Comment by MuffinFlavored | Hacker News Reader

Comment by MuffinFlavored | Hacker News Reader

1. Apple: $175,384,746,776 (48.1% of invested assets)

Not much I can say. Sounds like Warren did his homework, made a big investment, it took off and never stopped taking off. Not sure if he is to thank. Like does Tim Cook call Warren and ask for advice? Do they interact a lot with board decisions? Does Apple take outside input? Is Warren 100% hands off silent investor?

2. Bank of America: $33,278,491,633 (9.1% of invested assets)

Interesting why Bank of America and not JP Morgan.

3. American Express: $27,770,51,919 (7.6% of invested assets)

What would America look like if credit card processing fees were closer to 0.1% instead of 1-2%?

4. Coca-Cola: $23,932,000,000 (6.6% of invested assets)

I know they have a lot of brands but I'm surprised they have a $23b bet on basically a company whose brand name is associated with unhealthy drinks that are bad for you.

5. Chevron: $15,681,716,627 (4.3% of invested assets)

I know energy companies truly do mean "energy" and not "oil/fossil fuels". I wonder how this investment will do next 50-100 years. Energy companies obviously have resources and infrastructure to pivot from fossil fuels into whatever the next best thing is. I doubt they'll get left behind?

6. Occidental Petroleum: $13,750,445,662 (3.8% of invested assets)

Is this one company where Buffett + team did something the average investor can't: negotiate with company under duress using his globs of resources (money) then gain from it?

7. Kraft Heinz: $12,074,539,051 (3.3% of invested assets)

Top brands:

Oscar Mayer

Ore-Ida

Mac & Cheese

Velveeta

Jello

Kool-Aid

Lunchables

Maxwell House

Caprisun

Grey Poupon

I'm surprised they have this much in 'assets' tied to 'not sexy + boring' things like "not the best foods/drinks for you"

You should understand the cost basis, and the dividends these positions have paid out over time. It's not like Buffet paid $24B for Coca-Cola or $28B for AmEx yesterday.

From the 2022 letter, heading "Secret Sauce":

> In August 1994 – yes, 1994 – Berkshire completed its seven-year purchase of the 400 million shares of Coca-Cola we now own. The total cost was $1.3 billion – then a very meaningful sum at Berkshire.

> The cash dividend we received from Coke in 1994 was $75 million. By 2022, the dividend had increased to $704 million. Growth occurred every year, just as certain as birthdays. All Charlie and I were required to do was cash Coke’s quarterly dividend checks. We expect that those checks are highly likely to grow.

> American Express is much the same story. Berkshire’s purchases of Amex were essentially completed in 1995 and, coincidentally, also cost $1.3 billion. Annual dividends received from this investment have grown from $41 million to $302 million. Those checks, too, seem highly likely to increase.

These are positions that have matured and paid for themselves years ago.

>I'm surprised they have this much in 'assets' tied to 'not sexy + boring' things like "not the best foods/drinks for you"

Buffett drinks five cokes a day and has said 25% of his body is coke. I haven't read his biography yet but I've heard that his family has never seen him drink water.

Boring has low capital expenditures. You don't need to keep pouring money in to maintain the product. They're also sticky, stable goods that people will keep buying no matter what. They're also able to grow stably year over year.

But what are the margins on boring?

For coke?

~20% of their revenue converts to net income. That's the amount after cost of goods sold and fixed costs.

>I'm surprised they have a $23b bet on basically a company whose brand name is associated with unhealthy drinks

>I'm surprised they have this much in 'assets' tied to 'not sexy + boring' things like "not the best foods/drinks for you"

I can't tell if this is moral surprise or purely financial surprise. It certainly doesn't seem surprising financially, right? It seems very normal, surely. I can't speak on the nuances of how good an idea it is, but it certainly seems like a "normal" thing to bet big on. But even morally it's only even a little surprising if you have some reason to believe that Buffett is an unusually moral person (like, very very unusually).

I believe what they're saying is there is pressure to tax unhealthy foods. a.k.a. regulatory risk.

Not JP Morgan because of Jamie Dimon. 'Don't invest money in idiots' seems to be one of Warren's basic rules.

JP Morgan market cap is $500b, how dumb can the guy be?

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