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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
No. of Recommendations: 5
James Shanahan at Edward Jones downgraded Berkshire shares to a hold rating from buy Thursday evening.
'We continue to expect solid earnings from BRK's diverse group of operating companies. In our view, however, the current share price reflects these positives.'
For me, the downgrade is good news. I am looking to buy a big chunk.
No. of Recommendations: 1
Buy back a good chunk at what PRICE?
No. of Recommendations: 3
Not ready yet, but I would add if B's fell to $325-330 range.
No. of Recommendations: 4
Buy back a good chunk at what PRICE?
If I had $100,000 to invest:
I'd invest $20,000 at $348.10.
I'd invest $30,000 at $335.66.
I'd invest $40,000 at $323.23.
I'd invest $10,000 at $308.31.
No. of Recommendations: 4
Or...
You could put 100k into DG @ 102 😲. I'll grab my coat...
No. of Recommendations: 2
And the chances are good you would never get that 100k fully invested.
No. of Recommendations: 1
just added some
No. of Recommendations: 10
At current $335.80, my sundry "what if it's like the past" models suggest one might expect maybe inflation+6.0% in the next year.
That won't be right, but the notion is that it's about a 50/50 chance whether it's high or low.
Not really making me feel the need to add. Yet.
Jim
No. of Recommendations: 1
So why did WEB buyback at $335/share last?
No. of Recommendations: 0
Also, the BROOKFIELD complex has been destroyed. A lot of overlap with BRKB holders (ex: First Manhattan). BIP could be a screaming buy too.
No. of Recommendations: 12
So why did WEB buyback at $335/share last?
Presumably some at prices higher than that, too---that was merely the average price paid in June.
A mix of a few reasons why my conclusion is different--
* Mr Buffett isn't as greedy as I am in terms of short term return when looking at deploying capital, partly because...
* ...vast and rapidly growing piles of idle cash are not a current problem for me.
* Mr Buffett is smarter than I am.
I'm in effect wagering that it's pretty likely that there be an even better deal soonish, either in Berkshire or something else solid.
I do have a broader viable opportunity set.
Jim
No. of Recommendations: 4
"So why did WEB buyback at $335/share last?"
I thought about that too. Maybe his threshold for buyback price is lower now due to the higher inflation, which erodes the value of cash?
If inflation is 3%, Jim's analysis suggests that the central expectation for the return in a year is around 9%. After that, the return should approximate the growth in book value (which may not be too far off from 9% to 10%).
That's the kind of return that Berkshire gets from the utilities business which, obviously, is acceptable to Mr. Buffett. And an investment in Berkshire may be as safe as that in the utilities (if not more).
No. of Recommendations: 0
MUNGO: What about BROOKFIELD complex? You were a fan in the past?
BIP looking like massive fat pitch?
No. of Recommendations: 9
Also, the BROOKFIELD complex has been destroyed. A lot of overlap with BRKB holders (ex: First Manhattan). BIP could be a screaming buy too.
Staying within the Berkshire-blessed set, even BofA isn't looking too bad.
I opined many years ago that I was never too fond of the firm in general, and in particular at prices above the mid $20s.
But time moves on. At $26.50, it's probably not really so bad. Heck, their earnings per share are all the way back up to the levels of 20 years ago!
More generously:
Despite dips that are likely transient, they've shown they can manage EPS around $3.50ish in today's money. That's a 13% cyclically adjusted earnings yield, and they aren't going bust.
I'm not biting, but I'm watching for the first time in years. The trick is to get an entry with a big enough margin of safety to account for the fact that the next time banks have a chance to do something stupid, they will again be near the front of the line.
Jim
No. of Recommendations: 11
MUNGO: What about BROOKFIELD complex? You were a fan in the past?
BIP looking like massive fat pitch?
I have cooled on the Brookfield family in recent years.
In the end, I just don't quite trust them enough to have a big allocation. I don't think they are crooks, but...I can't help but think that there is a level of complexity that is considerably beyond what would strictly be necessary if the only goal were maximizing value for continuing outside shareholders. Which means, the existence of other reasons should be considered a possibility. If you can't understand what a company is saying in the statements, occasionally it's on purpose.
And if it isn't to be a big allocation, it's not worth the herculean task of making sense of all the structures and statements.
As for BIP in particular, it's a dividend play.
Those are rarely of interest to me, for a variety of reasons. I have horrible tax consequences on dividends compared to capital gains (marginal tax rate difference 30%), and things run for the dividend are rarely run for the best long run total return. Plus, dividend sales pitches often lead to unsustainable dividends. If the coupon is the only attraction, it gets unattractive rapidly if the coupon gets cut.
Jim
No. of Recommendations: 6
Exited all of Brookfield this year, a few months ago. I listened to the investor day this year a bit, it was shockingly promotive - even dismissive of any facts while boasting - just little if any susbstance.
No. of Recommendations: 3
Shares were repurchased between July 1st and July 26th. The low price for an A share during that timeframe was $513,874.
If I had to guess I would say that some stock may have been bought back today. A silver lining to the nosedive of the stock price since the September 19th high.
No. of Recommendations: 0
'I'm in effect wagering that it's pretty likely that there be an even better deal soonish, either in Berkshire or something else solid.'
Still holding some DITM Jan. '24 BRKB calls. Debating rolling them up and out vs. locking the 30% long term gain. Closed out some of them a couple months ago, but who knew price would drop >7% (Arghhh!). Please share your shrewd thoughts and weigh in on this dilemma :) Thanks!
No. of Recommendations: 8
Still holding some DITM Jan. '24 BRKB calls. Debating rolling them up and out vs. locking the 30% long term gain. Closed out some of them a couple months ago, but who knew price would drop >7% (Arghhh!). Please share your shrewd thoughts and weigh in on this dilemma :) Thanks!
I've rolled or sold most of mine for that date, but I still have some. I'm going to roll them some time soon, I just haven't got around to it. (and also watching what interest rate expectations do)
The best day to roll calls out (or out and up) is when that the stock price is highish, anticipated interest rates are lowish, and the market is calm.
Other than the fact that interest rates are not super low, last week would have been fine. Mid September even better.
On the other hand, if you're just going to sell them outright rather than roll them out, just go for the highest stock price.
The ideal for that, unlikely to be seen, would be a day with high stock price, high volatility (often panicky market), and high anticipated interest rates.
Jim
No. of Recommendations: 2
Staying within the Berkshire-blessed set, even BofA isn't looking too bad.
Amex looks very attractive too and a much better managed company than BAC.
They reported what seemed like a very good Q3 earnings, but then fell over 5%. Even though they beat expectations overall, some apparently reacted negatively to greater than expected reserve build up for credit losses.
The 2023 guidance is for EPS of $11 - $11.40 with revenue growth of 15 - 17%. For 2024, they are aiming for mid-teens EPS and at least 10% revenue growth. At $141, they are trading at under 11 times expected 2024 earnings. The 5 year average FWD PE is 18.5. And this in spite of excellent revenue and EPS growth.
BRK owns 20% of AMEX, and due to regulations regarding ownership of banks, may not be increasing its stake. Buffett didn't add in 2008 either, choosing instead to rescue GS and BAC. I wonder if he would have bought more, even the whole company, if regulations weren't a factor. The 80% of Amex BRK doesn't own now has a market cap of $90 billion.
