Berkshire Hathaway Just Got Better

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As discussed in the video below, both Morgan and Austin are Berkshire shareholders, but you shouldn't jump in with both feet without first hearing what the Fool's resident Berkshire Hathaway expert, Joe Magyer, has to say about the huge risks facing the company today. You can read more in this premium research report on the company. Inside you'll receive ongoing updates as key news hits, as well as reasons to both buy and sell the stock. Claim a copy by clicking here now.


Austin: Morgan, I was looking through your holdings the other day and I noticed you are a fellow Berkshire shareholder. We both got a bit of good news recently. It looks like Buffett's going to repurchase some shares.

Morgan: Yup.

Austin: What was the news?

Morgan: The news was Berkshire Hathaway is repurchasing $1 billion of its own stock from a longtime shareholder. He's also upping the amount that they can repurchase to 1.2 times book value, as the limit that Buffett will repurchase shares at.

Why is this good news for shareholders? It's obviously good news that Buffett, one of the best investors of all time, is bullish on his own company.

Austin: Right.

Morgan: That's a big vote of confidence there. One other thing I think about with Berkshire, too... one of the reasons I own it, the biggest risk that people talk about with Berkshire is that Buffett is an aging man, he's not going to be around forever, and what happens when Buffett passes, at Berkshire after that?

Austin: Right.

Morgan: I think what's really important there is that Buffett's legacy will live on far after he leaves. The companies that he has purchased over the last 40 years will stick around long after he's gone. When Buffett is gone, Coke is still going to be selling Coke. Geico's still going to be selling insurance.

Those don't change at all after Buffett, so really Berkshire is as strong a company as I think it's ever been, and it will remain strong long after Buffett.

Austin: Yeah. I think one of the interesting things, and one of the reasons I'm a fellow Berkshire shareholder with you, is that a lot of people talk about the "Buffett premium" on a stock, but in the case of Berkshire it looks like you're actually getting a bit of a "Buffett discount" because people seem reluctant to bid this company up to its fair value because Buffett isn't going to be there forever.

But, like you mentioned, the companies he holds are still tremendous assets, and stand on their own. We know powerful leaders make companies. Look at Steve Jobs over at Apple and Bezos over at Amazon.

You can't understate the role of a powerful leader in a company's development, but Apple has continued to thrive in the post-Steve Jobs era, so at some point these great leaders have built something bigger than themselves.

I think we're getting a "Buffett discount" today instead of a "Buffett premium," and I love it. Frankly, I love the share repurchase, and I'm happy that Berkshire is my largest personal holding.

Morgan: Absolutely.

Austin: All right, cool. Well, I guess it looks like we'll be sticking with our shares for a little while.

Morgan: That's right.

Read/Post Comments (3) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 17, 2012, at 11:26 PM, dabyrdman wrote:

    Yea, because AAPL is quite the penny stock... right?

  • Report this Comment On December 22, 2012, at 3:27 PM, busnelli wrote:

    Buffett is going to repurchase BRK shares at the maximum price of 1.2 times the book value.

    I'm wondering what is the book value. Benjamin Graham in the book "The interpretations of financial statements" chapter XXI wrote that book value is the Shareholders Equity value MINUS goodwill and intangible assets.

    Which kind of book value will Buffett take? The Shareholders Equity or the book value defined in the Graham's book?

  • Report this Comment On December 23, 2012, at 10:09 PM, Pscartelli wrote:

    Buying Brk tomorrow

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