Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 20883 times)

longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #140 on: October 11, 2018, 10:00:13 AM »
My $208 filled. Hope my $202 does as well.




alwaysinvert

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #141 on: October 11, 2018, 10:44:15 AM »
Yes, watching my portfolio plummet back from the all time high of $224 at yesterday's open, I was thinking Berkshire's broker could be getting busy with the buybacks today around $210, prices we haven't seen since the end of August.

compared to:

My understanding is that they are limited by rule 10b-18 to buying no more than 25% of the daily volume.  They are also not supposed to trade in the final 10 minutes before the close.

I would be very surprised if Warren purchased anywhere close to 25% of the daily volume of the combined share classes.  My impression is that he would feel that repurchase activity near the 25% level would influence the share price more than he desires.  It is impossible to completely eliminate your influence on the share price (witness the generally rising stock, closure of A/B share premium/discount, etc).

If I had to guess, I would guess that Berkshire established a 10b5-1 plan specifying a maximum price and a percentage of the trailing ADV to purchase.  I would guess that they specified somewhere around 10-15% of the Average Daily Volume, not to exceed 25% on any given day unless a large transaction was privately negotiated outside the plan (which would not be considered to be protected by the safe harbor of the plan).

They probably filed the 10b5-1 plan directly following their 10Q, allowing them to begin purchases under the plan immediately.  Buffett would receive daily trade confirms but isn't supposed to have any other communication with the broker he chose to administer the plan.  So he would know what was purchased each day and "we bought a little" is very difficult to quantify when you are talking about a half-trillion dollar market value enterprise...

We'll find out soon enough with the next 10Q and we can try to reverse engineer the % of daily volume they specified...

If this theory is correct then I gather there is no buyback pause during the blackout period? That would be a pretty major drawback to a more actively managed buyback program - 4 months a year where they can't make repurchases.

So, last week pretty strong resistance to general market price moves [outside the blackout period], ref. post #109 by sleepydragon, - this week [inside the blackout period] it moves around in the market price spectrum basically [give or take a bit] like any other stock.

Thoughts, gents?

It is a possibility that there are no repurchases now, like you seem to suggest. But even if the buyback program is ongoing it would probably not give as much "support" to the price under such selling pressure.

I don't know if we will know any time soon if they are buying during the blackout period. Possibly we can surmise it from the Q4 report if there has been very heavy repurchases.
« Last Edit: October 11, 2018, 10:46:02 AM by alwaysinvert »

alwaysinvert

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #142 on: October 11, 2018, 11:37:38 AM »
It could also of course be that they did'n't buy back anything after Buffett's comments.. I find that unlikely but let's not get ahead of ourselves.

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #143 on: October 11, 2018, 12:12:50 PM »
I actually think about it exactly like you, alwaysinvert. And, yes, it's speculation.
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