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Speaker 2: A lot of news flow today on the tech front Nvidia.
Speaker 2: I mean, when Masa Son sells stock in a company,
Speaker 2: that's news to me.
Speaker 3: That is news. But I mean does he have great
Speaker 3: timing or does he have poor timing? That's my question?
Speaker 4: Uh, yep, I don't know. I mean you mean sold
Speaker 4: it for five twenty billions. What are you gonna do
Speaker 4: with that?
Speaker 2: Ed Luvelow, he does all this tech stuff out there
Speaker 2: in San Francisco.
Speaker 4: He is the b Tech co anchor alongside Caroline Hyde.
Speaker 2: So Ed, you know, whenever Massa herosn does anything, it
Speaker 2: really gets people's attention.
Speaker 4: Here, what do you make of this trade? Your heads
Speaker 4: are in the right place.
Speaker 5: I mean, they're selling out of the entire stake, and
Speaker 5: that's worth reiterating. It's all of it in one go
Speaker 5: five point six billion dollars, which for a five trillion
Speaker 5: dollar company, almost five trillion dollar company is not that much,
Speaker 5: but it's also not unprecedented. And what Scarlett was saying
Speaker 5: about timing, soft Banks sold out of Nvidia once before.
Speaker 5: That was in twenty nineteen, right before the kind of
Speaker 5: chat GBT explosion in AI data center demand. But then
Speaker 5: they kind of realized twenty twenty they needed to get
Speaker 5: back in and they slowly built up a stake which
Speaker 5: resulted in on paper gains that were really significant. So
Speaker 5: the market seeing this, even though in video is down,
Speaker 5: I think it's down two and a half per cent, right, guys,
Speaker 5: not necessarily is an issue with Nvidia or a signal
Speaker 5: that SoftBank has concerned about Nvidia. They're seeing it or
Speaker 5: taking soft Bank at its word that this is just
Speaker 5: financing for the other things they want to do.
Speaker 3: Okay, And in terms of the other things that wants
Speaker 3: to do, It's got a lot of different AI projects
Speaker 3: going on, isn't it.
Speaker 5: Across both public and private initiatives. Right, There are some
Speaker 5: AI startups in the compute space that they're looking at
Speaker 5: taking private. For example. They still want to deploy capital
Speaker 5: out of the Vision funds and Vision fund too. And
Speaker 5: you know they didn't tell tell us much. The CFO
Speaker 5: in particular on the call. But but that's it, you know,
Speaker 5: realizing gains, using the realized gains to generate cash, and
Speaker 5: using that cash for investing.
Speaker 4: That's what they do, right, I think, yep, exactly right.
Speaker 2: Do you think that Massa believes that he and the
Speaker 2: fund have a proper allocation to AI at the moment?
Speaker 5: This is the really important question because there is a
Speaker 5: lot of exposure with soft Bank to open AI, both
Speaker 5: in terms of direct investment but also co financing and
Speaker 5: partnering on the Stargate Data Center project. Some people have
Speaker 5: concern about the concentration risk. You know, right now AI
Speaker 5: as seen as the world's leading frontier.
Speaker 4: Model lab or AI lab.
Speaker 5: But that's not guaranteed of course, and so they would
Speaker 5: ask what is it diversified enough? But yeah, it's a
Speaker 5: really critical question. Remember, like through ARM and the board
Speaker 5: representation that they have with ARM, there is an idea
Speaker 5: that if ARMED design staf senships, Top Bank benefits from that.
Speaker 5: What they're doing with ampare in the compute space as well.
Speaker 5: That's why they need this five point six billion dollars.
Speaker 3: They say, Okay, so that's one of the big stories
Speaker 3: on the top Worldwide page on the Bloomberg terminal. The
Speaker 3: other one is Corewed's results, and we talked a little
Speaker 3: bit about Nvidia earlier. In Vidia actually owns about a
Speaker 3: six and a half percent stake in Coreweaves, one of
Speaker 3: those neo cloud companies. What was the takeaway from the
Speaker 3: latest earnings report.
