Buffett/Berkshire - general news

[gfp]

5 minutes ago, TB said:

Indian billionaire Raamdeo Agrawal on Berkshire one trillion and Buffett birthday

 

https://www.youtube.com/watch?v=ivWIXnYkGfk

 

I like the part where he explains how Berkshire will double every 5 years so we are only 5 years from $2 Trillion and 10 years from $4 Trillion.  Easy peasy! 

[Hektor]

2 hours ago, gfp said:

no, not likely

 

1 hour ago, John Hjorth said:

I would personally be shocked to see a Berkshire insurance subsidiary go bankrupt, by Berkshire leaving its own subsidiary on its own, to swim in its own pond with whatever problems it may have.

Thanks @gfp @John Hjorth

[Munger_Disciple]

23 minutes ago, gfp said:

 

I like the part where he explains how Berkshire will double every 5 years so we are only 5 years from $2 Trillion and 10 years from $4 Trillion.  Easy peasy! 

 

[boilermaker75]

2 hours ago, gfp said:

 

 

The simple truth is that insurance companies are breaking out to new highs and Berkshire shareholders do not sell much stock.  In fact, because Berkshire shareholders by and large do not want to realize capital gains but sometimes sell covered calls you get an effective synthetic short squeeze in the stock around these options expirations (Friday was one).  Berkshire has traded like this for a long time.  Sideways for a while and then an abrupt adjustment that violates a bunch of sold call option strike prices.  Then sideways for a year or two.

 

Buffett is not repurchasing stock at these levels.  You can see him trail off on repurchases as the price rose last quarter.  I would bet the only stock he repurchased last quarter was incoming calls offering A-shares.  He repurchased nothing at all in June.

 

The Gates foundation is still receiving annual grants of Berkshire shares and is still selling in the same manner as they have been (basically every day).  Warren is still alive.  Even if Warren dies tomorrow they still have a lot of Berkshire shares to sell each day.

 

 

 

I have one account where I have 500 shares of BRKB with about 80% capital gains. I got cute and wrote some 420-strike calls. I have bought them back and resold at 430, then 435, and a week ago at 440. Each time I sell for a little more than the cost of buying them back and raise the strike price. If BRK does move sideways for two years I'll be able to do this till I have calls I can let expire, LOL! I am always worried someone is going to call me before expiration. (Edit: so I usually do this about a week before expiration.)

Edited August 31 by boilermaker75

[sleepydragon]

2 hours ago, gfp said:

 

I like the part where he explains how Berkshire will double every 5 years so we are only 5 years from $2 Trillion and 10 years from $4 Trillion.  Easy peasy! 

not impossible if Brk buy back 10% shares each year

[gfp]

4 minutes ago, sleepydragon said:

not impossible if Brk buy back 10% shares each year

 

Well buying back shares works against the market cap growing to $2 trillion and $4 trillion but I guess you have switched the metric to per share returns.

[sleepydragon]

1 minute ago, gfp said:

 

Well buying back shares works against the market cap growing to $2 trillion and $4 trillion but I guess you have switched the metric to per share returns.

Yeah, that’s what I mean (I didn’t read the article).  

[Charlie]

12 hours ago, gfp said:

The simple truth is that insurance companies are breaking out to new highs and Berkshire shareholders do not sell much stock.  In fact, because Berkshire shareholders by and large do not want to realize capital gains but sometimes sell covered calls you get an effective synthetic short squeeze in the stock around these options expirations (Friday was one).  Berkshire has traded like this for a long time.  Sideways for a while and then an abrupt adjustment that violates a bunch of sold call option strike prices.  Then sideways for a year or two.

 

Buffett is not repurchasing stock at these levels.  You can see him trail off on repurchases as the price rose last quarter.  I would bet the only stock he repurchased last quarter was incoming calls offering A-shares.  He repurchased nothing at all in June.

 

The Gates foundation is still receiving annual grants of Berkshire shares and is still selling in the same manner as they have been (basically every day).  Warren is still alive.  Even if Warren dies tomorrow they still have a lot of Berkshire shares to sell each day.

 

This is probably true. 

[Munger_Disciple]

1 hour ago, boilermaker75 said:

 

I have one account where I have 500 shares of BRKB with about 80% capital gains. I got cute and wrote some 420-strike calls. I have bought them back and resold at 430, then 435, and a week ago at 440. Each time I sell for a little more than the cost of buying them back and raise the strike price. If BRK does move sideways for two years I'll be able to do this till I have calls I can let expire, LOL! I am always worried someone is going to call me before expiration. (Edit: so I usually do this about a week before expiration.)

