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gfp

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    Buffett/Berkshire - general news

    in Berkshire Hathaway

    Posted

    Thanks for the link to the full interview!  Sounds like cash levels will be down slightly due to the equity buying, primarily the 75 million additional Apple shares, more than offsetting the PSX sale.  He mentioned that IMC and TTI are up big with the world economy accelerating.  Sounded like he hasn't bought any GE at this point.

     

    What are you buying today?

    in General Discussion

    Posted

    Added to BRK today as well.  Great price around 190.  Quarterly report out Saturday morning with new cash balance (should be huge) and quite possibly zero net earnings on the headline number because of the new mark-to-market equities passing through the income statement..

     

    Just buy some more BRK.B, Jeff! It's the perfect time of the year for it - about 50,000 Berkaholics [all of them constantly buying Berkshire, under eternal avarage ins] - coming out of their holes and caves, to go to Omekka - oops, typo here - Omaha - to have a good time and good experience! So the market price goes down because of lack of presence of the usual buyers in the market. -Capital allocation has momentarily switched from Berkshire to beer!

     

    [if you sense a stint of envy in this post, I assure you it is! I will have to settle with Yahoo Finance - not that bad either ...]

    Berkshire Hathaway Structure Choice

    in Berkshire Hathaway

    Posted

    The structure was an accident of history.  No fees because he was already wealthy and truly wanted to get wealthier alongside his investors, rather than "off of them."  A lot of people say that line, but Warren is the only one I've seen actually do it.  I personally manage large sums for a few people for no fee - it actually costs me money - but I can't do that for everyone.

     

    So much of what they do - the $50,000 reimbursements for "postage" and personal use of secretarial services, etc - is just to set a good example.  They can afford to do that.  The ridiculously low salary is to set an example by using an extreme.  He doesn't think Jaime Dimon should get $100k, he is using an extreme to set an example.

     

    Berkshire is an accident of history, but the track record and communications record are all in one place.  It's his painting, as he says.  It is valuable for his legacy to have a single long term repository of his life's work and the scorecard.

     

    To answer my own question a few posts ago: Fairfax India, Greenlight Capital Re, Third Point Re, etc, ALL have more egregious and costly fee structures than the one shareholders of Biglari Holdings are paying.  The only difference is that investors put up their money with that fee schedule fully disclosed ahead of time.  It was their money and they chose to pay the fees.  Biglari chose to add fees (however competitive with the above examples) on other people's money, after the fact.  And that is - one of the many things - that rubs people the wrong way.

     

     

    So back to the original point...

    1) Why no fees? Why does it make sense for Fairfax India to charge fees, but not for Berkshire (if this is even the case!).

    2) Berkshire and some other companies were merged. Technically speaking, what was the reason it didn't make more sense to have an investment vehicle owned 100% by Buffett, Munger & Co.

     

    Interested to hear your thoughts!

    What are you buying today?

    in General Discussion

    Posted

    Is the current market cap $875m ?

     

    I may need to duck and cover after posting this, but I bought some Biglari Holdings today.

     

    I know, Sardar is the worst partner money can buy, but this is just a short-term trade on the assumption that the 20%+ drop in the price of BH is due mostly to the company getting dumped from the Smallcap 600 index. Reading reports of the annual meeting that was held last week, it doesn't look like Sardar dropped any unexpected bombs that would explain the cratering stock price (the dual class stock structure was a foregone conclusion). Volume in the stock today was about 30 times normal volume, which is probably due to index funds selling.

     

    In any case, the next couple of weeks will either make me some money or teach me an expensive lesson.

    Is it really that cheap though?

     

    $1.05bn investments, take out $270m for deferred taxes and debt and you have net investments of $780m. Add in $500m valuation on fast food biz (12x normalized earnings), $50 first guard (12x normalized earnings) and a $0 for Maxim. Using a 2m share count (to prevent double counting as repurchased stock is included in investments), you get a total value of  $1,330m. Take 20% off that for the Biglari greed discount and you have a valuation of $1,072m. Current market cap is $875m.

     

    This looks a little cheaper than it should, but is it really worth getting involved in for such a small discount?

    What are you buying today?

    in General Discussion

    Posted

    thanks for the heads up, I hadn't noticed this.  got filled on a small amount of HRG at 9.555

     

    Off to buy some more kwikset products..