Speaker 5: Yeah, so they cut their full year revenue guidance for
Speaker 5: fiscal twenty five to a range of five point zero
Speaker 5: five billion to five point one five billion dollars. The
Speaker 5: previous high end of the range had been five point
Speaker 5: three five billion dollars, so they've lowered it by about
Speaker 5: two hundred million dollars. And they say that that is
Speaker 5: because a third party that was building data center capacity
Speaker 5: for them let them down. They're behind schedule, and because
Speaker 5: that data center won't be up and running, they can't
Speaker 5: realize the revenue for a specific customer, which they're not naming.
Speaker 5: Does that justify the stock being down eleven percent? That's
Speaker 5: not a question for us. That's a question for the
Speaker 5: sale s item, for the investors themselves. But there's a
Speaker 5: lot of commotion about what it is a two hundred
Speaker 5: million dollar trim because some capacity is delayed and the
Speaker 5: thing you need to know Scarlet is like generally speaking,
Speaker 5: call we've cannot get data center capacity up and running
Speaker 5: quick enough to meet the demand that it has.
Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
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Speaker 4: I think my new favorite stock symbol is peace guy.
Speaker 6: Yeah, such a good one.
Speaker 2: I like that one for Paramount Skydance. The company reported
Speaker 2: earnings yesterday kind of in line numbers, but there's a
Speaker 2: lot of cost cutting going over there, and the stocks
Speaker 2: up ten percent on the news today. So let's check
Speaker 2: it out with Getha rang on Nothing because she covers
Speaker 2: all the media stuff for Bloomberg Intelligence and Getha I'll
Speaker 2: ask you the one you know, Ernie's question. Then I
Speaker 2: want to get to the need of the matter here.
Speaker 2: How were the earnings for this newly combined company and
Speaker 2: what's the outlook?
Speaker 7: Yeah, Paul, earnings were a little bit messy. They were mixed,
Speaker 7: but the good news was that the company kind of
Speaker 7: over delivered when it came to streaming crafitability, which is
Speaker 7: the big thing that everybody's looking for, given that, you know,
Speaker 7: they've just lost tons and tons of money on their
Speaker 7: streaming business, so that was good news. I think why
Speaker 7: Wall Street is really cheering, you know, paramount Skuidance today
Speaker 7: is because the guidance that they provided for twenty twenty
Speaker 7: six was pretty promising. So A Street was in at
Speaker 7: about three point one billion for ibit dah for next year,
Speaker 7: they came in with three point five billion, and a
Speaker 7: lot of that, as you just pointed out, was because
Speaker 7: of the cost savings. So they've taken it out from
Speaker 7: two billion to three billion. Very very aggressive measures across
Speaker 7: the board, but I think overall it was you know,
Speaker 7: what really kind of came across was that this is
Speaker 7: a solid management team that really knows what they're doing.
Speaker 7: They're super focused, you know, on driving that transformation within
Speaker 7: the company, and I think that really kind of cheered investors.
Speaker 3: Speaking of driving transformation in the company, the big question
Speaker 3: for Paramounts guidance is whether it's going to buy Warner
Speaker 3: Brothers Discovery wholesale or at least parts of it. Did
Speaker 3: we hear anything from the executives in the earnings call.
Speaker 7: Yeah, Scarlet, that's a great question. I mean, obviously that
Speaker 7: was the first thing on everybody's minds. So, you know,
Speaker 7: obviously no specific commentary on Warner Brothers itself, but the
Speaker 7: one thing that they did say was that they think,
Speaker 7: you know, they don't there's no must have for them,
Speaker 7: So they really kind of downplayed the whole need for
Speaker 7: M and A. They said that, you know, they have
Speaker 7: all of the you know, they have a great portfolio
Speaker 7: of assets. Of course, we all know that these assets
Speaker 7: have been undermanaged for many many years, underinvested, so there's
Speaker 7: a lot of work to do there. There's a lot
Speaker 7: of restructuring that needs to happen. But they really kind
Speaker 7: of downplayed you know, Warner Brothers. Of course, we know that,
Speaker 7: you know, yes, they are making huge content investments. They
Speaker 7: are making huge technological investments. But if you look at
Speaker 7: their streaming service, which is Paramount Plus, it has roughly
Speaker 7: eighty million subscribers. Okay, they do have, you know, all
Speaker 7: of these new content investments. Let's say the UFC ZUOFA boxing,
Speaker 7: all of that South Park not enough to move the needle.