 

Seems like a lot of agony for little upside. If you think BRK is trading somewhat above its intrinsic value, why not just lighten up a bit instead of all these mental gymnastics?

Edited August 31 by Munger_Disciple

[Munger_Disciple]

4 hours ago, gfp said:

 

 

The simple truth is that insurance companies are breaking out to new highs and Berkshire shareholders do not sell much stock.  In fact, because Berkshire shareholders by and large do not want to realize capital gains but sometimes sell covered calls you get an effective synthetic short squeeze in the stock around these options expirations (Friday was one).  Berkshire has traded like this for a long time.  Sideways for a while and then an abrupt adjustment that violates a bunch of sold call option strike prices.  Then sideways for a year or two.

 

Buffett is not repurchasing stock at these levels.  You can see him trail off on repurchases as the price rose last quarter.  I would bet the only stock he repurchased last quarter was incoming calls offering A-shares.  He repurchased nothing at all in June.

 

The Gates foundation is still receiving annual grants of Berkshire shares and is still selling in the same manner as they have been (basically every day).  Warren is still alive.  Even if Warren dies tomorrow they still have a lot of Berkshire shares to sell each day.

 

 

 

 

The Berkshire shareholders who are selling covered calls against stock really want to have their cake and eat it too. IMO it doesn't make much sense. They should simply sell a tiny bit of their holding if they need the cash or want to reallocate it elsewhere. 

[73 Reds]

6 minutes ago, Munger_Disciple said:

 

 

The Berkshire shareholders who are selling covered calls against stock really want to have their cake and eat it too. IMO it doesn't make much sense. They should simply sell a tiny bit of their holding if they need the cash or want to reallocate it elsewhere. 

You can squeeze out a couple/few extra points each year in tax-deferred accounts without too much trouble.  In taxable accounts you've got to be constantly attuned to the share price and roll the calls forward if you don't want to lose the shares when the price rises like Berkshire recently has.  OTOH, there are funds that trade covered calls as an investment strategy and I've not heard of any that do particularly well over time.  Short puts - admittedly a different strategy altogether -  seems like a much easier strategy for tax deferred and taxable accounts when you want to own the stock at a particular price regardless of how shares trade in the interim. 

[sleepydragon]

Brk has unique shareholders basis— mostly retail investors. A big percentage of Brk shares are held by retail investors who has cost basis 50% below current prices. These guys will never sell. Yet, Brk is now one of the mega 8 in the index and shares need to be bought whenever someone invest in America (foreign money), but Brk is unlike the other 7 in that its average daily liquidity is much lower. Then there are quants/hedgers and call writers, who have to reduce their positions as the shares surge higher by buying the stock. 

[73 Reds]

2 minutes ago, sleepydragon said:

Brk has unique shareholders basis— mostly retail investors. A big percentage of Brk shares are held by retail investors who has cost basis 50% below current prices. These guys will never sell. Yet, Brk is now one of the mega 8 in the index and shares need to be bought whenever someone invest in America (foreign money), but Brk is unlike the other 7 in that its average daily liquidity is much lower. Then there are quants/hedgers and call writers, who have to reduce their positions as the shares surge higher by buying the stock. 

Yeah, but there are also those who own shares in taxable accounts and "traders" in tax-deferred accounts (long ago I used to be one).

[gfp]

As a fella on a different forum pointed out.  BRK looks an awful lot like the KIE insurance ETF if you squint

 

[sleepydragon]

4 minutes ago, gfp said:

As a fella on a different forum pointed out.  BRK looks an awful lot like the KIE insurance ETF if you squint

 

But Brk is not even in the top 15 holdings of this etf. I think it’s not probably not in this etf at all.

But Brk is in XLF , which is indeed surging too

[gfp]

I'm not claiming Berkshire is trading off of KIE fund flows - those are probably small.  I'm saying Berkshire is just trading like the rest of the insurance companies.

[aws]

2 hours ago, boilermaker75 said:

 

I have one account where I have 500 shares of BRKB with about 80% capital gains. I got cute and wrote some 420-strike calls. I have bought them back and resold at 430, then 435, and a week ago at 440. Each time I sell for a little more than the cost of buying them back and raise the strike price. If BRK does move sideways for two years I'll be able to do this till I have calls I can let expire, LOL! I am always worried someone is going to call me before expiration. (Edit: so I usually do this about a week before expiration.)

