Berkshire closed down to near book value

[John Hjorth]

Also amazing is that Apple is at 1.663T market cap and Berkshire at 443.17B market cap.

 

There could be a share price run up pretty soon, because of the acquisition, buyback activity, Witmer insider purchases, good earnings (the mayor investments should be earning good money) and 5% of Apple. I bought more on Friday after I read about the buyback activity. ...

 

About  4 - 5 weeks from now, we'll see the next Berkshire 10-Q. It for sure will be an interesting read. Time will tell how Berkshire has fared through this storm,  discussed recently in several separate topics within the last couple of months or so, with different focus [focus on the insurance part of Berkshire, the energy part of Berkshire, etc.]

[Charlie]

Buffett mentioned that the reinsurance business, the railroad business, the energy business and the Apple position are the four

biggest businesses and I think all are earning pretty good money.  :)

[John Hjorth]

I hope you're right, Charlie [ : - ) ],

 

Then there is the retail part of the "Insurance and other" part of the whole "Berkshire circus", and how the construction related companies within the Berkshire sphere have fared? -Time will tell.

 

[Disclosure : I may suffer from a great deal of home bias related to latter part ... - Here in Denmark, the real estate sector has continued to be glowing hot during the pandemic - I'm not in any way sure about how to interpret that.]

[Viking]

I hope you're right, Charlie [ : - ) ],

 

Then there is the retail part of the "Insurance and other" part of the whole "Berkshire circus", and how the construction related companies within the Berkshire sphere have fared? -Time will tell.

 

[Disclosure : I may suffer from a great deal of home bias related to latter part ... - Here in Denmark, the real estate sector has continued to be glowing hot during the pandemic - I'm not in any way sure about how to interpret that.]

 

Lots of people want to own a single family home (at least where i live). They want out of high density no space type places. Especially if they have young kids. Covid is really hitting young families hard.

 

Demand for single family homes is solid. Supply is limited - who wants to sell right now?

[Guest longinvestor]

Also amazing is that Apple is at 1.663T market cap and Berkshire at 443.17B market cap.

 

There could be a share price run up pretty soon, because of the acquisition, buyback activity, Witmer insider purchases, good earnings (the mayor investments should be earning good money) and 5% of Apple. I bought more on Friday after I read about the buyback activity.

 

Cheers!

 

While we’re at it, AMZN is pushing 2 Trillion and TSLA should be passing Berkshire in a short while Growth versus value at its finest. Growth in everything but earnings

[changegonnacome]

Buffett mentioned that the reinsurance business, the railroad business, the energy business and the Apple position are the four

biggest businesses and I think all are earning pretty good money.  :)

 

I’m interested to see how Apple fares....for the rest of 2020......think their Mac laptop business will do well....the Q is if the phone upgrade cycle behaves like in previous years....pre-pandemic I’m sure they were hoping that this would be a super cycle with all new form factor + 5G driving iPhone upgrades. Economic uncertainty may lead to a lot of deferred purchases of $1,000+ phones.

 

The great irony in that scenario where surely Apples SP falls is that Berkshire stock might haven’t gotten no credit as apple rallied but gets punished as it falls......which I’d be very happy to take advantage of

[Xerxes]

My math for July 7th implied share count is the same as your math a few posts above.  If 248,740.792 is 15.54% economic interest, then 100% of economic interest is going to be 1,600,648.597 A-share equivalents.  I think you had the July share count correct a few posts ago.  Not sure what changed your mind.

 

 

GPS,

approx. what percentage of the float do you have in mind in terms of buyback in Q2.

Something a like 3-4% ? or far less.

[Xerxes]

Answering my own question.

 

Reuter’s reports 1.2% of the float.

Which I think was about the same last year. 

 

https://financialpost.com/investing/buffetts-berkshire-hathaway-reduces-share-count-suggesting-possible-buybacks/wcm/5ead4a26-b7e0-46e8-a107-8cacf4114584/

 

 

[gfp]

Sorry didn't see your question.  Yes, it is basically 19,374 divided by 1,620,023.  So approximately 1.2% if we have it right.  I am assuming by float you mean all the shares outstanding and not the free float that trades.

[Palantir]

While I understand that WEB is focused on getting through this crisis instead of repurchasing shares, if they are unwilling to support the prices at these levels through a repurchase, doesn't that also imply that the premium to book value isn't that big? Either that or if he wants to hold additional liquidity, maybe book value may actually come down?

[Ballinvarosig Investors]

While I understand that WEB is focused on getting through this crisis instead of repurchasing shares, if they are unwilling to support the prices at these levels through a repurchase, doesn't that also imply that the premium to book value isn't that big? Either that or if he wants to hold additional liquidity, maybe book value may actually come down?

Not sure what you mean by this. As per the above post, it looks like he's bought back 1.2% of stock in Q2. This is pretty meaningful activity if you ask me.

[scorpioncapital]

If he buys 1.2% per quarter or 4.8% a year, then Berkshire will be entirely bought and private in just 20 years although I suspect the batch of 5% in year 19 is going to be a lot higher than today's 180 a share )

 

[AzCactus]

If he buys 1.2% per quarter or 4.8% a year, then Berkshire will be entirely bought and private in just 20 years although I suspect the batch of 5% in year 19 is going to be a lot higher than today's 180 a share )

 

I imagine you are kinda joking---but while the math is right this is a really poor way to look at things.  Obviously Berkshire won't buy the same amount every quarter and as a shareholder I don't really want them to.  I would rather they buyback shares when they are a bargain.  Had Berkshire bought back 5% of shares at sub 180 level that would have been awesome.  If today shares were at 220, I would imagine/hope he would be more prudent. 

