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Berkshire Hathaway Inc. Message Board

  • edfiggy edfiggy Sep 25, 2006 8:18 PM Flag

    BRKA Sell-Off is Done. Going much higher.

    BRKA just suffered a nice "little" correction. The correction started 10 days ago when before the close someone dumped a bunch of BRKA shares. Last week the correction continued with the seller of BRKA shares using any lift to sell more shares.

    The selling for the most part was on heavy volume. It felt like forced selling. Either an individual or a mutual funds got caught leading the wrong way. My guess some mutual fund with too much energy exposure got in trouble with redemptions. The mutual fund had to raise liquidity by selling BRKA shares. Probably one position (BRKA) they had a nice profit that also had liquidity and was forced to sell to meet redemptions or a margin calls. They had no option and we got caught in the middle of this mess.

    For the most part the sell-off is over IMHO. We created a double bottom this AM at $3,104. We have bounced from this level twice with heavy volume. I believe it is safe to start accmulating as BRKA recovers back to $97,000.

    After the earnings report I expect BRKB to start trading closer to $3,400 or over $100K for the BRKA shares. Without any major CAT and with earnings expanding rapidly from all the recent acquisitions the stock will drift higher now that the selling is done.

    Notice how KO, PG, WFC, etc traded much higher today as well. As a result, not only earnings are expanding rapidly but our investments are moving to 52 week highs. Basically, the perfect storm for anyone short the stock (I think it is crazy to be short BRKA with the current fundamentals).

    Despite the price BRKA is dirt cheap and I expect the B shares trading @ $3,600 by year-end. I hope you used the weakness during the last few days to buy shartes. I do not expect to many dips the remaining of the year as everything is going BRKA's way.

    In summary, BRKA is ready to make a major move becuase:

    1. Earnings are expanding quickly which will continue to lower our P/E and our book value
    2. Investment gains are expanding
    3. Plenty of cash to add to the portfolio and maintain the expantion of earnings.

    BRKA is in a sweet spot. Take advantage of this before it is too late beacuse in three months the stock will be 10-15% higher.

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    • Brka / Brkb goes up on huge volume and down on thin volume. People are accumulating the stock and only weak hands are selling. The pullback are not only on thin volume but very shallow. I do not understand why anyone would sell this stock at these levels. If you are trading this stock in and out you will eventually miss a significant move higher.

      • 1 Reply to edfiggy
      • <<If you are trading this stock in and out you will eventually miss a significant move higher. >>

        That's right,
        unless you're doing some kind of arbitrage with some strong facts backing you up, it's a losing game.
        But you'll always find someone who says, "it's working for me"
        Those folks eventually learn the hard lesson that all along, they've been rewarded for doing something foolish. It can only be repeated successfully on a normalized statistical basis like all other random events. I suspect most of the time, the real personal cost of this "strategy" is somewhat intangeable. It is lost opportunity cost as they watch from the sidelines as a hi quality company heads north, forever. Only play games that are win-able.

        "You don't have to be alot smarter than most folks, you just have to be a little smarter, for a long time"
        Charlie Munger

    • I wonder how much of the late rally yesterday was due to speculation on BUD. Either way we are shedding some of the late gains and consolidating at higher levels than last week. It seems two steps forward one back until earnings is to be expected. I still think BRKA is too cheap and trading below $3,600 after earnings will look like a bargain.

    • Look for a test of the new highs if we can manage to close above $3,286. It is amazing how cheap this stock is. After we release earnings November 2nd the stock should trade above $3,400. I am targeting no less than $3,600 by year end if $4,000 as my top target for the next 3 months.

      Eventually Wall Street will wake up to BRKA potential. Now we are hearing a possible buy-out of BUD? Another huge BRKA position.

    • The stock is down on very low volume. Looks like back filling before we move higher. Patience.

    • The discount between the A and B shares continues to narrow. I still think there is a chance we test $97,000-$97,100 before we make a move above $100K. However, I view $97K as a buying opportunity and continue to beleive that you do not trade your shares at this level. The risk of losing on a large move for a quick profit is not worth it IMHO.

    • <<I think she'd also insist on a large cushion between me and the danSIN girl. Somehow, I think that might take some of the fun out of it. >>
      How bout I get two and I let you watch,will she go for that?

    • <<@ 4k will your wife let me buy you a lap dance? If she insists I'll blindfold you.>>

      I think she'd also insist on a large cushion between me and the danSIN girl. Somehow, I think that might take some of the fun out of it.

    • Very large blocks took BRKA shares to $100K plus fairly quickly. This is not mom and pop buying the shares. I am curious to find out who made the move...if we get an upgrade tomorrow or early next week... we know who bought ahead of the news.

      Another possible explanation would be WEB finding a way to deploy large sums of money on an utility.

    • I seen this type of volume spike ahead of an upgrade one too many times. Major institution is buying ahead of the upgrade... This is not accumulation prior to EPS release. Almost panic buying ahead of favorable news.

      Morgan Stanley???? $130K price target within 12 months??? I know I am just speculating but this type of volume spike absent of news is typical ahead of such upgrade.

      Unless we are about to deploy large capital on another purchase??? My only guess is another utility.

    • I do not understand why would anyone sell at these levels. You might get lucky and sell stock at $99,500 / $3,305 and but it back a bit cheaper... maybe $97,000 / $3,225...

      However, when the fundamental and technicals showing this stock moving significantly higher why take the risk? The stock can take-off ahead of earnings and will not let you in unless you are willing to pay a significantly higher price.

      Personally, I think you hold tight. If it moves back to $97,000 you might even want to consider buying some more ahead of EPS release.

      This is not the time to trade BRKA. The stock is about to make a major move. You think you are smart trading in and out and you will eventually get caught and miss the major move.

      Remember:

      1. No major CAT this quarter.
      2. Huge increase in premiums without any major payments this quarter.
      3. Portfolio close or at reacord highs. Large caps now in vougue. P&G, WFC, KO...all close to 52 weeks highs.
      4. Recent purchases now part of earnings
      5. EPS exploding. Can you imagine what Mid American earnings will be this quarter?
      6. NetJets cash flow positive.
      7. Cash now earning close to 4.5% versus 2.5% last year
      8. Cup and bowl formation. Great technicals
      9. Huge volume spikes since the quarter ended.

      All this... and I bet a major buy recommendation by someone like Morgan Stanley within the next 5-6 trading days. The volume supports this theory.

      How can you sell at these levels? Are you crazy? Be patient and wait for the move that is going to be huge. Do not get cute trying to trade this stock right now.

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