Berkshire Hathaway appears to buy back more stock

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Yahoo Finance 24 June, 2021 - 01:30pm 14 views

Who is Warren Buffett?

Mr. Buffett, the 90-year-old chairman and chief executive of Berkshire Hathaway Inc., had served as a trustee of the foundation since 2006, when the billionaire pledged to donate all of his company stock to philanthropy. The Gates Foundation is one of five beneficiaries of Mr. Buffett's largess. The Wall Street JournalWarren Buffett to Quit as Gates Foundation Trustee

Why did Warren Buffett resign?

Last March, he stepped down from his role on Microsoft's board of directors to focus solely on his work with the foundation. Buffett is the world's eighth-richest person, with a net worth of $105 billion, according to Bloomberg. CBS NewsWarren Buffett resigns from Gates Foundation, donates $4.1 billion

The Berkshire Hathaway chief, who has given away billions, asks whether donations should keep their special status.

Buffett says that he has given more than $41 billion to charity over the years. He announced $4.1 billion in donations yesterday. This comes weeks after a ProPublica exposé based on confidential I.R.S. data revealed how much the richest Americans paid in taxes. The article noted that Buffett paid $23.7 million in taxes from 2014 to 2018, a period when his wealth grew by an estimated $24 billion.

Billionaire giving has become a hot topic of debate. Polling by Recode this year suggested that Americans believed higher taxes on the wealthy would be more beneficial to society than more donations from the wealthy. Democratic and Republican lawmakers alike have questioned whether billionaires’ donations are reaching their intended recipients quickly enough — or at all. Two years ago, Andrew cited Buffett’s donations of stock as an example of a loophole in the tax code.

Buffett says that philanthropy can be a powerful tax shield, if donors want it to be. Buffett’s donations, he said yesterday, resulted in only 40 cents in tax savings per $1,000 given. The reason his tax bill is so low, he said, was because he earns relatively little in wages, amassing most of his wealth from his holdings of Berkshire Hathaway stock, which isn’t taxed until it’s sold.

Buffett has criticized “huge dynastic wealth,” and his arguments for higher taxes on the wealthy led to the so-called Buffett Rule, a proposed minimum tax on millionaires and billionaires. Yesterday, he reiterated his support for overhauling the tax code. “It is fitting that Congress periodically revisits the tax policy for charitable contributions, particularly in respect to donors who get ‘imaginative,’” he said.

House lawmakers advance sweeping bills to curtail Big Tech’s power. After hours of sometimes contentious debate, the House Judiciary Committee approved efforts to rein in Silicon Valley’s giants. One would block the biggest tech companies from buying rivals; another, which would make it easier to break them up, is still under consideration.

A potential compromise emerges on infrastructure spending. President Biden is set to be briefed today on a $600 billion package for investing in areas like roads and broadband, brokered last night by White House officials and a bipartisan group of lawmakers. It would essentially serve as the first step in the president’s $4 trillion infrastructure ambitions.

John McAfee dies in a Spanish prison. The antivirus software pioneer, 75, died after a Spanish court said he could be extradited to the U.S. on tax-evasion charges. After severing ties to the McAfee company in 1994, he led a globe-trotting life full of controversy, including accusations of drug-dealing, drunken driving, illegally entering Guatemala … and running for president.

JPMorgan Chase weighs mandatory vaccinations for workers. The bank, which plans to bring its employees back to the office next month, may become the latest Wall Street giant to require some level of inoculation of its work force, according to a memo sent to staff.

You won’t believe how BuzzFeed plans to go public. The digital publisher that made its name with listicles and clicky headlines (and won its first Pulitzer this year) is nearing a deal to merge with a SPAC, and may also raise additional money to buy up rivals.

For decades, Brunswick Group made its name, and money, by advising companies on matters like mergers. Now it has struck a deal of its own: selling a minority stake to BDT Capital Partners, the merchant bank run by Byron Trott, a former Goldman Sachs banker and a Warren Buffett favorite.

BDT will invest in Brunswick at a £500 million ($698 million) valuation, we’re told. The deal, which came together after Brunswick explored financial options for more than a year, is meant to help Brunswick expand — it currently has 27 offices worldwide — and, perhaps more important, to fund £140 million in payouts to its 200 equity partners. (Half of which will go to Sir Alan Parker, the firm’s chairman and biggest shareholder.) Changes to Brunswick’s corporate structure will also give younger partners a stake in the firm. The Financial Times first reported the deal.

Compensation issues have been a problem for Brunswick in the past, driving some top performers to leave. But in recent years, the firm has hired prominent names, including the former deputy Treasury secretary Neal Wolin as C.E.O. and the former CNBC editor in chief Nik Deogun as head of the Americas.

