Monday, September 26, 2011

Berkshire Hathaway Inc: Share buyback !

NEW YORK (MarketWatch) -- Berkshire Hathaway Inc.,  BRK.B +5.91% the conglomerate run by investor Warren Buffett, said on Monday that it will buy back some of its own shares at up to a 10% premium over book value at the time of purchase. "In the opinion of our Board and management, the underlying businesses of Berkshire are worth considerably more than this amount, though any such estimate is necessarily imprecise," the company said in a press release. Berkshire said that it will fund the buyback with cash on hand. "Repurchases will not be made if they would reduce Berkshire's consolidated cash equivalent holdings below $20 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire," the firm concluded.


Potential Recession Minimum @1086 pts

Potential Recession Minimum at 1086 pts. To gauge how much more the KLCI has to fall, we look at the historical trading range of the KLCI PER in Figure 2. With the KLCI traditionally trading between 13 to 19x PER, we can see that only in severe situations will the PER drop lower such as in the period between Sep 2008 to Dec 2008 when global credit markets froze after the Lehman crisis. At that point of time, the KLCI traded slightly below 10x PER. Extrapolating a 10x PER against our 2012 KLCI forecasts, we derive a 1086 pts potential recession minimum for the KLCI.

(Source: OSK Research)