September 18, 2014 Comments

Thursday was a strong day in the U.S. markets with the S&P 500 up 0.5%. Toronto however was up less than 0.1%.

Gainers of particular interest included Bank of America up 1.6% and Berkshire Hathaway up 1.2% and Wells Fargo up 1.4%.

Liquor Stores N.A. was up 6.4% to $14. There has been no news from the company that would explain the recent strong recovery in this stock. Possible some analyst are recommending it. It’s also possible that some good news is pending such as maybe selling some of its British Columbia licenses to large grocery stores. Or maybe it will announce an acquisition (But where would it get the money?). Or maybe a buyout is in the wind? Without confirmation (or even any indication) of positive news I am skeptical that the rise will last. As reported previously I have rather soured on the company and no longer own it. It has lately been earning far less than it pays out as a dividend and seems to indicate that earnings will remain low until 2016. In my area it has way too many stores and they are not busy at all and strong competitors are taking market share. Maybe they are doing well in other areas and especially with their newer big box stores. I was recently in Vancouver and happened to walk past its Kitsilano wine store which was very nice and was busy. Overall, if I owned it I would likely reduce my position given the recent price rise.

I had entered an order a couple of weeks ago to sell my Berkshire shares if they got as high as $141. Partly just to grab profits and partly because there could be a perception of a conflict of interest for me due an acquisition that is pending by one of its subsidiaries that affects a company that I am involved in another aspect of my life. Every time I have ever sold some Berkshire shares it has later felt like a mistake (partly because one never quite remembers or tracks where the money from the sale gets reinvested). Anyhow at this time I don’t own any Berkshire shares.

Berkshire Hathaway closed at a record high of $141.28 for the B shares and a staggering $212,075 for the A shares. Earlier this year there was much ado when Buffett noted that in the six years ended December 31, 2013 Berkshire’s book value had not kept pace with the S&P 500. Buffett measures progress by book value not share price. A number of analysts jumped on this and talked about Berkshire under-performing. A look at the chart will dispel that nonsense.

https://ca.finance.yahoo.com/echarts?s=BRK-A#symbol=BRK-A;range=5y

An analyst named Doug Bass was famously short Berkshire and was silly enough to go to Berkshire’s annual meeting in Spring 2013 and debate the matter with Buffett. If Bass is still short the stock he has gotten absolutely clobbered.

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