rb
-
Posts
4,182 -
Joined
-
Last visited
Content Type
Profiles
Forums
Events
Posts posted by rb
-
-
On earnings of $13.8B, $414B equates to a multiple of 30x, and $290B equates to a multiple of 21x.
Does that make sense?
Perhaps if you apply your DDM to S&P500 and you can also conclude the whole market is very cheap.
I am not questioning BRK or S&P500 is cheap (possibly a little, unlikely a lot), but unsure of the implied multiple.
JBTC,
First of all, these are a bit of back of the envelope figures. Now, the 13.8B figure for Berkshire is owner's earnings. That accounts for CAPEX in excess of D&A to support growth. The reported earnings would be the $16B figure. That would give a multiple of about 26 at 8.5% discount rate and 18 at 10% discount rate. These are nice multiples but the businesses in Berkshire are also nice so they're not cheap.
As to applying this multiple to S&P, let's see.... I don't really wanna think about the S&P500 because that's a market value weighted index which has a number of distortions. Let's instead look at American business which the S&P500 is supposed to represent. Now inflation is running around 1.7% and real economic growth will probably be around 2%. So that gives a growth rate of about 3.7%. Add to that the fact that for American business owner earnings are around 70% of reported and plug it into the formula. What you get is a multiple of 15x at 8.5% discount rate and a multiple of 11.5x at 10% discount rate. That's not really out there.
-
RB
Do you have the link to your analysis handy?
Also, if interest rates are low, is that a good reason for using a low discount rate?
Thanks
Gary
Yes, low interest rates imply low discount rates. I've used 8.5 for my little Berkshire exercise. I think that may be a bit high as well but hey it's probably around there. The discount rates also don't really change the conclusion unless you want to use some crazy high rates.
Here's my analysis that I've posted earlier. For those that read it already, sorry for the repetition.
So what would be owner earnings? BRK had 17.5B in pre tax op earnings. PCP had 2.4B. Let's call it 20 together. BRKs cash taxes have been around 19%. Let's say 20%. So that's 16B after tax.
Now, Berkshire's businesses are really good businesses. They will have growth. But let's assume a much more pedestrian rate of growth (without BRKs extraordinary CAPEX juice) of 5%. It's clear that even at that growth rate the economic depreciation at BRK is higher than the accounting one. So accounting depreciation is at 6.3B. Let's bump that to 8.5 - that would take down owner's earnings to $13.8B.
Now using a simple DDM with a 5% growth rate and a cost of equity of 8.5%, that gives a value to the operating side of 414B - 29% above the market cap plus you get the insurance business and the investments for free. If you want to use a 10% cost of equity (though that would be insane) then the operating business is worth 290. Either way you look at this thing it is severely undervalued. And this is based on just 5% growth rate.
-
Hi, I am new here but thought rb asked a relevant question that demands a thoughtful answer - how come BRK has remained undervalued even though Buffett has been universally considered the best investing mind for decades and the long-term record of BRK is clear for all to see.
I recall hearing Michael Price sort of laughing at the idea that BRK is cheap and saying along the lines that how can it be cheap when tens of thousands line up in Omaha to worship Mr. Buffett year in and year out.
I own the stock and I am not questioning if BRK is undervalued. I am more curious about what factors may have led to the market choosing to neglect the stock so often despite its apparent merits.
Honestly I don't know why. I've read a lot of Michael Price had to say I even read the hard to find book of his most important apprentice - Seth Klarman. There's a lot of market game theory going on in there that I'm maybe not smart enough to understand. It's a lot of if you're thinking that what is the other person thinking. If people are coming to Omaha why is BRK undervalued.
I'm a simpler man than that. I try to think about valuation and what IV is. If I can buy something cheap I'll do it. I won't loose much sleep about the idiot that sells it to me cheap. That's his decision. Though if I knew what some of my counterparties were I would spring money for postage and a thank you card.
