Author Topic: berkshire - cheap?  (Read 85105 times)

Valuehalla

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Re: berkshire - cheap?
« Reply #280 on: August 06, 2018, 01:47:16 AM »
Lang & Schwarz is a private exchange / marketplace opening at 7.30 am, than later at 8 am Tradegate is opening as well

The ticker of the B shares in Europe is BRYN. Depending on the bank or Broker you can also use the WKN (Wertpapierkennnummer ) A0YJQ2 for BRK.B

I sucked the maximum available shares at Lang & Schwarz for the mentioned price a few seconds after 7.30 am.
« Last Edit: August 06, 2018, 01:49:48 AM by Valuehalla »
BRK FFH MKL LVLT CTL BAC WFC BMY MRK MCD MO PM


John Hjorth

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Re: berkshire - cheap?
« Reply #281 on: August 06, 2018, 01:49:24 AM »
Thanks Valuehalla.
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Dynamic

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Re: berkshire - cheap?
« Reply #282 on: August 06, 2018, 01:52:50 AM »
I also bought some on BRYN ticker this morning filling at €175.49 via SMART routing on IBKR, but a couple of hours later than Valuehalla. It may just be a short-term trade. The volume is tiny normally, about 3700 shares per day. It's a lot more today. BRYN is used for a number of exchanges in Germany and XETRA and Frankfurt seem to be busiest. I usually track ETR:BRYN on GoogleFinance to see the price before the US markets open, but I'm aware that the spreads are wider and the volume smaller and commissions are higher, so it's not ideal most of the time. Try typing slowly into the Yahoo Finance search box to see a lot of different tickers, then go in and compare daily trading volumes.

For my UK Capital Gains Tax I am considering that this could be useful to take advantage of my tax-free gains allowance every tax year. I can sell my BRK.B position and buy some BRYN at about the same price, realising gains to increase my cost basis without exiting my effective position. This is completely legitimate and doesn't come under "bed-and-breakfasting" rules that stop you realising gains if you buy back the same security within 30 days because it is different under the identification rules. And if the volume is low, I can just do so gradually at times when both US and EUR markets are open. Likewise BRKB.MX is in Mexico City, but the market hours match the NYSE, so I can switch at any time the NYSE is open. Berkshire Hathaway Class A is traded in Euros too, and probably at very low volume.
« Last Edit: August 06, 2018, 08:42:47 AM by Dynamic »

petec

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Re: berkshire - cheap?
« Reply #283 on: August 06, 2018, 02:34:23 AM »
For my UK Capital Gains Tax I am considering that this could be useful to take advantage of my tax-free gains allowance every tax year. I can sell my BRK.B position and buy some BRYN at about the same price, realising gains to increase my cost basis without exiting my effective position. This is completely legitimate and doesn't come under "bed-and-breakfasting" rules that stop you realising gains if you buy back the same security within 30 days because it is different under the identification rules. And if the volume is low, I can just do so gradually at times when both US and EUR markets are open. Likewise BRKB.MX is in Mexico City, but the market hours match the NYSE, so I can switch at any time the NYSE is open. Berkshire Hathaway Class A is traded in Euros too, and probably at very low volume.


That's a very good idea. Thanks.

Out of interest what platform do you use to trade Mexico?

John Hjorth

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Re: berkshire - cheap?
« Reply #284 on: August 06, 2018, 02:50:16 AM »
Also thank you to you for the elaboration here, Dynamic, - very kind of you. I got it on Yahoo Finance. It's a no go for me, unfortunately, at my broker. I can only find the A in Frankfurt, but not the B. I'm a bit puzzled about it, and will give my broker a call.

Your considerations about using BRYN to raise your cost base makes perfect sense to me, based on what you have explained to me earlier about UK capital gain taxes in the "What are you buying today" topic.
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Dynamic

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Re: berkshire - cheap?
« Reply #285 on: August 06, 2018, 05:21:03 AM »
I hope I'm not going too far off-topic, but here goes anyway.

John, when I first bought BRK.B (the pre-split stock) in 2003 in my tax-free ISA, I had to place the order by phone with a broker in Frankfurt and I used some numeric code supplied by my broker's customer services for the stock identification (about 10 digits). Since then I've been able to trade online and it does seem to actually be the BRK.B stock they hold and I can only trade during NYSE hours but I can only hold GBP cash in an ISA so my trades execute through a London Stock Exchange system, where it includes the currency conversion. The broker only updates US stocks in my Account Valuation screen about once or twice a month at the close, so I use a Google Sheet to track my positions and current valuations more accurately.

