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Berkshire Hathaway Inc. Message Board

  • dighy dighy Sep 9, 1998 12:50 PM Flag



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    • Reply to notbuffett and continuation of my

      Over the years, BRK has done very well - - I
      think better than even what Buffett might have thought.
      One reason for this is that Coke (over the last
      decade or so) and G have done extremely well. My guess
      is that Buffett expected Coke to do well but Coke
      probably surpassed even his expectations.

      in the future, we should not expect WEB to do as
      well as he has done in the past with Coke's help. I
      believe BRK (or WEB) will do well but Warren was also
      lucky to have done so well. If we extrapolate his past
      performance, we shall be slightly (or more than slightly)
      disappointed. WEB expects to give about 15% return (as he
      stated in the last shareholders' meeting) and I believe
      him. I think that we are going to get around 15% (or a
      bit more) in the next five to ten years. As I have
      said, I shall be happy with 15% a year (and hoping and
      dreaming for more but not really expecting or deserving

    • Lets not forget that most arb traders don't
      strickly follow the rules.... short A, long B. Sometimes
      they are long only one or even both and vise-versa In
      Brk's case, most arbs are short Brk, but not long GRN.
      They usually don't chase a spread that's not worth
      chasing. (Brk/GRN lost it's spread within the first 2
      weeks) So, in a strict sense, it is not risk-arbitrage
      that is putting pressure on Brk, but just

      If you want proof, just look at all the mergers
      where BOTH companies went up. MCI/Worldcom,
      Northrop/Lockheed (before it fell apart), Chrysler/Daimler, etc....
      These companies were considered too risky to short and
      most arbs closed out their initial shorts and went
      long only. But analysts who are 'conditioned' (by
      Buffet himself!) that stock deals for Berkshire equals
      overvalued are probably not too worried shorting Brk.

      They may be right, they may be wrong,.. but if all the
      lemmings are jumping off a cliff, you should jump off the
      same cliff and carry a parachute.... a good parachute
      would have been to buy a 6 month PUT option on GRN
      before it got too expensive and thinly traded. Oh well,
      hindsight is 20/20.

    • What you don't understand is how the markets for
      stocks are made...and how an ARB sets his or her postion
      up in the market...the first thing an ARB does is to
      begin to set up the short sale side before he sets up
      his long side....this is because the short side it
      more difficult to get going...this is true in the
      BRK.a/GRN deal....BRK.a or b is hard to short in
      by moving the market lower for brk.a/b it is easier
      to short...however, at the same time an arb is doing
      this he would have to lower his bid price that he is
      willing to pay for GRN.. both stocks would then

    • You sound like a man with a paper

      Buffett pulled off another one... sitting on 9 billion
      plus getting ready to inherit another 20 billion right
      at the best time to buy, re: LOW!!! remember, buy
      LOW sell high...

      PS: You're a putz
      (must have bought at

      All that cash......And still no

      I bet it could bring tears to your eyes.

      the WEB be with you.


    • <the net drift is that WEB's telegraphing that
      BRK is overvalued>

      I don't get the
      impression that Web's telegraphing that BRK is overvalued.
      What did Web say or not say to make you think this ??
      I heard he would not comment on BRKA's present
      market value at the BRK meeting on 9/16/98. I am not
      sure why he would not comment. Maybe he's planning to
      buy back some shares of the company with some of the
      9 Billion$. I think you can spin what you want,
      depending on your position, on his not commenting on the
      present BRKA market value.


      As far as
      why the stock is down, one guess could be the
      arbitragers, ie. the one's that sold BRKA short and then at
      some point in time bought GRN shares to cover their
      BRKA short. For every 285.XX shares they buy of GRN
      that will cover one share of BRKA short when the merge
      takes place.