It’s the latest deal in the P.R. industry, as investment firms have bet on growing client demand. CVC Capital Partners bought a majority stake in Teneo two years ago, while Golden Gate Capital bought a 40 percent stake in Sard Verbinnen in 2016. BDT tends to buy into founder-led private companies, with an aim for holding its investments longer than most private equity firms. “Our minority, long-term investment will continue to support their efforts to remain an independent and partner-controlled business,” Trott told DealBook in a statement.

When the going gets tough, call Larry Fink. BlackRock’s chief was in frequent touch with Treasury Secretary Steven Mnuchin and the Fed chair, Jay Powell, in the days before and after many of the Fed’s emergency rescue programs were announced in late March 2020, The Times’s Jeanna Smialek reports. In one email obtained by The Times, the asset management firm referred to parts of the rescue programs as “the project” that Fink and the Fed were “working on together.”

The weekend before the Fed’s policy package was released, Mnuchin spoke to Fink more than anyone other than the Fed chair. The New York Fed later hired the firm’s advisory arm, which operates separately from its asset-management business, to carry out the Fed’s purchases of commercial mortgage-backed securities and corporate bonds. (BlackRock also helped with the Fed’s crisis response during the 2008 financial meltdown.)

“They’re about as close to a government arm as you can be without being the Federal Reserve,” said William Birdthistle, a professor at the Chicago-Kent College of Law.

Read Jeanna’s full article, including the emails obtained by The Times, about BlackRock’s role in the pandemic crisis response.

The Supreme Court yesterday saved the imperiled Federal Housing Finance Agency, which has overseen Fannie Mae and Freddie Mac since their government bailouts, but put the agency’s director on the chopping block. The Biden administration quickly took the opportunity to remodel.

The case stems from the 2008 financial crisis. Shareholders in Fannie and Freddie sued to recover $124 billion in payments the lenders were required to make after their bailouts. The shareholders said the F.H.F.A.’s unconstitutional structure invalidated these collections. The statute creating the agency, written by Congress, limited the president’s power to dismiss its director, which shareholders said violated separation of powers principles. Justices agreed that the clause was flawed, but they declined to dismantle the agency or invalidate its past actions. They sent shareholders back to lower courts and said the agency’s director could be removed with or without cause.

Fannie and Freddie’s share prices plunged, hitting hedge funds that have bet on their privatization.

The White House removed the F.H.F.A. director hours after the decision. Mark Calabria, a libertarian economist appointed by Donald Trump in 2019 to lead the F.H.F.A., was working on a plan to release Fannie and Freddie from conservatorship. Calabria issued a parting shot in a statement, saying, “When the housing markets experience a significant downturn, Fannie Mae and Freddie Mac will fail at their current capital levels.”

“Having a privately owned, too-big-to-fail duopoly in control of the housing market was a terrible idea,” said Jim Parrott, a former housing adviser in the Obama administration now at the Urban Institute. There was once widespread agreement on that, Parrott told DealBook, but getting Fannie and Freddie back in private hands was Calabria’s top priority, and it informed all of his policy decisions. He expects the next director to focus on “questions of how best to help support the housing needs of a nation.” For now, that is Sandra Thompson, who has been at the agency since 2013 and was appointed acting director last night.

GlaxoSmithKline finally unveiled details on its $11 billion plan to spin out its consumer businesses. (Reuters)

The N.F.L. has reportedly hired Goldman Sachs to help weigh the sale of stakes in its media properties. (WSJ)

Embark Trucks became the latest autonomous vehicle start-up to merge with a SPAC, in a $5.2 billion deal. (Reuters)

“This Is the Plan to Rescue Poor Countries From the Pandemic” (NYT)

A federal judge temporarily blocked the Biden administration’s plan to offer debt relief to minority farmers. (NYT)

The Supreme Court ruled that a California regulation allowing unions to recruit agricultural workers at their workplaces was unconstitutional. (NYT)

Inside Comcast’s efforts to transform from cable titan to streaming giant. (WSJ)

Tech giants like Amazon are racing to buy up renewable energy supply for their power-hungry data centers. (WSJ)

C.E.O.s like Tim Cook and Jamie Dimon say being in the office is necessary to inspire innovation. Researchers say there’s no evidence for that. (NYT Upshot)

Gary Kelly, Southwest Airlines’ C.E.O. of two decades, will step down next year; he’ll be replaced by another veteran executive, Robert Jordan. (NYT)

How Peter Thiel reportedly turned a Roth IRA retirement account into a $5 billion tax-free windfall. (ProPublica)

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.

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1 Top Stock Warren Buffett Is Spending Billions On

The Motley Fool 25 June, 2021 - 03:31pm

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Famed investor Warren Buffett is investing Berkshire Hathaway's (NYSE:BRK.A)(NYSE:BRK.B) capital in one stock more than any other: Berkshire Hathaway. Yes, you heard that right. The investment conglomerate spent nearly $25 billion repurchasing its own shares last year -- and the aggressive buying seems to be continuing into Q2.

