Post New

This morning on cnbc MSTR, reported it sold another two billion in a debt offering to buy more bitcoin. Obviously, these transactions test Buffett's heart and general health. I wonder, will Buffett expedite 1-2 years of gifting and instruct the foundations to sell heavy in q-1 volume permitting? If Buffett believes the stock is fully priced, why not sell into strength? Years ago, didn't Buffett claim he didn't want anyone, overpaying for brkb? Are todays buyers, overpaying? Stay tuned.

I wonder, will Buffett expedite 1-2 years of gifting and instruct the foundations to sell heavy in q-1 volume permitting?

Obviously not. He said precisely the opposite.

If Buffett believes the stock is fully priced, why not sell into strength?

He as been. I imagine it's the biggest amount of stock ever sold from any portfolio.

Are todays buyers, overpaying?

That, on the other hand, is a reasonable question to ask.

I'd say "no". There's a difference between "more expensive than usual" (true) and "overpriced" (no). I don't think today's price is so high that you can't expect decent medium to long run returns from here. I usually define a fair price as "consistent with what has been the historical return from the average stock in the average year", around inflation + 6.5%. Buyers today should get that, though perhaps including a flattish spot in the shorter term.

Jim

" If Buffett believes the stock is fully priced, why not sell into strength?

He as been. I imagine it's the biggest amount of stock ever sold from any portfolio."

WHAT? I'm not referring to sales of apple, bac, etc. I'm referring to brkb, which he obviously believes is fully priced, or worse. Buffett wasn't a buyer at 450 what does he think about 495? The foundations should be, persuaded to sell 5-10 billion in the next 60-90 days volume permitting, as Buffett expediates his gifting. Has he mentioned in the past that he doesn't want anyone, overpaying for brkb?

This morning on cnbc MSTR, reported it sold another two billion in a debt offering to buy more bitcoin.

After listening to a recent podcast, I now understand a bit what MSTR is doing. Basically, MSTR stock trades at 2x the value of its bitcoin. So if MSTR sells stock (or sells bond that eventually can become or trade into stock) then they have a prima facie arbitrage between the stock and the bitcoin. If they sell $1B of stock and buy $1B of bitcoin, their investors reward them by growing the stock by $2B. They "made" $1B from their investors!

Here is a link to the podcast in question - https://www.youtube.com/watch?v=5x7r-GHcf9A (what I wrote about above is mentioned in the first 2 minutes of the podcast).

“ So if MSTR sells stock (or sells bond that eventually can become or trade into stock) then they have a prima facie arbitrage between the stock and the bitcoin.“ What do you think Buffett thinks of this, “ arbitrage play”. Can’t they let Charlie rip for a while? It’s legal and fully disclosed but Buffett would eat a salad with low cal dressing before he would bless this nonsense.

What do you think Buffett thinks of this, “ arbitrage play”. Can’t they let Charlie rip for a while? It’s legal and fully disclosed but Buffett would eat a salad with low cal dressing before he would bless this nonsense.

I think he despises such things. Remember his adage about the big block of gold in his letter a few years/decades ago? And furthermore, I think that he "feels" that such things can never end well. When there is no true economic value, eventually there is no true financial value. I suppose there will always be uninformed investors out there to be taken advantage of by clever folks who want to get rich without providing true economic value.

Buffett always hated gold, imagine what he REALLY thinks about Bitcoin, Fartcoin , trumps meme coin etc? Let's start a Buffett coin!! Yahooooooooooooo. TODAY, he should gift 10 billion and the foundations should start selling.

I usually define a fair price as "consistent with what has been the historical return from the average stock in the average year", around inflation + 6.5%. Buyers today should get that, though perhaps including a flattish spot in the shorter term.

