Invest your own money, let compound effect be your leverage, and avoid debt like the plague.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 3
I compared recent share purchases by Markel, Fairfax Financial and BRK.
Both Markel and Fairfax have repurchased and retired around 6% of the shares outstanding over the past 2 years, while BRK has repurchased none.
Interestingly PB for the 3 companies are very close:
MKL = 1.41, FFX =1.44, BRK = 1.46.
Of the 3 companies BRK share price is the closest to its 52 week lows.
I expect Abel to initiate share repurchases if valuations continue to remain at current PB levels or lower. I believe he will break from Buffett’s ultra strict repurchase criterion.
No. of Recommendations: 18
Hmm, best to remember that P/B can't really be used to compare different companies unless they are extremely similarly structured and in extremely similar businesses. That warning even includes comparing P/B of a company to its own past if the structure of the business has changed.
I'm not saying you're wrong, or that it's meaningless...just a health warning that 2.5x book for one company might be much cheaper than 1.5x book for another company. The extreme example is fine companies with negative book value : )
I don't disagree that buybacks might restart if the price weakness of Berkshire shares continues. At a guess, I think Mr Abel might wait for the 2025 annual report to come out though.
I haven't done a deep dive, but year end book might come in around $493000-498000? So if that figure were known and published now, the current price would be around 1.443 - 1.457 times book? That's below my estimate of the highest multiple paid for shares repurchased seemingly for purely economic reasons, which in my view seems to top out in the 1.46-1.48 region for B shares.
Jim
No. of Recommendations: 7
"So if that figure [$493K-$498K] were known and published now, the current price would be around 1.443 - 1.457 times book? That's below my estimate of the highest multiple paid for shares repurchased seemingly for purely economic reasons, which in my view seems to top out in the 1.46-1.48 region for B shares."
So by this math, which I agree with, Berkshire should repurchase shares now, or after the Q4 report. Why hold so much in T-Bills yielding 3.6% when you can buy a company that you know intimately, which is 5% undervalued and which will probably return 5+ percentage points more than the T-Bills? I would not make the same argument for buying any other company, but with BRK.B there no skeletons in the closet that management is unaware of.
