nickenumbers
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Posts posted by nickenumbers
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If Buffett were to be buying back shares:
[*]How would we know? Precisely. Not notionaly but precisely.
[*]When would we know? 1 month, 1 week, 3 months?
[*]How would he be required to tell us? Via this form or that document. Which form and how?
[*]Is there a limit to how much he can buy? Vis-à-vis Max Percentage imposed by a regulatory agency?
Thanks all.
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Great question about what to look for in daily volumes if BRK is purchasing back it's own stock..
My question- Would BRK buy back the B class or the A class or both? I don't have a clear strategy of if they would have a preference for either class, or both classes to keep them in parity..
Reason would tell me that they could not purchase the B class in isolation because with their large amount of capital, they are in a unique position to purchase the A class large unit stock price, and allow the rest of us "small wallet" investors bid the B class up to parity.
Average Daily Volume in dollars is CLASS A $97M vs. CLASS B $824M
I can't wait to read what you genius people come up with.
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I wrote a blog post speculating about this. I'll paste it here but if you want to read it in a better format here's the link: http://vardeinvesteraren.nu/vardeinvestering/buffett-buybacks-could-berkshire-tender-stock/
Alwaysinvert. I wanted to complement you on an outstanding post. Well reasoned, original, and compelling. Exceptional!
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Can anyone recommend a good biography of Mark Zuckerberg?
Thanks.
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Interesting graphic from visualcapitalist.com on how Growth Investors Pick Stocks..
It is not a cure all, but it is nicely done.
Here is a different link to the same thing: http://www.visualcapitalist.com/elite-growth-investors-pick-stocks/
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You guys nailed the calculations. In the words of Charlie Munger- "I have nothing more to add."
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Guys,
I don't have the answer to this but I wanted to see what all of you thought.
I don't think WEB wants to re-purchase his own shares, and I think it is semi-unrelated to the 120% of Book Value guideline. I think he has some genius psychology in place that causes him to not want to buy it back.
My Guess- as soon as he buys it back, he sends a huge huge signal that he is buying $1 bills for $0.60 [or some such deep discount.] It establishes a valuation, where now there is only speculation about the value. I suspect that the companies that are wholly owned by BRK have a much higher value than the market gives them credit for, and BRK is presently at or below the 120% of BV figure. But this is not large enough to be interesting to WEB. It could be that BRK is at a 70%, or a 60% of it's current price..
But, WEB only gets 1 time in 20 or 30 years to buy a bunch of BRK... So, just wait and buy Apple, or Southwest, or VISA, or something else that is amusing..
Once he starts buying BRK, he has a small window and the price will go up into never never land for a very long time. I don't believe that BRK has not sniffed 120% of BV, and with all the BRK cash they haven't purchased some shares. One has to ask WHY???
What do you guys think?
Please give me your input on the following:
Cash Dividend- He doesn't want to do it for a couple of reasons including, double taxation for shareholders, he can use the cash to purchase assets that return around 3-9% or more, but he is waiting for higher return options, once the cash is given out, it is gone..
What else am I missing?
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BRK price over the last couple of weeks and perhaps the last month or so has not rallied like the Dow or the S&P.
Does anyone know an event or a narrative that might explain why it has not tracked the S&P with the rally?
I am buying because I think banks are going to have a great day tomorrow, and BRK is going to have a great quarter when it releases on 8/2/18 for various reasons.
Related question- Do you think with all the robo-trading/advising BRK is adversely affected by the volatility of its Net Income due to the inclusion of all investments now running thru the P&L? I wonder if computer algos have been adjusted to include this muddling up of the Net Income.
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Valuehalla and Dynamic,
I appreciate the effort and the courage to put your numbers out there. That is part of the reason why I joined this group was to see what a group of SMART, Value Focused, investors have to say. We don't have to agree, but we should endeavor to be respectful. We can all Monday morning quarterback the numbers, but I think you guys are on track AND... I was too lazy to perform the arithmetic that you offered. I love LOVE the fact that you have taken a stab at the math for me. Thank you for the contribution and the opinion.
