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Berkshire Hathaway Inc. Message Board

  • axpkocop axpkocop Aug 16, 2013 3:12 PM Flag

    Bought More IBM

    I have some shares being put to me today-the option adjusted cost will be around 195.

    IBM will now make up about 11% of the assets in this account and 5% of my total assets. I'm willing to have 10% of my assets in IBM based on what I believe to be its current discount to its intrinsic value.

    I've also doubled my stake in PSX with an option adjusted cost of about 56.

    Next week I may buy more of both in my IRAs because options expire today which frees up lots of cash.

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    • I bought today at 179 and change and sold some BRKB to do it.
      First time I've owned IBM since I was an IBM employee.
      If it goes much lower, I will sell some WFC to buy more.

    • morning axp, appreciate your honesty ! I forgot what premium you got for those puts but that's what i mean about the RISK of selling puts into a 14 VIX and buffett hype. You are now stuck 15 what was the put premium, I forgot 3 $$ or so ? thanks.

    • I've been in IT for over 20 years and I honestly don't understand it as an investment. They provide servers and also storage which is a pretty competitive market. Their software is generally antiquated based on my experience. I know several companies that moved off Lotus Notes, and have never looked back. Aside from these businesses they farm work and consulting to India. There balance sheet sux in comparison to peers which usually have billions in net cash. Buffet's other tech investments have been questionable such as Intel. In addition, 22 times eps for VRSN seems like he is way late...he should have been paying attn when they sold some of there businesses to Symantec. If I were forced to invest in this sector I would put my money in Oracle at a pe of 14 with billions in net cash long before looking at any of the aforementioned.

      • 3 Replies to bribeavis
      • I've been an employee of IBM not too many years ago, and have friends still there.
        But to label IBM a server and storage company is a gross mis-representation imo.
        The server business has been in run-off for years. Storage is far from the core. Cloud and services are key to this business. Their service business is sticky and has been growing for many years, Buffett described it as like an STD. Although cloud is growing fast everywhere, no one has found out how to make money at it yet.
        I'll give Lou belated credit, he was right.

      • Even when IBM was king of the cats, back in the 70s, they had inferior products compared to their competitors. Theri speciality was schmoozing upper management and convincing them that "no one ever got fired for going with IBM". People think they will keep doing it.

        As I have posted here before, I think Intel is a decent investment. They still understand the business, thy know what it takes to make good products and will do so, and it pays a nice dividend. In general, I like upstream companies in tech, although I sold my GSM.

      • same here.... my only explanation is support of legacy, and the outsourcing of projects, project management, and IT maintenance jobs from companies' with small, core IT personnel, who cannot keep own personnel as not leading edge, so contract almost everything else out. In addition, they are very expensive, and in my experience, charge a lot for barely qualified staff. It's also still true that you never get fired for hiring IBM, and its a useful internal polotical scapegoat.

    • Faaaaaaaade

    • Bought more IBM in IRAs 3 & 4 and sold put options in both of them against AIG which is down to about 46 today.

    • Increased my IBM stake in IRA #1 from 3.5% to 4.5% also more than doubled it in my Roth IRA to about 15% of its assets. I paid 185.55/sh

      IRA #1 is still over 50% cash which is used to sell put options.

    • hi, remind me, what did you get for the puts ? Did you sell the 200 put ?

 
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