Please be patient and understanding when interacting with others, and avoid getting frustrated or upset if someone does not respond to your posts or if a discussion does not go as you expected. Remember that everyone is entitled to express their own perspectives. Furthermore, even when you don't entirely agree, try to benefit in some way from it.
- Manlobbi
Halls of Shrewd'm / US Policy
No. of Recommendations: 14
Back to Berkshire...
My newsfeed barfed up a link to an investment article: "Berkshire Hathaway: Nothing Lasts Forever"
Summary:
* In my opinion, Berkshire Hathaway, despite its phenomenal performance over the past few decades, will face a period of stagnation at best over the next few years.
*Buffett's AAPL position has gotten so large that BRK's portfolio is, roughly speaking, trapped in his most successful investment.
* Apart from the investment in Apple over the last ten years, BRK would actually be a very poor investment compared to the general market.
* My target price for BRK.B is at $361.3 - around 13.45% below today's share price.
I believe it makes no sense to buy BRK until its valuation in terms of P/E ratio falls into the low teens.*
Cute graphic, a bunch of hot-air balloons stuck up against a thick metal ceiling, with blue sky above.
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* But the current P/E is 12.24, so it's already in the low teens.
No. of Recommendations: 19
I read that.
I understood the (pseudonymous) author's argument as:
1) Berkshire's largest equity position is Apple
2) therefore, owning Berkshire is the same as owning Apple
3) Apple has plateaued
4) therefore, Berkshire has plateaued
5) and, they're both too expensive anyway.
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There went five minutes of my life I'll never get back
--sutton
wondering of there's a specific penance for succumbing to clickbait
No. of Recommendations: 3
Typical of the perception that BRK is just some sort of stock portfolio, and that the performance comes from clever stock picking.
No. of Recommendations: 18
Yeah, I read it too.
At least you have to hand credit to the clickbait title writers, they sucked us in.
Is there any merit to it? I agree insofar as I don't expect much return from Berkshire's stock price in the next year, maybe two, and I expect the rate of observable value growth to slow. But I don't see any big obvious alternatives at the moment. I have a cash pile ready to deploy if something comes up.
On the other hand...
I try hard never to read too much into Mr Buffett's moves as that way likes madness. But I have to say, the buybacks at around $403-$405 seem to be a more bullish signal than I would normally expect. Presumably he knows the value of a share much better than I do, and he sees value at those levels sufficient to give a satisfactory return with (presumably) some modest margin of safety. The simplest explanation is that I'm missing something. I've rarely seen him put money into anything that wasn't going to be having a 10%/year pretax yield on purchase price within 2-3 years.
Jim
No. of Recommendations: 3
I try hard never to read too much into Mr Buffett's moves as that way likes madness. But I have to say, the buybacks at around $403-$405 seem to be a more bullish signal than I would normally expect...
I think Warren and the board have decided to buyback stock as long as it is below (and not necessarily way below) their estimate of intrinsic value on a fairly regular basis since 2019. This was confirmed in an interview by Susan Decker, Berkshire board member during the 2024 annual meeting weekend in Omaha. I believe that this decision was taken so as not to have the cash pile grow too large. Naturally they will buy back way more if the stock is very cheap and there aren't many opportunities to deploy the excess capital and less when the opposite is the case.