I am totally guessing there - perhaps while most people still revere WB for his past record and broadly appreciate his thinking on investing and the world, they are not convinced WB can do a lot to lift BRK's performance in coming years. This thinking might be based on the fact that his large public holdings have not performed too well recently (IBM probably has done the most harm) and BRK's size may have become too big.
The valuation has become cheap as a result.
I keep hearing arguments about Warren being old and dying everywhere. However, if you look at the quick valuation I did earlier in the thread I used pretty pedestrian numbers. You don't need Warren to get that - any mediocre manager will get those. And I didn't include the insurance business. You get that as a gift. One could argue that my discount rate is too low but I think one should have a pretty good argument why that is.
Plus there are a lot of companies out there that are not run by Buffett. Should all of them have a be trading at a big discount to IV because of that?
-
I'm in the green but nowhere close to 20%. I wish I were there. That's a lot of coin.
-
I thought the deal was for $32 billion plus/minus(?) the already 3% stake. The extra $9-10 billion represents a FCF of $2 billion. If I can buy a business that earns $2 billion free cash flow for $10 billion that seems extremely cheap. But as you mentioned, the growth would factor into that.
Also the 32B for PCP includes the control premium. You'd figure that if they were to swallow Phillips 66 it wouldn't be at the market price. They'd have to pay a hefty premium for that.
-
Do you guys have any ideas about how one can engineer investment gains and losses?
Edit: I should probably clarify: I'm working on a white paper that looks into how investment accounts and derivatives may be used to engineer gains and losses. I thought some of you folks may have something to add.
-
It's because PCP has much better growth prospects than Phillips 66.
Are they also going to absorb/tuck-in a lot of capital?
I think so but I didn't want to bring it up because that's more my view than a generally accepted one.
-
It's because PCP has much better growth prospects than Phillips 66.
-
Hi, I am new here but thought rb asked a relevant question that demands a thoughtful answer - how come BRK has remained undervalued even though Buffett has been universally considered the best investing mind for decades and the long-term record of BRK is clear for all to see.
I recall hearing Michael Price sort of laughing at the idea that BRK is cheap and saying along the lines that how can it be cheap when tens of thousands line up in Omaha to worship Mr. Buffett year in and year out.
I own the stock and I am not questioning if BRK is undervalued. I am more curious about what factors may have led to the market choosing to neglect the stock so often despite its apparent merits.
Honestly I don't know why. I've read a lot of Michael Price had to say I even read the hard to find book of his most important apprentice - Seth Klarman. There's a lot of market game theory going on in there that I'm maybe not smart enough to understand. It's a lot of if you're thinking that what is the other person thinking. If people are coming to Omaha why is BRK undervalued.
I'm a simpler man than that. I try to think about valuation and what IV is. If I can buy something cheap I'll do it. I won't loose much sleep about the idiot that sells it to me cheap. That's his decision. Though if I knew what some of my counterparties were I would spring money for postage and a thank you card.
-
Or, you can take Buffett comments in this year's AR.
If an investor’s entry point into
Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares
have occasionally reached – it may well be many years before the investor can realize a profit. In other
words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire
is not exempt from this truth.
Purchases of Berkshire that investors make at a price modestly above the level at which the company
would repurchase its shares, however, should produce gains within a reasonable period of time. Berkshire’s
directors will only authorize repurchases at a price they believe to be well below intrinsic value.
He is practically giving you his valuation. At 1.2 P/B it is unambiguously cheap. At P/B of 2.0 it is expensive.
If you estimate "well below intrinsic value" to be 25%, then IV is around 1.6 P/B. Very hard to improve on this.
Vinod
Vinod,
I think you hit the nail squarely on the head. Their explanation fit very nicely with my estimate of Berkshires IV. But this was the most clear estimate of Berkshire's IV yet from Buffett and Munger. I was shocked to see it spelled out so clearly when they've been playing can and mouse games for years regarding the IV.
