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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Wallace Rivers who wrote (9361)	12/19/1999 9:59:00 AM
From: James Clarke	Read Replies (2) \| Respond to of 78530

re: Berkshire I own it and have been accumulating more at 1800. Now it is below that level. Mike has been vocal and consistent in saying he is going to wait for a catastrophe in the market and try to buy it below 1500. He's done the valuation analysis, I haven't. But there are other smart people out there who have done the work who would dispute the notion that it trades above NAV. I am trying to get hold of a model from one of them. I like the point made on the Buffetology thread the other day, I think by Wayne, that here we have a stock whose intrinsic value arguably INCREASES if the market tanks. Its a fascinating stock because the track record is so clear, and the stock is far less popular than it was a few years ago. But it is very very difficult to value with any precision, and Warren hasn't given out any signals that he thinks it is undervalued (though I can't recall him ever doing so in the past either). If he thought it was grossly undervalued, you'd think you might see him buy back stock (though he has never done so in the past). JJC

To: Wallace Rivers who wrote (9361)	12/19/1999 12:45:00 PM
From: LauA	Respond to of 78530

I can't perform an intrinsic calculation better than anyone else, but it appears to be within walking distance of the current price. Did anyone mention the quality of the management? I was not kidding about my January Effect pick being BRK.b. A tactical reason for me to buy now relates to the conversion price of GRN into BRK.a. I look at the former holders of GRN as "weak hands" interested in transactions now for tax reasons. A review of the GRN stock price from 1997-1998 gives some instruction. Lau

To: Wallace Rivers who wrote (9361)	12/19/1999 12:46:00 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78530

Wallace, seems like value investors can't get away from BRK.B. My take is that most posters here see a value stock at a price point they've set. As Jim alludes, some are buying now, some are waiting, some have bought @ 1500 range, some bought higher than current price. For me, I see no value buy either at current or lower prices. So I will turn your post back onto you. Wallace, why would you be putting this into an IRA? Short term, tax free trade? Then you'd be expecting a bounce from the down trend? Long term hold? Then why would you buy if you are concerned about WEB? (which is a valid concern, imo) re: NAV. Why would YOU buy if the stock is higher than NAV? Jim, says some smart people think actual value is much higher than current price. So there's a potential bargain therein. But to me, that means that many not-so-smart people have to come to the realization that the stock is undervalued. And value, for this situation, is difficult to figure. I suspect difficult for you to figure too. So if you bought the stock, you'd be relying perhaps on somebody else's determination of its value? That could be dangerous imo, if so. I have no issue that Mr. Buffett will do well when(if) the market crashes and he is able to scoop up bargains for BRK and make that stock even more valuable. But imo, that value will only be realized (BRK stock rise) as the stock market recovers. I don't see BRK stock necessarily holding up in cratering market as people exit positions or themselves try to scoop up the best bargains they see. And the bargains that Mr. Buffett buys will take some time to work out and increase that NAV, I'd guess. Wallace, here's my opinion: If you've looked at and rejected 50 other situations recently, and now this BRK is the best you see, and you intend to keep it for a while (maybe a long while), then BRK is a buy for you. Otherwise pass on it. And of course, the only thing I know for sure is: all just my opinion and I have been wrong many, many times.