Berkshire Hathaway investment from the UK

[abe2022]

Does anyone know of any way to buy BRK-B or BRK-A stock from a GBP/UK investment point of view? I was wondering if there are any investment trusts that may have significant holdings in BH that could be bought into (even better if under an ISA wrapper)?

[SalvorHardin]

I've owned Berkshire Hathaway shares for twenty six years. I've never seen an investment trust or British fund with anything other than a small holding in Berkshire Hathaway. One that springs to mind is the Buffettology fund, whose latest factsheet says that 4.57% of the fund is Berkshire Hathaway (link below). So 95.43% of this fund that isn't invested in Berkshire Hathaway.

https://www.sanford-deland.com/6/the-funds/the-buffettology-fund/fund-performance

IMHO if you want to invest in Berkshire Hathaway, buy Berkshire Hathaway shares

Most brokers will let you buy American shares and pay for them in sterling, so you don't need to convert your money into US dollars (the brokers do this for you by allowing you to pay in sterling). You can hold them in an ISA, though bear in mind that if and when Berkshire starts paying dividends these will be converted by the broker into sterling because under the current rules you cannot hold foreign currencies in an ISA.

[AsleepInYorkshire]

I've owned Berkshire Hathaway shares for twenty six years. I've never seen an investment trust or British fund with anything other than a small holding in Berkshire Hathaway. One that springs to mind is the Buffettology fund, whose latest factsheet says that 4.57% of the fund is Berkshire Hathaway (link below). So 95.43% of this fund that isn't invested in Berkshire Hathaway.

https://www.sanford-deland.com/6/the-funds/the-buffettology-fund/fund-performance

IMHO if you want to invest in Berkshire Hathaway, buy Berkshire Hathaway shares

Most brokers will let you buy American shares and pay for them in sterling, so you don't need to convert your money into US dollars (the brokers do this for you by allowing you to pay in sterling). You can hold them in an ISA, though bear in mind that if and when Berkshire starts paying dividends these will be converted by the broker into sterling because under the current rules you cannot hold foreign currencies in an ISA.

Salvor,

I was wondering if you are in need of a best friend My badness

Take care

AiY(D)
Diploma in Best Friends

[Charlottesquare]

I've owned Berkshire Hathaway shares for twenty six years. I've never seen an investment trust or British fund with anything other than a small holding in Berkshire Hathaway. One that springs to mind is the Buffettology fund, whose latest factsheet says that 4.57% of the fund is Berkshire Hathaway (link below). So 95.43% of this fund that isn't invested in Berkshire Hathaway.

https://www.sanford-deland.com/6/the-funds/the-buffettology-fund/fund-performance

IMHO if you want to invest in Berkshire Hathaway, buy Berkshire Hathaway shares

Most brokers will let you buy American shares and pay for them in sterling, so you don't need to convert your money into US dollars (the brokers do this for you by allowing you to pay in sterling). You can hold them in an ISA, though bear in mind that if and when Berkshire starts paying dividends these will be converted by the broker into sterling because under the current rules you cannot hold foreign currencies in an ISA.

You likely will also be asked to every so often complete a W-8BEN if you do not already.

[mc2fool]

Does anyone know of any way to buy BRK-B or BRK-A stock from a GBP/UK investment point of view? I was wondering if there are any investment trusts that may have significant holdings in BH that could be bought into (even better if under an ISA wrapper)?

Welcome to The Lemon Fool.

I just checked and both IWeb and Interactive Investor let you buy BRK-B directly, and if IWeb does so will Halifax and Lloyds Share Dealing, and I imagine pretty much any other broker that lets you trade US shares will too.

Interactive Investor also lets you buy BRK-A, but at $419,000 a share I think I'll give that one a miss.

[monabri]

W-8BEN form is a "one pager". It's pretty straightforward to fill in and supply to your online platform but there are a couple of points.

Come back if you need any help.

[abe2022]

Does anyone know of any way to buy BRK-B or BRK-A stock from a GBP/UK investment point of view? I was wondering if there are any investment trusts that may have significant holdings in BH that could be bought into (even better if under an ISA wrapper)?

