well shares just got diluted nearly 25% due to the rights offering with the debt also carrying an 8% coupon. Secondly theres substantial losses occurring between now and whatever time the assets could be liquidated and there doesnt really seem to be much of an indication that eddie is in fact trying to liquidate.
interesting article, but the entire premise is that if you took the down payment and invested in instead at an assumed real return of 7.5% (far too high imo) that it would more than make up for the savings of owning a house with a 4% mortgage that would be expected to appreciate about 1.2% in real terms. The author also assumes that the renter would contribute annual principal payments into the stock market.
I found it a little interesting that it was reason enough for doug kass to reestablish his short. We'll see how that works out.
Even if he lost 2.5 billion on KO and IBM, thats only 2/3 of 1% of market cap, less if you include tax effects. Brk's underperformed the last few days by more than that so I'm not sure what you mean. This is mostly an operating company
I dont know if its that unlikely. IBMs run rate non-gaap eps is now 14.72. Yeah thats 11x here but Ginni indicated that the slowdown just started in September and of course that excludes the restructuring charges taken each year. Its now in a loss position so selling reduces current federal taxes.
The price is a reaction to investors that want to participate in the rights offering, which i dont blame as its pretty favorable. Its very unfavorable to existing shareholders and i would expect shld to be back under 30 by the record date next week
Regardless at the current price its dilutive and evan the closing price last friday the combination is some very expensive debt
IBM can be decreased but its basically the only that can be without incurring tax consequences. I certainly wouldnt expect any of the other big 5 to be sold. Keep in Mind that even a large position like IBM is only about 3% of market cap so even on a strong down day for IBM like today, the effect on berkshire isn't particularly large.
what I see is a company that barely earns $3 billion a quarter that isn't growing particularly fast. Why do investors think its worth so much? am i missing something?
it does look really cheap but they're starting to invest their equity in real estate was a little more than 10 million last quarter and will continue to increase. The chance of this residential real estate earning decent returns especially without the use of leverage is practically zero, it just seems like an effort to make their portfolio less liquid.
well not even hyperflation but a moderate level of inflation where the fed then has to react with more rapid rate increases instead of acting sooner with a more measured reaction.
well as far as the fed goes I'm of the mindset that the danger of the fed raising rates too quickly is nothing compared to the danger of them raising them too slowly.
business performance does matter though and the business is not performing well. Even non-gaap numbers down 10% yoy
if he does want to get out though, how fast can he do it? it took him 6 months to start the position. My guess is that if he wants to do it without upsetting the share price too much once he reports the sales that he needs to make the deal directly with IBM
yeah in hindsight it was a bad investment and now slightly in the red as I believe average cost was about 171 per share. Cost is roughly 12 billion though so the good news is that even large positions like this are only 3% of shareholder value
I expect we're talking about 30% or more. In 2003 he went unhedged after a nearly 50% drop even though valuations were above what he would consider fair value. In 2011, we had about a 19% drop but he didn't show any indication that he was considering investing then and today valuations are higher.
I don't know how he loses so much when his staggered strike is only 2% of assets, although that may have gone up a little bit since last week. That said, he has managed some pretty large losses.
They've still been excluding the Series I from their diluted share count claiming its antidilutive. Doesnt make any sense to me as the common stock has stayed above the conversion price of $59. Maybe I'm missing something but it does seem odd and it is about 14 million shares.
and maybe it is. To be fair though, in the last 14 years which admittedly has had some high valuations there was only about a 1 year period in 2003 (and a very brief time in 2008) where he was not fully hedged and usually with a staggered strike.
The Fed went easy money in 2002 and 2008, didnt prevent the 50% losses.