You once said (refer https://www.shrewdm.com/MB?pid=459786738):

Historically, since 1997:
a purchase on a day with P/peak-book under 1.55 (50% of all days) had about a 32% chance of not hitting my real return hurdle.
a purchase on a day with P/peak-book under 1.50 (42% of all days) had about a 20% chance of not hitting my real return hurdle.
a purchase on a day with P/peak-book under 1.45 (34% of all days) had about an 8% chance of not hitting my real return hurdle.

Today's P/peak-book is 1.65 ($497.50/$301), and so there's definitely a chance of not hitting inflation + 6.5% over the next seven years.

Right?

" Today's P/peak-book is 1.65 ($497.50/$301), and so there's definitely a chance of not hitting inflation + 6.5% over the next seven years.

Right?"

Don't overthink it partner, the foundations should expedite their selling into this rally, unless Uncle Warren is thinking of joining team trump musk, to promote the new Buffett coin! I'm off to the park, uncle warren, you guys know how to contact me, I ALWAYS offer sage advice, FREE!

A few months ago when BRK was approaching 500 I thought about lightening up. It then retreated, so I didn't.

Now it's 499, up 19 this morning.

So consideration of lightening up is back on the table.

FWIW, trimmed some B’s after this 4% bounce today to $499. We are in the drawdown phase & “feels” appropriate from Jim & other folks’ comments, even though we are ~1.6 P/B. Although Jim has shared that we may see higher highs in general when we take out a new high. Who knows?!

Very pleased about the Report & enjoyed every word in Warren’s thoughtful letter.

I minorly lightened up at 498, and have a limit order back in at 450....meantime I can FDLXX it. If it doesnt work out, Thats my new kitchen for La Belle Vie. :-)

Today's P/peak-book is 1.65 ($497.50/$301), and so there's definitely a chance of not hitting inflation + 6.5% over the next seven years.
Right?

If that guy said so, then it must be so : )
The historical record is of course stuffed to the gills with a huge stretch of gradually falling valuation levels, so those odds based on observation do express that headwind. They *might* be a bit pessimistic? Beats me.

My more recent post was more constructed along these basic lines: As long as the value growth over the long haul is higher than your hurdle rate, you'll eventually manage your hurdle rate even if you pay a richer-than-usual price.

Imagine today's valuation is 20% above the future average but you're nimble enough to manage an exit at a valuation multiple only 10% lower than today's purchase. If share value grows at (say) inflation + 7.5%/year, and you pay 10% more than your future exit multiple, then you'll still get inflation + 6.5% if you wait a decade.

Jim

I'm not lightening up, but I am also less concentrated in BRK than some here.

I think BRK has better odds for higher returns compared to the alternatives (even if that is lower than average, historically), would disproportionately benefit in a flight to safety, and would have some odds for 2008 for productively deploying the dry power. I assume, because of the change in the cash position, that they have a strategy and a shopping list for if/when any crisis comes to pass.

B topped at $503.96 today.

Blew past 500, didn't quite get to $505.

B topped at $503.96 today.

I got filled on a 5 share (yes, five!) sell order at $503.86 today so I'm feeling rich.

Also got filled, long, on 30 contracts of June 20, 2025, 450-strike puts at $3.60. I expect these puts to expire worthless in June but I'm not planning to hold them for very long.

rocketshipemoji

Also got filled, long, on 30 contracts of June 20, 2025, 450-strike puts

I know you have far more experience with options, nevertheless a tiny comment: I made bad experiences with BRK puts that far out the money - - - but very good experiences with puts only 2-4% OTM like the (partly also June) 480/490/495 ones bought today, because during the last months such a spike always was followed by a quick counter movement (and if expiration is several months away one has a margin of safety if it takes longer).

I know you have far more experience with options, nevertheless a tiny comment: I made bad experiences with BRK puts that far out the money - - - but very good experiences with puts only 2-4% OTM like the (partly also June) 480/490/495 ones bought today, because during the last months such a spike always was followed by a quick counter movement (and if expiration is several months away one has a margin of safety if it takes longer).

If the stock moves lower relatively soon, my options will do much better than your options on a percentage basis. I am not planning for them to have value at expiry - only to change in price by a larger percentage if I am right in the short run.