Welcome to The Lemon Fool.

I just checked and both IWeb and Interactive Investor let you buy BRK-B directly, and if IWeb does so will Halifax and Lloyds Share Dealing, and I imagine pretty much any other broker that lets you trade US shares will too.

Interactive Investor also lets you buy BRK-A, but at $419,000 a share I think I'll give that one a miss.

.. pricey... right... so would there be any investment trusts that have a top ten holdings of only BRK-B perhaps?

[mc2fool]

Does anyone know of any way to buy BRK-B or BRK-A stock from a GBP/UK investment point of view? I was wondering if there are any investment trusts that may have significant holdings in BH that could be bought into (even better if under an ISA wrapper)?

Welcome to The Lemon Fool.

I just checked and both IWeb and Interactive Investor let you buy BRK-B directly, and if IWeb does so will Halifax and Lloyds Share Dealing, and I imagine pretty much any other broker that lets you trade US shares will too.

Interactive Investor also lets you buy BRK-A, but at $419,000 a share I think I'll give that one a miss.

.. pricey... right... so would there be any investment trusts that have a top ten holdings of only BRK-B perhaps?

Dunno, but BRK-B is only $278 a share. Does your current broker, whoever that is, not offer US shares?

[pje16]

Interactive Investor also lets you buy BRK-A, but at $419,000 a share I think I'll give that one a miss.

Note: In March 2022 they were $530,219

[torata]

Dunno, but BRK-B is only $278 a share. Does your current broker, whoever that is, not offer US shares?

A slight aside.
I monitor the price in my local currency as well as USD, so that even with the recent fall in price, the $ exchange rate doesn't yet make me want to top up. I imagine the same in GBP.

torata

[Mainwaring]

I bought my BRKB through HL. Skinned alive at the time with HL FX transaction cost but dollar strength an a proxy for US of A means I’m internation

[Mainwaring]

…international. Dollar shares and earnings recently mitigated UK holders losses though perhaps won’t always be so? I’ve had a view for 50 years that owning FX earners would be a good tilt. BRKB has been one. Good luck with your decision on Warren and Charlie.

[murraypaul]

There is an Irish domiciled ETF which wraps Berkshire Hathaway shares:

https://markets.ft.com/data/etfs/tearsh ... K1:LSE:EUR

[mc2fool]

There is an Irish domiciled ETF which wraps Berkshire Hathaway shares:

https://markets.ft.com/data/etfs/tearsh ... K1:LSE:EUR

Well found. But run by Leverage Shares (who?) for a fee of 0.35%pa and with a fund value of a mere $186,077 (or 693 shares of BRK-B).

https://leverageshares.com/en/etps/leverage-shares-berkshire-hathaway-tracker-etp/

Hmmm ... not sure I see the point!

[1nvest]

There is an Irish domiciled ETF which wraps Berkshire Hathaway shares:

https://markets.ft.com/data/etfs/tearsh ... K1:LSE:EUR

Well found. But run by Leverage Shares (who?) for a fee of 0.35%pa and with a fund value of a mere $186,077 (or 693 shares of BRK-B).

https://leverageshares.com/en/etps/leverage-shares-berkshire-hathaway-tracker-etp/

Hmmm ... not sure I see the point!

Their 2x offering 2BRK https://leverageshares.com/en/etps/leve ... haway-etp/ looks interesting.

Half in 2x, half in bonds, yearly rebalanced can compare to 100% 1x (US example)

Not holding BRK shares directly but via a Ireland based fund instead side steps US Estate Tax (inheritance tax) risks, where anything over $60K opens you up (or rather heirs) to having to file Estate Tax forms. Whilst that is generous, under US/UK tax treaty having the same $11M/whatever type exemptions as Americans, if you don't fill in the correct versions of forms, in the correct manner, at the correct times - you could end up being exposed to taxation.

Also if BRK did for whatever reason a large return of capital then that could incur relatively high FX conversion costs (maybe 1.75%), such as if being held in a ISA, as you can't hold foreign currencies within a ISA account. In general buying and selling US$ assets within ISA round trips to possibly a 3.5% FX costs - again assuming FX fees of 1.75%.