Speaker 7: And I think they know that the street knows that,
Speaker 7: which is why they do need something transformative like Warner
Speaker 7: Brothers Discovery, which will really kind of put them on
Speaker 7: the map when it comes to streaming for sure, and
Speaker 7: also in terms of extracting more synergy on the linear
Speaker 7: TV side of the business where they have huge exposure.
Speaker 7: Over fifty five percent of revenue still comes from linear TV.
Speaker 2: So when you look at the enterprise value of Warner
Speaker 2: Brothers Discovery, it's almost three times the enterprise value of
Speaker 2: Paramount Skuidance, suggesting that if Paramounts Guidance wants to do
Speaker 2: a deal here, they're going to need a ton of equity,
Speaker 2: whether it comes from mister Ellison or whether it comes
Speaker 2: from private equity or some combination. Is that kind of
Speaker 2: where people are thinking about it.
Speaker 7: That is kind of where people are thinking about it.
Speaker 7: And you know what was really interesting, Paul was, you know,
Speaker 7: they've made three bids for Warner Brothers Discovery thus far,
Speaker 7: all of which have been rejected. The last one was
Speaker 7: for almost twenty four dollars a share, which was basically
Speaker 7: sixty billion equity value, about ninety billion enterprise value. And
Speaker 7: the thing there was they were offering eighty percent cash.
Speaker 7: I mean they first started out with sixty percent. They
Speaker 7: sweetened it to eighty percent, but David Zaslav, as we know,
Speaker 7: is really a tough negotiator and basically said no, So
Speaker 7: we think he's looking for something north of thirty. I'm
Speaker 7: not sure Paramount Skuidance is going to be willing to
Speaker 7: cough up that much, but let's see.
Speaker 6: Yeah, that's a that's a big, big question, Mark Keitha.
Speaker 3: As you look at the media landscape, we're focused so
Speaker 3: much on Warner Brothers Discovery and what happens to its assets,
Speaker 3: what's happening to its businesses. What are we missing when
Speaker 3: we look at what else might be a for sale
Speaker 3: or might become, you know, not a for sale, but
Speaker 3: something that a buyer might be interested in pursuing.
Speaker 7: Yeah, I mean, when we look across the landscape, you're
Speaker 7: absolutely right, Scarleton. The reason why there's so much of
Speaker 7: attention on Warner Brothers Discoveries because it's really kind of
Speaker 7: the last big you know, iconic studio if you're looking
Speaker 7: at it, a huge streaming property with HBO, you know,
Speaker 7: huge names in the business, just iconic franchises, big brands,
Speaker 7: big brands, core franchises, things that can really move the
Speaker 7: needle for any company, for any buyer. We don't really
Speaker 7: have anything quite like Warner Brothers. Yes, we have a
Speaker 7: lot of smaller names. You can think of an AMC Networks,
Speaker 7: you can think of a Life studio, you can think
Speaker 7: of comcasts new spinoff cable TV networks which is called worsened,
Speaker 7: but none of them as attractive, you know, as as
Speaker 7: Warner Brothers. So there there are a lot of opportunities
Speaker 7: for consolidation. You have a lot on the broadcast TV
Speaker 7: station side, whether you're thinking of a Gray or Sinclair,
Speaker 7: but again, nothing quite as attractive or as massive as
Speaker 7: Warner Brothers Discovery.
Speaker 4: Timing. When do you think something might happen with Warner
Speaker 4: Brothers Discovery.
Speaker 7: It has to happen quickly, Paul, because they you know,
Speaker 7: if Warner Brothers Discovery doesn't decide to go ahead with
Speaker 7: a sale, they do have a split of the company,
Speaker 7: which is, you know, splitting the company into the TV
Speaker 7: network's division and the streaming of studio's division. That is
Speaker 7: supposed to happen sometime mid twenty twenty six. So I'm
Speaker 7: assuming you know, things have to move pretty quickly in
Speaker 7: the next couple of months.
Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 3: One subject that I can't get enough of is premium
Speaker 3: credit cards and the rewards that you rack up if
Speaker 3: you use them only in certain times at grocery stores
Speaker 3: versus restaurants versus to pay for your plane ticket. Well,
Speaker 3: there's been a settlement between Visa MasterCard and merchants that
Speaker 3: may change the way that we use our premium credit cards.
