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Strategies & Market Trends : Value Investing
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To: Jurgis Bekepuris who wrote (44603)9/26/2011 11:13:26 PM
From: Spekulatius  Read Replies (2) of 78666
 
re BRK.b - I don't think that buybacks do much to limit the downside. Based on current excess cash levels (~17B$), BRK.B cannot buy back much more than 10% of their shares, which is significant but once you look at it - a lof of stocks have cratered while they were buying back 10% of their shares or even more. An I doubt that he is going to buy back 10% after all, for one thing he will not buy back shares just to keep the stock price up - he will only buy if the stock is low enough to meet his discount to NAV hurdle.

FWIW, the buyback is less of a valuation call but more so a call that he cannot generate more value buying other stocks. This is different than in the past where he always thought that he could generate more value, reinvesting BRK funds than just buying back stocks. Also note that it was Ajit that was making the offer for TRH (traditionally that was WEB job to handle acquisitions) and that he has now two money manager working for him. These are all indications that WEB get's ready for retirement, which is doubt his followers consider a bullish indication.

I like BRK.B but I am thinking it's more fully valued than other stocks. it's quite possible to build a portfolio with BRK type quality stocks, probably at a lower valuation than BRK itself.
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