Yet another potential benefit is that 2x's tend to have a natural compounded decline. So if loaded into a SIPP, with bonds in ISA, the broader tendency is for funds to migrate out of SIPP and into ISA over time, but where the SIPP loading might have included a 20% 'bonus' paid in on top.

[Itsallaguess]

..so would there be any investment trusts that have a top ten holdings of only BRK-B perhaps?

JP Morgan American Investment Trust (JAM) has a holding in Berkshire Hathaway that floats around in their top-ten holdings -

https://www.theaic.co.uk/companydata/0P00008ZNZ

If you look at their full holdings list from 31st July 2022, it's shown in 10th position -



Source - https://am.jpmorgan.com/content/dam/jpm-am-aem/emea/gb/en/supplemental/full-portfolio-listing/jpm-american-portfolio-disclosure.xlsx

Although when we look at their top-holdings from 31st August 2022, it looks like it's dropped out of the top-ten view at that stage -

https://am.jpmorgan.com/gb/en/asset-management/per/products/jpmorgan-american-investment-trust-plc-gb00bkzgvh64#/portfolio

Given JAM's relatively large separate holding in Apple, which has a sizeable crossover with Berkshire's Apple holding as well, as well as some other cross-over holdings like Bank of America, then there's the possibility of viewing the JAM holding of Berkshire in a larger proportion than that specifically stated at the current time...

Cheers,

Itsallaguess

[abe2022]

The JPMAIT trust (and the Leverageshares) look interesting. I agree the FX swings, especially lately, need to be part of the consideration, but if you were to be buying the shares directly (rather than via a trust), and you have signed the W-8BEN agreement, then are there US tax implications that make life hard? I'm thinking that even though it could be purchased through an ISA wrapper in the UK - would I still have to fill out US forms each year - and when I come to sell, then would I still looking at a tax hit from US taxation?

[monabri]

The JPMAIT trust (and the Leverageshares) look interesting. I agree the FX swings, especially lately, need to be part of the consideration, but if you were to be buying the shares directly (rather than via a trust), and you have signed the W-8BEN agreement, then are there US tax implications that make life hard? I'm thinking that even though it could be purchased through an ISA wrapper in the UK - would I still have to fill out US forms each year - and when I come to sell, then would I still looking at a tax hit from US taxation?

The US tax authorities don't care whether you hold US shares in an ISA , Pension fund or a general trading account...all options are "local" to the UK.

A UK taxpayer deals with their tax affairs via HMRC.

The W-8BEN is valid for 3 years...that's the only US form required.

When you sell, you might be taxed on capital gains by UK HMRC if you exceed capital gains tax limits, not the US. Potential taxation to UK HMRC applies if you hold shares outside of an ISA (This would be true if you held shares in "UK shares " too...or other investment assets, eg property not your main residence).

If you hold your US shares in an ISA , there will be no further tax. The US taxman won't come knocking.

[OnMyWatch]

