The Digest #36
Buffett Reshuffles Bank Holdings, The Power of Morning Pages
Buffett Reshuffles Berkshire's Bank Holdings
Berkshire Hathaway's 13-F report, filed with the SEC on August 14, revealed that Warren Buffett sold several bank stocks during the second quarter. Dataroma's presentation is easier to read than the raw filing and shows all of Berkshire's activity during the quarter. The exhibit below summarizes the bank sales reported in the 13-F filing:
Source: 13-F filing on 8/14/2020
Last week's issue of Rational Reflections pointed out that the 10-Q report already indicated that bank stocks were sold during the quarter and noted that there were reasons to believe that the Wells Fargo position was reduced or eliminated. Rather than selling just Wells Fargo, Warren Buffett sold a basket of bank stocks instead.
Berkshire did not change its position in Bank of America during the second quarter. However, after the Federal Reserve approved Berkshire's request to increase its position in Bank of America to up to 24.9%, Berkshire purchased over $2 billion worth of BofA stock in late July and early August, as disclosed in a series of Form 4 filings. The disclosed purchases are summarized in the exhibit below:
Sources: Form 4 filings on 7/22/20, 7/27/20, 7/30/20, and 8/4/20
Berkshire Hathaway now owns over $27 billion worth of Bank of America stock and is the bank's largest shareholder. Bank of America is Berkshire's second largest position after Apple.
Warren Buffett has not made any public comments regarding his recent bank transactions. In the past, he has granted interviews to CNBC on his birthday which is coming up on August 30. Buffett turns 90 this year and perhaps he will give an interview and provide some thoughts regarding the economy in general and the state of the banking industry in particular.
The Power of Morning Pages
Productivity should be skyrocketing given the wealth of resources we have at our fingertips that claim to optimize our time. Yet, for some reason, there still never seems to be enough time in the day to accomplish all of our objectives.
For this reason, I was intrigued when I read about morning pages, a concept that promises to essentially clear away the cobwebs from one’s mind first thing in the morning. The concept behind morning pages is simple, so simple that it is tempting to dismiss it as a gimmick out of hand. The only rule is that you are supposed to sit down first thing in the morning immediately after waking up and write three pages of longhand, in a stream-of-consciousness style. I discuss the benefits of morning pages in a new article posted this week.
Read The Power of Morning Pages on The Rational Walk
Interesting Links
Joel Greenblatt Interview, August 13, 2020. Joel Greenblatt, Gotham Asset Management co-chief investment officer and managing principal, talks about value stocks, monetary policy, and education policy. Greenblatt is the author of You Can Be a Stock Market Genius, a classic book on special situation investing. His new book, Common Sense: The Investor's Guide to Equality, Opportunity, and Growth, comes out in September. (YouTube/Bloomberg)
Remote Work Is Reshaping San Francisco, as Tech Workers Flee and Rents Fall by Katherine Bindley, August 15, 2020. The longer the COVID-19 pandemic goes on, the more likely it is for temporary remote-work initiatives to become permanent. Many technology workers are asking whether living in the high cost Bay Area makes sense in today's world. This trend is not limited to the San Francisco area and could have major long term implications. (WSJ)
The Future of Crypto, August 11, 2020. Patrick O’Shaughnessy interviews Brian Armstrong, the co-founder and CEO of Coinbase. They discuss the future of cryptocurrencies and decentralized finance. Skeptics of the cryptocurrency movement, and I count myself among them, should still make it a point to expose themselves to what intelligent people in the field have to say. There is also a transcript of the interview. (Invest Like the Best)
The Treatment That Could Crush Covid by Kevin Kimberlin, August 13, 2020. A promising new therapy for COVID-19 involves “medicinal signaling cells,” or MSCs, which are found on blood vessels throughout the body. "When a MSC detects an infection or an injury to those vessels, it transforms into a factory to recruit and pump out immune-modulating and vessel-repair agents. These cells ameliorate crippling and deadly conditions when traditional chemical or biochemical drugs fail." (WSJ)
Expression is Compression by David Perell, August 14, 2020. "If a story can’t get to the point, it will lose the audience’s attention. That means to ship something excellent, you have to be willing to cut what may have taken weeks or months to produce. As West Side Story composer Stephen Sondheim once said: “You have to throw out good stuff to get the best stuff.” (Perell.com)
Accelerated Learning: Learn Faster and Remember More "Learning is the act of incorporating new facts, concepts, and abilities into our brains. We start learning in the womb and we never stop; we are always developing new competencies. Every new bit of knowledge we acquire builds on what we already know and gives us a fuller, richer picture of the world. And the more developed our understanding of the world is, the easier it is for us to adapt and pivot when our circumstances change." (Farnam Street)
Gaming the system: Edward Thorp and the wearable computer that beat Vegas by Donald Melanson, September 18, 2013. A fascinating account of how Ed Thorp and Claude Shannon created the first wearable computer in 1961 which they used effectively in Las Vegas casinos. For more on Ed Thorp, read my book review of A Man For All Markets. (Engadget)
Steve Jobs Responds to an Insult. When Steve Jobs appeared at the Apple Developers Conference in May 1997, he was not yet speaking as CEO, a role he would take over two months later. However, his real role at Apple's was already apparent. How he turned an insulting question into a commentary on Apple's strategy and vision is still worth watching today. (YouTube)
Buffett on Gold and Money Printing in 1980
"One friendly but sharp-eyed commentator on Berkshire has pointed out that our book value at the end of 1964 would have bought about one-half ounce of gold and, fifteen years later, after we have plowed back all earnings along with much blood, sweat and tears, the book value produced will buy about the same half ounce. A similar comparison could be drawn with Middle Eastern oil. The rub has been that government has been exceptionally able in printing money and creating promises, but is unable to print gold or create oil."
1979 Letter to Berkshire Shareholders, signed by Buffett on March 3, 1980
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Individuals associated with The Rational Walk LLC own shares of Berkshire Hathaway which is mentioned in this issue of Rational Reflections.