• Home
  • About
  • Team
  • Contacts
  • Blog

Berkshire Hathaway Third Quarter 2007

  1. Home
  2. Blog
  3. Berkshire Hathaway T ...

Portfolio manager’s Letter October 2007

Berkshire Hathaway Third Quarter 2007 sold H Shares

Berkshire Hathaway Third Quarter 2007: company filed seven separate disclosures of sales of PetroChina H Shares during the Berkshire Hathaway Third Quarter 2007. These sales will have a substantial impact on Berkshire Hathaway Third Quarter 2007 earnings. As of September 30th the company had sold 1.686 billion of the H Shares. We do not have prices for all sales, but by applying the prices listed on the disclosures to all sales in the intervening time period we can come up with a pretty good guess at Berkshire Hathaway’s gain. (See table)

Berkshire Hathaway’s cost basis is about $.17 per share, so the gain realized in the third quarter was about $2.4 billion. If taxes are paid at a rate of 35% the after tax gain will be about $1.54 billion.

The latest filing dated October 13, 2007 was a 13G filed with the SEC, and it shows Berkshire Hathaway’s position by September 30 had been reduced to 653 million H Shares. This means that in the last 3 days of September they sold 495 million shares. There has been no price reported for this sale, but if we estimate the sales at a 5% discount to the market price on those days.

Disclosure Date Estimated Remaining Holdings Sales Since Previous Disclosure (Estimate in Millions)
  Percent (Millions of Shares) Shares Est. Pr Amount Cost Gain
    2,339          
07/07/07 10.96% 2,312 27 1.61 $42.74 $4.41 $38.34
08/29/07 9.72% 2,051 262 1.47 $384.59 $43.43 $341.16
09/06/07 8.93% 1,884 167 1.47 $245.02 $27.67 $217.35
09/13/07 7.99% 1,686 198 1.46 $289.56 $32.92 $256.64
09/21/07 6.97% 1,471 215 1.55 $333.58 $35.72 $297.85
09/25/07 5.44% 1,148 323 1.66 $535.87 $53.59 $482.29
09/30/07 3.10% 653 495 1.75 $865.85 $82.13 $783.72
          $2,697.22   $2,417.35

In the Second Quarter Berkshire Hathaway’s after tax net was $3.1 billion, so the PetroChina sales may well push Berkshire Hathaway Third Quarter 2007 bottom line to over $4.5 billion. This compares to last years $2.77 billion for the quarter, so the quarter to quarter comparison may exceed plus 60%.

Factors that may reduce these earnings gains include a negative drag from the insurance operations because insurance premiums have softened, and the fact that GEICO’s margins have been tightening. In addition, the second quarter included $319 million in derivative gains which may or may not recur. (I am secretly hoping for a nice derivative gain from Warren Buffett’s pursuit of entertainment in credit default swaps) so that item could be either higher or lower.

The 13G listed no PetroChina ADRs so those were also sold in the Berkshire Hathaway Third Quarter 2007, but the ADRs were only a $100 million position and they will not change the results much. From rate of sales of H shares in last two weeks of September and the fact that we are two weeks into October it is quite likely the entire position is history.

The PetroChina stock has been rallying strongly in the last month on the increase in oil prices and speculation that mainland Chinese will be able to buy the H (Hong Kong) shares. Stocks trading on both the Hong Kong and Shanghai market trade at a higher price in Shanghai, a market that has recently become very bubbleish. I think that we can view this sale as a window into Buffett’s thinking on both the oil market and the Shanghai bubble.

Warren Buffett may be early with this sale, but hey, isn’t that what value investors do? They buy early and they sell early. Personally it looks like a good move to me, with all the speculation in the Chinese market, if Warren Buffett had waited, it might have been a lot, more difficult to get out of the position.

10/01/2007



Leave a Reply Cancel Reply

Your email address will not be published.


Comment


Name

Email

Url


Blog Archive

2020

  • The Stock Market

2019

  • Behavioral Investing

2018

  • Trumped
  • Warren Buffett vs Wall Street
  • Globalism, 1982-2000 Bull Market

2017

  • Volatility Underlying Calm Market
  • What’s new with CB&I?
  • Passive Investing
  • Economic Cycles
  • Current Stock Market 2017 Comment

2016

  • Global Plastics Summit Highlights
  • Value Investing vs Index Investing
  • How to Play an Index Bubble
  • Successful Investors
  • Is the Market Overvalued?
  • Operating Earnings
  • Article by investment manager in Bay Hill Living
  • Building Foundation

2015

  • 3G Culture – Dream Big
  • Myopic Loss Aversion
  • CBI Nuclear Energy
  • St Joe Company
  • What’s in a Word? Plastics.
  • Are Bonds Safer Than Stocks?

