Author Topic: What are you buying today?  (Read 1822531 times)

rb

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Re: What are you buying today?
« Reply #2730 on: February 08, 2018, 07:51:38 PM »
BRK.B, today [A lot, a lot just below 196, more just below 197, and some at 199] At around 35 percent position now.

I think my buy target for BRK.B would be ~$165 or about 1.2x book. I don’t consider it in value territory yet, just fairly valued.
I agree with Spekulatius though I'm not as greedy as him. I'd pick BRK at 1.3. P/B now it's 1.53. Although in reality it's probably about 1.6 if you mark it.

At the 1.5-1.6 book level BRK is somewhere in the neighborhood of fairly valued. That means that long term you'll average around 8-9%. Now here's the thing: There's nothing wrong with a 8-9% return. Especially if you get it without headaches and BRK won't give you headaches. So as long as you're aware of these facts and you're comfortable with them there's nothing wrong with buying BRK here.


John Hjorth

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Re: What are you buying today?
« Reply #2731 on: February 08, 2018, 11:04:23 PM »
I have a raw estimate of Berkshire equity YE2017 of USD 357 B ex. minority interests. With end 2017Q3 A share equivalents at 1,644,656, that gives me a BV per B share of 145, exactly as longinvestor has posted in a topic in the Berkshire forum a few days ago as a reply to wescobrk [longinvestor posted 143]. So to me, buying the B at 196 is equal to buying it at 1.35 x BV. We could go to that particular topic for further discussion, if needed.
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Dynamic

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Re: What are you buying today?
« Reply #2732 on: February 09, 2018, 12:50:34 AM »
I generally agree that 1.2x BVPS is a steal for BRK and I'm normally prepared to project forward to the yet-to-be-reported BVPS, which might mean adding 2.5% to the previous quarter's BVPS much of the time. However, this quarter is different!

I'd agree with John Hjorth that BVPS as reported on 23rd Feb when the Berkshire Hathaway Annual Report is published is very likely to be around $143-$145 range after accounting for the US Tax Cuts, which have a disproportionately large effect on BRK's deferred tax liabilities and profits made in the USA. For me, $172 would be a screaming buy at about 1.2x estimate 2017Q4 BVPS.

I would say that at close price of $191.42, the market-value of the operating part of BRK.B is about $119 and that $72½ would be about the look-through market value of the portfolio of stocks including Kraft Heinz, BYD and Sanofi stocks that aren't included in 13-F reports.

Mark-to-market losses on the portfolio of stocks since 31st Dec 2017 would perhaps knock off 3-4% from their contribution to current running book value. Maybe there is as much as a 1.5% reduction in running BVPS would knock about $2 per share off the BVPS that will be reported for 31st December 2017, so I'd reduce that $143-$145 to around $141-$143 for BVPS, setting a 1.2x BVPS "soft floor" of around $169-$172, although the authorized buyback threshold would be any price up to 1.2x the actual last reported BVPS, not the running BVPS.

I personally think the US Tax Cuts have boosted Intrinsic Value of BRK.B by a little less than they've boosted Book Value, but I'm content with what I suspect will be reliable compounding at a rate that significantly exceeds our goals, hence our large exposure to BRK.B, especially in the absence of other high conviction ideas and my additions in Dec and Feb around $196 (GBP £141 - £147 depending on exchange rate) even when it appears on the surface to be priced at 1.5-1.6x BVPS.

Last night we checked our household budget and brought forward and increased our usual cash subscription to add another 1.5% to our portfolio, which should be available to invest today or possibly as late as Monday. I'm also considering switching our 4% position in Wells Fargo to BRK.B, so might well do both on the same day and add about 5.5% to our BRK.B weighting soon somewhere in the $191 region (GBP £137).

Nell-e

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Re: What are you buying today?
« Reply #2733 on: February 09, 2018, 01:26:10 AM »
I also bought some BRK.B recently although my logic might make some cringe.  I'm a big believer in the "cover your ass" incentive.  Barclays and UBS put price targets on the B shares for ~$240.  I'm betting that money managers will herd into Berkshire by  year end in a volatile market because it's easy to justify to unsophisticated retail customers.

