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Buffett’s SEC Filing Implies Repurchases

Buffett’s SEC Filing Implies Repurchases

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Warren Buffett has often applauded share repurchase programs instituted by companies in which Berkshire holds significant equity positions, but his attitude toward Berkshire Hathaway repurchasing its own shares has always been more complicated. In early 2000, at a time when Berkshire shares were severely depressed, Buffett expressed an interest in repurchases below $45,000 per Class A share but noted that he was not doing so merely in order to “support” the stock. At the time, he admitted that he had made errors prior to that point by not repurchasing shares.

Over a decade later, Buffett expressed mixed emotions regarding the repurchase program announced in September 2011 noting that he doesn’t enjoy cashing out selling partners at a discount even though doing so somewhat enriches continuing shareholders. A watershed change in Berkshire’s repurchase policy took place in 2018 when an explicit price-to-book limit was removed in favor of allowing discretionary repurchases whenever management considered shares to be undervalued. Readers who are interested in a comprehensive review of Berkshire’s repurchase activity since 2011 can refer to Buffett Loosens the Purse Strings for Repurchases, an article posted on this site in February 2020.

During the Berkshire Hathaway annual meeting held on May 2, 2020, which was covered in the Rational Reflections newsletter, Warren Buffett seemed very worried about the COVID-19 pandemic and general economic conditions. During the meeting, he disclosed that Berkshire halted all repurchase activity after March 10 despite the stock price plunging well below the level of Berkshire’s recent repurchase activity. The transcript of the meeting is worth reviewing in order to understand the level of Buffett’s caution in early May. He clearly stated that the range of possible economic outcomes resulting from shutting down large segments of the economy remained “extraordinarily wide”. The fact that Buffett was repurchasing shares as late as March 10 before halting activity reveals that a change in his thinking might have taken place at that point. Perhaps it was related to his discussions with Bill Gates and Dr. Anthony Fauci around that time.

In light of Buffett’s comments only ten weeks ago, it was surprising to learn that Berkshire Hathaway almost certainly repurchased a significant amount of stock at some point between the annual meeting and July 8 when Buffett submitted a regulatory filing to the Securities and Exchange Commission documenting his annual charitable donations of Berkshire Hathaway stock. Sharp-eyed investors and journalists picked up on the implications of the filing which disclosed Buffett’s holdings as a percentage of shares outstanding. Here are the facts that were included in the filing:

  • Buffett owned 248,734 Class A shares and 10,188 Class B shares as of July 8.
  • Each Class B share has 1/1500 of the economic rights of a Class A share.
  • We can calculate that Buffett owned 248,740.8 Class A equivalents as of July 8.
  • Buffett’s ownership of Berkshire was 15.54% of the economic interest of the company.
  • Dividing 248,740.8 by 0.1554, we calculate that there were 1,600,649 Class A equivalents as of July 8.
  • The 10-Q report reveals that there were 1,620,023 Class A equivalents outstanding as of March 31.
  • This shows that 19,374 fewer Class A equivalents were outstanding on July 8 than on March 31.

The average closing price of the more liquid Class B shares between May 4 and July 7 was approximately $180, which is equivalent to $270,000 per Class A share. If we assume that repurchases were made at around that average price of $270,000, this would imply that Berkshire allocated approximately $5.2 billion to repurchases over that two month span. It is very doubtful that these repurchases started immediately after the annual meeting given Buffett’s clear indication that he was very concerned at that time and not eager to allocate capital. Given Buffett’s reputation for integrity, it’s inconceivable that he “talked down” the stock on Saturday, May 2 only to repurchase shares on Monday, May 4. But he might have changed his mind a couple of weeks later. We will not know the exact amount allocated to repurchases until Berkshire’s second quarter 10-Q report is filed in early August, but the repurchase amount is likely to be in the $5 – $5.5 billion ballpark.