     

    SPB

     

    Company guided down and replaced its CEO with its Chairman David Maura who is well-respected as a capital allocator. He stated that much of the guide down in FCF is due to transitory factors, which have been ongoing for about a year at this point.

     

    Announced $1BN share repurchase over 3 years would wipe out ~30% of market cap.

     

    Company will be largely unleveraged after selling its battery and appliance businesses.

     

    Transaction with HRG will allow index funds to own the stock once its no longer controlled.

     

    ~10% FCFF yield pro forma for divestitures of battery and appliance business.

    seeking alpha pro is getting annoying

    in General Discussion

    Posted

    http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/seekingalpha-turns-evil/msg327744/#msg327744

     

    More and more articles require pro membership even though they are not pro articles.

    https://seekingalpha.com/author/five-minute-stocks/articles#regular_articles

    This one for example. The left side shows that pro articles are 0, but when I click into any of them, it says continue reading with a pro free trial.  :(

    Buffett/Berkshire - general news

    in Berkshire Hathaway

    Posted

    You can sell cash secured puts in an IRA at interactive brokers and others that offer that trading approval. You cannot borrow in an IRA, so you need the cash unencumbered in the account. Which is one reason shorter duration is better. Also the last month or two is when you get the most premium decay or whatever they call it

    Buffett/Berkshire - general news

    in Berkshire Hathaway

    Posted

    For boilermakers trades, it's much better to sell puts with duration of 2 months or less, over and over again.  It's not riskier than buying shares, assuming you are interested in buying additional shares and size the trade appropriately.  If you get put to, you are happy to own the underlying and if you own a bit more than you intended, you start a covered call selling regimen against the excess shares.

     

    If he's the one that got $1.85 for a 3/29 expiry 190 BRK.B put, he's buying BRK.B shares at $188.15 next week - worst case scenario.  It's only risky if you don't want to buy BRK.B shares for $188.15 in a few days time.

     

    Selling LEAPS puts two years out on a single company ties up a lot of capital for a long time for a comparatively small upfront premium.  Not a great trade.

     

    Yea, that is WAY to risky of a trade for me...I dont care what premiums you are getting upfront.  I havent written puts on BRK in the low $100s awhile ago, but I feel like where we are in the market - you really have no idea what is going to happen.  I think if a big vol induced sell-off occurs, that writing both near-dated, and long-dated puts near 1.1x - 1.x2 BV makes a ton of sense.  Back in Jan of 17 one can sell the January 2019 BRK.B Put at $137.5 strike, and collect a premium of $2.20 (bid price).  So, unless you see BRK.B falling ~37% in the next two years, and are happy to own Berkshire at much lower prices…this could be an interesting way to add synthetically to an already established long position.  Of course if the stock rallies, you collect the premium and nothing more...that trade was obviously a home-run. 

     

    Sincerely,

    VM

    search function

    in General Discussion

    Posted

    There's a little toggle on top that hides it, you might have pressed it by accident or something.  I've done it a few times

     

    What mjohn said.  Little arrow in the top right corner of the site.  If it's pointing down, you have no search bar, if it's pointing up you do

    Berkshire acquisition of Pilot Flying J - long term 80 per cent

    in Berkshire Hathaway

    Posted

    That's in the ballpark of what I was assuming.  Pretty reasonable if you assume they are making somewhere around $500 million each year, 14-15x earnings for the first chunk.  Implied market cap will probably be higher for the next shares that Berkshire buys, likely based on some pre-established formula based on earnings like the Marmon deal.  If they had auctioned or shopped the entire thing with a banker it would have gone for more

     

     

     

    October 03, 2017, 06:19:03 AM

    Could be $8 Billion valuation for the whole thing.  Not sure.  Sales will be much higher than market cap for a company in that business.  It probably makes at least $500 million net each year, but I don't have a source for accurate numbers.

     

    October 03, 2017, 06:06:25 AM

    It may be 5 or 6 Billion dollars for the entire company.  38% could be $2.25 Billion, the eventual 80% $5 Billion or so.  With few other acquisitions this quarter and what I assume to be a quick closing with Byron as the investment banker and one of the sellers, we will probably find out what Berkshire paid in the annual report cash flow statement.
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