I understand Charlie and Warren saying that they can not continue to grow the company at rates that they have in the past. I get that and I get the upper limit on the economy growing. But when you listen to them in the 1990s, and the 2000 they were saying the same thing. Don't you think they are tamping down expectations so that they have an opportunity to exceed the expectations. They have never been happy to grow their wealth at 4%, why would they accept that now? I also get the fact that the cash and size of their company is a drag on their performance, but don't buy the opossum routine that Warren puts out there on slower growth. Slow growth might happen here and there, but that is not what they are aiming for. Finally when you have collected a menagerie of superior companies with high rates of returns as BRK has, why do we think that the S&P can outperform it?
PS- I am long Brk.b and I have Brk.B LEAPs going out over the next 6-18 months.
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I nearly invested in this Egyptian tourism business, but then I realized it was just a pyramid scheme.
That is funny!!! I don't care....Jurgis gets full marks! A+ that was funny!!!!!!!!!
:) ;) ;D
Pyramid scheme.!!~~ [Finance joke] Private message me if you want me to explain it.
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This link is the registration statement for the block of Costco Stock in question (momentarily called "PriceCostco" for a year following the merger with Sol Price's Price Club):
https://www.sec.gov/Archives/edgar/data/909832/0000912057-96-010651.txt
The partner was a subsidiary of Carrefour, the French hypermarket company. Carrefour owned 21.19 million shares, which was 9.7 - 10.8% of Costco around the mid nineties.
The offering ended up being for 19.5 million shares in this registration statement, so you can assume the block that Warren had a chance at was probably the 19.5 million shares.
edit -- I think it's as simple as 19.5 million shares at a split adjusted 10 bucks per share in May 1996, say 195 million for Berkshire. Without including dividends, the shares would be worth $3.9 Billion at 200/share today, 22 years later
second edit -- well I think the above is not exactly right. The shares were 20.875 / share for the offering, which would have cost Berkshire $407 million bucks for 19.5 million shares. They would now have 39 million shares at 200, so $7.8 Billion. At least I think this is correct...
More or less this attached image ->
Wow, that is excellent and exceeds my expectations. Those 2 crack me up. Whats another $7-8 Billion between a couple buds..
Thanks again GlobalFinancialPartners!
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Guys,
I hadn't heard the story that Charlie Munger told on the CNBC interview about Warren and Charlie having the opportunity to purchase the french portion/division/interest in Costco many years back. Charlie said that he told Warren to "close his eyes and BUY IT." And Warren DID NOT/WOULD NOT buy it....
Does anyone know how much they would have made/profited had they purchased it? How large was the sin of omission?
Thanks.
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I took a long term position in Facebook [FB] stock and a medium term position with options in FB, today.
Over the last couple of weeks I have been reviewing, Facebook, Amazon, Apple, Netflix, Google, Microsoft and Oracle. Twitter and Snap. Revenue, Rev Growth Rates, Net Income, NI Growth Rates and Margins, with Margin Growth rates. The story that that data tells is pretty interesting.
I have also been thinking about the intangibles of the products. Facebook based on current prices and current product offerings is a high probability treasure, I believe. Plus they still have room to grow. FB is not so large that there is no more room to grow. [Apple and Google have his problem of being too big, little room left.]
Not only does it own the FB platform, but it has Instagram, WhatsApp, and the messenger products. It has the Story component of Insta, and its products are very very sticky. There are not real substitutes for what it does. And when everyone is using a platform, FB, Insta, it forces everyone to use it even more. Becomes a self fulfilling prophecy. Network Effect. Zucker is young and fanatical for what he does... almost maniacal.. That is actually a good combination.
FB should not be priced as low as it is with the growth rates that it has. I think the political risk and Zucker testifying in front of congress is freaking everyone out. So, there is some political and regulatory risk. [Event Driven opportunity for us.]
