Jump to content

BRK Q1, 2012 BV


twacowfca
 Share

Recommended Posts

Quite sure he added the noncontr interests too. Without BV per A share is something of $106,650. Could be $107,000 now which makes buybacks possible from +- $118,000 and lower!

 

I've seen a post about being 50 and even 90% in cash. Guess it's a preference but I'd at least put a part of it in BRK at current prices. 90% cash rarely makes sense and even when it does your timing could be of a couple of years in the worst case. With BRK you get the upside to IV if we don't get a crash and in the worst case you sell at a 20-30% loss only to pick up lesser quality that will multiple your money over time!

Link to comment
Share on other sites

I've got it at 109k per A share and 72.69 per B share.  1.1x values are 199,900 and 79.95 respectively.

 

Did you add in the noncontrolling interests?  Or just the NAV per BRK shareholders?

 

I may have messed it up, I did it really fast at the time.  I think I included noncontrolling interests.

Link to comment
Share on other sites

Quite sure he added the noncontr interests too. Without BV per A share is something of $106,650. Could be $107,000 now which makes buybacks possible from +- $118,000 and lower!

 

I've seen a post about being 50 and even 90% in cash. Guess it's a preference but I'd at least put a part of it in BRK at current prices. 90% cash rarely makes sense and even when it does your timing could be of a couple of years in the worst case. With BRK you get the upside to IV if we don't get a crash and in the worst case you sell at a 20-30% loss only to pick up lesser quality that will multiple your money over time!

 

I think that's right.  BRK closed about 3% above the threshold for "aggressive" buybacks.  That's not a guaranteed floor, but close.  If the market got ugly, it might take a little while to get back to 110% of BV, but probably not too long. 

 

BRK's future downside volatility at this price is likely about as low as any stock could be.  Why wouldn't any fund manager with or without a value bent want to own as much of BRK as possible?

Link to comment
Share on other sites

If buying under 1.1 times book is important to you, sell the Dec12 $80 puts at $4.30 (Friday's close) and either have BRKB put to you at a cost of $76.64 or earn 9.6% annualized on the money you tie up until December. 

 

Not a bad result either way.  Of course if BRKB is substantially below $76.64 or substantially above $85.24 you will not be a happy camper.  Crystal ball anyone?

 

Link to comment
Share on other sites

  • 2 weeks later...

Seems to be trading very close or may be below 1.1x book value.

 

BRK.a buyback at around 117,260 with price at 119,750  (~2% above buyback)

I've got the BRK.b buyback price at around $78.17, so it's a little bit above that right now at $79.25 (~1.4% above buyback).

 

Q1 BRK shareholder equity = 175,997

A equivalent shares = 1.651

BV/A share = $106,600

BV/B share = $71.07

 

BV/A * 1.1 = $117,260

BV/B * 1.1 = $78.17

 

While I don't think the estimated buyback price is a real floor (Buffett isn't obligated to buy), I don't really see it getting significantly below that level.  I agree that the potential downside is somewhat limited at this point.  A market meltdown and/or significant economic downturn would shrink BV, so it's not really a one-way ticket to the upside.  But, I'd expect BRK to fare better than most in that kind of scenario.

 

I added a small amount to BRK this morning.

Link to comment
Share on other sites

Quite sure he added the noncontr interests too. Without BV per A share is something of $106,650. Could be $107,000 now which makes buybacks possible from +- $118,000 and lower!

 

I've seen a post about being 50 and even 90% in cash. Guess it's a preference but I'd at least put a part of it in BRK at current prices. 90% cash rarely makes sense and even when it does your timing could be of a couple of years in the worst case. With BRK you get the upside to IV if we don't get a crash and in the worst case you sell at a 20-30% loss only to pick up lesser quality that will multiple your money over time!

 

Does the 1.1x cutoff include the noncontrolling interests or no? I would think not, but I'm no expert.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...