BRK buying back stock @ 110% of BV!!

[rijk]

with the added downside protection in place,...  has anybody thought about selling put options?

 

the jan 13 put strike 60 goes for 5

 

-what is the chance of brk dropping below 60?

 

-how terrible would it be to be forced to buy brk at 55 when buffett just told us that the stock is significantly undervalued at 70?

 

my only reservation is that 3 (watsa, klarman, rodriguez) of the top 10 investors have recently expressed their concerns about the current state of affairs and the potential for a significant market correction

 

even with the buy back authorization, i have no illusion that brk would be excempted if a major correction would take place, maybe brk could limit the damage to half of a market correction? a 50% market correction could maybe be limited to a 25%/$17.50 impact for brk, i.e. s&p 600 would take brk to $52.50, only slightly below the 55 excersize price?

 

does the risk reward look interesting here?

 

regards

rijk

[rijk]

thanks for your input peter

 

markets are nearly back to pre 2008/9 correction levels, so effectively, today there is not a lot of correction left in market valuations

 

issues have mostly been 'postponed' instead of resolved which means that one of these days, reality could strike......

 

regards

rijk

 

[tombgrt]

If BRK drops anywhere near 50% and as much as the market I will eat my shoes, film it and post it here!

 

You'd get a company for $88.5b with $43.5b in cash (not counting buybacks), stocks worth $30-35b (1/2), $34b in bonds and a shitload of operating businesses of which a lot recently were acquired (BNSF $40b, Lubrizol $10b, ...). I am not counting on it. Maybe if the S&P500 drops to 300 and even then it would be crazy.

 

I think it's laughable that many "professional" commentators think that with this buyback program, Buffett is effectively saying there are no bargains in the market. Didn't he buy for $3.6b in stocks in the 2nd quarter, invest $5b in BAC and buy Lubrizol at a decent premium from it's market quotation? That's almost $20b right there, more than 10% of Berkshire's current market cap, that he invested mostly when prices where higher than today. There is absolutely no logic in what they are saying. This announcement doesn't even mean they HAVE to buy back anything, it just provides the opportunity.

 

Sorry for the rant, I'm just stunned by Mr. Market.

[original mungerville]

I am sure that the records of many people on this board are much better than Tilson's. The people on this board would not make the comments Tilson makes extrapolating Buffet's views based on this buy-back announcement. I mean he just doesn't make sense. He should just cut out the last half of whatever he says most of the time.

 

I remember some of his remarks on Fairfax did not make sense at one point. I think he also recently sold Fairfax? 

[satish00]

Didn't see this being posted. CNBC interview: Stock buyback has begun.

 

http://www.valueplays.net/2011/09/30/buffett-all-our-businesses-are-improving/

 

 

 

[claphands22]

Didn't see this being posted. CNBC interview: Stock buyback has begun.

 

http://www.valueplays.net/2011/09/30/buffett-all-our-businesses-are-improving/

 

Yeah, my friend just sent me this link. I could have died when I heard Buffett said he already has purchased shares. I kind of thought he would never do it, but I guess he called the bluff and is purchasing.

 

I'm happy Warren is buying back shares. Not only because Berkshire is stupid-cheap, but it will make it easier on the next guy if share repurchases have already been done. There will be some Buffett sacred cows, like dividends, that the next CEO will have to deal with. At least he won't have to worry about stock repurchases.

 

The repurchases are pretty historic. First time he has actually pulled the trigger on his own stock.

[zarley]

Transcript of his CNBC appearance this morning here:  http://www.cnbc.com/id/44730157

 

Interesting part about buybacks and finding opportunities:

 

BUFFETT: We find opportunities periodically.  I mean, we did the BofA deal, we did Lubrizol, we put 9, almost $9 billion in Lubrizol.  We just announced yesterday a $400 million acquisition for an insurance company.  Just yesterday.  We've bought, in the last quarter, the third— in the current quarter, we bought net 4 billion of common equities, which was similar to the total amount we bought in the first half.  The cheaper stocks get, the better I like to buy them, whether it's our stock or somebody else's.

 

So, they've been busy buying equities in the last 6 months.  Will be very interesting to see the filings on the new holdings when we get a chance to see them.  Something like $8 billion in equities so far this year.

[berkshiremystery]

Derek Pilecki from Gator Capital Mgmt. wrote a great blog article on Buffett's stock repurchase announcement. Pilecki did also an outstanding analysis of Berkshire's book value over the last decades.

 

Cheers!

 

<snip>...

http://gatorcapitalblog.com/wp-content/uploads/2011/09/092611BRKbuybackfsu.png

...<snip>

 

link to the full blog article:

 

http://gatorcapitalblog.com/365/signals-from-berkshire-hathaway%E2%80%99s-buyback-announcement/

 

http://gatorcapitalblog.com/

[twacowfca]

I love this quote:

 

"Experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. A few major opportunities, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious mind that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past."

— Charlie Munger

 

Cheers  :)

 

 

[prunes]

Love that quote.

 

Reminds me of:

 

There is a tide in the affairs of men.

Which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and in miseries.

On such a full sea are we now afloat,

And we must take the current when it serves,

Or lose our ventures.

 

 

[twacowfca]

Love that quote.

 

Reminds me of:

 

There is a tide in the affairs of men.

Which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and in miseries.

On such a full sea are we now afloat,

And we must take the current when it serves,

Or lose our ventures.

 

Ah, yes, The Bard!  :)

[Charlie]

Here is another great quote:

 

"It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it – who look and sift the world for a mispriced bet – that they can occasionally find one. And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple."

- Charlie Munger

 

:)

[link01]

Love that quote.

 

Reminds me of:

 

There is a tide in the affairs of men.

Which, taken at the flood, leads on to fortune;

Omitted, all the voyage of their life

Is bound in shallows and in miseries.

On such a full sea are we now afloat,

And we must take the current when it serves,

Or lose our ventures.

 

Ah, yes, The Bard!  :)

 

prunes, you nailed it with that quote. ironic that it should be from julius ceasar when we may be witnessing the beginnings of the modern day equivalent of the fall of rome

[Hawk4value]

The fall of Rome indeed.  Its amazing to me how the citizens of every southern European country are in complete denial of their circumstances. They are bankrupt in the truest sense of the word and yet they riot in the streets for a societal model that is a complete fraud. You cannot borrow your way to a grand, comfortable lifestyle forever, especially if you don't print your own currency. At some point the piper needs to be paid.  Well, pay they will, in spades. Hopefully the degree of suffering will be to a point where they repudiate prolifigate borrowing and spending and vow, as a society, to never do it again.  But humans being as they are, you can never say never.