I think it has a couple of years to continue to grow and I feel pretty good about it over the next 12-18 months..
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I love the CNBC archive of the prior SH Annual meetings. Starting in 1994 and slowly moving forward.
I am happier than a chubby kid in candy shop!! ;)
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All,
I would like to get the groups opinion on PE, PEG, growth rates, etc as tools to understand stock pricing and future price appreciation.
I am a hugh Monish Pabrai fan and I love his work. I have heard him talk about his work day, and I believe that he has said that he reviews investment company ideas that come to him daily, but he will not look at anything that is not under a 4 PE, or a 2 PE, etc. I think he talks about the PE as a filter, or a low bar..
I am confident that he is far more complicated than this simple filter, for sure. But, I am growing my realization on the best way to filter for investment prospects. I think it must involve, Price, Price to Book, PE, PEG, and it must have some larger understanding of the growth rates. As well as all the business intangibles and moat evaluation. This is shockingly obvious, I get it.. But why does Mohnish hand out PE as the primary filter?
I guess I am recognizing how little value there is in a stock market Screen as a way to select companies to evaluate. Filter on PE, is wrong. Filter on PEG, is wrong. Filter on LTM EPS growth rate, is wrong Etc.
Thoughts? Thanks all.
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Charlie Munger is on our group. Welcome! This is amazing and impressive. I guess he finally got himself a Thinkpad, or maybe he purchased and Iphone.
:P :P
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I think one must be very cautious when investing with an investment manager. They are interested in making money for themselves, you are interested in making money for yourself. The incentive is not always aligned.
I guess I have a philosophical problem with it where I don't believe they will be able to earn you an above average return, net of fees, and risk adjusted over time. Plus add in your time and interest to follow it, and loss of liquidity.
Why not just invest your capital yourself?
Ask about the fee structure. I like the version that Mohnish Pabrai uses currently and Pabrai copied from WEB used once upon a time.
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Guys,
I wanted to get myself clear on this once and for all.
What is the best, most widely adopted way of calculating Book Value of a company?
Option 1- All Assets at carrying value - liabilities = Book Value
Option 2- All Assets at carrying value - liabilities - intangibles = Book Value
Option 3- Some other variation. (Please describe)
I have seen different news sources use different versions and I wasn't sure. I get the fact that regardless, one must be consistent so that we are comparable over time and between companies.. But I wanted to get clarity from you guys.
Thanks.
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What does the group think, know, or want to say about Dr. Ed Yardeni Economist?
I heard him for the first time on the Meb Faber free podcast and I was generally impressed. I wasn't blown over, but he also wasn't a raving charlatan. He seemed to be a trained and educated economist, but also with some alternative opinion about the FED, tapering and interest rates.
Does anyone follow his blog and have any informed opinion about him?
Thanks.
Here is the link: https://play.google.com/music/m/Dwtfopfapzx5oiccaifenrcci3e?t=98_-_Ed_Yardeni_-_Weve_Got_Good_Growth_with_Low_Inflation_and_Thats_a_Very_Good_Environment_for_Stoc
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If you choose to be something different than a "reasonable" investor and think that you combine the necessary attributes (IQ, business savvy, behavioral edge), you have to consistently come to conclusions that are different from the wisdom of the crowd AND act accordingly (AND be right). It is much easier to fail conventionally.
I think that Mr. Buffett and Mr. Munger have consistently tried to lower expectations as the odds tend to be against you.
The argument of who is smarter may be irrelevant. Investment decision making is an individual exercise and I understand that Mr. Buffett continues to work alone behind his desk. He was able to find a way to work with somebody who had complementary skills, who could rapidly understand a situation and who could almost instantaneously provide unfiltered high quality feedback. It seems that this investment process has worked out fine.
