No. of Recommendations: 11
I took advantage by buying some BRK at $409, well below the price I sold at after Q1 results. There may be opportunities to buy more at lower prices, but just in case!
My thinking is similar. I'm a big fan of price dips.
I have cash just earning interest, and would love to deploy it back into Berkshire at valuation levels more attractive than those we've seen recently. So I wrote some cash-backed puts this morning.
There are plenty of choices that might make sense depending on your goals, but I wrote Jan $410 for a premium of $18.95. The two outcomes are that I get either
(a) a return of 4.85% on my cash committed for [up to] 165 days, which is an annualized rate of [at least] 10.72%/year. That's in addition to the interest rate that I'm already earning on that cash, currently a little over 5% but falling. Or...
(b) I get some Berkshire stock at a net entry price of $391.05, probably early in the new year. I think a reasonable guess of the stock price early next year might be around $396-411 per B share, so that's a good entry. Maybe 1.33 to 1.36 times year end book as a wild guess?? In any case, a pinch below typical multiples of on-trend value, I think.
I wonder how many Berkshire put contracts Berkshire could write before the market makers noticed and stopped offering decent premiums?
Jim