Just to share another insight. It was an off the cuff response from Buffett at an annual meeting a few years ago. There were questions about the value of the smaller BRK subs. Buffett came out and said that they're worth about 14x pre-tax earnings. I was shocked to hear such a direct answer about their value - it was late in the meeting so maybe he was tires. Then I went home and dove deep and found that it's true.
I think these days maybe they're trying to obfuscate the valuation of the smaller subs by combining them with insurance.
rb,
Can you share any insight into what subs Buffett is talking about? This is the first time I am hearing about this, so any additional info you can share around this would be great.
Vinod
Vinod,
Sorry to get back to you so many pages later in this post but real life intervened. I went back to my notes and that comment was at the 2012 meeting and he was referring to the small subs so ex BNS, BHE, Finance, Insurance, Lubrizol, etc. Basically he was saying the "Other" divisions were worth 14x pre tax.
-
The fairfax hedges are on the headline CPI so it is good to know that it is more volatile. So this is slightly to fairfax's advantage I guess. It is possible you could have some quick deflation before the fed can react. However, if headline CPI dipped and fairfax didn't sell their options it could all disappear when the CPI reverts back up. In 08 they probably wouldn't have made money because I don't think it fell enough that they would have sold.
I would prefer a fairfax that just equity hedges.
You're kind of on the right track on the CPI stuff. inflation in a rate of change so if you put the hedges at the right time and headline CPI drops because of a decline in oil (which would be a one time shock to cpi) then you need to sell right after to get your gains otherwise the regular inflation takes you above the strike again.
So it would work if you were market timing commodities. They're not doing that though. So I don't see how that works well.
You do, but I also don't like the equity hedges - and those have been the bigger problem. That's also a market timing issue. Why focus so much on that instead of using your vast stock picking (or valuation) skills to build value? Do good underwriting, make money, invest that money - make more money and so on. Worked pretty well for Berkshire.
As I've said in another post between the equity and deflation hedges they booked losses equal to roughly half the book value of the company - most of that came from the equity hedges. They've argued that it was in order to protect the company. I'm sure that someone will come and explain to me how it's great that they've done so because we're about to have a nuclear winter. But booking losses that are worth half your book value doesn't seem to me like such a great thing.
-
It is for this reason that I believe the delation contracts market prices will differ from actual cpi numbers. why? Oil was $148 dollars and we had huge inflation in June 2008...only to see massive deflation in 2009!! It is not where we are...it is where we are going...No one's hedges worked even Ray Dalio got smoked in August...Einhorn, Ackman etc...so the interest in another way to hedge is certainly on the table globally.
We really didn't have massive deflation in 2009. There was a spike up during 2008 of about 5%, which completely reversed by the end of the year. 2009 saw the CPI end within a fraction of a percent of where it started.
Here are the end of year CPI numbers for the US:
2007: 210
2008: 210.3
2009: 215.9
2010: 219.1
2011: 225.7
2012: 229.6
2013: 233.0
2014: 234.8
I guess I can't say with absolute certainty we won't have deflation but we really didn't have any sustained deflation during the 08/09 crisis and there wasn't any in japan over the past 20 years. That is all I am saying, we have to really get speculative that this will happen.
There are some very good points here. In economics there is the headline CPI and Core CPI which is CPI excluding food and energy. In economics you learn pretty quick that for monetary policy reasons you discard CPI and focus on Core CPI. One of the reasons for that is that food and energy prices are really volatile. The other is that it would lead to bad decisions. From the point of view of a central bank to keep the economy humming and have smooth inflation at some target rate. If you have a big jump in the oil price that is a negative supply shock. But it will cause a jump in the headline CPI so if you were focused on that you'd raise rates and hit the economy with a negative demand shock. Great you've just battered your economy.
If you ignore headline CPI and look at core CPI you'd see that it didn't really go negative in 08-09 so it was a lot to do with the price of commodities. There is also the concept of sticky prices that everyone ignores around here. But the fact is that it's hard to break through the zero barrier of inflation.