@PeteC, I used interactivebrokers.co.uk (the UK subsidiary of Interactive Brokers, regulated by the FCA) to buy BRYN this morning, an account I've only had open for a couple of months. Now the pre-market in the US and the BRYN price are roughly the same, when converted to USD, but I think the volume in US pre-trading is higher than on XETRA. Previously I only ever bought BRYN in a dummy "Paper Trading" account they let you try out with $1 million USD notional cash balance to play with. With the low volumes and my stingy limit order I only got filled for 2 shares of BRYN (notionally) and ended up getting about 10,000 shares of BRK.B (notionally) gradually later in the day once the US markets opened! I was experimenting with margin to see if I understood how it worked, and sure enough they started selling out my notional positions towards the end of the trading session to bring it in line with overnight margin, where you can borrow up to 50% of the market value of your stocks. The platform seems to be very powerful for professional users and people with fancy day trading strategies, forex trades and even some algorithmic strategies, and I'm sure I won't use 90% of the features available.

It's certainly worth checking out their trial account to see what you can do and then you can think about setting up a real account if you're really sure you can manage the risks. For your real money account you can pre-select which markets you allow in the account and what types of instruments and whether you will allow margin.

Certain instruments are only available to advanced traders with sufficient experience or who pass a test. I might like to sell some out of the money put options to either earn income or to enter positions (if I'm put to) at a price I find attractive, much like @boilermaker does, so I had to pass an online multiple choice test about options trading when setting up the account. I probably could have told them I had more experience than I really did and avoided the test, but it was interesting, even if most of it seemed too much like day-trading and technical analysis chartism to me and required Googling once or twice so I really understood the concepts and could work out the correct answer.

I have never actually bought or sold BRKB.MX but I've just successfully placed a DAY Limit order at 3,805.00 MXN in the "Paper Trading" account (a few options appear when you type BRK B with a space, not a period, into the Interactive Brokers ticker search box) to be notionally submitted at market open, so it seems to work. I had previously been almost exclusively using ISA accounts for myself and my spouse, which are exempt from Capital Gains Tax so no reason to switch tickers for the same stock.

Another way to avoid capital gains tax if you live in the UK or Ireland is through very careful use of DFT (Spread Bets) - read this post on 'Getting leverage' and those below for a story of what crazy and dangerous leverage you can obtain there - using a dummy trading account only. It turns out the CFDs offer similar leverage to DFTs but they are subject to UK Capital Gains Tax and they are available outside the UK and Ireland (except perhaps US and Canada, but possibly available routed via IBKR UK). The important thing is to fully understand the effective leverage you're taking on so you don't get wiped out or even owe more money than is in your account.

The nice thing about UK Capital Gains Tax is that you get £11,700 of gains per person exempt from CGT this tax year, then for lower-rate taxpayers it's only 10% tax on the gains above the exemption until they push you into the higher rate band, then it's 20% tax on gains for higher rate tax payers. So even if you do pay some tax on some extraordinary gains, its about half the rate of income tax and with no National Insurance Contributions to be paid like in your employment. An ISA is even better and is the mainstay of our portfolio of long-term holdings, except for the restrictions on the types of instruments and the amount you can contribute each year being limited to £20,000.

longinvestor

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Re: berkshire - cheap?
« Reply #286 on: September 20, 2018, 08:54:37 AM »
Is Berkshire still cheap?

I think so and if Omaha is buying back, they think so.

StevieV

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Re: berkshire - cheap?
« Reply #287 on: September 20, 2018, 10:11:04 AM »
Is Berkshire still cheap?

I think so and if Omaha is buying back, they think so.

I'm not sure if I'd sign up for  the shares being "cheap."  I'm more comfortable saying "not expensive".  FWIW, I think there will be better opportunities for purchasing shares in the future.

Swedish_Compounder

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Re: berkshire - cheap?
« Reply #288 on: September 20, 2018, 10:33:44 AM »
Quick and dirty valuation (just approximate figures):

Stocks and excess cash:
Value of stocks 200 BUSD
Excess cash 100 BUSD
=300 BUSD

After tax earning power:
Operating earnings 2018E : 19,5 BUSD
Normalized float increase: 8 BUSD
= 27,5 BUSD
Multiple of 14 - 15 = 400 BUSD

Total mathematical value 700 BUSD

In addition several factors which have additional value, which is hard to quantify:
1) more conservative accounting than basically any other large company
2) More owner oriented than basically any other large Company
3) World leading capital allocation skills
4) Preferred buyer for many family founded / owned businesses
5) No dilution from stock options to management
6) World leading management
7) More risk averse than most other companies
8 ) Extremely low turnover of senior executives
9) A highly rational compensation strucure, with no influence from comp Consultants
10) Accepting bumpy results instead of smoothness, if it is expected to give a better long term result
11) A contrarian mindset where they are greedy when others are fearful and vice versa
etc
« Last Edit: September 20, 2018, 10:35:48 AM by Swedish_Compounder »

gfp

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Re: berkshire - cheap?
« Reply #289 on: September 20, 2018, 11:19:37 AM »
Not a bad quick and dirty back of the envelope.  Seems a little aggressive to put a multiple of 14.5x some normalized float growth figure (you used $8B) and declare thats worth $116 Billion when we have already included the value of the stock portfolio, much of which is funded by float.  I do understand that growth in Float is a component of cash flow available to owners though.