Any thoughts on my reasoning?

John Hjorth

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Re: What are you buying today?
« Reply #2734 on: February 09, 2018, 02:44:25 AM »
Let's continue this Berkshire discussion here, so that we don't annoy other fellow board members with lengthy Berkshire talk in this topic.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

rolling

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Re: What are you buying today?
« Reply #2735 on: February 09, 2018, 03:07:17 AM »
Bought the FANG stocks GOOG and FB today. I think they are cheap with a Y2018 PE in the low twenties.
Also bought GOOG this week... I'm still doing my research and Alphabet topic on COBF seems to be dead...my only reasoning was that it is growing a lot, has 100B net cash and taxes in the US went down, meaning that their net income should increase only through taxes. To be sure I still don't have a meager idea of the roof for their growth... Do you know any good report I could read on their business? Thank you

Ps: I wanted to buy BRK instead but I sold at a loss at 210.8 last week and didn't want to lose the tax credit (truthfully I'm not sure I sold at a loss due to the favourable euro-dollar cambial evolution through deal closure on wednesday).
My usual portfolio: Highly concentrated (up to 3 or 4 positions) in smallcaps and microcaps.

Cigarbutt

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Re: What are you buying today?
« Reply #2736 on: February 09, 2018, 05:14:54 AM »
Dynamic,
I always read your posts with interest. Impressed by the level of internal consistency and transparency.

Question:
"Last night we checked our household budget and brought forward and increased our usual cash subscription to add another 1.5% to our portfolio, which should be available to invest today or possibly as late as Monday. I'm also considering switching our 4% position in Wells Fargo to BRK.B, so might well do both on the same day and add about 5.5% to our BRK.B weighting soon somewhere in the $191 region (GBP £137)."

Is this simply a one time adjustment in the saving/investing dynamic or is it some kind of periodic and opportunistic dollar cost averaging?


gary17

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Re: What are you buying today?
« Reply #2737 on: February 09, 2018, 05:34:15 AM »
what are people modelling for google and facebook’s 2018 tax rate?

Dynamic

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Re: What are you buying today?
« Reply #2738 on: February 09, 2018, 07:48:29 AM »
Dynamic,
I always read your posts with interest. Impressed by the level of internal consistency and transparency.
Thank you.

Quote
Question:
"Last night we checked our household budget and brought forward and increased our usual cash subscription to add another ..."

Is this simply a one time adjustment in the saving/investing dynamic or is it some kind of periodic and opportunistic dollar cost averaging?

We live frugal but fun lives below our means and we have no dependents. Since we both started full time work we decided to continue living on about the same budget we'd set (which did include some investment savings) essentially living on one income and investing the other income after taxes. We still get to go to shows and restaurants, take trips abroad, and generally really enjoy living.

We saw that prices such as BRK.B were looking to be in our buying range, so rather than keep a few thousand pounds hanging around in our various accounts as a buffer and add funds to our investment accounts later in the month, we decided to look at our outgoings (a few direct debits and two credit cards to be paid in full at the end of Feb) and run our buffer much lower this month, shuffling a few sums around while my paycheck for January clears, allowing any potential emergency spending to be funded by our ample credit limits on various cards. That probably means we've added about 2 months worth of our stretch savings goal immediately, plus a third-of-a-month's worth will be automatically taken from my wife's salary at the end of this month as it is every month for her ShareSave option plan (which has a market price 35% above the option strike price at present but can only be exercised in late 2022, though it could be redeemed for the saved cash prior to that time if we withdraw from the 5-year scheme).

As it happens we've booked flights to South America and paid for a clutch replacement on our very economical car just after the cut date for our credit cards, but we'll have those covered easily with our salaries at the end of this month/beginning of next without paying a penny in interest.

Sharad

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Re: What are you buying today?
« Reply #2739 on: February 09, 2018, 09:17:22 AM »
I bought UVXY because I want to see what Cramer says tonight.  8)

In all seriousness, I'm buying some BTI.
"If we are not able to ask skeptical questions, to interrogate those who tell us that something is true, to be skeptical of those in authority, then we are up for grabs for the next charlatan - political or religious - who comes ambling along."
- Carl Sagan