[Guest longinvestor]

For the entire duration since the intention of buying back was announced, the market had denied the opportunity to buyback by pricing the stock just about the threshold. That changed in 2018 and now the market is watching what Omaha does during the most recent 30-45 days. It is plausible that it would take another $5 B buyback quarter or two for the market pricing mechanism to gel. It makes a lot of sense to leave the market guessing by not showing clear or predictable intention. Buffett and his junior can always say that they were looking at an elephant when stepping off the gas. They need to buy for 10-20 years. It’s a high class problem and not any calamity at all. Few others have this problem.

[Palantir]

For the entire duration since the intention of buying back was announced, the market had denied the opportunity to buyback by pricing the stock just about the threshold. That changed in 2018 and now the market is watching what Omaha does during the most recent 30-45 days. It is plausible that it would take another $5 B buyback quarter or two for the market pricing mechanism to gel. It makes a lot of sense to leave the market guessing by not showing clear or predictable intention. Buffett and his junior can always say that they were looking at an elephant when stepping off the gas. They need to buy for 10-20 years. It’s a high class problem and not any calamity at all. Few others have this problem.

 

But why play all these mindgames with the market when instead they can just simply announce and execute a massive buyback?

[John Hjorth]

But why play all these mindgames with the market when instead they can just simply announce and execute a massive buyback?

 

Because there are literally billions of dollars at stake for the continuing, long term shareholders of Berkshire, to get this right - long term, ref. also longinvestors post.

[sleepydragon]

For the entire duration since the intention of buying back was announced, the market had denied the opportunity to buyback by pricing the stock just about the threshold. That changed in 2018 and now the market is watching what Omaha does during the most recent 30-45 days. It is plausible that it would take another $5 B buyback quarter or two for the market pricing mechanism to gel. It makes a lot of sense to leave the market guessing by not showing clear or predictable intention. Buffett and his junior can always say that they were looking at an elephant when stepping off the gas. They need to buy for 10-20 years. It’s a high class problem and not any calamity at all. Few others have this problem.

 

But why play all these mindgames with the market when instead they can just simply announce and execute a massive buyback?

 

At other companies, the purpose of buybacks is to benefit selling shareholders.

At Berkshire, the purpose of the buyback is to benefit remaining shareholders.

 

[Guest longinvestor]

For the entire duration since the intention of buying back was announced, the market had denied the opportunity to buyback by pricing the stock just about the threshold. That changed in 2018 and now the market is watching what Omaha does during the most recent 30-45 days. It is plausible that it would take another $5 B buyback quarter or two for the market pricing mechanism to gel. It makes a lot of sense to leave the market guessing by not showing clear or predictable intention. Buffett and his junior can always say that they were looking at an elephant when stepping off the gas. They need to buy for 10-20 years. It’s a high class problem and not any calamity at all. Few others have this problem.

 

But why play all these mindgames with the market when instead they can just simply announce and execute a massive buyback?

 

At other companies, the purpose of buybacks is to benefit selling shareholders.

At Berkshire, the purpose of the buyback is to benefit remaining shareholders.

Well said, I’ll use this. Thanks

 

The awkwardness of being rich and cash pouring in has a second order problem. Especially for the next guy. Buffett cares deeply about the attitude of shareholders towards that guy. It’s a tough job and Buffett would much rather take the brickbats now so that the next guy can be placed in a likable situation. For that to happen, the price has to stay below IV for a long enough time. Buffett is unlikely to do or say anything to not allow low prices. The shareholder friendly culture depends quite on a lot on the buyback runway to be long. Buffett is choosing his very conservative posture on the buyback threshold, Munger actually let it slip that they’re likely to be more liberal in the future. All meant to let the new guy to ease into the job for a while. Practicing mistake avoidance.

 

Not to get too melancholic here, Buffett could motor on to 100 and bag a couple of elephants.

 

[StubbleJumper]

For the entire duration since the intention of buying back was announced, the market had denied the opportunity to buyback by pricing the stock just about the threshold. That changed in 2018 and now the market is watching what Omaha does during the most recent 30-45 days. It is plausible that it would take another $5 B buyback quarter or two for the market pricing mechanism to gel. It makes a lot of sense to leave the market guessing by not showing clear or predictable intention. Buffett and his junior can always say that they were looking at an elephant when stepping off the gas. They need to buy for 10-20 years. It’s a high class problem and not any calamity at all. Few others have this problem.

 

But why play all these mindgames with the market when instead they can just simply announce and execute a massive buyback?

 

At other companies, the purpose of buybacks is to benefit selling shareholders management who gave themselves an obscene stock option allotment.

At Berkshire, the purpose of the buyback is to benefit remaining shareholders.

 

 

There, I fixed it for you.

 

 

SJ

[Palantir]

 

The awkwardness of being rich and cash pouring in has a second order problem. Especially for the next guy. Buffett cares deeply about the attitude of shareholders towards that guy. It’s a tough job and Buffett would much rather take the brickbats now so that the next guy can be placed in a likable situation. For that to happen, the price has to stay below IV for a long enough time. Buffett is unlikely to do or say anything to not allow low prices. The shareholder friendly culture depends quite on a lot on the buyback runway to be long.

 

But why? If they wanted the gap between intrinsic value and prove to be realized, which they should, why would they want a long runway? They should close it as soon as possible.