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

To: Paul Senior who wrote (33562)	2/19/2009 11:55:48 PM
From: Jurgis Bekepuris	Respond to of 78910

Well, I gave you a list of reasons why BRK-A is a better company than general: "company still with AAA ratings, practically no debt, no exposure to toxic anything, best of breed businesses, still tons of cash, Buffett at the helm, sweetheart debt deals from top companies". You ignored them. BRKA ROIC was about 17% in 2007: 13,213M/(120000M-44000M)*100% = 17%. Similar in 2006. I guess these numbers are not good enough for you. Of course, 2008 ROIC will be something like 5%, but then 2008 sucked for a lot of companies, so I would not count this as a permanent change. You think that PE 16 is expensive. I don't, since we are talking about one of the best companies ever. You think that P/tangible assets of 1.4 is expensive. I don't. Same reason. You think that P/book of 1 is relatively expensive. I don't. Same reason. You argue that Buffett's investors are fleeing. Of course they are, that's why the stock is at 5 year lows. I don't give a damn what Bruce or Monish or whoever thinks or does. I am not a chaser of their money or ideas. They are playing their own game, I am investing my money and that's it. You are making up a macro picture in your mind "a conglomerate with companies that are exposed to the economic declines that seem everywhere, a company that pays no dividend, and a company with a p/e that looks high to me for this market and its broad exposure to that market". And then you turn around and act surprised as if you did not mention macro side at all. I am not sure what else I can say. IMO, BRKA is a buy here and I am buying.

To: Paul Senior who wrote (33562)	2/20/2009 8:59:17 AM
From: Jurgis Bekepuris	Respond to of 78910

BTW, with all that I said about BRK being an attractive investment at current prices, I will agree that it is not an extremely attractive investment. It could definitely go lower. One intrinsic factor to consider is Buffett's age and health. I will repeat what I said earlier: I have seen no reason to trust his successors, since I have no record of their performance. Most of BRK's businesses will do OK when Buffett dies, but the investment side may do poorly. Other reasons to avoid BRK could be its size and non-transparency of its (re)insurance side, where one has to trust Buffett and Jain to correctly evaluate risks. I may move all my remaining WSC money into BRK, since WSC is much more an investment vehicle as opposed to being a business. It is still cheaper than BRK on some metrics and there could be scenarios where it outperforms BRK from here, e.g. if investments outperform the captive businesses. However, the ratio of WSC to BRK is somewhat attractive and BRKs captive businesses + BRK-only investments are attractive too.