-
I have been thinking about this deflation debate in general and it seems to me that deflation is what would happen if the government didn't interfere. In 08/09 it sure looked like deflation was going to happen and when it didn't the deflationists blamed it on government cronyism, can kicking, deficit spending, propping up failed banks, etc. I think the deflationists were right on the theory but ignored that government wouldn't stand idly by. That same issue will exist going forward. It just seems governments have so many tools to fight deflation, they can run deficits, the federal reserve can print money, they can lower taxes, enact stimulus programs, etc. All of these things are arguably bad in the long-run but I think we have enough evidence now that that is the way it will go. If the government can just make money appear, is that not all inflationary and shouldn't that at some point push up prices?
Lunch,
I don't see why it's a shock that governments stepped in? They basically came it to prop up demand and smooth the deleveraging. What should they have done? Sit back and let their economies implode? Why was that a rational expectation? The fact is that the governments haven't done enough. They had all the data but determined that doing more was not politically feasible. That's either a cop out or a sad state of society.
Don't take this the wrong way because I've seen a lot of stuff you posted and you're a smart guy so don't take what I say to heart. The truth is that macro is hard. The idea that "All of these things are arguably bad in the long-run" is wrong. That was the liquidationist view of the 1930s which was the dominant view back then. The thinking was that the government shouldn't step in because negate the good work that depression do. That worked out brilliantly!
The thing is that the economics profession has learned a lot from the 1930s and we've (less Europe) been lucky enough to have people at helm that know those lessons. The downside is that the measures implemented have only gone half way because of political reasons. What is disturbing is that the reasons against government intervention today are the same as the ones that popped up during the 1930s and which have been proven totally wrong. But I think it could have easily been worse.
-
I think it is a little more nuanced. I attempted to research a similar question and came upon the following information:
"Companies involved in the exploration and development of crude oil and natural gas have the option of choosing between two accounting approaches: the "successful efforts" (SE) method and the "full cost" (FC) method. These differ in the treatment of specific operating expenses relating to the exploration of new oil and natural gas reserves.
The successful efforts (SE) method allows a company to capitalize only those expenses associated with successfully locating new oil and natural gas reserves. For unsuccessful (or "dry hole") results, the associated operating costs are immediately charged against revenues for that period.
The alternative approach, known as the full cost (FC) method, allows all operating expenses relating to locating new oil and gas reserves - regardless of the outcome - to be capitalized.
[Accounting For Differences In Oil And Gas Accounting http://www.investopedia.com/articles/fundamental-analysis/08/oil-gas.asp#ixzz3lIdiR6Jf]
Depending upon the accounting method, the unsuccessful exploration costs may not be captured under D&A, and thus D&A may understate the true cost of finding and replacing each barrel. Of course you then need to also incorporate your own views about whether it will be more expensive in the future to replace each barrel of oil or oil-equivalent, as noted in the previous post.
I'm sorry but I don't really see your point here. What matters to an investor is the economic cost of replacing a barrel of oil.
Fiddling around with accounting may lower the reported numbers but doesn't really change the capital cost of developing reserves.
That being said I would be really interested to hear an argument about how the nominal cost of developing reserves is lower today than 10 or 20 years ago.
-
and c) they could re-orient their portfolio very quickly if needed.
I've struggled with what kind of multiple to apply in the past, but this thought always crossed my mind. It doesn't make sense for me to discount their future earnings streams by some massive percentage unless if I think they'll be equity-hedged with bonds yields at 2% into perpetuity. I have no idea where bonds yields go, but I bet they're higher in 10 years. Also, Fairfax has a history of hedging and then removing the hedges so we cant expect them to hedge into perpetuity.
So today they're worth x, but tomorrow they take equity hedges off and they're worth 1.3x because of the increase in earnings power? It'd be hard for me to get behind such a drastic change in valuation for something that is so easily changed and that they have a history of changing. I think it might be better to change your position sizing instead of multiple you buy at.
Maybe instead of a 10% position if they were fully unhedged, you do a 3-5% position so the opportunity cost doesn't kill if you they're wrong. If they remove the hedges, or appear to be right, you can rebuild your stake. It seems like this would be an easier way of controlling for the uncertainty than trying to come up with a different multiple of book for every change in interest rates, deflation hedges, and %-equity hedged status.
I'm sorry but I'll have to disagree with you here. It's not just that the hedges worked out badly that would hurt the valuation. It's a bit the fact that they did them. The equity hedges were put in place at a time when the market wasn't really overvalued. Maybe some people may have made the argument that it was somewhat overvalued, but I don't think anyone could have made the argument that it is grossly overvalued. So why go so short? Also as we've seen the markets go up over time so it is imperative that you get the timing right on such a big short bet. keep in mind that the shorts are total return swaps so it's not just index values but dividends as well. I'm not going to go an research the figures but we didn't have a lot of periods when total market return was negative over longish periods of time.
The deflation hedges don't matter as much but go toward the same point. The Fairfax guys are really smart, but they're bottom up stock pickers. They're not economists. They don't even have a bunch of brilliant economists on staff. So why are they making large macro bets. To me it looks like maybe they're operating a bit out of their circle of competence.
Now between the equity shorts and the deflation hedges they've booked losses equal to roughly half of the book value of the company. If those hedges weren't in place and the 4 billion was invested into earning streams wouldn't the company be way more profitable and robust? So why don't you think that their decision not to do that shouldn't impact the valuation multiple of the company?
By the way, if we were talking about Berkshire here rather than Fairfax we would be talking about Berkshire booking $120 billion in losses on one of Warren's bets. If that were the case I doubt we'd be so calm and nonchalant about it. On the other hand thinking that this would happen at Berkshire stretches credulity.
I also don't agree that because of the hedges they should maybe just get a smaller allocation in the portfolio. Intrinsic value is intrinsic value. But maybe that should be material for another post.
-
Thank pupil. Great analysis. Based on your analysis it looks fairly compelling at these prices.
Looking through it, the only thing I see is you use a tax rate of 25%. I see a 30% rate on the company as a whole, just wondering why you chose 25%?
Please explain why 30?
-
When analysing oil producer, I always come back to this same question? Is amortization and depreciation a good proxy for maintenance capex (i.e. Capex required to maintain production rate in the long run)?
There are probably people on here more qualified than me to answer that. But my view is that it isn't. Since oil is getting progressively harder to get out of the ground you need more capex to get replace a barrel of production, plus there's the inflation thing.
-
Pete,
I haven't done the mark to market for the portfolio or the derivatives either, but from a quick look at the Q2 report it looks like they're at 1.2 book not 1.1.
I think that 1x book is probably a good proxy. Possible reasons why it may not be are that the insurance operations still aren't very good. They're definitely doing fine now, but you'd need a longer record to be sure. Another are the hedges. Particularly the equity hedges.
-
I think a more appropriate topic of debate would be how such a large and stories company with a fantastic track record can be this undervalued! I don't understand it - but then maybe I'm not smart enough.
Not that it's the right way to value BRK, but if you take $16B of earnings as CF and run a 5% growth for 10 years DCF, your hurdle rate is only 7% to make current price cheap. If you use 10-15% hurdle rate, it is quite overvalued.
That's why you have to bring other parts into equation to persuade yourself that it's rather cheap. Or just go with P/B. ;)
Why would you use a 10-15% hurdle rate for BRK?
Because I want to have 10-15% return.
Hurdle rate == return rate.
Jurgis, I realize what hurdle rate is. The whole idea of my post was to look at how much BRKs operating subs as they are now may be worth outside of BRK under say average leadership. That's also why I didn't use more realistic growth rates.
All that being said, despite the fact that the idea of a hurdle rate sounds very good in theory, I think it's deeply flawed. And allow me a bit of rope here to tie it around my neck by making some points.
