SHDL Posted August 16, 2019 Share Posted August 16, 2019 How do you perceive these moves by Mr. Ackman & Mr. Greenberg? Hi John, I think it’s a good move. I think we have an interesting setup here in that BRK (by which I mean the stock) has done pretty much nothing for a few years now and remains cheap-ish, while a lot of other assets with similar characteristics — high quality, low risk — have really gone up in price. So if you think that general trend is here to stay then it is probably not unreasonable to expect BRK to join the party sooner or later. That said, there is one perfectly “rational” explanation for why BRK isn’t hot now, which is that everyone really seems to think that interest rates are going to go much lower and stay there forever — in which case industries like banking and insurance will probably not do so well. Personally, though, I feel perfectly fine betting against this consensus view by buying/holding BRK. Link to comment Share on other sites More sharing options...
gfp Posted August 16, 2019 Share Posted August 16, 2019 Various media is reporting snippets from Ackman's shareholder letter - outlining his views on the Berkshire purchase: https://finance.yahoo.com/news/1-ackman-eyes-more-gains-000843746.html I suppose a letter will be posted to PSH's website sometime soon, but I don't think Q2 is up yet. ** Nevermind, here is the Q2 report: https://assets.pershingsquareholdings.com/2019/08/15175158/PSH-2019-Interim-Financial-Statements.pdf Link to comment Share on other sites More sharing options...
Swedish_Compounder Posted August 16, 2019 Share Posted August 16, 2019 Interesting. Ackman keps it simple and values the company based on look through PE ratio. He considers the company to be undervalued with its low teen P-E and sees potential for mid teen EPS growth in the medium term. That must mean that he sees potential for 15 percent CAGR stock price for several years if the gap to intrinsic value closes. Link to comment Share on other sites More sharing options...
Nomad Posted August 16, 2019 Share Posted August 16, 2019 Not to be overly cynical, but how many of these HF moves are "I truly believe Berkshire is undervalued" vs. "I am completely out of ideas after a long bull market but I don't want cash drag to reflect in my returns"? WEB is the person best placed to understand the intrinsic value of BRK and while he has been buying back shares, he's not exactly backing up the truck either. Link to comment Share on other sites More sharing options...
thepupil Posted August 16, 2019 Share Posted August 16, 2019 I agree. Being long berkshire is kind of shorting the market, it’s the anti-valeant which was a glorious bull market vehicle. With respect to Ackman, the guys up 50% and in the process of rebuilding his reputation and track record. PSH trades for a 30% discount. In addition to genuinely thinking its undervalued, I imagine that buying Berkshire and simultaneously repurchasing PSH shares is a pretty sure fire way to crystallize and de risk gains and make money in the intermediate term. Buying Berkshire through PSH at a 30% discount is really attractive to me. He should go 100% BRK lol. Link to comment Share on other sites More sharing options...
DooDiligence Posted August 16, 2019 Share Posted August 16, 2019 Does anyone believe that WEB might be giving us every opportunity to buy for our own accounts before he goes on a tear? Link to comment Share on other sites More sharing options...
thepupil Posted August 16, 2019 Share Posted August 16, 2019 I agree. Being long berkshire is kind of shorting the market, it’s the anti-valeant which was a glorious bull market vehicle. With respect to Ackman, the guys up 50% and in the process of rebuilding his reputation and track record. PSH trades for a 30% discount. In addition to genuinely thinking its undervalued, I imagine that buying Berkshire and simultaneously repurchasing PSH shares is a pretty sure fire way to crystallize and de risk gains and make money in the intermediate term. Buying Berkshire through PSH at a 30% discount is really attractive to me. He should go 100% BRK lol. To be clear I actually think berkshire is very undervalued, just saying that berkshires relative outperformance probably increases in a downmarket so I think people piling in now is potentially a bit of market timing Link to comment Share on other sites More sharing options...
