BRK
- Thread starter james22
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papadad111
Thinks s/he gets paid by the post
- Joined
- Oct 4, 2007
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BRK has had a difficult year or more ... I like your thinking.
Sure, if it's part of your asset allocation.
I sold a naked put on the B shares with a $125 strike last August. It expired in December (which means that I kept the premium and didn't get exercised). The June 2016 puts with a $110 strike are already trading over $2/share.
I'm not going to get into an analysis of the companies or the Buffett/Munger succession issue (Happy 92nd birthday, Charlie!). I'll point out that Buffett's commitment to purchase shares at 120% of book value is not a floor on the value of the stock.
Buffett has said that Berkshire might start buying at that price, but they'll "fade" if other bargains become available. A market that drops BRK/B to $125/share will doubtless produce other compelling bargains within a few months as companies run low on cash and ask Buffett for a high-interest loan.
So, $125/share seems to be a reasonable price. Its all-time high was a bit over $150/share in late 2014. Lower prices would be a happier bargain.
I've reluctantly concluded that I don't want to part with any of our BRK/B shares.
Thanks, Nords.
$125 seems better than reasonable to me, but I do expect it'll fall further with the market.
Would the buy-back price ($121.50, per Q3 BV) tempt you?
I've been adding as assume we essentially there now (10 year average BV growth of 2.5% per quarter gives a Q4 BV of $103.75, so buy-back at $124.50), but not all-in.
$125 seems better than reasonable to me, but I do expect it'll fall further with the market.
Would the buy-back price ($121.50, per Q3 BV) tempt you?
I've been adding as assume we essentially there now (10 year average BV growth of 2.5% per quarter gives a Q4 BV of $103.75, so buy-back at $124.50), but not all-in.
harley
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I've had a limit order floating around for about 6 months to buy at $125. It was just in case of a flash crash or something. That got filled Friday, so I'm happy about it. If it goes lower I may add more, although I'm currently happy with my allocation of it. Next stop, AAPL at $85.
steelyman
Moderator Emeritus
That's a sound I like to hear, a limit order that goes unfilled for months (maybe never filled at all?). I was surprised to see I now own Wells Fargo. That order was out there a long time, too. I think of my core balance in the brokerage like the coin jar where you keep the money from your newspaper route, occasionally the order it covers gets filled. Or it doesn't.
Anything at book value would be a good price, but I wouldn't go too far above our asset allocation.
Selling puts gives me a way to get a little cash (and feel as if we're winning) without ending up too heavily overweighted. I usually sell them about 10% out of the money so that if the price makes a big move and we're exercised, we have a correspondingly big discount.