 

If you use IBKR, they allow you to buy new shares to deliver against any assigned calls so you never face the tax hit from getting low basis shares called away. I'm not sure if other brokers offer similar but it's something you might want to look into.

[Munger_Disciple]

2 hours ago, 73 Reds said:

You can squeeze out a couple/few extra points each year in tax-deferred accounts without too much trouble.  In taxable accounts you've got to be constantly attuned to the share price and roll the calls forward if you don't want to lose the shares when the price rises like Berkshire recently has.  OTOH, there are funds that trade covered calls as an investment strategy and I've not heard of any that do particularly well over time.  Short puts - admittedly a different strategy altogether -  seems like a much easier strategy for tax deferred and taxable accounts when you want to own the stock at a particular price regardless of how shares trade in the interim. 

 

I agree that writing covered calls makes more sense in a tax deferred account. In a taxable account, it's better not to be too cute. Just a simple buy and hold coupled with small sales to satisfy cash needs is the better approach. 

[Munger_Disciple]

1 hour ago, aws said:

 

If you use IBKR, they allow you to buy new shares to deliver against any assigned calls so you never face the tax hit from getting low basis shares called away. I'm not sure if other brokers offer similar but it's something you might want to look into.

 

That's interesting. At least avoids capital gains taxes. 

[LC]

1 hour ago, aws said:

 

If you use IBKR, they allow you to buy new shares to deliver against any assigned calls so you never face the tax hit from getting low basis shares called away. I'm not sure if other brokers offer similar but it's something you might want to look into.

 

That's good to know! Do you know how to enable this? Is it something you select when you initiate a short call position?

[nwoodman]

Interested to learn what other members think is the forward return on Berkshire (share price) at these levels?  My expectations are in the 6-9% range, the upper end depends on favourable investment opportunities.  Relative to the overall market, I expect that they will outperform by a significant margin.  This is more a reflection of the major north american indices being fully valued or perhaps even overvalued. Perhaps someone who knows what they are doing could set up a poll 

[Munger_Disciple]

2 hours ago, nwoodman said:

Interested to learn what other members think is the forward return on Berkshire (share price) at these levels?  My expectations are in the 6-9% range, the upper end depends on favourable investment opportunities.  Relative to the overall market, I expect that they will outperform by a significant margin.  This is more a reflection of the major north american indices being fully valued or perhaps even overvalued. Perhaps someone who knows what they are doing could set up a poll 

 

My guess is 5-7% range (and may beat the market). Intrinsic value may grow at 10% on the high side, and P/B (even though it is less relevant now, but it's a quick & dirty valuation tool, and not a bad one) let's say shrinks from 1.75 to 1.5 over the next 5 years, so that shaves away 3% per annum from returns, so you will get 7%. If IV only grows at 9%, then you will get a lower 6% annual return. All these numbers are over the next 5 years. 

Charlie (Munger) said secret to happiness in life is having low expectations; so it is better to lower our expectations after the tremendous run-up in 2024. 

I think a lot would depend on the interest rate environment in the next 5-10 years and sadly that's almost impossible to predict. 

Edited September 1 by Munger_Disciple

[UK]

[UK]

7 hours ago, nwoodman said:

Interested to learn what other members think is the forward return on Berkshire (share price) at these levels?  My expectations are in the 6-9% range, the upper end depends on favourable investment opportunities.  Relative to the overall market, I expect that they will outperform by a significant margin.  This is more a reflection of the major north american indices being fully valued or perhaps even overvalued. Perhaps someone who knows what they are doing could set up a poll 

 

Nothing to add:)

[John Hjorth]

Based on the interesting discussion above about what's been going on in the market with regard Berkshire B shares and A shares I did a lookup today on the NYSE website to get an overall perception of daily trading volumes within the last few months.

 

For the A shares, there appear to be an abrupt change in trading volumes between June 6^th and June 7^th - trading volumes appear reduced - give or take - on June 7^th with about five sixth or so - in one huge one-time drop [<-!, ?].

 

Please see NYSE website, page for BRK.A, volume column - scroll down to June 2024 data rows .

 

Does anybody here on CoBF have any idea, guess or personal speculation about what this may be about?