Berkshire Hathaway hit a 13 month high today as the recent rebound in equities has boosted confidence in the stock. Berkshire (BRK/B) is one of the core positions at T&T Capital Management as we believe that the company is misunderstood and undervalued. The market isn’t adequately pricing in the fact that the majority of Berkshire’s income comes from their operating businesses as opposed to the investment portfolio.
Meanwhile Warren Buffett has assembled a strong investment committee with Todd Combs and Ted Weschler to help him manage the mammoth investment portfolio.
Berkshire Hathaway was a complete “no brainer” investment when Buffett announced that he would buyback stock at 1.1 times book value or less. To take advantage of the opportunity we purchased the equity, sold long term put options below 1.1 times book value, and sold calls at about $87.50 expiring in January 2013. These strategies are low risk and generate solid cash flows while leaving a reasonable amount of room for capital appreciation.
http://www.bloomberg.com/news/2012-06-19/berkshire-hits-13-month-high-as-bofa-wells-fargo-gain.html
INVESTING IN THE FINANCIAL MARKETS INVOLVES RISKS. OPTIONS ARE NOT SUITABLE FOR ALL INVESTORS.