Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 6
In Berkville experts continue to be in denial that their IV calculations of $400-$430 are probably not correct and in fact may not even be close to the actual number.
Didn't even phase them when Mr. Bloomstran came up with a $500+ IV number. UCMTSU.
$600 or bust!!!
No. of Recommendations: 1
I think so too. Buffett was obviously not going to talk up the stock. It would not have allowed him to but back the $80b or so. It’s amazing that we had such a long run in undervalued territory. Many here on this board have handsomely profited off it. All good things end!
As another poster just observed, buying another whale with today’s stock currency would be awesome but we know the chairman’s distaste for it😳
No. of Recommendations: 1
" UCMTSU.
$600 or bust!!!"
I miss you old bud.
No. of Recommendations: 7
I think back to the spirited debates you had with webrules, He kept insisting that it was "good" that BRK was selling below IV and would be even "gooder" if it stayed at that low valuation for a long time. To his credit he finally came to the realization that it would not be in his best interests if that was always how BRK was priced.
The happiest person in berkville has to be Mr. Market who has been buying (while grinning from ear to ear) the experts shares since they became convinced it was fully priced at $430.
No. of Recommendations: 1
" I think back to the spirited debates you had with webrules, He kept insisting that it was "good" that BRK was selling below IV and would be even "gooder" if it stayed at that low valuation for a long time."
I remember it was toddfinaces who opposed splitting the Bs 50 for 1, but who told us to calculate our IV net worths and forget the bid? You couldn't make that sh$t up!
No. of Recommendations: 1
man HC , I remeber those debate ! you just would not give up... gave "stand your ground" a whole new meaning :-)) great days !!
No. of Recommendations: 9
IV calculations of $400-$430 are probably not correct and in fact may not even be close to the actual number.
You may be right. Who knows?
But bear in mind that there is a big difference between what actual fair value is, and what the market is likely to pay on a typical day, which is generally a fair bit lower : )
For myself, I frequently post observations about what the market is likely to pay, but avoid any mention of what I think the actual IV is. I don't even try to calculate it for myself.
Jim
No. of Recommendations: 9
You don't need to make complicated IV calculations. Just watch the actions of Berkshire itself as the price increases.
Buffett stopped all buybacks around the $470 per B mark. Ajit jain slashed his personal holdings of Berkshire by 55% around this level.
That was a pretty good indication that the price was approaching IV as the price hit that range. It is 14% higher as of today.
To me it seemed to be as good a=time as any to rebalance the portfolio and bring down some single stock exposure without any tax consequences - so I sold some in the $530 range. Obviously that is not everyone's situation butto me it was a fairly rational choice.
No. of Recommendations: 16
Buffett stopped all buybacks around the $470 per B mark.
FWIW, many of us believe he stopped before that, and that those transactions were price-insensitive purchases from long time shareholders. I would be a bit hesitant to read too much into those.
To be specific, there has never been a buyback anywhere near $470/B, so far the highest monthly average price paid has been $357.22. Only A shares have been repurchased since November 2023.
I personally don't believe any buybacks have been done for economic reasons above 1.5 times known book. Of course that might change, or I might be wrong. FWIW, the highest paid for B shares so far has been 1.48.
This tea-leaf-reading about what can be inferred from specific buybacks has nothing to do with the simpler observations that
* real value per share had done very nicely, and has kept rising through thick and thin, and will presumably continue to do so for some time to come, and
* valuation levels are higher than they have been in the last 17 years, so the price return from here will be poor for a while unless these valuation levels last (unlikely in the extreme, but always possible).
Jim
No. of Recommendations: 0
* valuation levels are higher than they have been in the last 17 years, so the price return from here will be poor for a while unless these valuation levels last (unlikely in the extreme, but always possible).
I'm not so sure, and it has nothing to do with value. I think the nature of the market participants has changed...I call it "the Redittor Effect ".
Lots of retail investors are just gambling, and who safer to gamble with...? its a psychological effect.
No. of Recommendations: 7
To be specific, there has never been a buyback anywhere near $470/B...
Yes, the highest I see was 100xAs at $626,686. The very last buy, May 2024, equivalent to $418/b.
That was a price to forward book of 1.5
The easiest explanation for the current run up is the usual: Mr. Market is in his manic phase.
Like many here updating my portfolio value has been quite pleasant of late. Those pleasing increases are not to be thought of in terms of consumption, however. It's probably temporary. We've seen a 50% cut before. It will happen again.
No. of Recommendations: 14
I'd like to offer one observation: In recent years, Berkshire's share price has moved more or less parallel to that of Munich Re (the world's largest reinsurer).
Could it be that the market views Berkshire primarily as an insurance company and values it accordingly? That the current valuation has less to do with Berkshire as an individual company and more to do with optimism for the reinsurance sector?
No. of Recommendations: 8
Could it be that the market views Berkshire primarily as an insurance company and values it accordingly? That the current valuation has less to do with Berkshire as an individual company and more to do with optimism for the reinsurance sector?Point well made. I used stockcharts.com to plot an S&P insurance index and BRK/B over the past 10 years. BRK has pretty closely tracked the index - slightly lagging - but this all depends upon what start point you choose. I took 10 years just to observe how each performed. Hope the link works.
https://stockcharts.com/freecharts/perf.php?dollar...If not, the symbols are $SPINPC and BRK/B and chose Perf Plot as the chart type.
Are the non-insurance businesses and cash actually holding back the BRK stock price? (grin)
Is the whole industry over-valued?
Otherwise, BRK is just keeping up.
No. of Recommendations: 0
Oops!! The chart defaulted to 200 days. But you can use the slider bar at the bottom to look at relative performance over time.
No. of Recommendations: 3
How many here will buy more in a 50% draw down?
I sold all the Brk shares in my IRA recently (but a bit too soon), and I would definitely get back in at that discount.
Unless I think the sky is falling, and then I will suck my thumb and do nothing. 😆🤦♂️
No. of Recommendations: 7
No less of an expert than The Motley Fool just ran an article "Three Reasons to Buy BRK like there is no Tomorrow". The three reasons were: a wonderful collection of companies, a wonderful portfolio of stocks, and a wonderful pile of cash. No mention of what a good price would be for all this wonderfulness, though to their credit they state it is a good place to put long term money and not worry about the future. I do wonder though that if there "is no tomorrow", why would I worry about something long term?
There is an author, Mett DiLallo, though I suspect he needs to step back from the chat GPT.
No. of Recommendations: 8
yes, I saw that Motley Fool article on a mainpage of maybe Yahoo? Or Firefox. It made me think, 'oh right, we are in the manic phase.' All we need is a Barron's cover story to put a nail in it.
I'm doing what I've done in the past and selling off in my tax-deferred accounts and letting everything but my yearly expenses ride in the taxable. (I don't need those yearly expenses but it enables me a nearly non-existent tax bill by selling in tiny yearly amounts -- usually, I buy in my IRAs to counterbalance, but not this time.)
Once the market moves south, I load up on BRK.B again.
It's worked for me. That's not saying much. I'm still an amateur at this game.
SD
No. of Recommendations: 12
<<<To be specific, there has never been a buyback anywhere near $470/B...
Yes, the highest I see was 100xAs at $626,686. The very last buy, May 2024, equivalent to $418/b>>>
From the 50th year commentary on the “past, present and future of Berkshire”, Buffett wrote to shareholders to not overpay for the shares. He told us to think of holding at least 5 years and not buy the shares when they are dear; he actually threw out the yardstick, “say, approaching twice book value”. Well 1.5x was approaching that in his mind and well, 1.8x is here. There’s no margin of safety.
It’s a great education for us, for most corporate boards as they buy shares back.
No. of Recommendations: 4
How many here will buy more in a 50% draw down?
A 50% drop is very unusual. Probably only once every generation or two. So historically it would be a great time to buy. I'd buy at that point. Without looking at a chart, I suspect the last time that happened was in the GFC. And the time before? Maybe 1987 black Monday crash? Maybe not.
Of course, in the modern era, too much information is available, so it appears that there's always enough people who "buy the dip", and when you "buy the dip", you usually buy too early, but if enough people do it, then we never reach the "natural" low, so it's possible that because too many people will buy at -20% and at -30% and certainly at -40%, that you will never see the -50%. And isn't that the general conundrum of "getting out" when you think the price is too high. The big problem is that you have to make TWO decisions at that point, when to get out, and then again when to get back in. And so many people wait and wait to get back in (maybe they are waiting for that -50% that never comes), and then they sit out the next big leg up.
No. of Recommendations: 2
Excellent Mark…wish I could recommend this more than once.
No. of Recommendations: 3
toddfinances!! If I recall he had done well in real estate and then found BRK/Buffett and was a frequent poster on the Yahoo boards both the original and the Prez board. Unfortunately he eventually became convinced that he could do better with his own stock selection(s) and sold his BRK shares. For a while he kept boasting about how he had "the optionality of cash" while he waited for the best entry point. Finally the big decision was made. Sure enough he piggybacked Warren which normally works out OK but Todd chose to buy IBM (think in the $150's) and of course boasted about how he had bought at a lower price than Warren did. Needless to say the stock cratered...don't remember if it dropped below $100. Todd defended the purchase for a while but then just disappeared never to be heard from again.....
No. of Recommendations: 14
Without looking at a chart, I suspect the last time that happened was in the GFC. And the time before? Maybe 1987 black Monday crash? Maybe not.
There had been a few times BRK stock dropped by 50% or more (peak-trough):
1. GFC: Dec 2007 ($151.7K) - March 2009 ($70K)
2. June 1998 ($84K) - March 2000 ($40.8K)
3. 1974-75 bear market
Interestingly, during it doesn't include the 1987 Black Monday event: BRK dropped by less than 50% peak-trough during that period: Oct 1987 ($4270) - Oct 1987 ($2,650), which was a 38% drop. My data only goes until 1985 so there might have been a couple more occasions when BRK dropped by 50% or more in the late 70s or early 80s.
This is the reason Buffett repeatedly warned BRK shareholders not to use (margin) debt to buy stock. He included this warning in the 50th anniversary special letter.
No. of Recommendations: 7
And so many people wait and wait to get back in (maybe they are waiting for that -50% that never comes), and then they sit out the next big leg up.
This is why it's best to buy without regret when you are satisfied you are getting good value for your money, given the information you have at the time--rather than waiting for a specific XX percentage drawdown from the previous peak that might never come.
No. of Recommendations: 0
Thanks. Was wondering what happened.
