MarkGillCPA

Berkshire Hathaway Stock Portfolio: At Risk of Resembling an Index Fund?

BRK is not so much an index fund as it is a closed-end fund. Going forward, I will analyze BRK by looking at its NAV relative to the price of the stock. If it's selling at a discount ot NAV, it's a buy. If is selling at a premium, it's a sell. BRK actually trades at either a high premium or low premium, but it's the same point. I suspect this NAV premium will decay over time, especially if something happens to Mr. Buffett. I know of at least one hedge fund manager who has been trading BRK using this concept over the last year with some success. Berkshire is slowly becoming Tri-Continental (TY), a closed-end fund that invests in blue chip stocks

Invest Using Stocks' Price to Free Cash Flow

I've read where Bruce Berkowitz at Fairholme looks for stocks with a free cash flow yield of 10% or better, and it's a metric I like to use. Your 15 multiple requirement would be equivalent to a FCF Yield of 6.67%, which is not too far removed from that metric. However, I haven't considered using FCF on invested capital. I just use the standard ROIC. Interesting. Good article.