Do you own Berkshire Hathaway a or b?

Thetightfist · Post by **Thetightfist** » Wed May 04, 2011 6:33 pm

Do Bogleheads dip into individual stocks and own BRKA or B?

investor · Post by **investor** » Wed May 04, 2011 6:43 pm

BRK.b is a great investment in a taxable account. No tax obligations till sold.

investor

celia · Post by **celia** » Wed May 04, 2011 6:47 pm

Its even better in a Roth!

TomatoTomahto · Post by **TomatoTomahto** » Wed May 04, 2011 7:01 pm

Funny you should ask... as it happens, it is the only individual stock I own.

dhodson · Post by **dhodson** » Wed May 04, 2011 7:14 pm

out of curiosity why is it the only stock

TomatoTomahto · Post by **TomatoTomahto** » Wed May 04, 2011 9:13 pm

dhodson wrote:out of curiosity why is it the only stock

I generally don't believe in buying individual stocks. I bought some because of respect for Warren Buffet, and a feeling that owning this stock was a bit like owning an actively managed mutual fund with low ER.

Other than my wife buying shares a decade ago "on tips" (long since sold) and some restricted shares we've received in companies we've worked for, BRK is the only stock.

jmbkb4 · Post by **jmbkb4** » Wed May 04, 2011 9:37 pm

Good question. I own quite a bit of BRK.B and had some B shares before the split.

leod · Post by **leod** » Wed May 04, 2011 9:42 pm

i own some B shares

CABob · Post by **CABob** » Wed May 04, 2011 10:02 pm

No, but, I am considering a purchase. Just happen to have some cash sitting in my "fun" account.
I am bit surprised by the numbers of Bogleheads that own BRK.

FredPeterson · Post by **FredPeterson** » Wed May 04, 2011 10:06 pm

Asking whether someone owns A or B is rather pointless and only serves to expose someones potential networth (and lack of desire for liquidity)

Did you know Bill Gates personal mutual fund owns a crapload of Berkshire stock? And I don't mean the Foundation. Which do you think he owns?

FredPeterson · Post by **FredPeterson** » Wed May 04, 2011 10:07 pm

CABob wrote:No, but, I am considering a purchase. Just happen to have some cash sitting in my "fun" account.
I am bit surprised by the numbers of Bogleheads that own BRK.

Its their own way of admitting to performance chasing (come on, admit it, you want that 22% CAGR to continue forever) while being ultra tax efficient!

natureexplorer · Post by **natureexplorer** » Wed May 04, 2011 10:13 pm

Which one is held by VTI?

nisiprius · Post by **nisiprius** » Thu May 05, 2011 8:29 am

Nope.

I used to hold some GE because people told me that it was soooooo big and diversified, with mumble separate individual businesses, that it was "really" almost sorta kinda like a mutual fund all by itself. Every single one of the GE businesses was, they said, one of the top three in its category, and GE was soooooo multinational that when you bought GE you had the whole world on a string.

Guess what? Individual stocks are still individual stocks. They're not mutual funds. They're not even ETFs. Not even GE.

Not that I don't envy the people who've owned BRK for a while.

Rick Ferri · Post by **Rick Ferri** » Thu May 05, 2011 8:40 am

I've owned B shares since they came public in 1996 (?).

natureexplorer · Post by **natureexplorer** » Thu May 05, 2011 8:46 am

FredPeterson wrote:Did you know Bill Gates personal mutual fund owns a crapload of Berkshire stock? And I don't mean the Foundation. Which do you think he owns?

I am always surprised that Warren is considered the best stock picker, when in reality Bill has a far better investment record.

PS: They are buddies, so I would expect Bill do lessen his Berkshire exposure once Warren steps down.

Grt2bOutdoors · Post by **Grt2bOutdoors** » Thu May 05, 2011 8:51 am

Rick Ferri wrote:I've owned B shares since they came public in 1996 (?).

Rick - I'm shocked, shocked to find out you own individual equities!!

Sorry, I don't own any, I had thought about it, but I have a serious problem owning companies where there are severe ethic violations, not to mention potential SEC violations. Oh, and I don't like managers who play "dumb". Reminds me of a saying "It takes a lifetime to earn trust, and less than 5 minutes to lose it"

Grt2bOutdoors · Post by **Grt2bOutdoors** » Thu May 05, 2011 8:52 am

natureexplorer wrote:
FredPeterson wrote:Did you know Bill Gates personal mutual fund owns a crapload of Berkshire stock? And I don't mean the Foundation. Which do you think he owns?
I am always surprised that Warren is considered the best stock picker, when in reality Bill has a far better investment record.

PS: They are buddies, so I would expect Bill do lessen his Berkshire exposure once Warren steps down.

What makes you think Bill is actually doing the stock picking?

CrankyManager · Post by **CrankyManager** » Thu May 05, 2011 9:15 am

BRK-B for me.

I don't own many. It's a way to pay homage to Buffett more than anything else, and the knowledge that I own a part of probably the greatest investment story ever told (despite the fact that I just bought them in the last few years).

4stripes · Post by **4stripes** » Thu May 05, 2011 9:24 am

I've owned B since 2000 or 2001. It's a hard stock to part with for many reasons, mostly emotional!

Jake46 · Post by **Jake46** » Thu May 05, 2011 9:45 am

I own B shares. It's the only individual stock I own.

protagonist · Post by **protagonist** » Thu May 05, 2011 5:10 pm

GRT2BOUTDOORS wrote:
Rick Ferri wrote:I've owned B shares since they came public in 1996 (?).
Rick - I'm shocked, shocked to find out you own individual equities!!

