Anyone else?

I have similar past experiences with the dot com bust and GFC that others have been discussing. I happen to feel like there is a high probability we see lower valuations for BRK in the coming months. That’s based on the fact that we are trading at something like the top 1-2% of P/B valuations for all trading days since 2012.

As a result, I currently have covered calls sold against approximately 2/3 of my BRK holdings with expirations in March and June. If I were to be called away on all of them the average all in price realized will be about $394. I’m willing to live with that price as I think it will likely be in the top decile of all P/B valuations between now and end of Q2 as far as my estimates are concerned. I’m guaranteed to be wrong with my estimate and the market will likely make a fool of me. All of my covered calls are in tax free accounts so re-establishing my position should not be overly painful.

If I’m lucky and am able to keep some of the premiums then I’ll have made a bit of the price exuberance a little more permanent in my account balances.

Jeff

Berkshire Hathaway FAQ

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