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Old 04-26-2013, 08:50 AM
 
809 posts, read 2,277,365 times
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Rolling over a 401K from former employer to an IRA elsewhere for the flexibility managing it etc. I am particularly interested in Berkshire Hathaway 'B' shares (BRK.B) because I can not afford the 'A' share (BRK.A). I am thinking of allocating about 60% of the funds to the BRK.B and spreading out the rest. The only thing I do not understand is why BRK.B does not pay a dividend despite the fact that many of the companies within this fund when purchased individually pays one.

Does anyone here own BRK.B and think the current price of $107 is too high or even think this stock is bad idea? I also like companies like Proctor & Gambles, Costco etc. Any advise or feedback guys & gals?
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Old 04-26-2013, 09:17 AM
 
Location: NE Mississippi
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Hold forever? I believe there are such things and I have company:
http://http://seekingalpha.com/artic...d-hold-forever
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Old 04-26-2013, 11:17 AM
 
Location: TX
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The reason BRK.B doesn't pay a dividend is because management believes they can reinvest their earnings at a better return than what shareholders would receive if they paid one out. They've always been right about that too.

For a better explanation, check out Buffett's 2012 shareholder letter - starting on page 19 he devotes a whole section to explaining their dividend policy in very clear terms.

In any case, you can essentially create your own dividend by selling the stock. Aside from the commission it makes no difference. But because of the commission, it is probably best to do that no more frequently than each quarter.
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Old 04-26-2013, 11:25 AM
 
Location: Warwick, RI
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I am long BRK-B, having bought it just prior to the Burlington Northern split, and have an average cost of a little over $70. I love Berkshire, and plan on holding this stock as an anchor in my long term prortfolio for a long time. The key thing to remember about Berkshire stock is it's defensive nature. It will tend to lag a bit when the market is flying high, but it also tends to retain strength better than most in down markets.

A lot of people question this stock because of Warren Buffetts age, but I look at it like this. Walmart did not collapse when Sam Walton died, neither did McDonalds when Ray Kroc passed away, and neither will Berkshire. Berkshire's subsidiary companies will continue to rake in the cash, the insurance segments will continue to provide billions in float, the two new investment managers will continue to invest that float the "Buffett Way", and a Buffett will remain at the helm and on the board, so the company will continue to be incredibly profitable. The stock may suffer a bit when Warren Buffett steps away, but if it does, IMO it will represent a major buying opportunity.

With all that said, I am not currently adding to my BRK-B position, but if you truly believe in the company and are willing to hold and average down during market corrections, then I wouldn't hesitate to start a position now. Good luck!
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Old 04-26-2013, 01:35 PM
 
Location: TX
795 posts, read 1,185,690 times
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Agreed. I use BRK.B as a cash/bond proxy, since I am 0% bonds. It's like a zero-coupon that never matures.

BRK's insurance operations are its crown jewel as they all produce underwriting profits. This is the equivalent of taking out a loan and paying a negative interest rate (the bank pays you). Most insurance companies operate underwriting losses and just accept that as their cost of capital. GEICO's results are just astounding.
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Old 04-27-2013, 10:18 AM
 
809 posts, read 2,277,365 times
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So guys, with 60% IRA invested in BRK.B and another 40% to invest elsewhere, I was thinking of getting dividend paying stocks like PG,GE and maybe some gold stock etc., unless any of you more savvy investors out there have better suggestions. How would you best use your funds to maximize your investment portfolio for a RollOver IRA?
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