paying for this acquisition, especially if you're only keeping the AAPL.
    - ericmay 4y ago
      > If you wouldn't buy a stock at the current price, why wouldn't you sell the stock at the current price? Taxes, portfolio position, longer-term price horizons, etc. Many business factors could potentially be at play. Why pay $150/share on the open market today for something you want to hold if you can get it for much cheaper? The fact that they added to that position though demonstrates that the considerations are not just today's price.
      - Dylan16807 4y ago
        > Why pay $150/share on the open market today for something you want to hold if you can get it for much cheaper? Did they pay much cheaper? If so, why wasn't someone else bidding up Allegheny? But that still doesn't explain why you wouldn't sell if you think it's worth significantly less than $150. Even if you only paid $2! But if you think it's close to $150 then the other factors make sense. Either way, I don't see how it matters what Allegheny paid for the stock.

MuffinFlavored 4y ago

Does Berkshire have any tricks from a 'cunning investor' perspective other than 1. Buy AAPL 2. Use their size as an advantage to bully distressed companies into giving them access to basically "sweetheart" deals?

Tuna-Fish 4y ago
As a gigantic insurance company, a lot of the money they invest is not money they own, but insurance premiums that have not been paid out as claims yet. I think this has some favorable tax implications for them.
dkural 4y ago
Berkshire is not unique in its ability to buy what you call "distressed" companies. The companies it buys are not usually distressed, but just undervalued by rest of the market. It's entrance into tech is fairly recent. Overall strategy is simple to state but hard to execute over time consistently: 1) Actually read financial reports. Buy what you truly understand. 2) Don't buy stuff during bubbles or when overvalued (which is a lot of the time) and be happy with just sitting on your accumulated reserves, 3) Buy when you spot companies/stock that is undervalued relative to the market 4) Mostly HOLD forever. The reason tech came relatively late is it failed Rule #1 of "buy what you understand", and vast majority of the time it fails Rule #2. What not to do: Time Warner-AOL merger was worth $350 Billion. In 2015, Time Warner got sold for $78 billion.
richardw 4y ago
They have many. In a lot of cases the original creator of the company stays on to run it, which would be extremely weird if they were forced into the situation. Why would you force someone into a bad situation and then let them run your newly bought company? It's like kicking them in the knee and then handing them a knife. Why would they take up the offer, except if they thought it was net positive for them? Why do many continue to run the business for many years, rather than cashing out and running? If you have a distressed company, that's not his fault. You create the situation, he merely offers you one of 100 options, you can choose that one or absolutely any other from the other people knocking on your door, who would presumably pay a premium for the company Buffett has just said is worth the money by virtue of having offered you a price.