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Berkshire Hathaway Inc. Message Board

  • axpkocop axpkocop Jun 13, 2014 4:05 PM Flag

    Grandma Sells LO & Buys WMT

    and she also bought more WELLS FARGO convertible 7.5% PFD.

    LO is still her 3rd largest holding behind only PM and BRK.

    She paid 75.57/share for WMT, 1221 for WFC PFD and sold LO for 61.07 per share.

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    • She was paid her first dividend for WFC PFD today and she bought back the LO shares she sold under 59.

      Both investments are trading XD today.

      LO will be held for the merger wherein she'll receive $50.5 per share in cash and .29 shares of RAI for each share of LO she owns. Grandma likes her risk arbitrage.

    • Hi AXP,

      Besides BRK what equities strike your fancy? I have more cash than I would like and am finding little in the way of value to buy. Last purchases were a series of Russian stocks back in Jan/Feb, and though up nicely are still cheap, but the gains could certainly disappear overnight and my tolerance for such risk is limited to an already sizeable existing investment. I still like SHLD and when the stock trades down into the mid 30s, tend to load up or sell puts, which premiums are still high due to the volatility in the stock. I keep looking at LUK, but can't find a catalyst, though it is probably cheap. Any thoughts or ideas?

    • Initiated a 1.3% position in WELLS FARGO & CO NEW PERP PFD CNV A, in IRA # 1 and also bought more BRKb in Roth IRA #1.

      IRA #1 is currently 44% cash which is used to sell cash secured put options but the premiums being offered are currently dismal so I'll be selling less options and buying more stocks and bonds in the near future.

    • Bought more WFC PFD @ $1,218/share and sold some LO at an option adjusted cost of 62.

      I do like my 6% dividends.

    • Don't like the WFC Pf at all. Ytm is about 6 and you can be converted out at a 21% loss of principal.

      • 1 Reply to not_toddy
      • Oh, toddy, JMO, but I believe you're being way too hard on WFC-PL.

        Yes, AXP paid 122% of par, but, correct me if I'm wrong, the conversion occurs at 130% of par not 100%.

        « On or after 3/15/2013, if the price of the common stock exceeds 130% of the conversion price for 20 of any 30 consecutive trading days, the company may, at their option, cause the preferred shares to be converted into common shares at the then prevailing conversion price. »

        And, since WFC-PL is a perpetuity, there is no YTM. Assuming conversion is probably at least 23+ years into the future ( $52*1.06^23 = 130%*156.71), my guess is the YTC (yield to conversion) is more likely to be ~6.27%, and the YTW (yield to worse, no conversion, ever) is not likely to be less than ~6.15% ($75/$1220*100).

    • Good buy on WMT. You are always hitting them good.

      BRK is my biggest financial holding. WEB gets deals other banks only dream of. AXP has been a fantastic ride for BRK since the lows. Good luck.

      Financials. I don't trust fractional reserve banking but I trust WEB. An enigma wrapped in a puzzle.

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