Invite ye felawes and frendes desirous in gold to enter the gates of Shrewd'm, for they will thanke ye later.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 2
This hurt the stock today in case anyone has any interest.
"Berkshire Missed the Bank Rally. Few of Its Stocks Are Truly ‘Forever.’" Barrons.
" Key Points
About This Summary
Berkshire Hathaway’s sale of bank stocks, including Goldman Sachs and Wells Fargo, resulted in over $50 billion in lost potential profits.
Berkshire Hathaway reduced its Bank of America stake by over 40% in 18 months, now holding 568 million shares worth about $30 billion.
Notable winning investments include Japanese trading companies, which cost $15 billion and are now worth nearly $40 billion.
Berkshire Hathaway’s
BRK.B
+0.14%
worst investment move in the past decade probably was its sale of bank stocks, with the company leaving more than $50 billion on the table in potential profits, Barron’s estimates.
The surge Thursday in Goldman Sachs
GS
-1.42%
to a new high after its fourth-quarter profit release underscores that mistake.
At the end of 2019, Berkshire held sizable stakes in six of the top 10 banks in the country— Bank of America, Bank of New York Mellon, Goldman Sachs, JPMorgan Chase, U.S. Bancorp and Wells Fargo."
No. of Recommendations: 12
Ah, the horseplayer’s lament. “I would, I shoulda, I coulda”. Exactly what does that tell us? Nothing. Actually it tells us that hindsight is 20-20.
Do you know how many hundreds of billions of dollars Berkshire would have made if the proceeds from the bank stock sales had all been invested in Invidia? I don’t and it does not matter.
Easy to be a critic. Of course, in order to miss out on $50 billion of capital gains, you need to have the capital to miss out on $50 billion of gains. And that, my friends, is a pretty small club.
Do they have a suggestion for where BRK should put $300 billion, right now? Now that would be something meaningful.
No. of Recommendations: 7
Do they have a suggestion for where BRK should put $300 billion, right now? Now that would be something meaningful.
In the vein of trying such a suggestion:
How about this: write an absolute boatload of one-month-out put options against Berkshire at an attractive buyback price. Very high odds they would have a low return, and would expire worthless, so just repeat. It would add to the T-bill return while not really committing that capital to that strategy for very long if/when another whale opportunity comes along. Most opportunities that are big enough for Berkshire to do at all last more than a coupla weeks.
It would be interesting to see how many contracts Berkshire could sell before "the market" stops bidding. Since writing the puts is bullish, the counterparties are implicitly bearish, meaning that to offset their risk they would perhaps buy stock in a quantity proportional to the delta. So selling enough low strike puts might actually cause the stock price to rise a bit. Probably not enough to really matter, nor for very long.
Jim
No. of Recommendations: 1
Most opportunities that are big enough for Berkshire to do at all last more than a coupla weeks.
That's actually a very good point. Most anything large enough requires at least a month to buy back the kind of quantities it takes to move the needle.
