Nov 032018
 

Berkshire Hathaway today released its Form 10-Q for the third quarter of 2018.

Five highlights during the third quarter were:

(1) Berkshire’s operating earnings increased by 100% as compared to the third quarter of 2017.

(2) Berkshire repurchased $928 million of its stock, indicating that both Warren Buffett and Charlie Munger conclude that Berkshire’s current price is below its intrinsic value.  Berkshire bought back its shares at an average price of $312,807 per A share and $207 per B share.

(3) Berkshire purchased approximately $13 billion in equities on a net basis, including approximately $15 billion in equities in “Banks, insurance, and finance”.  Berkshire held $103.6 billion cash as of September 30, down from $111 billion on June 30.

(4) Berkshire added approximately $6 billion, or about 30%, to its stake in Bank of America.

(5) Berkshire’s book value equaled $228,712 per Class A share as of September 30.  At Berkshire’s closing price of $308,411 on November 2, its price to book value ratio equaled 1.35, below its historical average of about 1.58.  This implies that Berkshire is now buying back its shares at prices below 140% of its book value, versus its previous standard of 120%.

 Posted by at 7:43 pm
Nov 022018
 
I am quoted in “Why GE’s Penny Dividend Signals a Sad Turn for Widow and Orphan Stocks”  that is likely to appear in the Business Section of the Washington Post on Sunday, November 4:
“Widow and orphan stocks were designated as such for their safety and income,” said David Kass, a finance professor at the University of Maryland. “In the past, they included utilities and regulated monopolies, such as AT&T, Con Edison, Exxon, Texaco, General Motors, Eastman Kodak and IBM.”  
 

That zaps Buffett’s Berkshire Hathaway. Even though the conglomerate has great finances, it does not pay a dividend. Buffett thinks he can increase the company’s stock price by investing the money instead of giving it to shareholders.

“Buffett likes to invest in companies that pay dividends,” Kass said. “His policy is not to pay dividends, but to own companies that do pay them.”

 Posted by at 2:24 pm