Speaker 3: And Justin Teresi is here with us. He is a
Speaker 3: bi litigation analyst to hear at Bloomberg Intelligence. Justin what
Speaker 3: happened and what does this mean for my Chase Sapphire
Speaker 3: card or my AMX Platform card.
Speaker 4: Yeah, really big news here.
Speaker 8: So first of all, this case has been going on
Speaker 8: for about twenty years now, long I started before I
Speaker 8: went to law school, which was a long time ago.
Speaker 8: There's salt and pepper in my hair. So we're talking
Speaker 8: about a really really ancient case. But basically what a
Speaker 8: lot of folks don't know is when you have those
Speaker 8: really valuable premium cards, right the airline miles cards or
Speaker 8: the cash back cards, there's a fee associated with those,
Speaker 8: and it's the merchants who are eating that fee, typically
Speaker 8: around three or four percent depending on the varying swipe
Speaker 8: fee when you use it at a register. So merchants,
Speaker 8: no surprise, they're upset about that, right. So Visa, you know,
Speaker 8: big litigation here, the accusation being that they fix those
Speaker 8: fees and that you know, the merchants are basically the
Speaker 8: ones eating the costs there. So big deal announced yesterday
Speaker 8: between Visa, master Card and merchants would make a little
Speaker 8: bit more flexibility on the part of merchants here. They
Speaker 8: could basically say, hey, we're going to take the lower
Speaker 8: tier version of a Visa or a master Card, but
Speaker 8: we're maybe not going to accept airline miles cards or
Speaker 8: cash back cards. And then alternatively, they also might have
Speaker 8: the option of passing those fees onto you, the consumer
Speaker 8: at the register if they do take them. So some
Speaker 8: big changes here and how things are shaping up.
Speaker 2: Well, I've noticed in the last couple of three years
Speaker 2: they are doing that. Yeah, I mean, almost every merchant
Speaker 2: I go to now, I don't know if it's just
Speaker 2: a state of New Jersey thing, but they're saying, hey,
Speaker 2: here's the cash price, here's the credit card price.
Speaker 8: Yeah, Paul, this is actually a really interesting issue here
Speaker 8: because state by state there's a lot of differences in
Speaker 8: how this actually plays out. In New York, and I
Speaker 8: see this too when I go to my dry cleaner,
Speaker 8: it's like, oh, maybe that's four percent more if I'm
Speaker 8: going to use my credit card here. That's actually illegal
Speaker 8: in New York right now to do that, But the
Speaker 8: enforcement seems to be lacking that this is a new
Speaker 8: law pass in twenty twenty four, there has to be
Speaker 8: an upfront kind of price on a tag if they're
Speaker 8: going to pass a surch charge onto the consumer. In
Speaker 8: New York, Massachusetts, Connecticut, you can't surcharge at all. So
Speaker 8: if this settlement goes through, you know, that's a big
Speaker 8: question mark.
Speaker 3: Too interesting that you say that the surcharge is illegal
Speaker 3: in New York, because what I've seen is the dry
Speaker 3: cleaner will say we'll give you a discount if you
Speaker 3: pay in cash. Here's the regular price, but you get
Speaker 3: the discount if you pay cash.
Speaker 6: So it's no longer a surcharge.
Speaker 3: Justin you said that this has been a case that's
Speaker 3: been around for twenty some odd years. So yes, this
Speaker 3: settlement that was announced yesterday, I mean, is it just
Speaker 3: going to get caught up in a more legal jegmire?
Speaker 8: You know, it really could. So last year there was
Speaker 8: a first attempt to this. This is the second try now, right,
Speaker 8: And the big issue that blew up the deal last
Speaker 8: year is that the smaller merchants kind of pushed for
Speaker 8: the terms that they set in the first place, and
Speaker 8: big folks like Walmart, et cetera kind of got ice
Speaker 8: out from the discussions on that. It seems like that
Speaker 8: might have happened again here. The National Retail Federation was
Speaker 8: out yesterday saying, wait a minute, what kind of business
Speaker 8: practice would this be for us to say, hey, we're
Speaker 8: going to take these cards and not those cards. And
Speaker 8: they're also criticizing the fee concessions that were part of
Speaker 8: this deal too for the next five years or so.
