What are you buying today?

[sarganaga]

Gazprom (OGZPY)

I think political and associated "klepto" risks are  more than reflected in the very cheap price. While this could have some really nasty surprises, it also has multibagger potential. The ~6% dividend shows at least some shareholder consideration.  About a 2.5% position.

[SafetyinNumbers]

Bought a little more ELF.TO.

 

 

[John Hjorth]

Gazprom (OGZPY)

I think political and associated "klepto" risks are  more than reflected in the very cheap price. While this could have some really nasty surprises, it also has multibagger potential. The ~6% dividend shows at least some shareholder consideration.  About a 2.5% position.

 

I've been sitting on this damn thing for more than five years now. [very small position]. I suppose TwoCitiesCapital does, too. Waiting for the gas to flow into China in 2018. We should discuss it more in depth in its separate topic in the Investment Ideas forum.

[sarganaga]

Gazprom (OGZPY)

I think political and associated "klepto" risks are  more than reflected in the very cheap price. While this could have some really nasty surprises, it also has multibagger potential. The ~6% dividend shows at least some shareholder consideration.  About a 2.5% position.

 

I've been sitting on this damn thing for more than five years now. [very small position]. I suppose TwoCitiesCapital does, too. Waiting for the gas to flow into China in 2018. We should discuss it more in depth in its separate topic in the Investment Ideas forum.

 

Great idea

[EricSchleien]

Increased position in Liberty Braves & Liberty SiriusXM today

[DooDiligence]

BRK.B

 

I've actually paid a little bit more every month for the past 4 months now.

 

Anyone else who's dollar cost averaging into Berkshire should do it on the 15th of every month as it seems to always go down in the subsequent weeks after I add & then it rises to new highs again as we approach the 1st of the next month ;)

 

(Disclaimer: Whoever doesn't know to ignore my advice is in pretty sad shape.)

[Guest longinvestor]

BRK.B

 

I've actually paid a little bit more every month for the past 4 months now.

 

Anyone else who's dollar cost averaging into Berkshire should do it on the 15th of every month as it seems to always go down in the subsequent weeks after I add & then it rises to new highs again as we approach the 1st of the next month ;)

 

(Disclaimer: Whoever doesn't know to ignore my advice is in pretty sad shape.)

Good show. I've been trying to get greedy(cute as well) and missing buying opportunities. The best price to buy is the current price. As long as the stock is selling below IV.

[John Hjorth]

It's good humor, DooDiligence,

 

A few years from now you will be able to look back at this post of yours and at that future point in time think that what mattered was that you actually bought in stead of staying on the sideline. Because longinvestor is right:

 

...The best price to buy is the current price. As long as the stock is selling below IV.

 

It's a hedge against bad things happening to you in the future. [Falling in love again etc.]

[DooDiligence]

Yep to you both!

 

Oddly enuf I'm up 3.something% on the ownership stake (meaningless stat.)

 

It's truly the ONLY company I feel totally comfortable doing this with.

 

Market cap < replacement value

 

---

 

Quick question; does the capital structure serve to hold TBV in this ridiculously low range?

[gfp]

By "TBV" are you referring to tangible book value?  Or just book value / shareholder equity?

 

Book Value is what it is because of huge liabilities he calls insurance 'float'.  Most people think it has some value greater than negative $113 Billion.

 

Tangible book value is lower still because of huge sums of goodwill and intangible assets that result from buying high quality companies in their entirety at prices higher than their identifiable tangible assets.  You know, their durable competitive advantage, market position, trade names, etc etc etc

 

Unless it starts to look like Berkshire develops a reputation for overpaying for acquisitions, tangible book value doesn't have a lot of utility for a company like BRK.

 

Yep to you both!

 

Oddly enuf I'm up 3.something% on the ownership stake (meaningless stat.)

 

It's truly the ONLY company I feel totally comfortable doing this with.

 

Market cap < replacement value

 

---

 

Quick question; does the capital structure serve to hold TBV in this ridiculously low range?

[DooDiligence]

By "TBV" are you referring to tangible book value?  Or just book value / shareholder equity?

