bmichaud Posted September 26, 2011 Share Posted September 26, 2011 http://www.marketwatch.com/story/berkshire-hathaway-authorizes-repurchase-program-2011-09-26 Link to comment Share on other sites More sharing options...
enoch01 Posted September 26, 2011 Share Posted September 26, 2011 I just saw a pig fly past my window! Link to comment Share on other sites More sharing options...
tombgrt Posted September 26, 2011 Share Posted September 26, 2011 Haha yes! This is great news. Although many thought it wouldn't happen, it sure was one of my catalysts for the stock price. Let's hope they can pick some up for some time to come! The press release is great because they don't give an estimate of IV which will help to keep the stock price in check so that they can actually buy some back. :) Maybe I'll be able soon to switch my 85% position in BRK to some other cheap stuff. 8) Link to comment Share on other sites More sharing options...
elltel Posted September 26, 2011 Share Posted September 26, 2011 realistically... who is going to sell though? I see one big natural seller... The Bill and Melinda Gates Foundation... Link to comment Share on other sites More sharing options...
tombgrt Posted September 26, 2011 Share Posted September 26, 2011 realistically... who is going to sell though? I see one big natural seller... The Bill and Melinda Gates Foundation... Berkshire may repurchase shares in open market purchases or through privately negotiated transactions, at management's discretion. Current price is probably 1,05-1,07x BV so it seems to me that the Market is selling. They won't be able to repurchase 10% of the stock of course unless markets fall substantially from here. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted September 26, 2011 Share Posted September 26, 2011 I hope Mr. Ballmer at Microsoft is watching this... Link to comment Share on other sites More sharing options...
NormR Posted September 26, 2011 Share Posted September 26, 2011 Humm, why 110% and not 100% of book? Link to comment Share on other sites More sharing options...
alwaysinvert Posted September 26, 2011 Share Posted September 26, 2011 Humm, why 110% and not 100% of book? Because it is sufficiently undervalued at 110%? Link to comment Share on other sites More sharing options...
merkhet Posted September 26, 2011 Share Posted September 26, 2011 The real question is the following: Are they doing this because: (1) They don't see sufficient value in the markets right now (2) They believe their earnings engine is going to explode over the next few years (3) Both (1) and (2) Link to comment Share on other sites More sharing options...
mankap Posted September 26, 2011 Share Posted September 26, 2011 Is there a dollar amount limit to what they will buy back. Will they keep on buying till it reaches 1.1 BV and start buying back again if it drops less than 1.1 BV Link to comment Share on other sites More sharing options...
returnonmycapital Posted September 26, 2011 Share Posted September 26, 2011 Humm, why 110% and not 100% of book? With a profitable underwriting business (cost of float has been negative over time), BRK's insurers are worth at least BRK's investments per share. These days, investments per share = book value per share (about $100,000 per A share). WB suggests there must be some value to the operating businesses. In today's news release, he states "considerably" more than the 10% of BV purchase limit. At 10% of book value, his purchase price for the operating businesses is around $10,000 per A share. The operating businesses are probably earning $6,500 per A share on a pre-tax basis, implying a multiple of only 1.5X pre-tax earnings for the rest of BRK. Maybe the question should be: why 110% and not 160% of book? Link to comment Share on other sites More sharing options...
tombgrt Posted September 26, 2011 Share Posted September 26, 2011 One thing is certain: Finding $20 billion ideas with the same risk/reward level is very hard if you agree that Berkshire is one of the safest and best businesses in the world currently trading at 60-70c on the dollar. Given the recent deals and stock purchases I believe they see plenty of value in today's market. Share buybacks were just inevitable at some point of undervaluation as Berkshire got bigger just as dividends will ultimately be paid out. Link to comment Share on other sites More sharing options...
gfp Posted September 26, 2011 Share Posted September 26, 2011 Is there a dollar amount limit to what they will buy back. Will they keep on buying till it reaches 1.1 BV and start buying back again if it drops less than 1.1 BV It is indefinite and has no cap on dollar amount or shares retired. It appears permanent and will continue under Ted and Todd and whoever is CEO at BRK. Link to comment Share on other sites More sharing options...
Parsad Posted September 26, 2011 Share Posted September 26, 2011 The real question is the following: Are they doing this because: (1) They don't see sufficient value in the markets right now (2) They believe their earnings engine is going to explode over the next few years (3) Both (1) and (2) I believe #2. Insurance premiums are hardening. Rail traffic continues to increase and Buffett believes that housing will stabilize and turn up in the next couple of years...thus Berkshire's various subsidiaries related to housing are going to turn. Berkshire became one of our largest holdings a few days ago. And that was simply because the operating subs should be trading at 1.5-2 times book value...the entire company was trading at about book. So you have the best insurance businesses in the world, along with some of the best non-insurance businesses in the world, all trading at book value. It was as ridiculously cheap as it was in February 2000. Cheers! Link to comment Share on other sites More sharing options...
rmitz Posted September 26, 2011 Share Posted September 26, 2011 Is there a dollar amount limit to what they will buy back. Will they keep on buying till it reaches 1.1 BV and start buying back again if it drops less than 1.1 BV It is indefinite and has no cap on dollar amount or shares retired. It appears permanent and will continue under Ted and Todd and whoever is CEO at BRK. Yeah, it seems to be putting a floor on the stock. They probably will never be able to buy a particularly significant amount (though I hope they can). At the specified brain-dead value it's simply a brain-dead simple investment for them to increase value, which can be accomplished relatively mechanically with minimal effort over time. Link to comment Share on other sites More sharing options...
