BRK

[Viking]

BRK appears to be priced at an attractive level today to deliver reasonable returns going forward. I am trying to decifer if it is cheap or VERY cheap. I have ready the standard reports and also done a fair bit of searching on the internet to get as much input as possible. My thinking is (as Buffett said): better to purchase a great company at a reasonable price than a reasonably run company at a great price.

 

Peter Lynch has a great line about how doctors love to invest in commodity plays and those working in the commodity sector love to invest in health care. I have a small position in BRK (5%). I am trying to decide if I should move this to 7.5% or perhaps even 10%. Given that this is a BRK website, I was wondering if others have an opinion regarding the investment merits of BRK. Or has anyone come across an analysis or web site that they can link me to? Thanks.

[treasurehunt]

Here are some sites where you can find information on Berkshire and interesting analysis.

 

John Kish's Berkshire intrinisivaluator: http://www.creativeacademics.com/finance/IV.html

 

Ravi Nagarajan's site: http://www.rationalwalk.com/

 

The Motley Fool Berkshire board: http://boards.fool.com/Messages.asp?bid=101158

 

 

[omagh]

Viking,

 

http://www.rationalwalk.com/?p=281

http://www.loschmanagement.com/Berkshire%20Hathaway/Financial%20Tables/8.%20Two%20Column%20Valuation/2008%20valuation%202%20column.pdf

 

This is probably the model that you'll want to look at -- the 2-column model which Buffett has suggested as an approach in his annual reports.  This model will show that there is a modest undervaluation in the range of about 20-30% depending on assumptions.  You'll also want to consider the range of values that Buffett was willing to use in the BNSF purchase where stock was a component of the deal.  He put a collar on the upper and lower ranges (I just don't have it at my fingertips, but I did see it in the last few days) which give an indicator of intrinsic valuation.  At 100K for an A share, I recall that it was about dead centre in the collar ranges.  Hope that helps...

 

EDIT:

http://www.bnsf.com/investors/berkshire-hathaway/pdf/berkshirehathaways4a_20091223.pdf

      If the merger is completed, each of your shares of BNSF common stock will be converted into the right to receive, at your election (subject to the proration and reallocation procedures described in this proxy statement/prospectus), either (i) $100.00 in cash, without interest, or (ii) a portion of a share of Berkshire Class A common stock equal to the exchange ratio, which is calculated by dividing $100.00 by the average of the daily volume−weighted average trading prices per share of Berkshire Class A common stock over the ten trading day period ending on the second full trading day prior to completion of the merger (the “Class A average trading value”); provided, however, that if the Class A average trading value is above $124,652.09 or below $79,777.34, then the exchange ratio will be fixed at 0.000802233 or 0.001253489, as the case may be. Fractional shares of Berkshire Class A common stock will not be issued in the merger. Instead, shares of Berkshire Class B common stock will be issued in lieu of any fractional shares of Berkshire Class A common stock and cash will be paid in lieu of any fractional shares of Berkshire Class B common stock. To facilitate the merger and related transactions, Berkshire is seeking stockholder approval to effect a 50−for−1 stock split with respect to its Class B common stock. Shares of Berkshire Class A and Class B common stock are listed on the New York Stock Exchange under the stock symbols “BRK.A” and “BRK.B,” respectively.

 

 

-O

 

BRK appears to be priced at an attractive level today to deliver reasonable returns going forward. I am trying to decifer if it is cheap or VERY cheap. I have ready the standard reports and also done a fair bit of searching on the internet to get as much input as possible. My thinking is (as Buffett said): better to purchase a great company at a reasonable price than a reasonably run company at a great price.

 

Peter Lynch has a great line about how doctors love to invest in commodity plays and those working in the commodity sector love to invest in health care. I have a small position in BRK (5%). I am trying to decide if I should move this to 7.5% or perhaps even 10%. Given that this is a BRK website, I was wondering if others have an opinion regarding the investment merits of BRK. Or has anyone come across an analysis or web site that they can link me to? Thanks.