 

Book Value is what it is because of huge liabilities he calls insurance 'float'.  Most people think it has some value greater than negative $113 Billion.

 

Tangible book value is lower still because of huge sums of goodwill and intangible assets that result from buying high quality companies in their entirety at prices higher than their identifiable tangible assets.  You know, their durable competitive advantage, market position, trade names, etc etc etc

 

Unless it starts to look like Berkshire develops a reputation for overpaying for acquisitions, tangible book value doesn't have a lot of utility for a company like BRK.

 

Yep to you both!

 

Oddly enuf I'm up 3.something% on the ownership stake (meaningless stat.)

 

It's truly the ONLY company I feel totally comfortable doing this with.

 

Market cap < replacement value

 

---

 

Quick question; does the capital structure serve to hold TBV in this ridiculously low range?

 

Thanks 4 pointing out the diffs (I should not have even said T or BV.)

 

I've got this thing stuck in my head about looking at the market cap of a company & comparing it to the cost of replicating the business & was simply confusing myself by adding BV to the thought process (that's for companies that might go bankrupt right?)

 

Probably shouldn't go there since I'd be relying on the calculations of others regarding replacement value.

 

---

 

Old hat for u & most here but:

 

https://www.fool.com/investing/general/2014/12/12/understanding-the-true-value-of-warren-buffetts-be.aspx

 

---

 

As to why the market cap is what it is; does the base of "A" shares keep the valuation stable?

I understand that the "B" shares were largely created for gifting purposes?

[gfp]

$480 Billion market cap seems about right.  Not crazy low, could be a little low.  If they were willing to use leverage to buy a $150 billion business it would look too low in retrospect.

 

Low turnover might stabilize the price, but in my experience Berkshire tends to level out in market value for a while and then make fairly quick reappraisals higher as some perception changes a bit.  Because of the nature of continually hitting all time highs and a lot of long term, low basis, holders - Berkshire's share price tends to respond a lot to violating round number options strike price levels (190 for example) because people are forced to cover their short 'covered calls.'  If this FIFO law comes into being, that would only exacerbate those type of moves going forward.

[DooDiligence]

$480 Billion market cap seems about right.  Not crazy low, could be a little low.  If they were willing to use leverage to buy a $150 billion business it would look too low in retrospect.

 

Low turnover might stabilize the price, but in my experience Berkshire tends to level out in market value for a while and then make fairly quick reappraisals higher as some perception changes a bit.  Because of the nature of continually hitting all time highs and a lot of long term, low basis, holders - Berkshire's share price tends to respond a lot to violating round number options strike price levels (190 for example) because people are forced to cover their short 'covered calls.'  If this FIFO law comes into being, that would only exacerbate those type of moves going forward.

 

Not good news for someone who's looking for a big dip to shove "all in" & free up a lot of time to study something other than equities  ;)

 

Thanks for the illumination (once again.)

[gfp]

purchased February 2018 150 strike call options on Apple at 21.68 average cost.  this is a trade obviously

 

update - added more of same at 20.25, new average cost is 20.967

[DooDiligence]

A little more CVS.

 

The Aetna purchase looks expensive today but I believe it'll work out.

 

Less breakfast cereal & beach chairs & more Minute Clinics & medical supplies.

 

Which insurer would WalMart try to buy if they were so inclined?

 

I think CVS has an edge on becoming a healthcare superstore where WalMart won't be able to focus.

[Spekulatius]

recent buys are MLPs - BPL and SEP, which seem to have come under selling presssure (tax loss selling?)

 

I also bought some RE - a solid up insurance company that got hit by the hurricane season (like just about anyone else in the industry) , but has a very solid history of book value growth and reserving history. I think the latter is a better buy than BRK right now.

[EricSchleien]

recent buys are MLPs - BPL and SEP, which seem to have come under selling presssure (tax loss selling?)

 

I also bought some RE - a solid up insurance company that got hit by the hurricane season (like just about anyone else in the industry) , but has a very solid history of book value growth and reserving history. I think the latter is a better buy than BRK right now.

