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Berkshire Hathaway Inc. Message Board

jad1148 51 posts  |  Last Activity: 12 hours ago Member since: Dec 8, 2002
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  • jad1148 jad1148 Dec 8, 2015 1:55 PM Flag

    Anyone who has ever watched Shark Tank knows that Kevin is a wine snob. IIRC, Costco sells his wines. Check out his video:
    « Kevin O'Leary Explains Tastevin »

    I'll bet that next you'll be telling us that Teresa Strasser (The List) is one too!

    No way, José!

    Everyone knows that "Teresa" is a good, Catholic girl's name, and "Strasser"? Come on, you DO remember the Major Strasser character from Casablanca?

    Honestly Bernie, do you ever get anything right?

  • jad1148 jad1148 Feb 2, 2016 5:19 PM Flag

    « He'll post non stop til we get to $131. »

    I believe his target is $140.

    My guess is, there's no profit to be made selling covered calls (shearing the sheepies) until the stock price is north of $140.

    Assumptions: $150 Strike (I doubt that he'd willing take the risk of assignment, i.e., giving up his shares, for anything less), 3 months to expiry, 0.33% risk free rate, and 20% volatility.

    Stock Price, Theoretical Call Premium
    $125, $0.19 {pfft}
    $140, $2.13 {major mad money}

  • jad1148 jad1148 Nov 14, 2015 7:49 AM Flag

    Wow, hc, now you've given even me a reason to throw caution to the wind (ignore single stock risk) and contemplate buying IBM. $116 per share, (your "downside target of 8 xs 14.50") implies a theoretical nominal annual total return of more than 9%, and that's assuming that IBM will have no real (organic) growth and no inflationary (pricing power) growth in the future, that their only source of per share growth will come entirely from buying back their own shares. Of course, they'll need to spend as much on buy backs as they do on dividends, which, by the way, they did in the third quarter!.

    TNATR = ( 1 + $5.20 / $116 ) / ( 1 - $5.20 / $ 116 ) * ( 1 + 0% ) * ( 1 + 0% ) - 1 = 9.3%

    It'll be interesting to see if Buffy bought more in the third quarter. Correct me if I'm wrong, but isn't the 13F-HR due on Monday?

  • jad1148 jad1148 Nov 14, 2015 8:55 AM Flag

    Regarding Gates? No and No.

    Anytime you coattail Buffy you're taking your chances.

    Some of his picks (the textile mil) work out and some (Dexter Shoes, my father used to wear them) don't.

  • jad1148 jad1148 Jan 18, 2016 7:59 AM Flag

    Dear hjc:

    Oy vey!

    What can I say?

    Veren zol fun dir a blintsa.


  • jad1148 jad1148 Nov 18, 2015 7:53 AM Flag

    « lets see how the year ends up »

    LOL!, your holding period is 43 days?

    What do you believe IBM will do over the next 30 years?

    I'll guesstimate that it will pay out dividends that total at least two times his original purchase price and end the period trading at a residual price that is at least three times his original purchase price. That's not a great return by any measure, but it does beat the 4.26% YTM on the 30-Year Treasury that was available at the time of his initial purchase.

  • Reply to

    another 1.5 million shs of ibm

    by hjclasvegas6969 Nov 16, 2015 8:29 AM
    jad1148 jad1148 Nov 18, 2015 5:30 AM Flag

    « What does Gates think about BRK's investment in IBM? »

    See msg # 216710 on the other board for an excerpt and a link (requires a subscription) to the source.

    As you read the excerpt note that he qualifies his remarks with the following phrases:

    "I’m biased."

    ... "I competed with them ..."

    Seriously, if you asked a Chevy Malibu dealer for his opinion of the Ford Fusion what would you expect to hear?

  • Reply to

    Help me with the math

    by tomandjanewright Nov 30, 2015 10:55 AM
    jad1148 jad1148 Dec 1, 2015 5:50 AM Flag

    « IBM cannot buyback $13 billion a year and pay $4-5 billion in dividends a year. »

    Over the last nine years, 9/30/2006 to 9/30/2015, IBM has reduced the share count, on average, by 4.77% per year, from 1506.4 to 970.1 million shares outstanding.