CorpRaider Posted August 16, 2019 Share Posted August 16, 2019 One advantage he didn't mention. WEB should compound in the teens and he doesn't charge 2 and 20....awwwwwkward. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted August 16, 2019 Share Posted August 16, 2019 Interesting times we live in. It was just two years ago that Buffett had the Hedge funds squirming with the embarrassing bet and now they are themselves piling in. What’s next? They go activist? Seek board seats? A la Icahn. Force buybacks? Break up the company? Link to comment Share on other sites More sharing options...
gfp Posted August 19, 2019 Share Posted August 19, 2019 Berkshire looks about to borrow in Japanese Yen - https://www.sec.gov/Archives/edgar/data/1067983/000119312519223905/d783972d424b5.htm https://www.nasdaq.com/article/berkshire-hathaway-hires-banks-for-secregistered-yen-bonds-20190819-00018 https://asia.nikkei.com/Business/Markets/Buffett-s-Berkshire-to-issue-first-ever-yen-bonds A team! Investment decisions and all other capital allocation decisions are made for us and our subsidiaries by our senior management team which is led by Warren E. Buffett, in consultation with Charles T. Munger. Mr. Buffett is Chairman and Mr. Munger is Vice Chairman of Berkshire’s Board of Directors. And a new "conflict of interest" disclosure: We own more than 10% of the outstanding common stock of Bank of America Corporation, the parent company of Merrill Lynch International. Accordingly, this offering is being made in compliance with the requirements of Rule 5121 of the Financial Industry Regulatory Authority. Because the notes to be offered will be rated investment grade, pursuant to Rule 5121, the appointment of a qualified independent underwriter is not necessary. Link to comment Share on other sites More sharing options...
DooDiligence Posted August 19, 2019 Share Posted August 19, 2019 Berkshire looks about to borrow in Japanese Yen - https://www.sec.gov/Archives/edgar/data/1067983/000119312519223905/d783972d424b5.htm https://www.nasdaq.com/article/berkshire-hathaway-hires-banks-for-secregistered-yen-bonds-20190819-00018 Fingers crossed that Omaha will receive interest payments for borrowing! That'd be a new twist on loan sharking. Next stop Europe? Link to comment Share on other sites More sharing options...
cubsfan Posted August 22, 2019 Share Posted August 22, 2019 Update by Tilson on his intrinsic value calculation for Berkshire: https://assets.empirefinancialresearch.com/uploads/2019/08/Berkshire-Hathaway-analysis-Whitney-Tilson-8-21-19.pdf Today IV = $261/B share 12 months out = $284/B share At least with Berkshire, Whitney is generally spot on with the IV trend line, if not a little early. Link to comment Share on other sites More sharing options...
Orchard Posted August 22, 2019 Share Posted August 22, 2019 "the Prophet" Link to comment Share on other sites More sharing options...
Guest Posted August 22, 2019 Share Posted August 22, 2019 "the Prophet" haha I also liked this part: "Each month in the Empire Investment Report, Whitney Tilson and his team share their top investment recommendations, ideas, predictions, and warnings – in short, everything you need to know to beat the markets in the coming years." He should have been reading this over the past 10 years so he, too, could have beaten the market. Link to comment Share on other sites More sharing options...
John Hjorth Posted August 22, 2019 Share Posted August 22, 2019 Perhaps a bit hard times for your posts, here, Mike, Thank you for sharing, and please let it go here. I always appreciate & enjoy reading your posts here on CoBF. Link to comment Share on other sites More sharing options...
cubsfan Posted August 22, 2019 Share Posted August 22, 2019 Perhaps a bit hard times for your posts, here, Mike, Thank you for sharing, and please let it go here. I always appreciate & enjoy reading your posts here on CoBF. Thanks much John - doesn't bother me in the least. Lots of Tilson haters out there - even though Whitney's been spot on with Berkshire over the years. His analysis on BRK has been very good in the past - so I could care less if investors want to ignore it or make fun of it. My money agrees with his current view. Link to comment Share on other sites More sharing options...