2014

  • Chicago Bridge and Iron
  • CAMEX 2014
  • Global Economy October 2014
  • Fluor Corporation
  • Interesting Quotes from Daily Journal Annual Meeting
  • The Daily Journal Annual Meeting
  • Albemarle Corporation
  • Triumph Group
  • The American Energy Revolution
  • Singapore

2013

  • St Joe Company Update
  • Hedge Fund Managers
  • Triumph Group Inc.
  • Bitter Brew
  • An Antifragile Portfolio

2012

  • Leucadia National Corporation
  • This Time it is Different
  • Successful traders psychology
  • St Joe Company
  • Learning from Pain

2011

  • Long Cycles – Part II
  • Long Cycle
  • Nasty Month for Market
  • Make a Buck with Fortescue Metals Group
  • Berkshire Hathaway Look Through Earnings
  • St Joe Company Inc
  • Successful Investment Management
  • A Look Into Latin American Market
  • The Mother of all Quarters
  • 2010 Investment year results

2010

  • Fault Lines
  • US Market 2010
  • Berkshire Hathaway Third Quarter 2010
  • The Stock Market 2010
  • Berkshire Hathaway Second Quarter 2010
  • Berkshire Hathaway Performance
  • Long Term Greedy
  • Goldman Sachs
  • Berkadia and Leucadia
  • USG corporation
  • Berkshire Hathaway 2009 2010
  • Why Capitalism Works

2009

  • The Lords of Finance
  • The $44 Billion Dollar Train Set
  • Berkshire Hathaway 3rd Quarter 2009
  • Career Risk for Investment Manager
  • Berkshire Hathaway financial statements
  • Berkshire Hathaway Preferred Stock
  • Moral Hazard
  • Credit Default Swap
  • The Shadow Banking System
  • Learning Things the Hard Way
  • Our C-System
  • 2008 Investment results

2008

  • Investment Risk
  • Bear Markets
  • Generational Events
  • Orange sheets – Money is doing better
  • Inflation Not The Problem
  • Tipping Point
  • Long Term Capital Management
  • Financial Insurance
  • Western Refining Inc
  • Berkshire Hathaway Year To Date
  • Berkshire Hathaway Cash Flow
  • 2007 investment results

2007

  • Investment results 4th Quarter 2007
  • Greenspan on Inflation
  • Berkshire Hathaway Third Quarter 2007
  • Berkshire Hathaway Operating income 2007
  • Berkshire Hathaway Hedge Fund
  • Leveraged Buyouts
  • Stability Unstable
  • Weak Dollar
  • Berkshire Hathaway Chairman’s Letter
  • Steel Dynamics
  • Breakwater Resources
  • 2006 Investment year results

2006

  • New Investment Stocks
  • Equitas
  • Berkshire Hathaway Third Quarter 2006
  • Hurricane Synergy
  • Berkshire Hathaway Second Quarter 2006
  • Fat Pitch
  • Perfectly Obvious
  • Berkshire Hathaway Growth Rate
  • Berkshire Hathaway First Quarter 2006
  • Berkshire Hathaway Annual Report 2006
  • Inflation Is
  • 2005 Investment year results

2005

  • Exogenous Events
  • The Easy Money
  • Look-Through Earnings
  • High-Risk Mortgages
  • Unintended Consequences
  • Rydex Ursa Fund
  • Warren Buffett Premium
  • Private Equity
  • Latticework Mental Models
  • Buffett’s Lackluster Performance
  • 2004 Investment year results
  • Professor Smith’s Second Bubble

2004

  • Hedging Currency Disaster
  • Risk Assessment
  • Too Many Bears
  • The Chinese Century?
  • Patterned Irrationality
  • Timber
  • Costco’s Cash
  • Physics Envy by Charlie Munger
  • Asset Allocation Berkshire Hathaway
  • The Balance of Payments
  • 2003 Investment year results

2003

  • Hedge Funds
  • The trade deficit is not debt
  • Secular Bear Market
  • Which Index Funds?
  • A Different Drummer
  • Costco’s Float
  • The Power of Float
  • Berkshire Hathaway Annual Meeting 2003
  • Psychology of Human Misjudgment
  • Sitting on the Sidelines
  • Berkshire Hathaway intrinsic value
  • 2002 Investment year results

2002

  • Insurance company Moats
  • Bond Bubble
  • Berkshire Hathaway Cash Flow 2002
  • Behavioral Economics
  • The Bear Market 2002
  • Greenspan Put
  • Second Quarter Cash Flow at Berkshire Hathaway
  • Berkshire Hathaway Annual Meeting 2002
  • Red Wire – Green Wire
  • Stupid FED Tricks
  • The Bottom Line
  • 2001 Investment year results

2001

  • Don’t Fight the FED
  • Buy and Hold? – It all Depends
  • Ben Laden and Berkshire Hathaway
  • The Dinosaurs Dance
  • Costco Moat
  • Bubble Watching
  • Sit on your Ass investing
  • Berkshire Hathaway Annual Meeting 2001
  • Carnival Cruise Lines
  • 450000 Square Ft Furniture Store
  • Lunch Money Indicators – Annual report
  • Other People’s Money

2000

  • Bear Tracks
  • Build It and Money Will Come
  • Efficient Stock Market
  • Style Drift
  • Lunch Money Indicators – Options
  • Identifying Problems
  • Small Retail Stocks
  • Charlie Munger comments
  • Big Al and the Bubble Machine
  • Berkshire Hathaway Cheap
  • Index Funds
  • 16 rules for investment success
Make an appointment or contact us by phone: +1 (689) 246 49 49
© 1999 - 2022 Losch Management Company
Support by Global AGM