Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 36888 times)

longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #20 on: August 04, 2018, 03:43:38 PM »
33:00 in, about the 1,2x floor (when it was still there). Still relevant.

https://youtu.be/2yMeIdheIS0

I listened to the clip and respectfully disagree as the relevance of BV. WEB clearly says that BV is very poorly correlated with IBV, across the investing universe; not just at Berkshire. At 1.2x BV they were rather willing to buy back because they are cheapskates. They do have mixed feelings about buying partners out, but wouldn't hesitate if buying stock back compares favorably with buying other businesses.

Now, this is from the 2013 meeting. WEB has repeatedly telegraphed that IBV is diverging (up) away from BV; most notably, BV has actually been dropped from the performance table on the first page of the chairman's letter!
« Last Edit: August 04, 2018, 05:13:56 PM by longinvestor »


Valuehalla

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #21 on: August 04, 2018, 05:00:19 PM »
So what does it mean? what is a conservative IV for today ?
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John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #22 on: August 04, 2018, 05:05:36 PM »
...I listened to the clip and respectfully disagree as the relevance of BV. WEB clearly says that BV is very poorly correlated with IBV, across the investing universe; not just at BV. At 1.2x BV they were rather willing to buy back because they are cheapskates. ...

Somehow hilarious - two billionaire cheapskates!  [ : - D ]

I think it's about two - thee years ago, I personally left looking at Berkshire based on BV progress. With the soft buyback threshold abolished, or at least making it even softer [upwards <-?], it does not make much sense to me any longer.

The future for Berkshire investors boils down to future earnings, future cash flows, & future capital allocation.

I speculate we'll survive , no matter what.
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longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #23 on: August 04, 2018, 05:53:15 PM »
So what does it mean? what is a conservative IV for today ?

I will go with SemperAugustus line of thinking; They had the YE 2017 IV at $610B of market cap. I agree with them that the market in due course will happily pay 13x (or more) for the earnings growth at Berkshire.

SwedishValue

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #24 on: August 05, 2018, 12:11:44 AM »
33:00 in, about the 1,2x floor (when it was still there). Still relevant.

https://youtu.be/2yMeIdheIS0

I listened to the clip and respectfully disagree as the relevance of BV. WEB clearly says that BV is very poorly correlated with IBV, across the investing universe; not just at Berkshire. At 1.2x BV they were rather willing to buy back because they are cheapskates. They do have mixed feelings about buying partners out, but wouldn't hesitate if buying stock back compares favorably with buying other businesses.

Now, this is from the 2013 meeting. WEB has repeatedly telegraphed that IBV is diverging (up) away from BV; most notably, BV has actually been dropped from the performance table on the first page of the chairman's letter!

I must have been unclear. I agree with you that Buffett here - and on other occassions - clearly hints at IV is significantly above the previous treshold. I also agree to your pointing out the fact of Buffett saying IV increasingly diverging over BV over time.

I think buybacks are likely.

rolling

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #25 on: August 05, 2018, 03:53:41 AM »
So what does it mean? what is a conservative IV for today ?
And more importantly, what is real IV for today? Because if they buy agressively below conservative IV the gap to real IV will widen very quickly.  I would bet 220 and over 250 per b share. I got to 255 yesterday on a slightly modified 2 column approach and don't think I was agressive (if net income from operations is rising 50-60% this year, then applying a 15 multiple to 2017 pre tax earnings, excluding underwriting gains, is the same as it was apllying a 10 multiple before)

About the 220, I'm just throwing dards... As far as I know they might agree with the 255 number...
« Last Edit: August 05, 2018, 03:57:54 AM by rolling »
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nickenumbers

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #26 on: August 05, 2018, 09:11:11 AM »
I wrote a blog post speculating about this. I'll paste it here but if you want to read it in a better format here's the link: http://vardeinvesteraren.nu/vardeinvestering/buffett-buybacks-could-berkshire-tender-stock/


Alwaysinvert.  I wanted to complement you on an outstanding post.  Well reasoned, original, and compelling.  Exceptional!
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alwaysinvert

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #27 on: August 05, 2018, 10:02:11 AM »
I wrote a blog post speculating about this. I'll paste it here but if you want to read it in a better format here's the link: http://vardeinvesteraren.nu/vardeinvestering/buffett-buybacks-could-berkshire-tender-stock/


Alwaysinvert.  I wanted to complement you on an outstanding post.  Well reasoned, original, and compelling.  Exceptional!

Thanks, that's great to hear.

SwedishValue

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #28 on: August 06, 2018, 11:46:52 AM »
Is there anything we should expect in terms of volume patterns if Buffett is buying back significant amounts of stock? I've never thought about these things before, and I'm not sure whether to expect increased trading due to having an active buyer in the market or gradually decreased trading as Buffett would soak up free float?

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #29 on: August 06, 2018, 11:54:19 AM »
Is there anything we should expect in terms of volume patterns if Buffett is buying back significant amounts of stock? I've never thought about these things before, and I'm not sure whether to expect increased trading due to having an active buyer in the market or gradually decreased trading as Buffett would soak up free float?

That's great questions, SwedishValue,

We need to keep an eye on the development in the daily volume for the next three months, where we'll find out by facts presented to us in the 2018Q3 Q-10, if Berkshire has actually been buying back during the quarter.
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