    No doubt, it finally dawned on the CEO and the BOD that if they keep that up, they'd be handing the "keys" over to Buffett's successor in about 50 years. My guess is that's why they lowered their forward planned share reduction rate to 2% to 3% year. That at least reduces their aiding and abetting of what looks like BRK's passive takeover plan.

    100% * ( 1 - 4.77% ) ^ 50.8 years = 8.35%

    As of 9/30/2015, BRK owned 8.35% of IBM's outstanding shares.

  • Reply to

    Why buy an index ETF or mutual fund

    by richer_than_your_mother Dec 15, 2015 8:54 PM
    jad1148 jad1148 Dec 16, 2015 5:10 AM Flag

    Because you want both dividends and also want to avoid single stock risk. You say you don't understand single stock risk as it relates to BRK? Reread page 8 of the 2001 Annual Report. The first sentence of the relevant paragraph is:

    "Insurers have always found it costly to ignore new exposures. Doing that in the case of terrorism,
    however, could literally bankrupt the industry."

    Folks who owned BRK during that period, and I was one of them, sweated it out, hoping that there wouldn't be a follow up event before the existing policies expired and could be rewritten.

  • jad1148 jad1148 Dec 3, 2015 9:10 AM Flag

    It should be obvious by now, hc, that the only thing I care about is getting paid - dividends and their growth. For me, the stuff you want to discuss is just noise, endless jibber jabber. I'm tired of the financial fairy tales so many folks like to indulge in on these message boards. Again, just my opinion, but thinking about and discussing stocks that can't, or won't, pay a dividend, is an unproductive waste of time.

  • Reply to

    Help me with the math

    by tomandjanewright Nov 30, 2015 10:55 AM
    jad1148 jad1148 Nov 30, 2015 2:01 PM Flag

    As of 9/30/2015, BRK owned 81,033,450 shares of IBM's 970,110,126 total shares outstanding. Assuming Ginni stays committed to a 2% - 3% annual share count reduction (see: slide #30, 26Feb2015 IBM Investor Briefing) and BRK doesn't buy another share on its own, theoretically, BRK would own IBM in about 100 years.

    970,110,126 * ( 1 - 2.5% ) ^ n = 81,033,450

    Solve for n.

    n =LN(81033450/970110126)/LN(1-0.025) = ~98 years.

  • jad1148 jad1148 Dec 3, 2015 12:29 PM Flag

    « remind me did you ever own brkb ? »

    Yes, on three different occasions.

    I never lost money on BRK, but I did make low single digit returns on trades #1 and #3 (that's the one Spirach2 likes to harp about) and high double digits on trade #2.

    I vowed, after trade #3, to never again buy BRK. I was totally outraged by WEB's solution to the low P/B problem. I expected him to start paying a dividend. I was willing to wait for the pumptards to reinflate the price with their endless IV jibber jabber. But, no, what does WEB do instead? He offers to buyback shares at a totally unacceptable P/B of less than 110%, which he later bumped up to less than 120%. IMO, it would have been better if he had just done nothing. Then, when he failed the five year test, I once again expected him to initiate a dividend. So what does he do instead? He moves the goal posts. So, to answer your question, why am I still here? After having invested more than 17 years of my life following this little gemstone (coprolite?), I'm still curious enough to want to see how the story ends, and so I check in for a few minutes every morning just to see what you folks (& the fools over on the other board) are up to.

    So, tell the truth hc. aren't you too, just a tiny bit frustrated with BRK?

  • Reply to

    Sept $140 puts

    by tomandjanewright Aug 5, 2015 5:13 PM
    jad1148 jad1148 Dec 1, 2015 4:58 AM Flag

    LOL, professor.

    Are you still making infinite ROI selling naked puts backed with insufficient collateral?

    IIRC, you never did got back to us on how you decided to solve your dilemma when your buyer exercised.

  • jad1148 jad1148 Dec 30, 2015 9:21 AM Flag

    « Disclosure: I am/we are long BRK.B. »

    No, really?

    I would never have guessed!


