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Berkshire Hathaway Inc. Message Board

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  • garmingchan garmingchan Nov 3, 2009 9:04 PM Flag

    People thought Buffett overpaid for Coca-Cola too

    I'm a troll here.
    i have a question re: Buffett's actions.
    I know there's a simple answer to this, but I wanted to double check with this board.
    Warren Buffett has always said that by paying with stock you basically are telling the world you don't want to own it OR its overvalued.
    Is he making a call on the equities market?
    or does he just not have cash around (or rapidly available).
    Thanks
    g

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    • You don't sound like a troll.
      The trolls are the board jackasses.

      Yea, normally you'd never want to buy something with undervalued stock like Brk today. But....
      A. He just plain doesn't have enough cash to do this deal
      B. He obviously really wants to do this deal
      C. The stock part only comes to about 1/3 of the price
      d. who knows, maybe the BNI bod demanded a stock transaction

      It's most likely trading undervalued Brk for undervalued BNI.
      Sometimes you gotta strike when the iron is hot, he seems to feel that getting this thing done relatively quickly is important.

      • 3 Replies to davidyab
      • something to add is that the way the deal is structured, BRK can issue less stock if the price goes up from today to the moment the deal closes...Around 6 months...

        I liked that structure, cause it promises $100, but if Berkshire goes up, they get fewer shares, and it will probably go up, since headline numbers will be good (the inverse is true too, if the price goes down dilution increases)...

      • Good post.

        -TF

      • <<Yea, normally you'd never want to buy something with undervalued stock like Brk today. But....
        A. He just plain doesn't have enough cash to do this deal
        B. He obviously really wants to do this deal
        C. The stock part only comes to about 1/3 of the price
        d. who knows, maybe the BNI bod demanded a stock transaction>>

        Dave, keep searching for answers and justifications, your comments give you away, I see you too can't see the sense of this deal at these high prices, twisting the math with illusionary justifications may help your conscious but doesn't really change the fact that we over payed.

        <<It's most likely trading undervalued Brk for undervalued BNI.
        Sometimes you gotta strike when the iron is hot, he seems to feel that getting this thing done relatively quickly is important.>>

        If we dance hard enough we'll likely cause it to rain, the witch doctor seems pretty adamant about that. I think he feels getting this thing done quickly is important, so quick dance faster he looks like he's getting angry at us.

        BNI ain't undervalued, no matter how many times you keep saying it. I'd bet 99% of the folks on this board think we over payed, just like we did with GenRe. And please don't bother telling me how we bought GenRe with overvalued stock, to somehow justify somehow that it wasn't really that bad.

 
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