Warren Buffett talks about Intrinsic Value

Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.
The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised. Two people looking at the same set of facts, moreover – and this would apply even to Charlie and me – will almost inevitably come up with at least slightly different intrinsic value figures. That is one reason we never give you our estimates of intrinsic value. What our annual reports do supply, though, are the facts that we ourselves use to calculate this value.
Meanwhile, we regularly report our per-share book value, an easily calculable number, though one of limited use. The limitations do not arise from our holdings of marketable securities, which are carried on our books at their current prices. Rather the inadequacies of book value have to do with the companies we control, whose values as stated on our books may be far different from their intrinsic values.
The disparity can go in either direction. For example, in 1964 we could state with certitude that Berkshire’s per-share book value was $19.46. However, that figure considerably overstated the company’s intrinsic value, since all of the company’s resources were tied up in a sub-profitable textile business. Our textile assets had neither going-concern nor liquidation values equal to their carrying values. Today, however, Berkshire’s situation is reversed: Now, our book value far understates Berkshire’s intrinsic value, a point true because many of the businesses we control are worth much more than their carrying value.
Inadequate though they are in telling the story, we give you Berkshire’s book-value figures because they today serve as a rough, albeit significantly understated, tracking measure for Berkshire’s intrinsic value. In other words, the percentage change in book value in any given year is likely to be reasonably close to that year’s change in intrinsic value.
You can gain some insight into the differences between book value and intrinsic value by looking at one form of investment, a college education. Think of the education’s cost as its “book value.” If this cost is to be accurate, it should include the earnings that were foregone by the student because he chose college rather than a job.
For this exercise, we will ignore the important non-economic benefits of an education and focus strictly on its economic value. First, we must estimate the earnings that the graduate will receive over his lifetime and subtract from that figure an estimate of what he would have earned had he lacked his education. That gives us an excess earnings figure, which must then be discounted, at an appropriate interest rate, back to graduation day. The dollar result equals the intrinsic economic value of the education.
Some graduates will find that the book value of their education exceeds its intrinsic value, which means that whoever paid for the education didn’t get his money’s worth. In other cases, the intrinsic value of an education will far exceed its book value, a result that proves capital was wisely deployed. In all cases, what is clear is that book value is meaningless as an indicator of intrinsic value.

[OnMyWatch]

What Are Look-Through Earnings?

Look-through earnings take the current period earnings of a company (as reported in a quarterly or annual report) and add to that figure all sources of earnings expected over the long haul. Look-through earnings are not really an amount; all things being equal, look-through earnings depend on the concept that a firm's value is eventually determined by how retained earnings are invested in later years by the firm to deliver more earnings.
The term "look-through earnings" is credited to celebrated investor Warren Buffett, who favors this concept to beat a few limitations of accounting rules in determining the intrinsic values of companies. Buffett is more keen on the long-term earnings-age capacity of a firm and less so in the annual reported numbers in its financial statements.

Figuring out Look-Through Earnings

Warren Buffett made sense of his concept of look-through earnings in his booklet "An Owner's Manual," which was initially distributed to Berkshire Hathaway Inc. Class An and Class B shareholders in 1996 and refreshed in 1999. The booklet expected to make sense of Berkshire's broad economic principles of operation. In the booklet, Buffett spread out 13 "proprietor related business principles."
Buffett makes sense of the look-through earnings concept obviously in the accompanying section, which shows up as "Principle No. 6."
"We endeavor to offset the inadequacies of conventional accounting by consistently reporting 'look-through' earnings (however, for special and nonrecurring reasons, we sporadically overlook them). The look-through numbers incorporate Berkshire's own reported operating earnings ... plus Berkshire's share of undistributed earnings of our major investees — sums that are excluded from Berkshire's figures under conventional accounting ...
...We have found over the long haul that undistributed earnings of our investees, in aggregate, have been completely as beneficial to Berkshire as though they had been distributed to us (and accordingly had been remembered for the earnings we authoritatively report). This wonderful outcome has happened on the grounds that the vast majority of our investees are participated in genuinely outstanding businesses that can frequently utilize incremental capital to great advantage, either by giving it something to do in their businesses or by repurchasing their shares. Clearly, every capital decision that our investees have made has not benefited us as shareholders, but rather overall we have collected definitely in excess of a dollar of value for every dollar they have retained. We thus view look-through earnings as reasonably depicting our yearly gain from operations."

Special Considerations

Buffett trusts that the intrinsic value of Berkshire Hathaway Inc. has developed at around similar rate as its look-through earnings in the past and will keep on doing as such from now on. In addition, he accepts this principle applies to any company. The thought is that all corporate profits benefit shareholders, whether they are paid out as cash dividends or invested once more into the company. Assuming an investor were to just respect the dividends he received from his shares as his return, he would overlook the greater part of the funds — and the stock value — that was gathering to his benefit.
The look-through earnings concept, Buffett has said, powers investors to assess stocks as long as possible. "We keep on getting more cash while wheezing than when active," he cleared up for investors in 1996. "Our look-through earnings have developed at a decent clasp throughout the long term, and our stock price has risen correspondingly. Had those gains in earnings not appeared, there would have been little increase in Berkshire's value."