$103,250.00 -645.00 (-0.62%)
11/20/2009 4:00 PM

Berkshire Hathaway, Inc. (BRK-A)

CAPS Rating: 5 out of 5

A holding company owning subsidiaries engaged in a number of diverse business activities, including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, retailing and services.

Current Price $103,250.00 Mkt Cap $104.63B
Open $103,210.00 P/E Ratio 31.50
Prev. Close $103,895.00 Div. (Yield) N/A (N/A)
Daily Range $103,095.00 - $103,750.00 Volume 691
52-Wk Range $74,100.00 - $151,650.00 Avg. Daily Vol. 1,000

BRK-A News and Commentary

Caps

How do you think BRK-A will perform vs the S&P 500?

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All Members

3,007 Outperform
77 Underperform
 

All-Star Members

1,068 Outperform
24 Underperform
 

Wall Street

9 Outperform
0 Underperform
 

Top BRK-A Bull/Bear Pitches

The best Bull and Bear pitches based on recency and number of recommendations.

bullishbabo (100.00)
Submitted May 07, 2009

Berkshire Hathaway is a collection of cash-producing companies and other holdings. On average, the holdings are above average companies. If you ask me, a collection of above-average companies will tend to beat the S&P 500 over time. Would I own… More

Barebonez (95.33)
Submitted June 17, 2009

I agree with Doug Kass here

After a two-month period of improving breadth and an advance that approached 38%, it appears that the upward momentum of the market is finally being tested. Typically, overbought markets are corrected in brief… More

BRK-A VS S&P 500 (SPY)

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Recent Community Commentary

Read the most recent pitches from members about BRK-A.

Recs

0
Member Avatar Hairetikos (42.33) Submitted: 11/10/2009 12:31:48 PM : Outperform Start Price: $102,150.00 BRK-A Score: +0.79

Size allows BRK to get better deals than anyone else. Experienced management with great track-record.

Recs

0
Member Avatar yankeenick (< 20) Submitted: 11/10/2009 1:01:35 AM : Outperform Start Price: $103,000.00 BRK-A Score: +0.13

Some random ideas I pieced together:

Free Money from Fed (For His Competitors)
Wall Street is receiving a huge and free "float" to invest from the Government, whereas BRK & Insurance subsidiaries are forced to play by the rules. Temporarily, this "free float" erodes BRK's long-established competitive advantage when compared to many alternative investors. BRK has spent decades building its float, and when the Fed finally tightens money supply, the float (or rather, moat) will be re-established. This could take years though.

Buffett's Age & Culture
Despite the most substantial succession planning of any company, possibly ever (GE/Jack Welch comes to mind), this will always weigh and possibly bring down the multiples paid for BRK. Still, I find this odd. Buffett doesn't sell businesses that often, holds shares for many many years - even if Buffett was gone tomorrow, you are getting $80k of book value and likely $150-200k of intrinsic value for $103k/share. It is a STEAL. The stock is trading at a major discount whereas it should simply be trading on a parts-of-the-whole bread and butter analysis. Hell if Buffett was 55, the stock would belong at $220k/share.

Operating Businesses
His operating businesses are not sexy (other than Geico), but most of them have well established moats and should bounce back nicely. Geico's free float is always nice, as is $6k/share in earnings from these businesses in a trough year. I think it only gets better from here, with better than averages businesses that deserve a premium to S&P.

Puts on the Market
This is actually one of the catalyst to stock over-performance over the next few years. The puts Buffett sold where he pocketed $4.7B will continue to reverse themselves with even a modicum of inflation and investment gains on those dollars. Let's look at the scenarios:
1) Markets go to 0 and BRK owes $37B. I'll go ahead and say that if all the major world markets go to 0, then we're probably on a barter system or marshall law. Or possibly we're all zombies.
2) Markets are where they are today. Assuming BRK was able to get a 6% rate of return for the decade, and they're maybe 10% underwater today (based on Buffett's most recent shareholder letter), and BRK would walk away with $8.4B - $3.7B = $4.6B. Not a dollar in, but $4.6B out - in a pretty negative case. And about that 6% return on equity -- well that sounds a lot like BNI (even assuming a "lost-decade").
3) Markets are far above where they are today in 2019, possibly due to global inflation or for growth. Either way, he does not pay out a dime on the contracts. In that instance, assuming he has had a more aggressive return (i.e. 10% like GE), he's but up $12.2B - JUST LIKE THAT. There is no 'capital outlay'. No 'investment'. With a 12% IRR, its closer to $16B, or $10k of book value or CASH per share.

The puts have risk -- and every investor should ask themselves what is more likely, collapse of everything, or steady inflation to reduce the value of the world's bad contracts, thereby increasing the value of the market? Don't punish him for the 1% chance, even if it was relatively recent.