First of all a hurdle rate is applicable to mainly long term investments. By setting your own rate arbitrarily of market you cannot tell is something is undervalued and miss out on relatively quick and significant gains as prices of securities converge on fair value.
Secondly, if you set the rate too high you can even miss out on very profitable long term investments. For example, if you were to say that you are looking for a 15% hurdle rate today you are basically saying that you are looking for Berkshire's in 1970. There's not a lot of those around. To be totally honest, I don't even thin Berkshire back then would have passed that test since (I'll channel Munger here) you could not have anticipated all those Lollapalooza effects. And in the meantime you end up holding cash while you're waiting for that lollapalooza home run and even if you get it you end up with less money in the end compared to if you accepted lower hurdle rates earlier on.
Thirdly, I find it useful to think about investments from multiple points, of view. Intrinsic value vs. market value, IRR, hurdle rate, etc. That way I get a more complete picture.
I should end by saying that this is not all about your post. These discussions help me organize my thoughts about these things. I'm weird like that :)
-
I will disagree with you there muscle man. From what I can remember from cycles past there was never any shortage of people and institutions willing to write stupid loans or any other kind of paper.
-
I think a more appropriate topic of debate would be how such a large and stories company with a fantastic track record can be this undervalued! I don't understand it - but then maybe I'm not smart enough.
Not that it's the right way to value BRK, but if you take $16B of earnings as CF and run a 5% growth for 10 years DCF, your hurdle rate is only 7% to make current price cheap. If you use 10-15% hurdle rate, it is quite overvalued.
That's why you have to bring other parts into equation to persuade yourself that it's rather cheap. Or just go with P/B. ;)
Why would you use a 10-15% hurdle rate for BRK?
-
Pupil,
I'm not going to take your bet because I only make bets when there's a margin of safety involved and there's no margin of safety in you bet. Sorry.
You make some very good points about the sustainable rates of growth moving forward. My own view (and this may be in line with your thing) is that the float supported a lot of the growth. And while the float growth has been simply amazing there's no way that the float will grow along the op earnings so it won't provide as much support going forward. There just aren't that many opportunities in insurance.
Also a lot of the growth in op earnings is not organic but artificial - through acquisitions and tons of oversized capex. I'm not complaining it has been and will continue to be a very financially fruitful experience.
But I don't really understand what's the argument here. I propose an alternative view. Let's look at the operating business not as if they're part of Berkshire. Instead let's look at them as we would at any other company. So what would be owner earnings? BRK had 17.5B in pre tax op earnings. PCP had 2.4B. Let's call it 20 together. BRKs cash taxes have been around 19%. Let's say 20%. So that's 16B after tax.
Now, Berkshire's businesses are really good businesses. They will have growth. But let's assume a much more pedestrian rate of growth (without BRKs extraordinary CAPEX juice) of 5%. It's clear that even at that growth rate the economic depreciation at BRK is higher than the accounting one. So accounting depreciation is at 6.3B. Let's bump that to 8.5 - that would take down owner's earnings to $13.8B.
Now using a simple DDM with a 5% growth rate and a cost of equity of 8.5%, that gives a value to the operating side of 414B - 29% above the market cap plus you get the insurance business and the investments for free. If you want to use a 10% cost of equity (though that would be insane) then the operating business is worth 290. Either way you look at this thing it is severely undervalued. And this is based on just 5% growth rate. If the growth rates will be anything close to what you guys are fighting about there will be oceans of money to be made. So let's stop fighting and enjoy the amount of money we're all about to make on this thing.
I think a more appropriate topic of debate would be how such a large and stories company with a fantastic track record can be this undervalued! I don't understand it - but then maybe I'm not smart enough.
-
What do you guys think of the following simple valuation for the ultra longterm equity investor:
1. The stock portfolio (plus Heinz, Bac, converts, preferreds etc) is worth what it's worth. The cash and IG fixed income is worth 50% of gaap but in any case the discount to be a minimum of $25bn.
