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what are you selling today?


muscleman

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27 minutes ago, treasurehunt said:

 

Me too. I have sold about 15% of my BRK.B position in the last few months.

 

It's a tough call.  Berkshire was valued at something like $888 Billion at the highs today.  In this market environment I don't see any reason they shouldn't be a 20x owner earnings company.  So it's not a crazy valuation.  I think for a long time we had great results using price to book as a quick shortcut to valuing Berkshire and maybe that usefulness is waning.  There won't be high rates of growth, but some of us have large tax considerations and it really is a tough decision to reduce on valuation alone.  Maybe Charlie (munger not dealraker but not much difference in this context) said it best to his heirs, "just hold the goddamn stock."

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51 minutes ago, gfp said:

 

It's a tough call.  Berkshire was valued at something like $888 Billion at the highs today.  In this market environment I don't see any reason they shouldn't be a 20x owner earnings company.  So it's not a crazy valuation.  I think for a long time we had great results using price to book as a quick shortcut to valuing Berkshire and maybe that usefulness is waning.  There won't be high rates of growth, but some of us have large tax considerations and it really is a tough decision to reduce on valuation alone.  Maybe Charlie (munger not dealraker but not much difference in this context) said it best to his heirs, "just hold the goddamn stock."

 

@gfp What do you think is a decent allocation to BRK in one's portfolio? I agree with your views. I think tax considerations make it very hard to sell BRK (for long term holders) even if it is at intrinsic value which it appears to be at currently because the alternative needs to outperform BRK after paying taxes on BRK sale if one diversifies. And the S&P 500 index is trading at a high valuation. 

Edited by Munger_Disciple
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2 minutes ago, Munger_Disciple said:

 

@gfp What % of your portfolio is BRK? I agree with your views. I think tax considerations make it very hard to sell BRK even if it is at intrinsiv value which it appears to be at currently because the alternative needs to outperform BRK after paying taxes on BRK sale if one diversifies. 

 

My personal capital it isn't a huge percentage anymore.  But for some of the separate accounts I mange for others it is very large.  One is like 92% although she has maybe 130% long equity exposure so 100% isn't the total.  Many of these accounts are in Berkshire with a cost basis averaging around the post - 9/11 market rep-opening price.  It was like 2000 on the B-shares at the time, I guess that's like $40 on today's B-shares?  That was a major buying period for me and I have sold most of the higher basis shares by now.  Most of what I manage is taxable money.  I was buying Berkshire before 9/11 in a normal way but that reopening dip was when I bought everything I could.  Tax considerations can save you from a lot of foolishness in this game if you aren't naturally wired right for the long holds.

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1 hour ago, gfp said:

 

My personal capital it isn't a huge percentage anymore.  But for some of the separate accounts I mange for others it is very large.  One is like 92% although she has maybe 130% long equity exposure so 100% isn't the total.  Many of these accounts are in Berkshire with a cost basis averaging around the post - 9/11 market rep-opening price.  It was like 2000 on the B-shares at the time, I guess that's like $40 on today's B-shares?  That was a major buying period for me and I have sold most of the higher basis shares by now.  Most of what I manage is taxable money.  I was buying Berkshire before 9/11 in a normal way but that reopening dip was when I bought everything I could.  Tax considerations can save you from a lot of foolishness in this game if you aren't naturally wired right for the long holds.

 

Thanks for the great points made. I sold Berkshire in my tax deferred accounts and swapped it for FFH last year but taxes are a significant consideration for me (I live in CA) in taxable accounts. I agree we shouldn't let taxes completely dictate our portfolio. I think BRK is fully valued now (but not overvalued). 

Edited by Munger_Disciple
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2 hours ago, gfp said:

 

It's a tough call.  Berkshire was valued at something like $888 Billion at the highs today.  In this market environment I don't see any reason they shouldn't be a 20x owner earnings company.  So it's not a crazy valuation.  I think for a long time we had great results using price to book as a quick shortcut to valuing Berkshire and maybe that usefulness is waning.  There won't be high rates of growth, but some of us have large tax considerations and it really is a tough decision to reduce on valuation alone.  Maybe Charlie (munger not dealraker but not much difference in this context) said it best to his heirs, "just hold the goddamn stock."

 

I agree for the most part. I haven't touched any of the Berkshire I hold in taxable accounts. And the stock is still 23% of my portfolio.

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2 hours ago, gfp said:

 

It's a tough call.  Berkshire was valued at something like $888 Billion at the highs today.  In this market environment I don't see any reason they shouldn't be a 20x owner earnings company.  So it's not a crazy valuation.  I think for a long time we had great results using price to book as a quick shortcut to valuing Berkshire and maybe that usefulness is waning.  There won't be high rates of growth, but some of us have large tax considerations and it really is a tough decision to reduce on valuation alone.  Maybe Charlie (munger not dealraker but not much difference in this context) said it best to his heirs, "just hold the goddamn stock."


Operating earnings + investment portfolio gains is about 60B-70B per year. 900B market cap is still not close to fair value. I feel it should be closer to 1.2T

 

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17 minutes ago, adesigar said:


Operating earnings + investment portfolio gains is about 60B-70B per year. 900B market cap is still not close to fair value. I feel it should be closer to 1.2T

 

Yeah but making returns from a 1T base is a lot harder than from a 25b base. And where is the dislocation in the stock market right now--> value and smallcaps. Large caps getting more and more pushed up by the passive investing flood and i dont see this stopping much. More and more people i know start investing in FAANG+ ETFs or the SP 500, its a lot of power. 

 

Still, they can develop their operating businesses, their investments are rock solid, they can buy back stock. At this price will probably still beat the index but i dont see the opportunity for outperformance i see with FFH which is why i would shift to a degree. 

Edited by Luca
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Fortunately no tax considerations for me. Brk is 50% of my portfolio, I dont think it is outrageously overvalued but believe the odds are decent to re-enter sub 380 even with higher BV expected to be announced later this month

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1 hour ago, Spekulatius said:

Reduced $C a bit and sold my highest cost shares in $RI.PA

 

Why? Its still significantly below TBV/BV.  Jane re-affirmed their ROTCE targets as well.  

Edited by ourkid8
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3 hours ago, ourkid8 said:

 

Why? Its still significantly below TBV/BV.  Jane re-affirmed their ROTCE targets as well.  

Sure, but I want to build cash in one of my tax deferred accounts. I don’t expect $C rise from the ashes to be without hiccups either.

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On 2/21/2024 at 5:25 AM, gfp said:

Tax considerations can save you from a lot of foolishness in this game if you aren't naturally wired right for the long holds.

 

True! I have a couple of A shares I bought near the very lows in 2000. They are grandfathered under german tax law and gains are forever tax free. I don't plan to sell any of them as long as Berkshire can grow BV at a halfway decent rate. If the shares get a little ahead of the business like now I sell OTM calls. If I can achieve an (almost) tax free return of 10% in the future by doing this I'm perfectly happy.

 

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