I sold bunch of BRK.b today and I bought GRN. My
GRN holding will get converted back into BRK.b
someday. My calculation shows that I am better off by
about 5.5 percent after taking the transactions costs
into account. We know all about risks of the deal not
going through. In addition, there are some tax issues
if one can not somehow sell other shares where there
is a loss. Any other problem?? Any comments.
I really feel that if one already owns BRK, one
should seriously think about selling some and buying
GRN. If one is thinking of buying new BRK, one should
instead buy GRN. At this point in time, there is very
little benefit in buying BRK. Thus, more people will be
selling BRK. I am not sure if it would result in a
temporary price decline. But, it is likely. As some of us
have noticed, the premium has gone down from about
seven percent to about 5 percent in a few days.
GRN/BRK merger is expected to be a tax-free
merger (i.e. to the holders of GRN shares). Almost
surely. I think it was announced
it to be so.
Technically, IRS will issue some kind of ruling if
companies want that.
Of course, if someone already
owns BRK (like I do), it is more
I called the investor relations
dept thanks to your phone number and spoke to a very
conversant, spontaneous and warm individual.
She said the
deal is slated to go through somewhere between Oct 1st
and Dec 31st. I asked if it didn't go through then,
for some reason, would it mean the deal was off. She
said that, in her opinion, if the deal didn't go
through then, it would most likely go through sometime
I asked what the mood around GenRE was
concerning the merger. She said it was optomistic, that
people were looking forward to it.
I asked about
the tax consequences. She said it was a stock for
stock exchange and there weren't any.
that's about it... I'll be going for a swim
Good luck in everything and thanks for your
I did not ask that question when I spoke to the
shareholder relations guy. I did try 3 times during the
course of the conversation to pin him down on when this
deal would be done. He absolutely refused to speculate
beyond the standard boilerplate of "sometime in the 4th
quarter pending govt. approval" He was pleasant enough
but it was plain that he had been coached. The main
switchboard is 203 - 328-5000. A $5.00 longdistance phone
call is plenty cheap compared to the investment you
are contemplating........especially if it gives you
peace of mind. Good Luck
Thanks for the "further" info on GRN/BRK.
I'm getting myself geared up to buy GRN, but just one
more question: is there a tax consequence to the
conversion of GRN to BRK?
Thanks very much. You and
all the other posters have been generous in your
help. It is deeply appreciated.
To add further to you reply to
Lindaseed...........I called up to GenRe headquarters and had a talk to
their share holder relations guy. The merger is to be
completed "sometime in the 4th quarter pending govt.
approval" Each share holder will be sent a complete proxy
statement "in excruciating detail" and also in plain
English describing your conversion options to BRK. If you
want "A" stock your fractional shares will be paid off
in"B"and any leftover fraction of "B" will be paid to your
account at your brokers in cash. Based on present values,
I guess some folks could get $2500 to $2600 in
cash. The beat goes on.........
business week and to a certain extent barron's
say that brk bought grn to lessen risk of a market
downturn and to use overpriced brk stock as an inflated
currency. the economist, a magazine in the austin library
sort of like a european newsweek says:
1. on a $600
million supercat policy brk has a 94% chance of making
2. catastrophy "bonds", which web
scoffs at in the annual report, are not that bad a
3. without a major catastrpohy there will always be
a lot of capital flowing into catastrophy insurance
so prices will stay low.
the interesting thing
about this article is that it has a contrarian point of
view oposite of what the media here says. buying grn
might not have been a way to get partly out of the
market and into cash.
I have decided that I should buy another 9 shares
of GRN to insure that I get a BRK A (as opposed to
B's), just in case the "Tax Free" status is not granted
when the merger closes. I wonder what a good guess is
as to when the merger will actually be finialized?
I've been thinking about your comments. Correct
me if I am wrong:
BRK.B shares =
If one bought 100 GRN today, one would get about 10
At today's price for GRN (258)
and BRK.B (about 2589) wouldn't one end up with about
the same cost for each?
Thank you for your
Be careful, do not ignore the third decimal point
as some calculators round it off. If you ignore
that, you will not get the positive five
If you buy 1 GRN today, you pay
You get 0.105 of BRK which implicitly means you get
0.105 x 2599 = $ 271.95.
So, you save =
271.95-259 = $12.95 on an investement of $259, or aobut five
If you prefer, you may try buying 1000
shares of GRN (a bit too much for most people but the
math is easier).
For 1,000 shares of GRN, you
You get 105 shares of BRK.b =
105 x 2599 = $272,895 which means that you save
$13,895. (This is what I have done, and the discount was a
little more a couple of days ago.)