First up, Reuters:
Historic disconnect between intrinsic value, share price
* Berkshire invested $5 billion in Goldman in Sept. 2008
* Geico, MidAmerican, Burlington Northern to fuel growth
* Slowing economy, big storms, Buffett retirement may hurt
* Geico, MidAmerican, Burlington Northern to fuel growth
* Slowing economy, big storms, Buffett retirement may hurt
Berkshire Hathaway Inc (BRKa.N) (BRKb.N) shares may rise 25 percent in the next year as a recovering economy lifts profit and investors recognize that Warren Buffett's company is undervalued, Goldman Sachs analysts said, starting coverage with a "buy" rating.
Analyst Christopher Neczypor set price targets of $152,000 for Berkshire's Class A shares and $101 for its Class B shares, saying a "disconnect" between the market value and intrinsic value of Berkshire is "close to a multi-decade high."
Goldman Sachs Group Inc (GS.N) received a $5 billion preferred stock investment from Berkshire in September 2008. Buffett has praised the leadership of Goldman Chief Executive Lloyd Blankfein and defended Goldman's marketing of securities that led to a U.S. Securities and Exchange Commission civil fraud lawsuit. Wall Street banks have procedural safeguards to keep equity research units independent.
Neczypor said earnings at Omaha, Nebraska-based Berkshire will benefit from growth in auto insurance sales through direct-to-consumer entities such as its Geico unit, as demand for energy from its MidAmerican Energy unit increases, and as more customers depend on shipping through its Burlington Northern Santa Fe railroad unit.
He also said recent acquisitions have reduced Berkshire's dependence on equity investments, and "provides greater clarity into the source of future value for the company."And from Schaeffer's Research:
He said the risks to this forecast include an economic slowdown, losses at Berkshire's insurance and reinsurance units from catastrophes such as hurricanes, and the ability of the 79-year-old Buffett to find appropriate successors....MORE
Speculative trader looks for a sharp decline by this well-known conglomerate
Class "B" shares of Berkshire Hathaway Inc. (BRKB) have pulled back roughly 1% today, as the stock appears to be stalling once again near $82-$83 per share. This region marked the stock's March 2010 highs, and a rejection for BRKB here could create a bearish technical formation called a double top for the security. Should such a pattern take hold, the equity could be in danger of retesting its near-term low of $70 per share in short order.
Whether due to speculation on the stock's short-term direction, or another more subtle reason, BRKB's options have been quite popular today. So far, call volume has more than doubled the stock's daily average, with some 3,946 contracts changing hands. Meanwhile, put volume has spiked to nearly five times BRKB's daily average, with approximately 9,000 contracts crossing the tape. Overall, the most active strike has been the August 80 put, where some 5,600 contracts have traded.
Digging through BRKB's put volume at the August 80 strike, I ran across a block of 500 contracts which traded on the American Stock Exchange (AMEX) for the ask price of $2.85, or $285 per contract. This block was marked "spread." After a bit of digging, I found the other leg of this spread on the August 70 put, where 500 contracts traded for the bid price of $0.73, or $73 per contract. Given this data, we could be looking at the initiation of a vertical put spread, or a debit spread, on Berkshire Hathaway Class "B" shares....MORE
