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which is cheaper - brk, msft, frfhf or luk?


shalab
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A studied board member made a comment sometime back that if one bought brk, frfhf or luk when they were underpriced in the last decade, that is all it took to do well. Lowest risk with extremely able capital allocators at the helm.

 

I think the time is right to do the analysis now to see which is better now from a price stand point.

 

brk-b continues to do  well as the economy is coming out of recession and is well placed with a huge war chest of cash in case the double dip happens. Already people are calling BNI buy as a steal as several other companies achieved the stock price without the buyout premium. It is the greatest compounding machine humanity has ever seen and continues to do well although not at the same rate as before. It is the cheapest of the lot as book value is expected to hit $75 in two years.

 

frfhf not cheap but not expensive either. Expect the insurance sector to do better after a harder market. From last decades growth, it seems brk-b is a better bet than msft at the moment. However, msft does have a payout in dividends which should interest some people.

 

luk is the most expensive of the lot at the moment and is also tied to commodities to a certain degree.

 

msft cheap with growing earnings and monopoly businesses. catalyst is needed to move the price up.

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My thinking is that given all the variables to consider, LUK is the cheapest of the group. I don't see $200 billion market cap companies outperforming $10 billion market cap companies so MSFT and BRK are out. As for Fairfax you have an average insurance operation with large amounts of fixed financial assets on the books selling for twice book in an inflationary future, not a dealmaker, not having much in the way of industrial operating businesses. Given all these variables LUK is the cheapest and most likely to outperform, just my opinion of course!

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I don't know LUK, so I don't have an opinion about that one.  As for the others . . .

 

I have the most certainty about BRK being undervalued.  I think Tilson's approach is reasonable enough, not super-conservative, but not wildly optimistic either.  But, BRK is cheap even relative to more conservative estimates.

 

The range of potential values for MSFT is wider, and although it is cheap (I added to my position this week) there are more serious potential threats to MSFT, but also more potential upside. 

 

I think FFH is reasonably priced, but it is smaller and has much more room to run than the two mega-caps.

 

I own all three, and like my chances for future compounding.

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I think BRK and MSFT probably give the most downside protection at the current prices, but the size of them makes compounding returns more and more difficult each year.

 

And I don't think BRK is really that cheap yet.

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I think BRK and MSFT probably give the most downside protection at the current prices, but the size of them makes compounding returns more and more difficult each year.

 

And I don't think BRK is really that cheap yet.

 

1. How do you figure MSFT has the same downside protection BRK gives? What period are we talking of? I would agree with a 1-2 year frame, but anything beyond that I believe BRK has a serious edge against almost any company.

 

2. How do you calculate IV for BRK? How do you define "that" cheap?

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  • 3 months later...

Microsoft seems to be slowing the rate of buybacks...

 

http://ycharts.com/companies/MSFT/shares_outstanding#zoom=10

 

Can ANYONE explain why MSFT won't use the cover of a bear market (S&P 500) to announce a MASSIVE buyback?

 

They could borrow $50 BILLION @ 2-3% and retire ~ 1/3 of public shares. (yeah, I know...I got that from Tilson)

 

But is their anything they would do that would be better for shareholders because they have a tragic history of overpaying for acquisitions.

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own LUK, BRK/B,FFH

 

have been adding BRK/B and LUK over last several weeks

 

which is cheaper now - brk, msft, frfhf or luk? considering the market decrease since Aug

 

Shalab, I like the idea you mentioned:  if one bought brk, frfhf or luk when they were underpriced in the last decade, that is all it took to do well. Lowest risk with extremely able capital allocators at the helm.

 

Also own ALS.TO, smaller amount of FUR.

 

I know FTP liked by board members as well.

 

Any other owner managers one would buy now.

 

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Microsoft seems to be slowing the rate of buybacks...

 

http://ycharts.com/companies/MSFT/shares_outstanding#zoom=10

 

Can ANYONE explain why MSFT won't use the cover of a bear market (S&P 500) to announce a MASSIVE buyback?

 

They could borrow $50 BILLION @ 2-3% and retire ~ 1/3 of public shares. (yeah, I know...I got that from Tilson)

 

But is their anything they would do that would be better for shareholders because they have a tragic history of overpaying for acquisitions.

 

bill gates does not believe in leverage. most of their cash is overseas and can't be used to fund the buyback. they just spent $8b on skype. they aren't price sensitive buyers. they calculate the IV of the company and as long as it's below they buy. one good thing about people losing faith in them is that they can buy at low IV.

 

Who is the ultimate decision-maker Gates or Ballmer?

 

They produce floods of cash but allocate it in less than supreme ways.

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