Author Topic: BRK Ever Hit 1.2?  (Read 5620 times)

Dynamic

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Re: BRK Ever Hit 1.2?
« Reply #10 on: February 10, 2016, 09:32:52 AM »
I bought a new batch of BRK.B on 3rd Feb at about $124.26 (not completely sure, as I bought in British pounds at 85.121 GBP for my tax-exempt Individual Savings Account and estimated the USD price using the exchange rate a few minutes later). That's a P/BV of about 1.234 using 3Q2015's BV.

My purchase decision was both that BRK's price was attractive and that I was fund it by selling a fully-valued position without having to pay tax on my gains on it over the last 14 years. By my estimation, at a P/E of 28.8 when I sold, it had ~10% per annum long-term upside, the highest P/E in recent years was about 34 last year, so limited short-term upside, and it had plenty of short-term downside risk, despite being a fundamentally good company.

Having both of these in my favor made my decision easier.

I figure that once BV is announced for the year ended 31 December 2015 (announcement due around 25th Feb), it could well be higher BV so my price could well be below 1.2 anyway. I'm not sure if Berkshire's authorised buyback at P/B <= 1.2 is based on current book value as it varies day by day or the last SEC-reported book value (which would seem fairer as it uses only publicly disclosed data).

That fact that everyone knows about the buyback option probably will stop it from regularly getting that low as for most it provides a fairly good 'floor' below the price that provides a feeling of safety to many investors, myself included. I think enough people use it as an approximate buy price target that short of major adverse world events creating near-term fear and panic, it's likely to remain a pretty good downside buffer.

The new UK tax-year starts on 6th April and I'll then be able to invest more within this tax-free account, so I'm hoping the price will remain close to 1.2x BV for some time. My wife's own account isn't fully funded this year, so we'll be considering adding within her account before then.


HWWProject

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Re: BRK Ever Hit 1.2?
« Reply #11 on: February 10, 2016, 05:52:54 PM »
Patiently waiting as well.  My current buy price is $178,500 at A shares.

Buying A shares? Baller...

Ha!  No but I wish.  Just using A shares as a proxy.  My buy price is actually based on Buffett's '2-Column' valuation method.  Was pleased that it correlates well with 1.2 x BV
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