Today berkshire announced they have resumed the buyback and separately the CEO announced he bought $15m (his annual salary after tax) worth of berkshire shares. Instead of buying the shares, I have entered a call spread for buying $400 call and selling $500 calls both Jan 27 expiration for $74.19. Thus my net price would be $74.19, about 5% less than the current market price; and if the calls were exercised I will make 34.79% simple, or 39.93% annualized return;
On another account, which is little more conservative, where I did $400 ~ $450 call spread for net $41.18, which is 11% below the current market price, which will give 21.42% return or 24.58% annualized.
Greg in his interview with Becky touched on dividend. So for now the first option to return cash is buyback and at some point dividend is how I read it. Of course that is not what exactly Greg said. My view for few years is, Berkshire should do aggressive buyback and at some point establish dividend. I am glad to see the buybacks resumed. I expect that it will be on-going, in fact, that expectation is the central reason I did the spreads with so little downside protection.
1 Like