  • Reply to

    Dividends are for suckers

    by richer_than_your_mother Dec 18, 2015 6:57 AM
    jad1148 jad1148 Dec 18, 2015 7:23 AM Flag

    [Excerpt begins]

    Undistributed earnings reinvested in a business cannot properly be considered a second form of payment to its owners. The money thus diverted remains at risk. It may finally fail to earn any profit at all. Unless it produces dividends sometime in the future, it comes to nought. Thus it is only actual dividends as such, paid in cash on common stock by companies not subject to regulatory ceilings on their earnings – it is only these particular dividends, to repeat, that drive the whole engine of industry.

    The market value of a common stock is set by marginal opinion concerning true worth. Investment value, however, is set by the present value of future dividends. The two seldom coincide. To forecast dividends and estimate their present value is the task of the investment analyst.

    Dividends rather than assets or earnings are what really count. After all, what good are assets without earnings, or earnings without dividends either now or later? If Congress were to levy a tax of 100% on dividends, with no hope of repeal, all stocks would become worthless. No matter how large their earnings, their prices would be zero. Clearly dividends determine value.

    [End of excerpt]

    Reference: Williams, John Burr. Interest, Growth, and Inflation or The Contractual Savings Theory of Interest. Circa 1964-1974. Pages 141-142.

    In short, if you're not buying stocks for their future dividend stream then you might as well be trading baseball cards, hoping the cards increase in price over the years.

  • jad1148 jad1148 Dec 30, 2015 1:36 PM Flag

    hjc, clearly these "experts" who tout ratios (IV/BV) of 1.8 are hoping that their readers haven't bothered to read the 2014 AR.

    Excerpt from page 34:

    "If an investor’s entry point into Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares have occasionally reached – it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this truth. Purchases of Berkshire that investors make at a price modestly above the level at which the company would repurchase its shares, however, should produce gains within a reasonable period of time."

  • Reply to

    The rational walk on buybacks and floors,

    by hjclasvegas6969 Jan 7, 2016 10:43 AM
    jad1148 jad1148 Jan 7, 2016 1:25 PM Flag

    I was pleasantly surprised to read that his 10 year BV/s target was actually quite reasonable.

    On a related note, Jim, on the other board (#221431), made a good case for doing a buyback: "It burns off excess cash."

    JMO, but, theoretically speaking, if the relative increase in the ROE, E/BV, is greater than the relative decrease in BV/s, then the IV/s should increase.

  • jad1148 jad1148 Nov 19, 2015 7:10 PM Flag

    It looks like the author has done a good job of presenting both the pros and cons.

    For me, the key "takeaways" were:

    • "Free cash flow generation is no problem for IBM and won't be for the foreseeable future."

    • "The company has raised its dividend for 20 consecutive years and shows no signs of stopping."

    • "IBM's payout ratio is less than 35% on a trailing 12 month basis, leaving it with plenty of flexibility for growth."

  • jad1148 jad1148 Dec 8, 2015 5:57 PM Flag

    Take it easy, Bernie, I was just having a little fun with you.

    By the way, the jokes about Teresa Strasser's name are actually hers. They're from something she wrote years ago. I can't find it now, but if I remember correctly, she also wrote that her instructor at Hebrew school didn't like her name either and chose to call her Rebecca instead.

  • jad1148 by jad1148 Dec 17, 2015 6:46 PM Flag

    Apparently there is no interest, here or on the other board, in discussing Buffy's latest purchase for his personal account. This is the kind of thing he buys to generate the income he needs to pay his personal expenses (e.g., fractional ownership of a jet). Anyone remember, FR, the REIT he bought and recommended in 1999? Someone paid $210,000 for that tip (If you're interested, search for the 17Dec1999 WSJ article: « Don't Tell Anyone, but Tip In Buffett's Wallet Is a REIT » )

    SRG declared a dividend today of $0.50 per share for the 177 day period ending 12/31/2015.

    Sounds kind of low to me, that's roughly an annualized ROE of about 3.5% based on Yahoo's reported book value per share of $29.24.

    Thoughts anyone?

193,999.00+3,999.00(+2.10%)Feb 12 4:00 PMEST