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Big Berkshire Hathaway bounce coming up on Monday 22 Sep 08?
Old 09-20-2008, 11:54 AM   #1
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Big Berkshire Hathaway bounce coming up on Monday 22 Sep 08?

Here's an excerpt from the end of an article on Berkshire Hathaway's weekly financial gains:
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Berkshire Class A shares rose more than 8 percent Friday on the New York Stock Exchange, until a late trade boosted the gain to 14.8 percent, or $18,990, for a close at $147,000. The Class B shares closed up $345 at $4,595.
A & B shares trade independently, both at very low volume, but Berkshire Hathaway will redeem an "A" share for 30 "B" shares anytime. (Buffett says that this arbitrage will quickly reduce any spread between the A:B 30:1 ratio.) A $147K "A" share implies that the next "B" price should be $4900/share.

I'm not aware of an after-hours market on either ticker, let alone options or many shares available for shorting, so it'll be interesting to see which way the share prices go on Monday.

I wonder if a limit order of $4600 at the open would execute?
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Old 09-20-2008, 01:56 PM   #2
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One interesting issue with this is that the change only works one way. You can turn Class A shares into Class B shares, but not the reverse.

So it is possible for the B shares to underperform the A shares. There is no arb opportunity.

Likely what will happen is that the A shares will come down on Monday.
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Old 09-20-2008, 03:03 PM   #3
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eh, I'm still gonna wait for my limit order to buy more shares near the $3700 low.
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Old 09-20-2008, 05:41 PM   #4
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So it is possible for the B shares to underperform the A shares. There is no arb opportunity.
I guess that depends on whether a bunch of eager retail investors buy the "B" shares on Monday in the hope that their ask price will rise to match the 1:30 "A" share ratio.

It'll turn into a self-fulfilling prophecy, but the profits will depend on the speed of execution-- or at least on how alert the market-maker is.
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Old 09-20-2008, 06:00 PM   #5
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The consensus on the Fool Berkshire board is that A was probably a desperate short covering, and likely the A will drop down to the B of 30*4600= $138,000.

On the other hand the financials that BRK owns like WFC, USB, all had terrific Thursday's and Fridays and look like the will be the winning financial companies. Berkshire is the large shareholder of KFT just included in the Dow to replace AIG. The melt down of AIG is great news for Berkshire insurance operations.

Of course early this week, Berkshire become the biggest utility in the country with purchase of Consolidated Energy at prices generally thought to be .25-30 on the dollar.

Oh and as an added bonus the Consolidated CEO's wife is Baltimore Raven cheerleader not bad for 38.



Perhaps she can bring the rest of the squad for the shareholder meeting
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Old 09-22-2008, 09:25 AM   #6
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The consensus on the Fool Berkshire board is that A was probably a desperate short covering, and likely the A will drop down to the B of 30*4600= $138,000.
Yep, looks like everything sagged back down together as soon as they opened. Impressive volume, though.

I'm referring to the stock's "A" & "B" shares...
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Old 09-22-2008, 09:42 AM   #7
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Yep, looks like everything sagged back down together as soon as they opened. Impressive volume, though.

I'm referring to the stock's "A" & "B" shares...
Quit being a cheerleader.........
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Old 09-22-2008, 11:55 PM   #8
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Nords, Nords, Nords.....too much time spent in military confinement of one sort or another, I see :-)
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Old 09-23-2008, 01:31 PM   #9
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Nords, Nords, Nords.....too much time spent in military confinement of one sort or another, I see :-)
"I'm sorry, we're not at liberty to discuss what happens when an all-male crew goes to sea, slams the hatches shut, and puts up the underway décor submarine operations..."
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Old 09-23-2008, 03:52 PM   #10
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What's long and...oh nevermind.
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Old 09-23-2008, 09:50 PM   #11
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I always wondered: is it "underway" or "underweigh"? (as in 'weigh the anchor')
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Old 09-24-2008, 12:27 PM   #12
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I always wondered: is it "underway" or "underweigh"? (as in 'weigh the anchor')
On the pre-underway checklist, weighing the anchor comes before getting underway... and then making way.

But submarines lack a traditional hawsepipe, so instead of hawsing the anchor you retract it into its housing. How's that?

It's even more fun when you get into the nuclear terminology, although apparently Naval Reactors frowns upon referring to withdrawing control rods for a reactor startup procedure as "Latch 'em & snatch 'em!"...
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