 

RE has compounded BV at 12% since 1995. You don't think there's better stuff out there? Do you think they will compound higher in the future? Paying around book value seems good but can probably do better, no?

[Jurgis]

If I knew that RE is going compound at 12% going forward 5-10 years, I'd buy tons of it.

 

I don't think there are (m)any opportunities in current market that offer 12% going forward. (IMO neither BRK nor FFH do; 12% is reachable for both just far from certain).

 

I doubt that RE (or AXS) can do 12% going forward either. I think that (re)insurance is still soft and gonna remain soft. Plus fixed income returns are crappy.

[EricSchleien]

If I knew that RE is going compound at 12% going forward 5-10 years, I'd buy tons of it.

 

I don't think there are (m)any opportunities in current market that offer 12% going forward. (IMO neither BRK nor FFH do; 12% is reachable for both just far from certain).

 

I doubt that RE (or AXS) can do 12% going forward either. I think that (re)insurance is still soft and gonna remain soft. Plus fixed income returns are crappy.

 

Got it. Different strokes. I think there's much cheaper shit out there. But that's what makes a market.

[Bojack]

bought some bitcoin... where do i report for reindoctrination?

[gjangal]

bought some bitcoin... where do i report for reindoctrination?

 

There are many people signing up for accounts at exchanges still. This thing is going to go on for a while

[Spekulatius]

recent buys are MLPs - BPL and SEP, which seem to have come under selling presssure (tax loss selling?)

 

I also bought some RE - a solid up insurance company that got hit by the hurricane season (like just about anyone else in the industry) , but has a very solid history of book value growth and reserving history. I think the latter is a better buy than BRK right now.

 

RE has compounded BV at 12% since 1995. You don't think there's better stuff out there? Do you think they will compound higher in the future? Paying around book value seems good but can probably do better, no?

 

As Jurgis stated, I don’t think they will do 12% going forward, but neither do BRK and FFH, which trades at richer multiple of P/B.

 

If you know a compounder that is cheap, relatively low risk and can do 12% going forward, you should tell us about it.

[Bojack]

bought some bitcoin... where do i report for reindoctrination?

 

There are many people signing up for accounts at exchanges still. This thing is going to go on for a while

 

I agree... worth a flyer position (1 - 2%) imo in case it gets real weird next year

[Dynamic]

BRK.B at $196.69 (increasing stake from 55% to 65% of portfolio using essentially all accumulated cash awaiting investment + dividends received).

 

Portfolio is now 65% BRK.B, 28% AAPL, 4% WFC plus a few bits and bobs mostly at modest valuations. (My effective AAPL and WFC exposures are about 31% and 8% respectively on a look-through basis).

 

See this message for reasoning: http://www.cornerofberkshireandfairfax.ca/forum/berkshire-hathaway/2017-ye-intrinsic-value-versus-market-value/msg317834

 

This represents a bit of a change of opinion for me.

 

Looks like a sound investment for long term (I'd expect 7-10% CAGR above inflation) plus fairly high probability of limited downside risk over next year or two (meaning we should be able to snap up deep value bargains when we see them by trading some BRK.B or AAPL and any new cash awaiting investment, meaning we shouldn't lose a lot of that cash optionality and may gain some buying power if BRK.B appreciates above $196), by which time the buyback threshold should have reached our purchase price (unless the tax reform bill fails to make it into law, in which case it'll be a few years longer and we might have to ride out some temporary quotational losses, but should still be in line for 7-10% real terms return long term).

[DooDiligence]

Sold AZO after a 40% + ST run.

 

I think management is chasing DIFM when ORLY & GPC have a lock on.

Also ignoring e-commerce & subsequently not skating towards the puck where their core customers are going to be.

 

Hazards of operating leverage biting them in a downturn + working capital maybe going to shit if vendors regain power (GPC doesn't appear to abuse their vendors as badly.)

 

Negative owners equity WTFK?

 

I have no replacement & am happy to keep GPC / NAPA as I like the owner / operator model.