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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 0
It seems that we are at 1.49x Book this AM, and the A/B ratio which has been mired at 1500 and below for the past bunch of months has perked up.
Repurchases happening now?
What do folks think about selling the 450 puts here, even for a month, seems like their offering value.
No. of Recommendations: 5
Repurchases happening now?
Generally speaking, since Berkshire has not implemented an automatic trading plan, they would not be repurchasing shares until tomorrow at the earliest.
A-share holders may be less likely to react to whatever the marginal B-share owner is "seeing" in the Q2 report. I certainly didn't see anything concerning in the report.
No. of Recommendations: 0
It's possible repurchases are happening now that the lockup period around earnings release is over. I think it's also possible you have more fleeting owners in the B-shares, and those are the only people selling at the moment. I'd be tempted to go a bit lower on the strike price, given the market's reaction to Buffett's warning about tariffs affecting Berkshire.
No. of Recommendations: 13
What do folks think about selling the 450 puts here, even for a month, seems like their offering value.
If you're going to do that, I recommend going out more months. The premium is simply bigger, meaning a bigger discount for any given strike price you pick. Also a more meaningful amount of return if they expire worthless rather than relative chump change.
Around year end book will probably be somewhere around $322 at a guess. (or near that, on trend, which probably matters more).
Random example, sell January $440 put for about $12, entry price about $428, which might be around 1.33 times book at the time of expiry. Hard to imagine that being a bad outcome.
Or you get 2.79% on the capital you tie up, which is a return of 6.2%/year rate on top of whatever you're already earning on the cash. IB is paying 3.83% at the moment, so if that holds it's a rate of 10.01%/year.
Tune the numbers to get two outcomes which you consider equally attractive. Because, sure as shootin', you'll get whichever one looks worse at the time : )
Jim
No. of Recommendations: 3
A/B ratio which has been mired at 1500 and below for the past bunch of months has perked up.
1504.9.
Not really very noteworthy in the grand scheme of things.
Above that a lot of 2023 even if you ignore the oddities of A-share close price reporting.
Jim
No. of Recommendations: 5
Jim,
One of my say-to-myself's is that when Berk is getting pummeled and Mr. Market is doing fine that there's trouble ahead. Of course this is an in-the-moment thing and it comes and goes sometimes quickly.
I'm not asking you to do a lot of work with this, just given your energy for things similar I wondered if you had figures of some sort about such.
Charlie
No. of Recommendations: 1
B-shares, and those are the only people selling at the moment.
I don't understand this, with this moment the Aīs down 2.44% and the Bīs 2.40%?
No. of Recommendations: 1
The January 2026 $390 Put gets you an entry point at 1.2 times Mungo's estimate of year-end book value. It adds only 2.15% to your yearly return on cash. That's a really attractive entry price for Berkshire, but a less attractive rate of return on the cash. Also, at a certain price point, I'd like to have the cash available to buy long term Calls, say when the current price is near 1.1 to 1.0 times book value.
No. of Recommendations: 5
I wondered if you had figures of some sort about such.I don't have anything numerical. Like you, just the observation that sudden relative-to-market drops are sometimes brief things.
On the other hand, we've had two relative-to-market gaps down recently that saw the trend continue, both in early May, so it's not much of an observation.
Long stretches of slow relative-to-market slides are common. Today's weakness, though sudden, is basically on the four month trend like that.
A graph of the ratio: (horizontal line means market tracking, rising line means Berkshire outperformance)
https://stockcharts.com/sc3/ui/?s=BRK%2FB%3ASPY&p=...I have been net short Berkshire in this stretch, and long some other stuff, and it has been very pleasant for me. Beating the market nicely this year, while being 2/3 in cash.
Jim
No. of Recommendations: 0
I don't understand this, with this moment the Aīs down 2.44% and the Bīs 2.40%?
The A shares suffer from low trading effects. I just got a quote from Yahoo showing the A shares down 2.5% at 693,734.6. This is despite both Bid and Ask behind higher than this (693,841.5 and 694,420 respectively). Basically the quote for A lags until a sale gets made, while the B quote is more realtime.
A quick look at A vs B trading can give you either deceptively high A/B or deceptively low A/B ratio depending on where A's are in the lagging. I believe the discrepancy remains at close, with A-shares showing the last-price regardless of what the Bid and Ask prices were.
My point was just that higher A/B ratios can be explained by increased demand from a large purchaser (maybe Buffett), or reduced supply by lots of sellers that don't follow the day to day market. I didn't really look closely at what we're trading at today.
No. of Recommendations: 0
I have been net short Berkshire in this stretch, and long some other stuff, and it has been very pleasant for me. Beating the market nicely this year, while being 2/3 in cash.
Same for me, with this moment 46% of net assets cash, 38% BRK shares, and 9% puts.
But today "head scratching" starts for me. I have Dec/Jan/Mar puts, all kind of streikes from $440 to $500, 12%-112% in the plus (apart from an old Jan26 $400 one bought last year which lost 69% currently).
Original intention/conviction: Starting to sell at $460 and down, expecting to see $420-$440 this year. I still think we will see that, but time value is running against me. So itīs tempting to as originally intended start(!) selling now, but with Berkshire clearly in a down trend itīs also tempting to wait --- with the risk to eventually regret that as bit later as having been too greedy. Itīs always the same for me: Buying is easy, but selling hard as in that there are too many emotions involved (greed and fear).
May I ask: What would you do?
No. of Recommendations: 7
I have Dec/Jan/Mar puts, all kind of strikes from $440 to $500, 12%-112% in the plus
I presume we're talking about puts you purchased, putting out cold hard cash as a wager on a price drop.
In the long run, the price is going to rise. When it was trading at $535 it was a pretty solid bet that the price would be lower some day soonish. But now, it's not nearly as certain. P/B was down to around 1.48 today, a multiple around where we know for sure that Berkshire was buying back B shares for economic reasons (i.e., thought to be a good deal). It's still fairly likely the price will go lower--the two most popular directions for share prices are up and down, after all--but it is no longer certain enough that I would bet hard earned money on it.
So perhaps there is a case to be had for closing them, or at least some of them? I closed the last of mine a little while back. Just my two cents. The positions probably have a meaningful cash value at this point, which it would be a shame to give back.
There is sometime a case for selling half of each position. If they become more profitable, you'll feel great for having waited to close those. If they start giving back profits, you'll feel great for snagging profits on the first half. "Minimize maximum regret" : )
Jim
No. of Recommendations: 1
"Minimize maximum regret"
Done!
Just sold 30% of all (Dec+Jan ones, for around +100%).
Thank you, Jim.
