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I bought more Brk.B Berkshire Hathaway @ $2,900
This past week, when Berkshire Hathaway B shares dipped around 2800 to 2900, I added more shares to my existing pool. The isn't rocket science really since my previous purchases hovered around 3100 to 3200 more than 3 years ago. And it has since fluctuated to as high as 4,858.00 and as low as 2147 in the past 52 weeks.
Owning Brk.B shares at these levels is like holding cash with an upside, this is my main holding area until I can find better ideas to move out of BRK.B. This past week, I scanned the following companies as potential candidates:
* Pipeline companies like KMP / KMR, TPP , BPL/BGH for its delicious dividends. But I decided that the high debt load was an unknown.
* Cemex (CX), i almost bought this a couple of years ago for its best-in-class business. Again the debt load from previous M&A made it quite risky, perhaps better to wait until the housing market recovered
* Amazon vs Etrade. Decided that Etrade was cheap with a P/E of around 8 but since I no longer used Etrade, I think I am not alone. However in the past 12 months, my usage of Amzn has risen quite quite a lot despite the fact that I'm from Asia where the shipping cost is high. However, AMZN isn't cheap enough.( Well, after my analysis, AMZN announced better than expected profits and it rose 10% shortly after that...oh well)
* McCormick (MKC) and Kraft (KFT), I like MKC because of its linearity in Revenues and earnings. Again I did not choose either because of the high debt load, although I have no doubts that they have no problems with servicing the debt.
* In the end, I chose Ticketmaster (TKTM), and ended up buying a minuscule position at $6.45, while I continue to do some due diligence before I decide whether to buy more or not. (See the TKTM post in the "Investment Ideas" forum.)
cheers!
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Based on recent SEC filings of Fairholme Fund, Bruce Berkowitz could have sold all of their holdings in BRK:
http://www.fairholmefunds.com/2008ar.pdf
By studying Bruce's top positions, I think his decision to sell BRK is due to Warren's exposures in the banking and insurance industry. Bruce perhaps concluded that insurance and banking stocks to too hard to understand the downside, and he had enough with the downside uncertainty.
It's true that those industries are tough to analyze. Even Buffett made some mistakes about WFC and USB. He seems to have made a mistake by buying more WFC near the high instead of selling. (I am still wondering why Buffett did not sell his positions closely linked to the housing bubble when he himself predicted the housing meltdown years ago.) But on the other hand, selling those at the high and pay 35% corporate tax may not be better than simply holding them. (The huge disadvantage of being too big and too profitable. Maybe he just predicted a 40% drop in those stocks.)
Yes, banks and insurances are hard to analyze. But it is a necessary industry. It has to exist for the economy to work. If they could contain their loan losses, other units could be hugely profitable.
Insiders in big banks started buying. Do they see the bad loan trends that we don't see?
Looking the recent strong rally in financial shares, I think BRK is ripe for a big rally.
With this huge bear market, Buffett was dealt with a great opportunity to put his cash to work. So even there could be health problem, the master's new investment positions could do extremely well for the next 10 years, with or without the master at the helm. So selling on health concerns is another mistake. Betting on a master's painting often pays off even after the master is gone.
Cheers!
This article may have contributed to the late drop in BRK late today:
http://www.reuters.com/article/marketsNews/idINN0537838620090205?rpc=44
No new insights.
This is a new era for Buffett and for Berkshire. From here on, advising President Obama, Buffett now has a greater influence of the U.S. economic machine and maybe the entire world.
A new era and a new a major rally for BRK maybe just around the corner. Go Obama! Go Buffett! Go Berkshire!
I think Buffett is now fully invested.
After writing this post, i realised that i rejected the companies because of debt (or high debtloads). As someone on another board pointed out, perhaps i should look for companies like the ones mentioned above but with lesser debt.
Cheers.
Raytoei
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