Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 140791 times)

wabuffo

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #30 on: August 06, 2018, 12:01:46 PM »
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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?

A preference for buying back A-shares?  It definitely would be easier to spot the volume increase if that's what he targets.

wabuffo 



SwedishValue

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #31 on: August 06, 2018, 12:06:44 PM »
Quote
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?

A preference for buying back A-shares?  It definitely would be easier to spot the volume increase if that's what he targets.

wabuffo

B-shares trades at a discount to A-shares and are much more liquid, so my guess would be he buys B-shares.

nickenumbers

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #32 on: August 06, 2018, 12:08:25 PM »
Great question about what to look for in daily volumes if BRK is purchasing back it's own stock..

My question- Would BRK buy back the B class or the A class or both?  I don't have a clear strategy of if they would have a preference for either class, or both classes to keep them in parity..

Reason would tell me that they could not purchase the B class in isolation because with their large amount of capital, they are in a unique position to purchase the A class large unit stock price, and allow the rest of us "small wallet" investors bid the B class up to parity.

Average Daily Volume in dollars is CLASS A $97M   vs.  CLASS B  $824M

I can't wait to read what you genius people come up with.
The fastest Cheetah still waits for the lame baby antelope.  ..patience..

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #33 on: August 06, 2018, 12:25:15 PM »
Here is my take, however I haven't ever studied the spread between the A shares and the B shares:

If I was Mr. Buffett and and Mr. Munger, I would focus on the B shares to buy, because it's supposed to be the cheapest all the time, because of the irreversible nature of the conversion from A to B, not the other way around. Against that talks, that some blocks of A shares might end up never converted. [Think early Berkshire investors, First Manhattan Berkshire shares etc.]

We could track both, and conversions from A to B in the next Q-10. We already know what Mr. Buffett has converted from A to B.
« Last Edit: August 06, 2018, 12:30:57 PM by John Hjorth »
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longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #34 on: August 06, 2018, 12:31:05 PM »
On the subject of trading volume, evidently it is inversely correlated with high price. At what price level does the B start trading less? $1000? Any thoughts on this?

LC

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #35 on: August 06, 2018, 02:33:17 PM »
One thing buffett hates is being front-run. So if we're just talking about now, he's probably already doing it.
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nickenumbers

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #36 on: August 07, 2018, 07:48:50 AM »
If Buffett were to be buying back shares:

  • How would we know?  Precisely.  Not notionaly but precisely.
  • When would we know?  1 month, 1 week, 3 months?
  • How would he be required to tell us?  Via this form or that document.  Which form and how?
  • Is there a limit to how much he can buy?  Vis-à-vis Max Percentage imposed by a regulatory agency?

Thanks all.

The fastest Cheetah still waits for the lame baby antelope.  ..patience..

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #37 on: August 07, 2018, 08:10:46 AM »
We'll find out by reading the section "Item 2. Unregistered Sales of Equity Securities and Use of Proceeds and Issuer Repurchases of Equity Securities" in the next 10-Q [p. 45 in the 2018Q2 10-Q], combined with analysis of "CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY" [p.5 in the 2018Q2 10-Q], about three months from now.
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longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #38 on: August 07, 2018, 08:30:56 AM »
What really happened is that the advance information/transparency about buybacks was working against the company and the remaining shareholders. The opaqueness with the new buyback policy is the same practiced by them when buying other securities. The burden of pricing the stock switched from Omaha to Mr. Market. Omaha can just go back to adding value. I am guessing that Buffett feels a weight off his shoulders.
« Last Edit: August 07, 2018, 08:32:47 AM by longinvestor »

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #39 on: August 07, 2018, 08:46:24 AM »
I think the line of thinking by longinvestor is backed by the fact that Mr. Buffett hasen't given an interview about it yet [AFAIK]. Nobody can convince me that Becky Quick hasen't tried to get one with him by now.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai