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woltac

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    what are you selling today?

    in General Discussion

    Posted

    Bought DIS @ 85.02 yesterday and sold today for 95.40

    Bought MCD for 125.00 yesterday and sold today for 147.30.

     

    I don’t usually trade much, but couldn’t pass up the one day gain and wanted to keep more dry powder for the next leg down.  I did not think the buy orders would be filled yesterday and put in similar, but lower orders in after selling.

     

     

    Is This Buffett's AT&T Moment?

    in Berkshire Hathaway

    Posted

    Perhaps the change is for exactly the reasons he cites:

     

    First, Berkshire has gradually morphed from a company whose assets are concentrated in marketable stocks into one whose major value resides in operating businesses. Charlie and I expect that reshaping to continue in an irregular manner. Second, while our equity holdings are valued at market prices, accounting rules require our collection of operating companies to be included in book value at an amount far below their current value, a mismark that has grown in recent years. Third, it is likely that – over time – Berkshire will be a significant repurchaser of its shares, transactions that will take place at prices above book value but below our estimate of intrinsic value. The math of such purchases is simple: Each transaction makes per-share intrinsic value go up, while per-share book value goes down. That combination causes the book-value scorecard to become increasingly out of touch with economic reality.

     

    Maybe the third reason should have been listed first.  Take a look at the equity of a company that buys back stock on a regular basis.  Moody’s is an extreme example, at 12/31/17 the MCO had negative equity of $114.9m.

     

    I see this as a clear indicator that major stock buybacks are coming soon.

     

     

    Warren Buffett's Ground Rules - Jeremy Miller

    in Books

    Posted

    I have been following BRK since the early 90s and really liked Ground Rules.

     

    The information in the book is from the partnership days and has more relevance to the way small investors should approach their investments than the way BRK currently operates.  This is in no way a criticism of the current BRK operation, which has evolved due to the ever increasing size of the firm. 

    Cash Flow Statement & Interest Income

    in General Discussion

    Posted

    In the red square, what do you make of the amount spent on stock-based compensation and repurchases of common stock being the same dollar amount? My first thought is that this effectively cancels out any dilution or any impact of repurchases, but my gut tells me that this is incorrect.

     

    When a company purchases their own stock, the purchase price first reduces common stock to the extent there is a balance in the account, then reduces paid in capital followed by retained earnings.  In the statement you attached, there is no balance in common stock/pic at the beginning of the year. The entry to record stock based compensation during the year increases common stock and the entry to record the stock purchases during the year reduces the capital stock/pic balance back to 0.  So the two numbers (stock repurchases and stock based compensation) are the same only because the beginning balance in capital stock/pic is 0 prior to the entries.

     

     

    Berkshire Hathaway 2016 Meeting - Live Stream / Saturday

    in Berkshire Hathaway

    Posted

    "Just come out and say, 'We're selling this stuff to all of the human race, many of whom lack self control and will most likely develop health problems over time, which society will bear. In the meantime we're going to make a lot of money for our shareholders. And we're OK with that.'"

     

    Maybe not in those words, but that is what I understood their answer was with an offsetting happiness caveat.

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