"WHAT?"

Hint..... before reacting, stop and think of alternatives.

If the stock moves lower relatively soon, my options will do much better than your options on a percentage basis.

I don't understand this. I just looked at what our June puts did yesterday (ok, that was up, not down). Your 450 ones: - 47%. My 480/490/495 ones: -47%/-49%/-49%. Practically no difference.

Would you care to elaborate?

I'm not certain but I think that if Buffett changed the timing of his gifting, he would file an 8 k, disclosing it. Something doesn't add up, he won't buy brkb this high, and he doesn't want retail overpaying, SO, expedite the sale of 10 billion by the foundations, simple.

Something is going on that hasn’t been disclosed. IF, it’s a huge deal like Chubb, I hope he’s using stock as part of the deal. 🙏

Has HSY agreed to dump it's problems on us? Come on uncle, someone may be leaking?

If the stock moves lower relatively soon, my options will do much better than your options on a percentage basis

Instead of theory we now have a real life data point:
- I just sold the Jun 495's I bought yesterday at $12 for $16.7 = 39%
- At that moment the 450's you bought for $3.6 were $5.2 = 44%

So yes, your far OTM puts moved 10% more, but in terms of options with such a high leverage I would call that negligible.

(Of course I don't know whether that one data point is representative.)

I sold a few for $5.15 but I don't think they actually traded $5.20. Probably the bid was $5.20 though.

- At that moment the 450's you bought for $3.6 were $5.2 = 44%

So yes, your far OTM puts moved 10% more, but in terms of options with such a high leverage I would call that negligible.

There are other things to account for when trading options. For example, those Jun 450s only traded 20 contracts today. If someone wanted to sell 30 of them, they very likely would have had to trim the ask down by some amount.

Furthermore, if you look at the trading today of the Jun 450s, you will see the following trades took place throughout the day:

5 $3.85
4 $4.60
4 $4.93
2 $5.00
4 $5.15
1 $4.03

Just because the ask was $5.20 doesn't mean any traded at that price, and indeed none traded at that price. And in fact, when the ask was $5.20, that trade of 3 contracts for $5.15 took place. And the highest bid of good size that I can see was $4.90, so someone selling 30 contracts would definitely have gotten at least $4.90, possible $4.95 if that bidder really wanted them. Call it $4.95, that would be 3.60 to 4.95, or a 37.5% gain. Excellent gain for a single day!

There are other things to account for when trading options. For example, those Jun 450s only traded 20 contracts today. If someone wanted to sell 30 of them, they very likely would have had to trim the ask down by some amount.

Furthermore, if you look at the trading today of the Jun 450s, you will see the following trades took place throughout the day:

5 $3.85
4 $4.60
4 $4.93
2 $5.00
4 $5.15
1 $4.03

Just because the ask was $5.20 doesn't mean any traded at that price, and indeed none traded at that price. And in fact, when the ask was $5.20, that trade of 3 contracts for $5.15 took place. And the highest bid of good size that I can see was $4.90, so someone selling 30 contracts would definitely have gotten at least $4.90, possible $4.95 if that bidder really wanted them. Call it $4.95, that would be 3.60 to 4.95, or a 37.5% gain. Excellent gain for a single day!

An accurate analysis of today's trades! 14 of those contracts were me selling (not the 4.03 or the 3.85). The other 14 contracts (trades at 4.60,4.93,5.0 and 5.15) averaged about $4.908 on 3.60 cost. I tried to repurchase a few in the 3's later in the day but no fills. I was also offering to purchase more at $3.35 all day long but that order was placed before the market opened.

According to Fidelity I realized a whopping $1,812.83 after expenses and I still have the other 16 contracts so we'll see...

I had tried to buy more than 30 contracts but was stingy about price. Maybe we will get another shot

those Jun 450s only traded 20 contracts today. If someone wanted to sell 30 of them, they very likely would have had to trim the ask down by some amount.