Guest longinvestor Posted August 22, 2019 Share Posted August 22, 2019 Perhaps a bit hard times for your posts, here, Mike, Thank you for sharing, and please let it go here. I always appreciate & enjoy reading your posts here on CoBF. Thanks much John - doesn't bother me in the least. Lots of Tilson haters out there - even though Whitney's been spot on with Berkshire over the years. His analysis on BRK has been very good in the past - so I could care less if investors want to ignore it or make fun of it. My money agrees with his current view. Mine too. If anything, his implied multiple of 12x is conservative and is based on the Berkshire of the 1990’s. The stellar earnings since 1999 deserves a higher multiple, more like Semper Augustus. Link to comment Share on other sites More sharing options...
Swedish_Compounder Posted August 23, 2019 Share Posted August 23, 2019 One should also keep in mind that the tax rate has changed. If the pre tax multiple was 12x with the 35 % tax rate it should be 14,5x now I suppose. Link to comment Share on other sites More sharing options...
Spekulatius Posted August 24, 2019 Share Posted August 24, 2019 The valuation is OK, but it doesn’t exactly take an advanced valuation method to determine that BRKB is undervalued. Even just looking at the chart gives you an idea. Traditionally, BRKB stock prices hasn’t always moved its the intrinsic value as ai see it, there wer periods, when the stock price stalled, while the IV increased. Typically, those periods lasted about 2 years. As I see it, they were from 2010-2012 ($70/share), 2014-2016 ($130) and 2018-???? ($200). simply put, since 2018 BRK has been building up “stored energy” in terms of earnings power, float, and cash (which will eventually be deployed) which at some point will lead to a rising stock price. On a side note, Wilson has a funny typo in his slide - “Fort Know” Link to comment Share on other sites More sharing options...
John Hjorth Posted August 24, 2019 Share Posted August 24, 2019 ... Simply put, since 2018 BRK has been building up “stored energy” in terms of earnings power, float, and cash (which will eventually be deployed) which at some point will lead to a rising stock price. ... Simply put, this line of thinking by Spekulatius, has some merit, to me. Link to comment Share on other sites More sharing options...
Viking Posted August 24, 2019 Share Posted August 24, 2019 ... Simply put, since 2018 BRK has been building up “stored energy” in terms of earnings power, float, and cash (which will eventually be deployed) which at some point will lead to a rising stock price. ... Simply put, this line of thinking by Spekulatius, has some merit, to me. Agreed. The Occidental preferred stock deal has just started to pay Berkshire $800 million per year. What i also like about Berkshire is it is likely that Buffett will be a buyer, and perhaps in volume, if shares fall much below $190. That should provide a nice floor for the stock price. I also like that they are not highly leveraged. They are the opposite, with $100 billion in cash which can be used should businesses go on sale in the next year or two. Brk, below $200, is my favourite stock pick given the current environment. Decent value. Some downside protection. $100 billion in cash. Link to comment Share on other sites More sharing options...
james22 Posted August 25, 2019 Share Posted August 25, 2019 Not only is Berkshire selling at a large discount to our estimate of its intrinsic value, but we expect it to grow this value 8% to 10% annually over the long term. In addition, if the current discount narrows (i.e., BRK trades up from 1.26x to 1.50x book value), shares could be worth about $360 in five years, equivalent to a compound annual return of 13%. https://www.checkcapital.com/Research_Reports/BRKB_Report_0819.pdf Hat tip to mdtif. https://boards.fool.com/another-brk-bull-34280630.aspx?sort=postdate Link to comment Share on other sites More sharing options...
alpha Posted August 27, 2019 Share Posted August 27, 2019 Some details about the hybrid electric locomotive BNSF is developing with Wabtec https://www.railwayage.com/mechanical/locomotives/bnsf-wabtec-advancing-the-future-of-motive-power/ Link to comment Share on other sites More sharing options...
gfp Posted August 30, 2019 Share Posted August 30, 2019 Happy 89th Birthday to Warren Link to comment Share on other sites More sharing options...
sleepydragon Posted August 30, 2019 Share Posted August 30, 2019 Happy 89th Birthday to Warren Cheer! Link to comment Share on other sites More sharing options...
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