Speaker 8: So I think there's still a lot of questions here.
Speaker 8: There's probably enough changes from last year's deal to get
Speaker 8: it over the finish line, but there's a big period
Speaker 8: here with objectors who are going to be weighing in
Speaker 8: on what they think of the deal. And honestly, the
Speaker 8: judge last year she said, look, you guys can do
Speaker 8: a lot more than you're offering to do in this deal.
Speaker 8: So is this enough? That's going to be a huge
Speaker 8: question moving into an approval hearing. What are the dollars
Speaker 8: dollar amounts we're talking about here, you know, so it's
Speaker 8: quadrupled according to the National Retail Federation since two thousand
Speaker 8: and nine. But if you said MasterCard, they've got eighty
Speaker 8: percent of this market for the the card fees, right,
Speaker 8: one hundred and eleven billion dollars last year alone collected
Speaker 8: in these wipe fees according to the NRF, So really massive, massive.
Speaker 8: But you know, these companies are also diversifying their streams, right,
Speaker 8: They're looking into digital wallets and other payment platforms too.
Speaker 8: So there's a lot more on the table now than
Speaker 8: there was when this was first brought back in two
Speaker 8: thousand and five.
Speaker 3: And to be clear, this is Visa and MasterCard and merchants.
Speaker 3: What about American Express? Where does it sit here?
Speaker 8: Yeah, so that's another great question. American Express basically settled
Speaker 8: a version of this loss or one a version of
Speaker 8: this lawsuit years ago. Their card acceptance terms are a
Speaker 8: little bit different. Surcharging doesn't really allowed with those when
Speaker 8: it's not applied to all card types, right, But that
Speaker 8: begs the question if you start allowing surcharging through card
Speaker 8: holder through acceptance agreements for Visa MasterCard, does Amex now
Speaker 8: have to allow us for charging on its card? So
Speaker 8: that's another big question mark. If this deal goes through,
Speaker 8: it really has the potential to impact everything, not just
Speaker 8: Visa MasterCard.
Speaker 6: Paul.
Speaker 3: I remember when MX used to be accepted everywhere, and
Speaker 3: then after while it was like, oh we'll take Visa
Speaker 3: master Card, but not American Express because it was always
Speaker 3: for the merchants.
Speaker 6: Too expensive, too expensive.
Speaker 2: Okay, yeah, I haven't. I can't remember the last time
Speaker 2: I used my AMEX card.
Speaker 4: Literally can't.
Speaker 6: It's there in your pocket, though it's in my pocket.
Speaker 7: Okay.
Speaker 6: See that's the thing.
Speaker 3: I mean, what does this mean for companies that have
Speaker 3: corporate cards justin.
Speaker 8: So that's one of the different brackets here too. So
Speaker 8: the way the settlement works is that it's going to
Speaker 8: divide cards into three different types, so it be commercial cards,
Speaker 8: standard customer cards, and then premium customer cards.
Speaker 4: I think the.
Speaker 8: Commercial and standard cards you know, you want that corporate business.
Speaker 8: I think those two really are of the less concern.
Speaker 8: It's those premium cards, I think, with the rewards that
Speaker 8: really are on the line here in terms of whether
Speaker 8: or not they continue to have that universal acceptance everywhere.
Speaker 3: So there's so many businesses built around how to gamify
Speaker 3: your points.
Speaker 4: Oh yeah, I love it, So you do that question.
Speaker 4: I absolutely love it.
Speaker 8: I mean every day it's like, oh, these annex offers,
Speaker 8: you know, what can I get here for this discount paper.
Speaker 6: And redsheet tracking?
Speaker 8: But I really should, honestly, I mean it's that good,
Speaker 8: I think.
Speaker 6: So Paul's like, I cannot get into this.
Speaker 4: But the kids are.
Speaker 2: Because I mean I've noticed it that they really are
Speaker 2: good at gaming the system and to the point where,
Speaker 2: you know, I'm going to Barcelona for the weekend on points,
Speaker 2: you know, right exactly.
Speaker 3: And these premium credit cards are almost like coupon books
Speaker 3: in any ways, right because they offer you know, like
Speaker 3: fifty dollars a quarter at well, actually it's seventy five
Speaker 3: dollars a quarter at Lululemon for instance, right, the Camic's
Speaker 3: Platinum card. And then people try to buy gift card
Speaker 3: and stack them and use them like a year later.