Are you sure?

Jim and Ray not long ago pointed out that on the other side usually is a computer. A computer of a big gun I suppose, hedge fund etc.

If you look at yesterday's bids and trades you still don't know what would have happened if I had tried to sell 100 contracts Jun 450. If a hedge funds computer found my asking price interesting, it might have bought them.

If that computer did not put in a bid itself you wouldn't have seen that potential interest and would not have expected that such a large volume would trade - but it nevertheless would have happened and therefore not 20 but 120 contracts would have changed "hands" (if a computer has such).

Wrong thinking?

I had tried to buy more than 30 contracts

Usually when I want to buy "a lot" of contracts relative to OI and volume, I will spread my purchases (or sales as they may usually be) across multiple strike prices. That gives me more of a chance of getting better prices overall. It's almost become a habit because even in things that have HUGE OI/volume compared to my small trades, I still do it (use multiple strike prices). In this case, you could have done some 440s, some 445s, some 450s, some 455s, and some 460s, and then with only 5 or 6 contracts in each, when you decide to sell, you can get that top bid much more often.

Wrong thinking?

Yes. While computers are often used for this trading, the computers are programmed pretty well, because if they weren't, they would be constantly losing money for their owners/operators. So, you will rarely see "the computer" snap up large asks, because that is a very bad option trading technique. Instead the computer would break it down into smaller trades, and see if it could collect the number of contracts it wants at LOWER ask prices. Heck, that's what I do when I want to buy a bunch of contracts (rarely, because I usually sell contracts).

If you look at yesterday's bids and trades you still don't know what would have happened if I had tried to sell 100 contracts Jun 450.

Well, we do know that when the $5.15 trade took place, there were 58 contracts on the ask at $5.20. And we also know that only 4 contracts traded at $5.15. So we KNOW FOR SURE that the person(s) (or computer(s), whatever) that wanted to sell 58 contracts at $5.20 only managed to sell 4 of them at $5.15. What we do not know is if you put an ask in for 100 contracts at that time for let's say $5 what would have happened. Maybe all 100 would have sold, or maybe only 6 would have sold. Probably only 6 would have sold because that's how many sold at $5 or higher throughout the entire day of trading. But you never know, maybe at that instant suddenly someone would pop up and agree to an ask of $5 for 100 contracts. Not likely though.

" Well, we do know that when the $5.15 trade took place, there were 58 contracts on the ask at $5.20. And we also know that only 4 contracts traded at $5.15. So we KNOW FOR SURE that the person(s) (or computer(s), whatever) that wanted to sell 58 contracts at $5.20 only managed to sell 4 of them at $5.15. "


If there are 58 contracts offered at 5.20 for the day and I sell, short, 4 to you at 5.15, what's my risk? Thanks.

Well, we do know that when the $5.15 trade took place, there were 58 contracts on the ask at $5.20. And we also know that only 4 contracts traded at $5.15

Where do you get that information? I usually trade at Schwab, using their simple order form that only shows bid and ask, without sizes.

Thanks to Jim I just remembered they also have a "Contract details" screen showing current(!) sizes of both. But how to you get a full list of what happened? Surely(?) not at Schwab. IBKR, where I also have an account? Or a Nasdaq/NYSE or whatever public website?

" Where do you get that information? I usually trade at Schwab, using their simple order form that only shows bid and ask, without sizes.
'

FIDO active trader pro offers time and sales.

If there are 58 contracts offered at 5.20 for the day and I sell, short, 4 to you at 5.15, what's my risk? Thanks.

https://www.investopedia.com/articles/optioninvest...

You're welcome.

“ You're welcome.“ I thought so, just what I expected. GL.

Where do you get that information? I usually trade at Schwab, using their simple order form that only shows bid and ask, without sizes.

Here's how you get time&sales at Schwab -

https://help.streetsmart.schwab.com/pro/4.38/Conte...

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.