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Berkshire Hathaway Inc. Message Board

  • For valuation of Eln and the jv topic, have a look at the poster on the Eln board whose name is Uduc.

    I bought 80 % more shares at the opening at 1.32

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    • Yeah ok, that makes a lot of sense to me. I like it because it considers price in a more(IMO) meaningful way than simply a discount to IV. Thanks for the responses, I really appreciate it.

    • "Just one more question. What are you using for a discount rate in figuring "my value"

      I don't figure it that way. I search for low ratios, compared to other companies: for example, low price to sales ratio compared with other companies that are similar, low price to cash-flow, low price to earnings, low ratio of price to book value. I search as well for big stock price declines that don't seem to be warranted, purchases by insiders, etc

      Then I dream that I am a rich man and ask myself what I would pay for the whole company.

      Remembering my own shortcomings, in that I am quite unable to reach a precise understanding of what is the intrinsic value of any security, I would try to make a low-ball offering, it's "my value"...

    • Just one more question. What are you using for a discount rate in figuring "my value".

    • On the sell side, some dumb and not so dumb examples:

      DTG: "my value": 18 $

      sept. 26: initiated a pos at 9.4 $
      oct. 30: sold at 11.4 $

      felt elated at the time, thought good to take a quick profit.
      Later, seeing the actual price of 25 $ ...

      SCRA: "my value": 25 $

      May 8 2001: initiated a pos at 15.1 $
      Sept 18 2001: bought more at 12 $
      Sept 20 2001: bought more at 8.3 $
      Jan. 4 2002 : sold at 13.4 $
      March 7 2002: sold at 14.5 $

      Actual pos = twice the initial one with a
      basis cost of 3.4 $

      I prefer the second way ...
      So, if I buy in stages as it comes down, I also like to average my cost as the price recovers...
      I will probably sell more SCRA at a price of 20 $ + or buy again at less than 10 $.

    • "I bought 80 % more shares at the opening at 1.32"

      I don't know that you have an interest in discussing this but, if you would, could you talk to me in general terms about how you determine your progression on the buy side. Basically I'm curious about your buy side discipline.

      • 1 Reply to npv72000
      • First I try to value the shares, in this case, about 20 $.

        Then, I wait until, hopefully, it is priced at about 60 - 70 % of the value.

        I initiate a position.

        If the price falls below 50 % of the value, I buy again, for about the same amount of cash as in the first purchase (in other words I increase the number of shares bought, given the lower price).

        If it keeps falling, I don't buy again until it is about 30 % of the value, and again for about the same amount of cash.

        And finally, each time the price is cut in half I buy again.

        It doesn't bother me at all going against the tide, but I reappraise my evaluation of the company and if I don't find any reason to change my mind, I simply go ahead...

        I can wait for ages before buying anything. Some companies, I am still waiting after more than 15 years ...: I like the brand, but never liked the price...

 
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