When the "modern" investor is mentioned, does it imply that Mr. Buffett and Mr. Munger:
a)have lost their touch?
b)can no longer adapt to changing environments?
c)size is just too large?
d)value investing is dead?
I'm asking since I still consider them to be the golden standard.
"I have nothing to add." [Mic Drop..]
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That is going to be really interesting.
I clicked on the link but is says that I have to be a digital subscriber to the Herald to read the article.
Does it say where the video/audio will be posted?
Thanks.
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I agree with the thesis on Tesla. I have tried to short it a couple of times, and I have come away with a small profit, but it took longer than I thought and the ride was bumpy.
In the long term I think it is a matter of time before the arithmetic of Tesla catches up with it. Some have corrected me that Tesla is an energy company and not a car company.. etc.
Elon and Tesla has that cultish following. And it could get the support of billionaire investors who are willing to advance his project despite the underlying economics. I don't even think that they have a moat around their vehicle.. It is a cool car, but it is not a moat.
I just don't know how long it takes for the whole thing to break down, or morph into something else/different... The timing aspect of it is the risk to me.
BYD, plus all the other US and German automakers are advancing in Tesla space as well now.
I am reminded by the statement "A stock can remain irrational longer than you can remain SOLVENT." Any idea on how to short it by taking the long potential time horizon off the table?
If you time it right, you will be paid handsomely....
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US yield curve
The gap between 10-year and 2-year US Treasury yields. A 'flattening' curve is often considered a portent of slowing economic activity, an 'inverted' curve has been a reliable predictor of recession. The curve hit its flattest in a decade in January and has flattened further in recent days on demand for safe-haven, long-dated Treasuries.
Any clever soul wish to put forward a thesis on how to play the flattening to inverting 2/10 yield curve? We'll figure out later how to leverage it.
Not really a bond curve guy but anything that hasn't happened in 10 years deserves to be looked at for possibilities imo.
Excellent question. Yes please, me too!
Plus I think we would need to hear your narrative behind the strategy that you are proposing. Something like, I believe that this would work under this situation and until this happens. Or it will work as long as this...
DrValue- It feels like it would be a short strategy premise. [i might be wrong.] I view short strategies as having more risk than a long investment strategy because of the timing of the short to cash out before the rebound. Additionally, the inverted yield curve, pointing to a recession, and then a recovery would force me to work through the probabilities and timing of it all. Just to spur conversations, I wanted to throw that in.
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I love them both and they are both extremely intelligent, however, as a mental exercise, if you imagine a word where Charlie didn't exist and Warren was doing this on this own, Warren would still be a billionaire. I can't say the same about Charlie since without Warren and the opportunity to invest in and work at Berkshire, his net worth would have been considerably less. He would still be a millionaire but not a billionaire.
Granted we're talking about intelligence here but it takes a highly intelligent person like Warren to have been able to recognise the talent in Charlie, get Charlie on-board, give him is unique niche in California, create a cult around him, without ever jeopardising the relationship or stepping on his ego.
Having said all of the above, I would personally still prefer to have Charlie's life since he seems well rounded, multi-dimensional, having created a great family and involved in multiple causes and also, back in the day at least, pretty anonymous in terms of being able to go out and live life with no one recognising him.
[Mind Blown]!!!!! ;D ;D ;D ;)
That was an outstanding thought experiment and amazingly effective way to demonstrate your idea/perspective. Very well thought out and illustrated.
WELL DONE! Thank you for sharing that with us.
GOLD STAR!!
Buffett/Berkshire - general news
in Berkshire Hathaway
Posted
Experienced and Well Informed Brains of COBF,
Instead of BRK purchasing Class B shares on the open market, could BRK contact large holders of B shares and agree to purchase stock from them directly?
Said differently, are these the most likely methods of BRK repurchasing its own shares:
I think this would enable them to deploy hundreds of millions fast and efficiently, rather than disturb the daily float? I know that they couldn't give an advantage price to one large share holder over others, but still..
8) ???