      The 9.975 M shares of GRN that the
      institutions bought, how much of that was with money gotten
      from shorting BRKA. If you look at the profile of this
      company clicking on the Yahoo profile URL, you'll see at
      the bottom that there were 18K shares shorted as of
      August 10. I don't know what that number was on June 10,
      that would be interesting to know. I would guess that
      number is much greater now, September 18. If so many are
      selling short are there enough buyers to compensate for
      this large abnormal volume of the shorters.

      am not sure how much of the drop is related to the
      shorting? Of course all the negative global news, some of
      BRK's holdings like G and KO are down, which frightens
      people away and the downward momentum of the shorters is
      not countered by much buying.

      Please when
      anyone adds your comments to this thread of discussion,
      about why BRKA price falling, tell us whether you are
      long or short BRKA or whether your sitting on the
      sidelines in the Money Market. If you don't tell us your
      position I will assume you are short or in MM. This will
      clarify the subconscious or conscious spin we all put on
      our messages.

      By the way I am long BRKA via

    • The Bs should be no different than the As in
      price movement - arbitrage will ensure it. The
      difference is in the voting rights
      per $ invested. I
      don't care anyway since I proxy WEB all of my

    • I've owned a couple of shares of Big Daddy for a
      few years. I have cash to buy but not enough for the
      real thing. With the cash position a $9B, wouldn't the
      B's be a good buy as well. The man is the man and
      holds a canyon of cash for acquisitions in a really bad
      market. Please advise on Class B's!

    • The theory's been advanced here and elsewhere
      that GRN has been dragging down BRK since institutions
      (which have loved GRN) and particularly index funds,
      have been selling before the merger. I tried calling
      Deborah Nelson at GRN investor relations but couldn't get
      through. However, I found what I was looking for at Market
      Guide ( and click on market guide, then
      click on 'ownership').
      GRN is 90% owned by 973
      institutions, while BRK is only 13% owned by 321 institutions.
      In the last 3 months however, there has been a net
      BUYING of GRN shares by institutions (9.975M shares
      bought vs. 9.734M sold). Insiders, however, have net
      sold 7,000 shares (not that much).
      BRK in the
      last 3 months has not changed in institutional
      ownership, with 6 net insider sells.

      Although the
      exact date of this information is not given (it might
      be a bit stale, who knows?), the net drift is that
      WEB's telegraphing that BRK is overvalued has probably
      been more to do with the poor performance relative to
      the SP since June. I'm long GRN, hoping to cash in on
      the arbitrage, but I've continually been bloodied by
      the falling knife as I buy and then sell.

      would have thought with the huge cash just revealed,
      more people would have figured that BRK wasn't as
      bloodied by August as KO, G, etc were and thus there would
      be some upward movement, as well as by the
      confirmation of shareholder approval of the merger. No such
      luck. Makes me pretty nervous that I don't understand
      all the issues. What am I not getting here????

    • He knows that G and KO are some of the best
      companies in the world and is happy to keep them for an
      indefinite period of time.
      As for the $9B in cash, he
      can't wait to buy additional positions
      in new and
      current companies when "Mr. Market" will be having
      sale. This period is not dissimilar to the mid 70s and
      90s where he did the same - only with less.

    • bamabanker wrote:
      "It seems to me that a point
      that makes a tremendous difference is whether BRK owns
      all of a business or a part of the business (which is
      what you have in Coke, Gillette, etc.) When BRk or
      anyone (you or I, etc.) owns shares in a public company
      then the only possibility for making money is through
      increases in the stock price. The stock price is driven
      over the longterm by growth in earnings."

      is a fairly narrow view. Companies can still return
      large amounts to investors such as BRK via share
      buybacks (i think Washington Post is an extreme example of
      this) if BRK doesn't sell any, then over time they head
      to 100% ownership. Alternatively dividend payments
      are analagous (though not as tax efficient *unless*
      through pref shares) to the cash flow that you mention.
      You have to separate the idea of cashflow from
      growth. A company can remain largely static (eg a utility
      co. owning a hydro station) but if it's requirements
      for reinvesting capital to replace equipment /etc are
      minimal, then vast amounts of free cash flow can be


      peter xyz

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