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Non-Tech : Berkshire Hathaway Class B
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To: Maher Sid-Ahmed who wrote (894)8/6/1999 4:59:00 PM
From: Richard Forsythe  Read Replies (3) of 1652
 
An earlier post of mine speculated that technical issues regarding the Gen Re takeover would cause the stock to suffer for a while, but the deal closed in December and therefore it is surprising that the stock continues to be oversold. Presumably there are funds that had a sufficiently large amount of Gen Re that they are still dropping it. $1bn of Gen Re would become 14,000 A-shares. Given that daily volume for BRK.a is roughly 200 and BRK.b is 12000, you could sell the equivalent of about 600 A shares a day, taking 1 month to sell $1bn of Berkshire -- probably longer in reality.

There was a massive volume spike on 7/6/99. I am guessing that some fund somewhere started selling that day and continued until a few days ago. The volumes were high and there were often 1000 B-share (and 100 A-share trades at the open). This has since stopped.

The alternative explanation is that there is a *serious* problem that has leaked to certain institutional holders, who sold. However, this seems unlikely.

One final thought, many buyers of BRK since 1/1/98 will be bitterly disappointed by the performance -- their friends are probably smugly holding onto their AOL. I think there is some "disappointment" selling from the retail side as well. The good news is that if the stock picks up a bit, the disappointment selling will stop...

Hope that helps,

Richard
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