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Anybody getting greedy at under $301/B share? WEB paid $322 once and letter on Saturday.

WHAT PRICE do the buy tickets come out around here?

I bought back the March 330 calls I was short today. They lost 95 percent of their value so my stock is no longer encumbered. I don't expect great news from Buffett , Saturday but we shall see.

I think the answer was just given in the "Today's Barron's..." thread by

Mungofitch: I think it's fair to assume that future dips in book, like past dips in book, will all be transient. By extension, when book drops a bit it's most sensible to assume that value hasn't dropped.
... and
SteadyAim: We now have probable buybacks below 1.2 (say) and 1.5 has been close to as high as it gets

With Price/PeakBV around 1.32 we are in the middle of that range => Not a bad entry point to own Berkshire longterm, but not exactly amazingly cheap (that for me would require the around 10% lower price (B's=$280) we've seen in 2021+2022.)

292 HC

Hi hbird , hope all is well. My guess is brkb might be down 10 to 292 before it goes up 10 to 312. Do you see a near term catalyst to move brkb higher? Years ago Buffett finally agreed that selling off his life's work near BV via the foundations, was foolish. He finally agreed to the highly restrictive buyback with a 1.1 xs BV limit to goose the stock closer to 1.2 xs BV. He never really had much interest in buying back brk. His mindset was always, buying back brkb above BV, was dilutive to BV. His thinking should have been, buying back brkb at, material discounts to Iv, was accretive to IV. Now that discount IV is the hurdle, do you think Buffett will be an aggressive buyer at 1.4 xs BV, even if he believes it's a 20 percent discount to IV? What other catalysts do you see, going forward? I think Geico has serious competitive pressure. How much further can apple take us? Yesterday Kyle Bass was interviewed again, he has no doubt China is going after Taiwan , sooner, rather than later. What do you see near term, that might increase demand for brkb common? Thanks to anyone else who might respond, since this question is rarely asked. Take care.

Only minor nibbling at most at this level. I'll start taking notice if things get below 275.

-WEB paid as high at $322/B share
-Bloomstran said worth north of $400/share...last year
-Morningstar just updated valuation work>>>>5* buy price (read drop everything to add) is $296/B share.
-Adam Mead....who wrote one of the definitive books on BRK history, last I checked has IV at $360/B share.
-Whitney Tilson....etc

But we still want to focus on useless P/B and backtesting exercises that are most certainly meaningless?

Stocks can trade anywhere but we must be close to an aggressive buy price. Do not anchor on past prices.

Agree 280 range seems like a very good price. Sitting on some (Jim influenced) DITM call '24 and '25 LEAPS (Strike 150-200 range) which I picked up in the Fall when it was sub-280. For what it's worth, chart seems to support that level as well. I imagine buybacks would re-accelerate if we get down there again. Sorta hope we do!Looking forward to the AR and all the shrews commentary.

What other catalysts do you see, going forward? ... What do you see near term, that might increase demand for brkb common?

One possible answer: Same old.
Weak mean reversion of price in the direction of what it's actually worth.
The value rises, the price eventually tags along, with wandering along the way.
At some point a cheap stock will be perceived as cheap and people, at the margin, will want to own more shares and bid up the price a bit.
This mechanism certainly has no firm time frame, but no other "catalyst" is really needed.

As for Apple and China and Taiwan and lions and tigers and bears oh my...I agree it's a big risk.
But it's bounded.
I estimate Apple accounts for around 1/5 of the value of a Berkshire share.
Apple's presence in greater China (production and sales) might be critical for (say) half of the value of a share of Apple.
(Leaving "hard" would be an even bigger hit for a while, but there would be substantial if not complete recovery over time, so some of it is only a one-time loss)
So, round numbers, the worst downside risk to the value of a share of Berkshire is on the order of 10% from this particular concern.
That would be very bad, but survivable.
I've permanently lost 10% of my portfolio before, and life goes on: there's enough left for it to recover and hit new highs again.

Jim

Stocks can trade anywhere but we must be close to an aggressive buy price. Do not anchor on past prices.

Speaking of past prices, forecasts, and anchors...

Last summer I gave a back-of-the-envelope opinion on a two year outlook.
http://www.datahelper.com/mi/search.phtml?nofool=y...
So, if we ignore all bad news since then (not really that much other than price changes), it's now a forecast for next year.
It suggested a two year gain of 37.7%

The price was $402120 then ($268.08 per B).
So, it was a forecast of around $553720 June next year ($319.15 per B). In 2022 dollars...it was a happy envelope.
The price is $301 per B in pre-market as I type, so that old forecast thinks we might see a price rise of 22.6% from here in the next 16 months = 16.8%/yr rate.
That definitely looks pretty optimistic now, but I could live with that result.


This is the valuation linked in that thread
http://stonewellfunds.com/ConsensusValue2008-2022....

New data points coming soon...

Jim

Thanks for the reply Jim. I know you are an options player and the lack of liquidity in brkb options and spreads doesn't bother you much. Another reason I increased my exposure to spy over brkb, is I don't like laying in, limit orders, and allowing the bandits , to trade around my orders. With spy I eliminate that problem. Anyway, Buffett was never a fan of buying back stock above 1.1 xs BV, then 1.2 or so above BV, I doubt his mindset will change, regardless of what he says. Good luck.