This is a telling sign of how valuable Buffett thinks Berkshire's own shares are, as he has said numerous times that the company only buys back its stock when he believes it's undervalued.

Warren Buffet. Image source: The Motley Fool.

After repurchasing $24.7 billion of Berkshire stock last year -- more than ever before -- the company appears to be buying back stock at a similar pace in 2021.

A new Securities and Exchange Commission (SEC) filing from Warren Buffett that shows details on Berkshire's share count suggests that the company has bought back about $6.4 billion worth of stock in Q2, according to estimates by Barron's. This adds to the $6.6 billion the company repurchased in the first quarter of the year. 

Of course, there's still time left in Q2 for even more repurchases.

Notably, if Berkshire repurchases just as many shares in the second half of 2021 as it did during the first half of the year, this would amount to $26 billion -- more than the company's record buyback last year.

To put the significance of this buyback into context, the $24.7 billion Berkshire repurchased last year was enough for the company to reduce its share count by about 5%. Further, the fact that Berkshire continues to buy back its own shares in droves is particularly telling in light of the company's capital-allocation strategy regarding repurchases. "In no way do we think that Berkshire shares should be repurchased at simply any price," Buffett explained in the company's 2020 annual shareholder letter.

I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.

In other words, Berkshire aims to buy back its own shares only when Buffett believes they're trading at a meaningful discount to their intrinsic value. Suffice it to say, if Buffett is buying back shares of Berkshire today, he believes they're a good long-term investment.

Given the fact that Buffett has compounded the per-share market value at an average rate of 20% annually since 1965, beating the market's average annual return of about 10%, Berkshire's sizable repurchases should be enough to get investors to take a second look at the stock.

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In One Fell Swoop Warren Buffett Donates $4 Billion To Charity And Quits The Bill And Melinda Gates Foundation

Celebrity Net Worth 25 June, 2021 - 03:31pm

Whoa! There was a big shakeup in the world of billionaire philanthropy on Wednesday. Warren Buffett, the billionaire Chairman/CEO of Berkshire Hathaway announced today that he is stepping away from the Bill and Melinda Gates Foundation.

In the letter revealing his decision to step down from the organization, Warren also disclosed he had donated $4.1 billion to charity. He specifically donated the $4.1 billion to the five foundations he's given money to every year since 2006. Those five foundations are:

The Gates was the largest recipient of today's donation, receiving $3.2 billion.

Of the five foundations above, only the Bill and Melinda Gates Foundation is NOT run by one of Warren's children. Warren has three children:

As you might have guessed, Susan runs the Susan Thompson Buffett Foundation. She ALSO runs the Sherwood Foundation. Howard runs the Howard G. Buffett Foundation and Peter Buffett runs the Novo foundation.

In his announcement, Warren did not mention the high profile and very expensive divorce of Bill and Melinda Gates, or any of the rumors floating around about Bill's allegedly inappropriate behavior in the office. Instead, he noted that his resignation from the Gates Foundation is simply part of his overall plan to cut back and resign from all corporate boards except Berkshire Hathaway. He is, after all, 90 years old. He remains the CEO and chairman of his own company.

In his statement today, Buffett said:

"Today is a milestone for me. In 2006, I pledged to distribute all of my Berkshire Hathaway shares – more than 99% of my net worth – to philanthropy. With today's $4.1 billion distribution, I'm halfway there."

Even after this latest donation of $4.1 billion, Buffett still owns 238,624 shares of Berkshire Hathaway and is worth $105 billion. That's enough to earn him the rank of the 8th-richest person in the world.

But there's an important caveat when discussing Warren Buffett's net worth!

When you include today's $4 billion donation, Warren has donated $41 billion to charity during his lifetime. If he had never donated a single dollar to charity, today Warren's net worth would be $145 billion. That would be enough to make him tied with Bill Gates as the fourth richest person in the world.

But there's a similar caveat with Bill Gates. Bill and Melinda Gates gave $50 billion to charity during their marriage. If they had never donated any money to charity and were not planning to divorce, today Bill Gates would be worth $195 billion. That would make him the second richest person in the world behind Jeff Bezos, who is worth $202 billion.

Buffett's resignation as a trustee of the Bill and Melinda Gates Foundation comes at an uncertain time for one of the world's largest charities as its founders proceed down the path to divorce. Bill and Melinda have jointly led their foundation for decades. Reportedly, the former couple is talking about adding a board of directors to the philanthropy as well as bringing in outside directors to add more governance and independence to the foundation and to ensure the stability of the foundation in the future. Bill and Melinda are currently co-chairs and trustees and oversee how the foundation is run. Buffett is a major donor to the Bill and Melinda Gates Foundation and in his former role as trustee, had a say in key matters. Buffett had been a trustee of the foundation since 2006.

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