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

Berkshire Hathaway: Proof That the CDS Market Is Irrational

IMHO, CDS contracts do more harm than good and should be eliminated from the financial world.

Mr. Lanthrop, hedge funds are not buying CDSs to hedge against bond portfolios. They buy them at the same time they are shorting common. They do this to incite fear in the markets. Last I checked market manipulation was supposed to be illegal. If the SEC was doing its job, these things would have been made illegal over a year ago.

I have no problem allowing anyone to short a stock. An argument against CDSs is not an argument against shorting. But we cannot allow someone to link a short position with a CDS to manipulate markets.

We need to get our financial markets back to the basics of buying and selling stocks and bonds. Its the derivatives that are destroying us.

GE Finally Enters the Zone of the Unknown

Let me get this straight. Your short GE because the debt has a 1 in 3 chance of begin downgraded, yet you state in your article that the debt is already trading as though it were rated lower than AAA. Looks like the market has already discounted your downgrade. So what's your advantage? The only way you can justify a short position now is if your EPS analysis is coming in much lower than everyone else. But you make no mention of what you think EPS will be in 2009 or 2010. The time to short GE was when it was trading for $40 last year, not now when it's trading at 16.50. Sure, I could see it retest that $12.58 November low, and that could give you a 20% gain on a short position (minus having to pay one of those dividend payments while you wait). But the corporate bond market is beginning to thaw, EPS estimates for 09 have already been lowered numberous times to $1.42, which appears reasonable. And right or wrong, GE has committed to the $1.24 dividend for next year, which will provide a floor for the stock. Are you really going to try to push a short position to 7 times next year's earingins? GE could just as easily trade to 20. And if GE does fall back to that 12.58 low, I'll be looking to load up the truck. Good luck with that short.