Sorry, I don't own any, I had thought about it, but I have a serious problem owning companies where there are severe ethic violations, not to mention potential SEC violations. Oh, and I don't like managers who play "dumb". Reminds me of a saying "It takes a lifetime to earn trust, and less than 5 minutes to lose it"

Good point. Better to spread out your severe ethics violations and SEC violations across a broad-based index fund. (giggling.....)

CABob · Post by **CABob** » Thu May 05, 2011 5:41 pm

natureexplorer wrote:Which one is held by VTI?

It doesn't make much difference does it? I assume that the Berkshire capitalization is the total of both A & B shares times their respective prices and VTI would hold something to represent Berkshire's market share.

lethean46 · Post by **lethean46** » Thu May 05, 2011 7:53 pm

CABob wrote:No, but, I am considering a purchase. Just happen to have some cash sitting in my "fun" account.
I am bit surprised by the numbers of Bogleheads that own BRK.

Bob

IMO, the current price of BRKB on 5/5/11 is an attractive buy price.

Here's an interactive site devoted to BRK. Drop down on top right has various valuations of BRK depending on the method you chose to use. I use the conservative setting. (The "more conservative" setting is new.) Top left drop down enables you to chose various years.

Historically, buying at a 25% discount to the conservative value works out well over time. I don't know the market price of BRKB today but as of yesterday, BRKB was selling at a 28% or so discount. That's quite low compared to conservative IV.

http://www.creativeacademics.com/finance/IV.html

Scroll down the page for an explanation of the tool.

Check out the liquidation value year end 2000. It matches Buffett's famous buy back price announced in the 2000 annual report made public in spring of 2001. He had no takers by the way.

More to say ... but I won't. I hope the link is useful to you and others who have an interest in BRK.

Following BRK becomes a study, a hobby. A wonderful company.

Someone here said that Buffett says BRK will beat the S&P 500 index by a couple of points a year, over time. He used to say that. In the 2010 annual report he said that BRK will beat the S&P 500 index by "several points" a year, over time. That change in wording is no accident.

Good luck to you whatever you decide to do.

ML

ps Buffett still recommends indexing for most people. Just recently I heard him expound on that advice re indexing. He ended by saying, "But I still like BRK", i.e., meaning that he thinks BRK will outperform the index (by several points a year, over time). That's good enough for me. Also, Munger recently said that his family will own BRK for decades after Buffett's death. Think ... Disney, Walmart, etc. A milestone of sorts? In the 2010 annual report Buffett said that BRK is now producing $1B in free cash per MONTH. That's B as in billion. $38B in cash at the end of 2010 PLUS $1B per month going forward plus $5B coming from GS soon. Most of that is in Treasuries waiting for the next acquisition opportunity.

Does BRK price ever hit 100% of conservative IV. Yes, it does. Off and on. The last time was late fall 2007. Usually though, it will hit current IV value ... sometime in the following year. Selling at a 28% discount to conservative IV now? ... That's a very nice entry point.

gotherelate · Post by **gotherelate** » Thu May 05, 2011 8:13 pm

4stripes wrote:...It's a hard stock to part with for many reasons, mostly emotional!

One of the reasons I no longer own individual stocks.

lethean46 · Post by **lethean46** » Thu May 05, 2011 8:28 pm

[quote="FredPeterson"]Asking whether someone owns A or B is rather pointless and only serves to expose someones potential networth (and lack of desire for liquidity)

Did you know Bill Gates personal mutual fund owns a crapload of Berkshire stock? And I don't mean the Foundation. Which do you think he owns?[/quote]

1 BRKA = 1500 BRKB.

You can convert BRKA to BRKB (without selling).

Therefore, one should buy whichever is cheaper.

It used to be that BRKB would periodically sell in the market at a discount to BRKA. Sometimes as much as a 6% discount. So naturally, even the BIG BOYS would buy BRKB at that kind of discount.

The funds that I have seen that own BRK? Own both BRKA and BRKB. Opportunistic buying? I think so.

Conversely, BRKA doesn't sell at a discount to BRKB ... because BRKA can be converted .... and the arbs step in.

Since the last split of BRKB which was 50:1, the price discrepancy between 1 BRKA and 1500 BRKB has substantially closed. I haven't seen those 2% - 6% discounts since that occurence.

Also, if 1 BRKA should happen to trade above 1500 BRKBs, then you would sell your BRKA and buy 1500+ BRKBs with the proceeds. Right? But that rarely happens any longer either.

I can't think or move fast enough to do any of that. But as I said, the price discrepancies have essentially disappeared since the last BRKB split. Just saying .... it used to happen. And I suppose, it could happen again.

FWIW ...

ML

ps Buffett himself says in the annual report:

If BRKB is selling for less than a 2% discount to BRKA - then buy BRKA.

But if BRKB is selling for more than a 2% discount to BRKA - then buy BRKB.

Presumably, the voting rights attached to BRKA has some value not reflected in the related conversion rights.

MarkNYC · Post by **MarkNYC** » Thu May 05, 2011 9:49 pm

At the risk of appearing to gloat (which I probably am), I bought the A shares in June of 1990. I later converted to B shares and have been gradually selling as Buffett ages. I expect I'll always own at least some of the stock, out of nostalgia if nothing else, which I understand is not a good reason.

Bogleheads.org

Do you own Berkshire Hathaway a or b?

Do you own Berkshire Hathaway as individual stock?

Do you own Berkshire Hathaway a or b?

BRK current market price vs IV