Cardboard Posted September 26, 2011 Share Posted September 26, 2011 No doubt that the stock is cheap, but it has almost always been (not to the same degree of course). So IMO, you can't assume a very high price to book in your valuation. It is also tough to see a catalyst as it is with almost any of my stocks. However, if the economy improves, BRK business and share price should do quite well from here. In terms of opportunities, I still think that Buffett should take a close look at AIG. I see a lot of value that could be created under the Berkshire umbrella with this really large insurance business. Float returns improvement, lower cost of funding and the ability to say no to poor underwriting would do wonders. This thing could be acquired for book, maybe less. Cardboard Link to comment Share on other sites More sharing options...
txlaw Posted September 26, 2011 Share Posted September 26, 2011 Berkshire became one of our largest holdings a few days ago. And that was simply because the operating subs should be trading at 1.5-2 times book value...the entire company was trading at about book. So you have the best insurance businesses in the world, along with some of the best non-insurance businesses in the world, all trading at book value. It was as ridiculously cheap as it was in February 2000. Cheers! Good timing! I was considering buying BRK.B a couple days ago as well, but decided to go with LUK instead. Link to comment Share on other sites More sharing options...
Viking Posted September 26, 2011 Share Posted September 26, 2011 The biggest overhang on the stock is what happens when Buffett is gone (notwithstanding the current economic issues). I think this announcement provides some important clarity on how capital allocation decisions will be made post Buffett. Another brick in the wall... In the near term with (BV = $66-67/share) we can expect buybacks to happen to the $72-74 range. I will be interesting to see how close of a trading range the stock trades in moving forward. Link to comment Share on other sites More sharing options...
gfp Posted September 26, 2011 Share Posted September 26, 2011 In terms of opportunities, I still think that Buffett should take a close look at AIG. I see a lot of value that could be created under the Berkshire umbrella with this really large insurance business. Float returns improvement, lower cost of funding and the ability to say no to poor underwriting would do wonders. This thing could be acquired for book, maybe less. Cardboard If BRK bought all of AIG, my understanding is that all of the tax assets would be lost - which represents a big chunk of value in the current AIG. Is that correct? Link to comment Share on other sites More sharing options...
prunes Posted September 26, 2011 Share Posted September 26, 2011 I guess this means I won't get a chance to buy BRK-B at $65? Link to comment Share on other sites More sharing options...
gfp Posted September 26, 2011 Share Posted September 26, 2011 I guess this means I won't get a chance to buy BRK-B at $65? You could still get a dollar a share for the October 65 put today, if you'd like $100 to make the offer... Link to comment Share on other sites More sharing options...
beerbaron Posted September 26, 2011 Share Posted September 26, 2011 I've been buying BRK since it hit 73$ a few months ago. When Charlie Mungers tells us that he never expected BRK to sell that cheap (around 76$) and you can get a 20-30% discount from munger's "deep cheap" you know you have a winner. It's about 20% of my portfolio and I'm very happy about it. BeerBaron Link to comment Share on other sites More sharing options...
Charlie Posted September 26, 2011 Share Posted September 26, 2011 with 100% of my portfolio in Berkshire and zero cash it´s a good day and the next months will be good as well!!! I love 1-foot hurdles with nearly zero risk! Cheers :) Link to comment Share on other sites More sharing options...
Santayana Posted September 26, 2011 Share Posted September 26, 2011 I guess this means I won't get a chance to buy BRK-B at $65? I sold Jan $65 puts this morning and used the proceeds to buy the $75 calls with a few cents left over. Had the idea last week, wish I had jumped on it then! Link to comment Share on other sites More sharing options...
tombgrt Posted September 26, 2011 Share Posted September 26, 2011 Lol wait a second. I remember something from this weekend. Stupid coincidence but still... 15. AlbertaSunwapta says on Sep 23, 2011 at 3:47 PM: Only twice in 14 or 15 yrs with my current brokerage have I ever been put on a long hold. So it's a funny coincidence here: On a Friday in March of 1999 at the very height of the internet bubble when people were dumping quality companies to buy crap, I went to buy BRK.B shares and for the first time was put on hold - a long hold. It was those pesky speculators taking up time. I gave up waiting and decided to call back on the next Monday. That weekend Buffett announced that he'd consider buying back shares. I missed by a day, getting BRK at that great low point. Well, today, I again went to buy BRK.B shares and for the first time in since 1999, I was again put on hold. :-) I hope Buffett is on vacation. I have a limit order in for Monday. Quote This Comment Add Your Comment Rate this comment: Currently 4.50/512345 Rating: 4.5/5 (8 votes) http://www.gurufocus.com/news/146183/berkshire-hathaway-is-now-traded-at-the-lowest-valuation-in-decades#146504 Lol, what are the odds, poor guy. :D (It was 2000 btw and not 1999 but oke.) Link to comment Share on other sites More sharing options...
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