"so that old forecast thinks we might see a price rise of 22.6% from here in the next 16 months = 16.8%/yr rate."

I'd be doing handstands with that result!

m

Hi HC, I dont think I will get 292 but one never knows in this hyper irrational market, barring some real scare... I see nothing but sector rotation by talking heads and meme-ery. Reminded me of the markets can remain irrational..etc etc.. still, good for longs and shorts (short term holdings)taking "little flyers" for a quick circuit round the runway.like me.:-)

what I find most interesting has little to do with BRK... Playing the dollar/euro moves has been quite nice since last year, and has moved into quite nice territory again.

so.. catalysts ? for BRK ? fear, both 1)large market fears and 2) the WEB moves into tech stocks , AAPL has an ecosystem, all my youger relatives are there, nothing else will do...but for us older folks, we have seen techs come and go 3) longevity of WEB and Charlie.. 4) other oportunity, eg currency, hot tech, and china opening.

Me ? I think we will stay "undervalued" as usual for some years to come. BRK is a pensioners stock , trouble is most pensioners dont know it, and most brokers dont earn on it, so there's very little tailwind, until one believes its a "cant lose ever" purchase... I'm good with that, as I'm now officially a pensioner :-))

Probably not the answer you're hoping for , but all these sharp pencil estimates, to me anyway, are useful for high and low guardrails , but not much else. Someone posted the "BRK as an income stock" a couple of days ago , I recall the original article being posted on the old "bored" years back , and took it "on board"...I have my BRK table ready to go when I need to , and meanwhile try to add at "low valuations" and goose with some sectors I know,

anyway, good luck to you ! and as we say in Brexshit land "dont let the Bastards get you down " :-)))

did nibble at 300.41 this am.....kind of a biscotti with my coffee nibble.

Hbird, years ago I think I recall reading Buffett said he and munger are usually within 5-7 percent of each other on their IV estimates. Bottom line, on this issue only Buffets opinion matters, will he buy at 1.4 ish xs BV regardless of IV ? We shall see.

I must admit I get tired of always getting so many buying opportunities. I'd like it if we also got an equal amount of selling opportunities like back in March 2022. It seems like those opportunities always have short windows compared with buying. Some of us have to sell 3% to supplement our income. Besides, if the overall market falls, so does BRK and it would be nice if it fell from a lofty height vs. a seriously below IV price.

SD

BRK has almost permanent headwinds, I said in another post "its a pensioners stock" .. and in a sense although I too would love closer to IV or whatever, the upside to the tailwinds, is it usually does not tank as much as the market, so there is some downside protection , if you had to seel at some amazingly bad crash time.....FWIW..

I added a pinch. It isn't crazy cheap but it's on the cheaper end, to my mind.

By a combination of profits chugging along and BRK never falling too far below fair value for too long, I think we are more likely than not to revisit new highs by the end of 2024. That's a nice expected return, and I wanted to buy before a possible post-report bounce.

A small note: I have BRK buying back A shares at a B-equivalent average price of $323.34 in March, 2022, which bests the average of B shares bought at $322.88. That's in March 2022 dollars. And those are averages for both figures, of course, so the peak purchase was very likely a little higher than the monthly average peak.

If we're translating to Feb 2023 dollars, buybacks were therefore occurring at $340+ in today's money.

A small note: I have BRK buying back A shares at a B-equivalent average price of $323.34 in March, 2022, which bests the average of B shares bought at $322.88. That's in March 2022 dollars. And those are averages for both figures, of course, so the peak purchase was very likely a little higher than the monthly average peak.

They did. Spent $3Bn in 2022 Q1 at prices higher than the current quote.
They stopped when it got pricier, then didn't start again till it got to $284.
Just $1Bn in Q2, $1Bn in Q3.

Q4? I'm not expecting much. Large buybacks seem to happen when Berkshire's cash would otherwise go over $150Bn. My pet hypothesis.

So, it was a forecast of around $553720 June next year ($319.15 per B).

Small correction: Around $365 per B.

that old forecast thinks we might see a price rise of 22.6% from here in the next 16 months = 16.8%/yr rate.

Which raises an interesting question: What does that forecast say about the direction of the general market in that time frame?

The Mantra here is: "In a bear market Berkshire falls too" (maybe less severe, maybe less long, but ......) which could be translated into: "Berkshire is too big to move for long in the opposite direction than the overall market" - - - which makes a lot of sense.

If the Mantra and the forecast are both correct it's extremely unlikely the market will do what Grantham expects (going down at least another 20% or so), even unlikely it won't rise.

So something must give (=be wrong) during that time frame, either the mantra or Mungofitch's forecast or the bears market forecast.

"the average of B shares bought at $322.88"

The March 2022 repurchase price is telling, imo. The price paid is close to the highest P/B that Buffett has paid in his 48 repurchases, 1.41x BV. Buffett paused repurchases in April and May 2022 after that when the stock price rose, and he resumed repurchases in June when the stock price fell back. In May 2021 and August 2022 Buffett also repurchased shares at about 1.41x BV. From these repurchases I think one can estimate what Buffett thinks IV is in terms of a multiple of BV. Make your own inference.

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