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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 212559  
Subject: Confused Mr. Market? Date: 12/13/2012 11:38 AM
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So Berkshire is trading below 1.2x book value and the other guy on the side of the trade could very well be a guy in Omaha who happens to be the best capital allocator of the past fifty years.

The same weird behavior took place right after the September 2011 buyback announcement. Shares traded slightly below 1.1x book for a few days. Then the shares never again returned to buyback territory. In the chart below, I show the P/B for Berkshire's A shares at each day's closing price vs. June 30, 2011 book value per share (last published book value) for the couple of days preceding the announcement to a month after the announcement:

http://www.rationalwalk.com/wp-content/uploads/2012/12/BRKAS...

The ratio had a tendency to hover between 1.15-1.20x book after the market digested the news. If the same behavior occurs this time, we could see a regular trading range of 1.25-1.3x book by the middle of January. That would be $140-$145K vs. 9/30/2012 book value.

Not a prediction, just an extrapolation of Mr. Market's confusion and eventual dawning of comprehension based on the last similar event ...
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Author: edemera Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 196979 of 212559
Subject: Re: Confused Mr. Market? Date: 12/14/2012 11:09 PM
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Rationalwalk, funny thing, I turned your chart upside down and it looked the same. Just kidding. In reality, It looks good on paper but there are a myriad of reasons I wouldn't bet on the same result although it may very well happen and I know you would never "bet" on such a thing.

As I said, I could list several reasons why it might not do the same thing but the first thing that comes to mind is that market conditions then (sept. oct. 2011) when the first buy back was initiated were far far different than they are now. Market conditions then arguably played a vital role not only in the buy back itself but the results thereafter.

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