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TheDumbMoney (58.47)

Added to Berkshire Hathaway Holding

Recs

10

May 11, 2012 – Comments (6) | RELATED TICKERS: BRK-B , MSFT , AAPL

As we all know Buffett and Munger think Berkshire is undervalued even at 1.1ish times book value.  As anyone following me knows, I have owned it for awhile, and bought last summer/fall in the low 70s and even some in the high 60s, which was awesome.  I rarely add to a position before earnings, and this is no exception.  But after hearing Buffett's latest, I'm willing to add more, especially since his guys Coombs and Wechsler have been following me so assiduously on my picks like Intel.  Yeah, I'm kidding.  But anyway, I think this thing is worth well north of $100 share, and I'm comfortable adding here.  I added 13 shares today in my IRA, at $82.10, with a $6.95 commission.

Notes on some other stocks I already own:

MCD -- I think it's undervalued by over 20%, but I'm running an experiment and seeing if the technical guys are right, since the technicals are very, very bad here.

KO -- Currently overvalued folks, it's great, but look for a significaly (20% or more) better buy point.  I bought at $45 and $63, holding for LT gains and dividends.

PG -- Currently fairly or overvalued.  I wouldn't add more above $55 unless we get some better news on the cost-cutting.  I'm not holding to outperform in CAPS, I'm holding as an anchor, for the dividend and the low-beta if the market turns south.

MSFT -- Currently still way undervalued, but already my largest position.

INTC -- Currently still way undervalued, but I am worried about cyclicality.

AAPL -- Currently still way undervalued, but I recently added at $570.  If it hits $550 I'll start to look seriously again, and will definitely add more if it gets much below $550.

XOM -- Likely undervalued (I estimate $100), a buy below $80, back up the truck for a long-term stellar dividend hold if it gets below $70.

SODA -- Shorts are absolutely convinced it's a fad, and either they are right or they are keeping it perpetually undervalued.  My major worry is inventory issues, which preceded the fall at GMCR.

ISRG -- Too far too fast, I started looking for a pullback at $580 and have gotten it somwhat.  I may add if it gets below $520. 

6 Comments – Post Your Own

#1) On May 11, 2012 at 12:32 PM, TheDumbMoney (58.47) wrote:

Also, reminder:

-- I used to call myself "dumberthanafool"

-- I now have a new CAPS player as well, named "TheDumbMoney2" that tries to compete in CAPS as it is meant to be played.

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#2) On May 11, 2012 at 2:19 PM, TheDumbMoney2 (98.57) wrote:

I should have said "bought more" last summer/fall.  WHile I have owned it before, my oldest current holdings date to the BNI purchase, where my small amount of BNI shares (which I had owned since around six months before Buffett announced he was buying it), were convereted to BRK.B shares at around $72/73/share, if memory serves.

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#3) On May 11, 2012 at 3:45 PM, TheDumbMoney2 (98.57) wrote:

More notes:

1) "way undervalued" to me means undervalued by significantly more than 20%.  To me a 20% undervaluation to my best guess of value is where I set my standard buy-in.

2) By my worries about Intel cyclicality, what I mean is that I worry it is at somewhat of a cyclical high, which is where cyclical stocks always look cheapest, even when they are not.  (Cyclical stocks always sport high P/Es and look expensive when they best bought.)  I suspect I will regret my caution re: adding, but so it goes.

3) SODA; just keep an eye here to make sure inventory growth does not outpace revenue growth, among other things.  The busienss model, particuarly the leasing aspect of the CO2 canisters, could theoretically enable financial shenanigans. 

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#4) On May 11, 2012 at 9:02 PM, HarryCarysGhost (99.78) wrote:

DTAF,

I somewhat disagree on your price target on KO. Don't get me wrong I would be happier then a pup with two peters if your correct, since I'm DCA'ing in a DRIP.

When I did my initial price projections many moons ago I thought that $100 pr/sh was not out of the question within the year.They had a really good last qtr, and are positioning themselves for further growth.

Also you might be disregarding the pyshcological power of a split. Of course you and I know it's meaningless, but normal people who don't spend much time on investments think it's the greatest thing since butt warming seats were invented.

KO's widely held by by retail investors and mutual funds, so I could see that causing a spike in the share price.

Welp man, either way it's a win/win situation for both of us.

Cheers.

  

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#5) On May 11, 2012 at 9:39 PM, HarryCarysGhost (99.78) wrote:

Note- I bought BRK-B after the reverse split at $72 and sold all but 1 share at $82.

I love the company and policys that Mr Munger and Mr Buffett have instilled into the investment community, but have no patience to hold a stock that does not pay a dividend for more then one year.

Bonus, with my one share I still get all the perks, and hope to make it to Omaha someday.

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#6) On May 12, 2012 at 12:52 AM, TheDumbMoney2 (98.57) wrote:

Hi Harry,

See this link for the justification of my valuation on KO, an article for SeekingAlpha that I wrote:

http://seekingalpha.com/article/537661-coke-is-not-a-great-deal-right-now

I think it's probably fairly valued at around $75, but I don't like to buy without a 20% margin of safety. 

I also think that it's one of the top five best companies in America, and it's likely to survive longer than just about any company in America, and you pretty much can't go wrong with it as a DRIP and an incredibly long-term investment. 

That said I just call 'em as I sees 'em based on FCF.  As great as KO is, to have a real Graham/Buffett margin of safety, I'd like to see a $60 price before I bought a major stake.  However,for a DRIP I don't really think it matters as much, since you just dollar-cost-average in over time

DM

DTAF, etc. 

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