Speaker 4: Paul's laughing.
Speaker 8: I mean that's true, and they carry those really high
Speaker 8: annual fees. But I always think to myself, look how
Speaker 8: much I'm getting back for this, and that ways the
Speaker 8: fees sometimes at least in my mind.
Speaker 7: So there you go.
Speaker 6: What are what are Visa MasterCards saying about this?
Speaker 8: So they are they signed onto this deal, they reach
Speaker 8: this agreement. I think they're pretty happy with the terms
Speaker 8: of it because you know, that kind of lets them
Speaker 8: walk away. The issuing banks like JP Morgan, Bank of America,
Speaker 8: all of them are also defendants. They get to walk
Speaker 8: away from this litigation. The overhang would be removed, right,
Speaker 8: So it's really the merchants. Are all of the merchants
Speaker 8: going to sign on? And what are those objections look
Speaker 8: like in the coming months to the court?
Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto
Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
Speaker 1: get your podcasts, or watch us live on YouTube.
Speaker 2: I don't know, for a lot of us that have
Speaker 2: been in this market for a long time, this is
Speaker 2: kind of the end of an.
Speaker 4: Ear, if you will, Warren Buffett.
Speaker 2: Warren Buffett saying that he is going quiet and marking
Speaker 2: the end of an ear for one of the business
Speaker 2: world's most watched investing gurus. He will stop writing BERTRAI
Speaker 2: Hathaway's annual letters and speaking at its meetings.
Speaker 4: Let's bring in Matthew Palozoli. He's a senior analyst.
Speaker 2: He covers Berkshire Hathaway and the property and casualty insurance business.
Speaker 4: He joins us here in our Bloomberg Interactive Brooker Studio Boy.
Speaker 2: Again, for most of in America, this is a big
Speaker 2: piece of news that Warren Buffett is stepping back from
Speaker 2: the day to day, which he's been doing over time.
Speaker 9: I yes, so you know, kind of sad day said
Speaker 9: for us Berkshire watchers. But we've known it. I mean this,
Speaker 9: so we knew this letter was coming out. He does
Speaker 9: this every year around Thanksgiving. We also knew he was
Speaker 9: stepping down as CEO, so not huge surprise in this letter.
Speaker 9: I think the going quiet thing was kind of to
Speaker 9: everyone a little bit by surprise. I think maybe the
Speaker 9: thought was, hey, he's he's gonna he's stepping back a CEO,
Speaker 9: but maybe he'll kind of be out there in the
Speaker 9: public and he's still chairman, so maybe we'd still hear
Speaker 9: more from him. A little while ago he said he
Speaker 9: wasn't going to speak at the meeting, and now he's
Speaker 9: going to kind of focus on his philanthropic work. And
Speaker 9: he's also a ninety five years old, he's maybe a
Speaker 9: little tired.
Speaker 4: Yeah, exactly.
Speaker 2: And he's going to donate more than one point three
Speaker 2: billion dollars to four family foundations and plans to quote
Speaker 2: step up the pace of his childable giving to kids
Speaker 2: foundations while he's still alive.
Speaker 4: So that seems to be the point of life.
Speaker 2: He is any reason to think that the business strategies,
Speaker 2: the operations Hathaway may change now that he has kind
Speaker 2: of stepped back on another step, I guess so.
Speaker 10: I don't think so right away.
Speaker 9: So he is always praising his successor Greg Abel, talking
Speaker 9: about how he maintains the ethos of Berkshire, and they'll
Speaker 9: be doing the same thing. I think Abel walks a
Speaker 9: fine line now where I think over the next couple
Speaker 9: of years he will want to put his own stamp
Speaker 9: and make a name for himself, but also not stray
Speaker 9: too far from what has led to this massive value
Speaker 9: creation of Berkshire. So I don't think anything dramatic happens
Speaker 9: in the near term.
Speaker 10: You know, we talked about this.
Speaker 9: I think in the past the amount of capital they're
Speaker 9: sitting on and Able is a good capital allocator, at
Speaker 9: least according to Buffett. Maybe something happens there special dividend
Speaker 9: or something like that. You know, no guarantees on any
Speaker 9: of that stuff, but I could see Able wanting to
Speaker 9: put that kind of stamp on the company.