2. Total operating income has the interest, dividends, gains derived from the above assets removed. All of the remainder (including an averaged number for the insurance underwriting gains) is then capitalized at a rate that makes sense to the investor keeping in mind that with full retention of earnings BRK has historically grown these earnings at a CAGR of 20%, about double the long term returns of the market.
1 + 2 are then added together and are the total equity value for shareholders. (No subtractions of DTL or Float.)
*Note on Float. If float grows over time then the above undervalues the company. And If float declines Buffett wrote in this year's report that it would do so very gradually and probably not any more than 3% per annum.
Dear Simian,
I would call you baboon but I think that would be rude. It's hard with your handle.
I agree with your idea of splitting off insurance from the operating subs and valuing them separately. Though even in insurance geico should probably split off and valued differently still.
What I do not agree with is your discounts on cash and FI. A discount may be appropriate for the 20 billion that will not be deployed but nor for the rest. To apply a discount you must assume that the funds will be deployed in a manner that destroys value. This is not the case of Berkshire. They're not some tech company keeping idle cash stashed offshore. Nor are they the kind of company that does "strategic acquisitions" at lofty premiums.
Actually I could argue that $1 of cash in the hands of Berkshire is worth more than $1. Because I believe in conservativism I will not do that. But I would find it very hard to make the case that $1 in the hands on Berkshire is worth 70 cents and much harder still to make the case that it's worth 50 cents.
-
I don't think that the examples you've put up are very good ways to get money out. It's more likely that some spiffy algos will capitalize on those trade before the perpetrator has a chance to get the money.
Just for fun. 8)
There's a security A. Trades at $1, 1000 shares a day.
Bad guy has accumulated 10000 shares.
There are 2 sellers at $1.10 1000 shares and $1.50 1000 shares.
Bad guy puts limit sell order at $10 for 10000 shares.
Bad guy puts a market buy order for 12000 shares from your account.
How exactly algos are going ruin this?
Curious minds want to know.
To simplify there are no options available for this security.
Also to simplify, it is very unlikely that non-algo people will look at it, see a market buy order for 12000 shares and manage to get their sell orders in time.
-----------
BTW, without one-time passcode, they don't need to break IB encryption. They just need a keylogger on your computer that comes with any virus or malware. If they zombie your computer, they can even execute the trades from it, so IB won't even notice "it's a different computer, alert".
I agree that if you're not liable due to Canadian laws, then you don't give a crap about inconvenient security. ;)
Good sir, algos look thought everything.
That being said you're a smart man, your example is pretty good. As I've told you before I haven't thought that much about it before because yes, it is nice to be protected by the current Canadian legislation. From what I have heard it is much more difficult to deal with these issues down in the US. Don't feel too bad though, our government is trying hard to remove our current protections.
1.2x P/BV entry point
in Berkshire Hathaway
Posted
I'm sorry but I don't see why you have a point here. Maybe you could back up your statements with some numbers?
Yes WB has been a god when it comes to value creation. Yes in the future he will be no longer with us. And maybe his successor won't be as good at finding/doing deals. Will he or she be a total idiot though? Also keep in mind the subs aren't run by WB they have their own managements. Will they all of a sudden turn stupid?
What you're basically saying is that once WB dies everyone at Berkshire will get busy destroying value.
You don't need Warren doing deals for BRK to be worth 1.5x-1.6x book so why should it be worth 1.2 book?
Now let's say that Mr. Market gets angry at BRK (cause Warren isn't there anymore and life is boring now for him) and knocks it down to 1.2 book. Am I the only one that pictures a Teledyne like situation where Berkshire buys back a ton of stock while still generating organic growth? Personally I wouldn't be unhappy with that.
I see here a lot of multiples being thrown around like the BRK will be worth 1.2 book or the op cos are worth 12x post tax. What I don't see is the math how one gets to those numbers. Maybe you guys can share your numbers so we can all see how you get to those multiples.