BNI
BNI Acquisition will earn solid ROE even at awful rail utilization levels. When the market swings the other way in volume, likely to coincide with higher gas prices, rails will have assets to deploy. In a peak year with high gas prices (i.e. 2013-2015), BNI could earn $10+/share (BNI share) through continual 10% increases in price & huge increases in volume. Coal is to Base Power Now as Trains are to Base Transport in the Future. It's really the "ultimate" private equity deal - and likely a worst-case 2x investment over the next decade, or a good-chance 4-5x investment, with unbelievable downside protection, assets, and inflation-pricing power.

I'd also encourage you to look at the land/track value of BNI. Cost to replicate would be closer to $100B. Sure those assets have a bad ROA, but what's important is ROE. Oh and every dollar of capex in that company is worth it. It's like building the lines of the Internet in 1980 -- they should make every preparation for the green-driven shift from truckers to rail within transport - even if it takes a decade.

However, BNI will work against BRK for the next few quarters as people say he overpaid and we continue on a trough for a few years. When the economy is back, BRK shareholders will have final laugh.

Couple other thoughts:
I think the 50:1 split with Class B is actually because he wants better coverage by the analyst community. A simple parts-of-whole analysis that GE gets every few months is rarely done with BRK in a detailed manner. With more people trading and covering him, he expects professional investors to also step up the game in analyzing BRK.

Can't say enough good things about BNI. It's a business that will be around and most likely owned by BRK when my children are grandparents. And it will likely be one of the most valuable businesses in America - perhaps eclipsing BRK's other assets. Of course by then, America will be demanding a windfall tax on Railroads because they'll be the new Exxon Mobil.

I still like the GE warrants BRK picked up - although it will take 24-30 months for those to do well for him. Still love the 10% coupon more.

Recs

0
Member Avatar smittyhaggis (28.00) Submitted: 11/3/2009 4:15:12 PM : Outperform Start Price: $101,100.00 BRK-A Score: -1.59

It's Buffet baby!

Leaderboard

Find the members with the highest scoring picks in BRK-A.

Score Leader

EsamMoney

EsamMoney (88.91) Score: +51.18

The Score Leader is the member with the highest score across all their picks in BRK-A.

Top
Pick
Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
S&P
Gain
Score Commentary
stoneyg72 98.61 10/10/2008 Underperform 3W $110,000.00 -6.14% +29.40% +35.54
upbatter 60.35 10/22/2008 Underperform 5Y $118,600.00 -12.94% +20.95% +33.89
roncrlc8 68.69 10/28/2008 Underperform 3W $108,500.00 -4.84% +27.85% +32.69
This player feels very strongly about this pick and has marked it a Top Pick. Top Picks do not affect a player’s score. rekcarc 99.27 10/20/2008 Underperform 5Y $120,200.00 -14.10% +17.63% +31.74 1 Comment
TMFLucky11 96.58 5/11/2006 Outperform 5Y $89,800.00 +14.98% -11.39% +26.37 1 Comment
kiwimark101 33.61 7/10/2006 Outperform 5Y $90,100.00 +14.59% -8.50% +23.10
GordonTrain 93.52 7/7/2006 Outperform 3M $90,000.00 +14.72% -8.10% +22.82
prospectorgadget 70.68 7/10/2006 Outperform 5Y $90,100.00 +14.59% -8.16% +22.75
MSUmilkman 33.71 9/27/2006 Outperform 5Y $94,200.00 +9.61% -12.94% +22.55
ILikeDividends 98.84 9/27/2006 Outperform 5Y $94,200.00 +9.61% -12.94% +22.55

Wall Street

See what the Wall Street professionals think, according to their public statements and filings.

Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
S&P
Gain
Score End Date Commentary
TrackMHawkins 63.90 7/17/2009 Outperform 1Y $90,450.00 +14.15% +16.90% -2.75 2 Comments
TrackChrisDavis < 20 6/3/2008 Outperform 1Y $131,500.00 -21.48% -18.53% -2.95 1 Comment
TrackTomGayner 35.16 4/10/2008 Outperform NS $131,800.00 -21.66% -16.85% -4.81 1 Comment
TrackEveillard 88.00 9/30/2007 Outperform NS $118,510.00 -12.88% -24.86% +11.98 1 Comment
TrackRonBaron < 20 9/30/2007 Outperform NS $118,510.00 -12.88% -24.86% +11.98 1 Comment
TrackBerkowitz 82.69 9/30/2007 Outperform NS $118,510.00 -12.88% -24.86% +11.98 6 Comments
TrackChuckAkre 50.96 9/30/2007 Outperform NS $118,510.00 -12.88% -24.86% +11.98 6 Comments
TrackPabrai 85.78 9/30/2007 Outperform NS $118,510.00 -14.02% -27.10% +13.09 9/24/2009 @ $101,900.00 3 Comments
TrackWWeitz 65.74 9/30/2007 Outperform NS $118,510.00 -12.88% -24.86% +11.98 3 Comments
TrackDodgeCox 88.49 9/30/2007 Outperform NS $118,510.00 -12.88% -24.86% +11.98 1 Comment

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