Speaker 2: Because again what we learned I guess from the last
Speaker 2: quarterly released was the cash is now three hundred and
Speaker 2: eighty two billion dollars.
Speaker 4: You know, it's a number that's you know, most portfolio
Speaker 4: managers what have wouldn't know where to start.
Speaker 10: Get boggles of mine.
Speaker 9: I think even in the letter he had mentioned, uh,
Speaker 9: there's just not a lot of things that moved the
Speaker 9: needle for them. So they bought a twelve billion dollar
Speaker 9: company in Alleghany a couple of years ago doesn't really
Speaker 9: move the needle that much. Help the insurance businesses grow
Speaker 9: a little bit, but overall for the company.
Speaker 10: Not dramatic.
Speaker 9: They bought this eleven billion dollar chemical business from Occidental.
Speaker 9: You know these are these are ten and twelve billion
Speaker 9: dollar deals, but they're just not moving the needle for
Speaker 9: the company. So there's not not a ton they can
Speaker 9: do too dramatically.
Speaker 2: Historically, why is Warren and the company what's been their
Speaker 2: thought about returning cash to shareholders?
Speaker 9: The thought has been, we don't want to do that, right,
Speaker 9: even said, you know, Berkshire shareholders have foregone dividends for
Speaker 9: a reinvestment in America. I forgot the exact line, and
Speaker 9: that was Buffets. He likes collecting dividends, he didn't like
Speaker 9: paying them. I think he always thought we are the
Speaker 9: best allocators of this. So if you're a owner of
Speaker 9: Berkshire shares, would you rather have some money or would
Speaker 9: you rather have warm Buffett invest that money for you?
Speaker 10: I think over the past couple of years, again, they've
Speaker 10: had so.
Speaker 9: Much money that's been tough for them to invest it
Speaker 9: in effective ways. But that's that's been the philosophy.
Speaker 2: Yeah, because I mean it's I guess my response would be,
Speaker 2: I can put it in cash too and get similar
Speaker 2: rates of return to you. And I guess that when
Speaker 2: it's ten twenty fifty one hundred million dollars line around,
Speaker 2: not that big of account argument.
Speaker 9: Now it's you know, it's significant, and it helped their
Speaker 9: earnings over the past couple of years. Just getting four
Speaker 9: percent on that was a dramatic tailwind to their earnings.
Speaker 9: So you know, it didn't do much for the stock
Speaker 9: after Buffett said he was leaving. That's been the thing
Speaker 9: that's weighed on it more than anything else. But annual
Speaker 9: see short term rates going down, so that tail wind diminishing.
Speaker 10: I mean, I think the.
Speaker 9: There is a school of thought that Berkshire, you know,
Speaker 9: not the same without Buffett, but just maybe not as
Speaker 9: good at almost all of their things.
Speaker 10: That's one school of thought.
Speaker 9: I could see other ones where you know, still able,
Speaker 9: maybe takes a different direction. So that's another maybe catalyst
Speaker 9: for the shares. But you know, it's it's a kind
Speaker 9: of darker time for Burshure.
Speaker 4: And what's Warren's ownership stake in the company.
Speaker 10: So I don't know this of my head.
Speaker 4: I don't controlling yeah, oh for sure.
Speaker 2: And you're not going to have an activist investor come
Speaker 2: in here and say this is just a poor allocation gun.
Speaker 9: It would be impossible. He owns too much in the
Speaker 9: The A shares I believe are ten thousand votes to
Speaker 9: a B share, he owns most of them. He will
Speaker 9: he's going to step up the amount he's giving away,
Speaker 9: but he still owns.
Speaker 10: Too much for anyone else to step in.
Speaker 9: And should he should he die in his will, he would.
Speaker 9: I think it's over ten years. His ownership goes to
Speaker 9: these foundations run by his children, who I can't imagine.
Speaker 9: Would you let them kind of immediately fall into the
Speaker 9: hands of some sort of actives investor. I think he'd
Speaker 9: set a timeframe of over ten years that he'd want.
Speaker 10: That stuff divested. But he does want to divest it.
Speaker 10: He doesn't want them to just hold on to it.
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