Reading the tea leaves regarding repurchase activity at Berkshire is hazardous business. In Berkshire Hathaway and the Coronavirus Crash, published on March 22, I noted that Berkshire was trading at a price-to-book level significantly below the old 1.2x limit and that it was possible that Buffett could find shares attractive. The key question of how much of Berkshire’s large cash balance was truly deployable was the subject of another article, Thoughts on Berkshire’s Deployable Cash, published on April 21. Along with many Berkshire shareholders, I was surprised by Buffett’s cautious tone at the annual meeting and by the lack of repurchase activity even as shares fell far below valuation levels that had previously prompted repurchase activity. However, as Buffett said, his view of the range of possible outcomes of the COVID pandemic were very wide and clearly he wanted to reduce risk to the business by maintaining significant cash.

Based on commentary in the financial media and on Twitter, it seems like many Berkshire shareholders were disappointed with the lack of repurchase activity and the stock declined immediately after the annual meeting. Although the stock price has recovered since then, Berkshire has badly lagged the S&P 500 this year and remains far below its record high level of $344,970 reached on January 17, 2020. Although the explicit price-to-book limit of 1.2x was eliminated in mid-2018, many shareholders still erroneously viewed that level as a “floor”, a mentality that I criticized in 2016 in Berkshire’s Repurchase Level is not a “Floor”. Buffett has made it abundantly clear that he will never “support” the stock and initiate repurchases merely because it is falling and he wishes to stop a further decline.

So what can we infer based on the apparent ~$5 billion of repurchases that likely took place over the past two months?

It seems likely that Buffett’s views of the range of possible economic outcomes related to COVID have narrowed somewhat, and that he might view the very worst outcomes as less likely than he did when he spoke at the annual meeting on May 2. To be more precise, his views were likely more positive at the time the repurchases were made, and we do not know the exact timing. At the time of this article, published on July 13, the level of COVID infections, the rate of tests turning up positive, and other metrics have again taken a turn for the worse and several states have implemented new social restrictions and business closures.

Many commentators have noted that Berkshire’s equity portfolio, as reported on Form 13-F, appreciated strongly during the second quarter and into the first half of July. This appreciation has been driven by the extraordinary move in Apple shares which are close to breaching the $400 level. Berkshire owned 245,155,566 shares of Apple as of March 31, a position that is now valued at nearly $97 billion, up from $62.3 billion on March 31. Due to recent changes in accounting rules, the tens of billions of dollars of market appreciation in Berkshire’s equity portfolio will show up as tens of billions of dollars of “net income” when second quarter earnings are released.

It is not likely that the appreciation of Berkshire’s equity portfolio alone prompted Buffett to repurchase Berkshire stock. Although it is true that Berkshire’s book value is now far greater than the $229,358 per A share reported as of March 31, Buffett almost certainly has his own assessment of the intrinsic value of Berkshire’s equity portfolio. His own assessment of the intrinsic value of the portfolio, as well as the intrinsic value of Berkshire’s operating companies, is what will inform his thinking when it comes to calculating Berkshire’s intrinsic value. If shares can be purchased at a sufficient discount to that value, and if he views the range of overall economic outcomes as being acceptable from a risk standpoint, it is likely that he will repurchase shares. If the discount is not wide enough, or if he views the range of outcomes as too wide or skewed to the negative side, he will hoard cash.

Although Buffett does give periodic interviews, he has been notably quiet over the past ten weeks since the annual meeting. Few businessmen in America have a collection of companies in as many diverse sectors of the economy and Buffett is well positioned to personally observe the impact of COVID. He also has direct access to Bill Gates, Anthony Fauci, and other expects regarding pandemics. The repurchase activity implied by the recent SEC filing is good news in the sense that Buffett must have been more optimistic when he initiated those repurchases than he was on May 2. However, shareholders should not make too many assumptions beyond that until the second quarter report is released in early August. The COVID pandemic is by no means over and Buffett has demonstrated that he will change his mind as the facts change.

Disclosure: Individuals associated with The Rational Walk LLC own shares of Berkshire Hathaway.

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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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