Invite ye felawes and frendes desirous in gold to enter the gates of Shrewd'm, for they will thanke ye later.
- Manlobbi
Halls of Shrewd'm / US Policy
No. of Recommendations: 16
From Barron's Andrew Bary today:
https://www.barrons.com/articles/berkshire-hathawa... <Looking out to the end of 2026, book value could top $540,000 per class A share, Barron’s estimates, meaning the stock trades for less than 1.4 times that projection. Any buyback today could look good in hindsight as book value grows. Berkshire stock has traded between 1.3 and 1.8 times book value in recent years, peaking just before last year’s annual meeting.>
I've slowly become an Abel bull. At the very least, he'll tighten the sails nicely.
Would anyone like to take a swing at what "Barron's estimate" might look like to arrive at a 1.4p/b forecast? My personal squishy red-line is 1.3x, but I sure would be interested in seeing 1.4 .
PS. Bary goes on to write: < The board member with the smallest holding is Susan Decker with about $1.5 million of stock. She has been a board member since 2007. She is a former Yahoo executive and is the CEO of Raftr, a community experience platform, according to the Berkshire 2025 proxy. >
Remind me of her value and why she's relevant? I live about ten stories below being a 'nobody' and my 27 year commitment dwarfs hers!
m
No. of Recommendations: 1
Decker- on the Costco board, this is all I have on her, maybe a Charlie fave?
No. of Recommendations: 0
Decker is overrated
No. of Recommendations: 18
Looking out to the end of 2026, book value could top $540,000 per class A share, Barron’s estimates...Always good to have a baseline range of expectations. FWIW, some figures I have pencilled in for book per share in the next few quarters
Usual Weaker Slow
2026-12 497600 495100 492700
2026-03 510000 505000 500100
2026-06 522800 515100 507600
2026-09 535800 525400 515200
2026-12 549200 536000 522900
These three scenarios are based on nominal growth rates of "normal" 2.5%/quarter (10.4%/year), "weaker" 2.0%/quarter (8.2%/year), and "slow" 1.5%/quarter (6.1%/year). Subtract inflation for estimated real returns. USD monetary inflation (the portion not involving idiosyncratic changes to specific items) has been running very close to 2.8% for 2.5 years.
Obviously bear markets tend to depress share prices, so book per share dips. I blithely assume those dips are transient and meaningless for share value beyond a slowing in the growth rate for a while.
The figure from Barrons is just a hair below my "business as usual" estimate above, so I wouldn't argue. Other than that they elide the distinction between currently 1.4 times book a year hence and the range of price-to-KNOWN-book range in recent years. The recent historical range of the ratio of current price to book value a year later is not 1.3 to 1.8.
However, the general notion is true: current price is not at all unreasonable if you don't mind good chances of one flat year if valuation multiples go back to recently typical. If that doesn't excite you, we are at a point that someone writing cash backed puts expiring a year from now would likely get either an attractive entry point in terms of future evaluation multiple (say, 1.27 to 1.36 times future book), or a 10%+/year cash return counting the interest on the cash till then, both of which sound not terrible.
Jim
No. of Recommendations: 0
we are at a point that someone writing cash backed puts expiring a year from now would likely get either an attractive entry point
I never did or was interested in this, but if I am not mistaken with the simple way I see it, it indeed looks attractive, so please let me ask a dumb question: With BRK this moment at $482 and 1 year out puts with strike $480 fetching $25 it means: If called I effectively buy BRK for $455, right (minus the interest on the cash until called)?
What surprises me: I just tried at Schwab to put in a fake order to sell such puts. With my non-margin account and being option level 1 only I expected that to be refused with a message "Higher option level required" or so. Not so. Non-margin account and option level 1 really is enough --- or would the expected message appear if I´d dare to click on "Submit"?
No. of Recommendations: 8
With my non-margin account and being option level 1 only I expected that to be refused with a message "Higher option level required" or so. Not so. Non-margin account and option level 1 really is enough --- or would the expected message appear if I´d dare to click on "Submit"?
For restricted (in the broadest sense) accounts, many brokers make exceptions for specific kinds of trades that are, when you look more closely, obviously of no risk to you or your broker as they can never require margin debt or more assets.
The most common one is covered calls: allowed in a non options account with a stock holding to write calls against it (though no more). Another common exemption is buying long calls, since you will never *need* to come up with anything more.
Perhaps your broker allows cash backed put writing and you have enough cash to accept assignment if that should happen?
Jim
No. of Recommendations: 1
I just tried at Schwab to put in a fake order to sell such puts. With my non-margin account and being option level 1 only I expected that to be refused with a message "Higher option level required" or so. Not so. Non-margin account and option level 1 really is enough --- or would the expected message appear if I´d dare to click on "Submit"?
Probably not. The other day I put in an order at Schwab non-margin account and accidently typed too many zeros in the quantity. It immediately gave me a "No can do" message.
If you really want to try it out, put in an order when the market is closed -- like on the weekend. If it accepts the order you can cancel it. I do this every so often.
---------------
As for your immediate question, I did have a similar experience long ago in an IRA.
I called the broker and asked what would happen if I got assigned and didn't have enough cash.
He said: We would buy it and immediately sell it. If there was a loss we would treat it like a margin call and sell other holdings in the account.
No. of Recommendations: 0
With BRK this moment at $482 and 1 year out puts with strike $480 fetching $25 it means: If called I effectively buy BRK for $455, right (minus the interest on the cash until called)?
Nope, not exactly.
You are selling THE OPTION for someone to sell you Berkshire shares at $480 anytime between now and the expiration date. BUT, it is THEIR option, they choose yes or no. In general, if Berkshire trades below $480 upon expiration, they will sell it to you for $480, but if not, they won't sell it to you and the option will expire and you kept the $25 you received.
No. of Recommendations: 1
“ BUT, it is THEIR option, they choose yes or no. In general, if Berkshire trades below $480 upon expiration, they will sell it to you for $480, but if not, they won't sell it to you and the option will expire and you kept the $25 you received.” What?
No. of Recommendations: 5
I've never understood why Susan Decker is on the board, and have had similar thoughts for many years. Her initial holding of BRK, when she was made a board member, was smaller than mine, and I'm a retail investor of no great note.
No. of Recommendations: 4
“I’ve never understood why Susan Decker is on the board……….”
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I also have questioned her commitment to Berkshire based only on her BRK share ownership.
Many on this board have an order of magnitude & greater skin in the game!
The following search result may shed more light on her value but I still would like to see her up her ante in Berkshire to show greater commitment.
A quick search on Gemini regarding Susan Decker’s value to BRK board of Directors ,
“Role as Lead Independent Director
Shareholders generally view her role as Lead Independent Director as a critical stabilizing force for the post-Buffett era.
• Succession Planning: She is tasked with providing recommendations on board size and composition if Buffett can no longer serve.
• Expertise: She is officially designated as an "audit committee financial expert" in SEC filings, a credential that provides comfort to institutional investors regarding the company's financial oversight.”
ciao
