E A Good Way To Buy Berkshire Hathaway At A 21% Discount

I believe Berkshire Hathaway (BRK-B) is an attractive investment now, especially in taxable accounts because it pays no dividends and is "tax friendly".

But in IRA retirement accounts, a good alternative may be to purchase the Boulder Growth and Income Fund (BIF) because of its large discount to NAV and large holdings in Berkshire Hathaway stock and other solid blue chip stocks.

BIF- Five Year Discount History

BIF now reports its NAV daily. As of June 20, 2016, the discount to NAV is -21.16%. Management has already taken some steps to reduce the discount to NAV, which at one point got as high as -25%:

  1. Completed the four way fund merger to reduce the expense ratio and improve trading liquidity. The expense ratio for 2015 was 1.48%. This is expected to drop further this year, since there will not be any merger related expenses this year.
  2. Implemented changes to the fund web site to provide clearer information about the fund.
  3. Moved from weekly to daily updates of NAV.
  4. Moved to monthly reporting of portfolio holdings.
  5. Introduced a monthly managed distribution plan in November 2015. The fund currently pays a $0.033 monthly distribution or about $0.40 a year.

The fund had 45 holdings as of the end of April, and the assets are highly concentrated with 68% of the portfolio in the top ten holdings. Here are the top ten BIF portfolio holdings as of April 30, 2016 taken from the fund web site.

Top 10 BIF Holdings (as of 4/30/2016)

 

BRK-A

Berkshire Hathaway, Class A

22.11%

YUM

Yum Brands, Inc.

  6.42%

BRKB

Berkshire Hathaway, Class B

  6.23%

JPM

JP Morgan Chase & Co.

  5.73%

CVX

Chevron Corp.

  5.73%

WFC

Wells Fargo & Co.

  5.44%

WMT

Wal-Mart Stores, Inc.

  4.83%

CSCO

Cisco Systems, Inc.

  4.42%

PFE

Pfizer, Inc.

  3.48%

CAT

Caterpillar, Inc.

  3.42%

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Disclosure: I am long BIF.

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Comments

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Alpha Stockman 8 months ago Member's comment

I enjoyed this. Where can I read more current info about this? $BRK-A $BRK-B

Bill Johnson 2 years ago Member's comment

Good article George, would like to see more by you.

Dick Kaplan 3 years ago Member's comment

This is a great investment idea; excellent to utilize $BIF in this way. Thanks for sharing George Spritzer

George Spritzer 3 years ago Author's comment

Dick- Thanks for the kind words. Looks like BIF is having a good day today- the NAV should be up around 2%.

George Spritzer 3 years ago Author's comment

My disclosure should say "I am long $BIF."

Boaz Berkowitz 3 years ago Contributor's comment

It's been fixed, apologies for the error.