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Old 05-29-2005, 06:30 PM
imported_bingobazza imported_bingobazza is offline
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Join Date: Feb 2005
Posts: 171
Default Re: Whats the point of investing when Buffett will do it for you?

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you can buy berkshire Hathaway non voting shares for aroung $3000 a pop

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Is that the only difference in the 2 classes of BRK? I really don't know.

To your question... I guess you would need to look at BRK the same way Buffett looks at everything he buys. I haven't, but it could be very over-valued. This doesn't sound unreasonable considering how highly esteemed Mr. Buffett is.

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Berkshires A shares are expensive for a very good reason...to promote a direct link between the underlying value of the business by discouraging short term trading, which buffett despises, and to encourage long term ownership. I think 2%-10% of shareholders change from year to year. The B shares came in to facilitate 'gifting' by long term shareholders, and also for tax purposes that I dont understand, as Im not a US citizen. They are 1/30 of the A shares.

Check out the intrinsic value for the A shares here (I use the liquidation model), and divide by 30 to get the value of the B shares. You should find that the variance from true value is never that much. The long term nature of the owners of the shares essentially make sure that there is never a specualtive bubble in the share price.

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

Bingo
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