Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 87291 times)

AdjustedEarnings

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #390 on: April 03, 2019, 10:12:27 AM »
Can everybody throw out an estimate of what they think the buyback was and we'll see how close our consensus is when the real number comes out? I was waaaay off last time. Given that, through Feb 14, there had not been much in the way of the buyback, I think it's going to be light AGAIN. Maybe 300mm to 800mm, probably closer to the lower end of that. One thing I'm learning is (I posted on this before) that while WEB's rationale and his actions are mostly in sync, but not always. And the buyback is one of those anomalies where he'll tell you stocks are not expensive if rates are low, that BRK is not expensive, then the whole discourse he gave Steve Jobs about buybacks, etc. etc. and then not do anything about BRK's own buyback.

The reasons leave a lot to be desired: Don't want to take advantage of our partners.... well is it fair to take advantage of those who are staying for the sake of those who would leave? Do they not feel bad taking advantage of shareholders of companies where they're buying stock, such as Delta. I don't buy this taking advantage argument at all. When you buy back $1.4 billion of stock, is it okay to take advantage of some shareholders if it's on a small scale? Or that some or other acquisition is in the offing.... when you are WEB, you always have deals you are looking at. There simply are not enough 50bn+ dollar deals out there in companies that BRK can/will buy. The cash balance is truly getting silly now. There have been too many mistakes when they have done something (General Re, IBM, not selling KO, GOOG, etc.) Yet, I'm almost certain nothing will be done about it, except a lot of talk about what SHOULD be done. In fact, when they didn't follow through on the 2000 and 2011 buybacks, both times WEB/CM said that it was a mistake not to do so. And yet, here we are.

I feel like I'm turning into a cynic here but I think WEB has given folks a lot of reasons to feel that way. We'll soon be at 1 yr anniversary of the buyback announcement, the stock has been cheap during that time, and nothing of consequence has been done. Just imagine if Apple stopped their buyback because of the pending TV service. I don't think WEB would be very happy about that. With rates now at sub 3% for much longer, WEB/CM must really reconsider their priorities here. What are your estimates on the buyback?
« Last Edit: April 03, 2019, 10:16:47 AM by AdjustedEarnings »


aws

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #391 on: April 03, 2019, 12:13:29 PM »
Unless he ends up buying back more than his foundations end up selling, which is on the order of $5 billion a year, then on a net basis he isn't even taking any shares out of the public float. 

I agree that I think it's going to be very low, maybe $400-500mm to put a narrow range around it.  Obviously I'm hoping for a lot more, but the shares were so weak in the quarter and I would expect a big buyback to be more noticeable. 

Lemsip

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #392 on: April 03, 2019, 01:17:32 PM »
I would expect a range of $1 to $1.5bn unless he has been working on other deals.

Not having bought much by Feb 14 does not really matter. If you look at Q3 2018, all the buying of about a billion was concentrated in the space of 10 working days in August. The pattern was the same in Q4 with a block of a week to 10 days in October and December  accounting for all the buys with no buys on any of the other weeks .
So if he wanted to, he could have bought upto $2bn between Feb 14 and end of March. My guess would be closer to the amount seen in Q3 August i.e $1bn.
 

villainx

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #393 on: April 04, 2019, 10:16:54 AM »
I'm kinda assuming it's just something that Buffett has to be comfortable with and then it's going to happen in a major way.  Either it will make sense or not, and when it clearly makes sense quarter after quarter, then Buffett will just own it.

Swedish_Compounder

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #394 on: April 04, 2019, 10:58:27 AM »
My guess for this quarter is 1,5 BUSD.

I believe that he wanted to distribute the annual letter explaining how to value Berkshire before initiating buybacks in a big way.

He has probably bought lots of JPM during the quarter.

I would not be surprised to see annual buybacks of between 20-30 BUSD going forward, unless he makes major acquisitions that requires the cash on hand, because they will probably always go first, even if there would be more value in buybacks.

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #395 on: April 04, 2019, 12:36:32 PM »
... He has probably bought lots of JPM during the quarter. ...

Welcome back, Swedish_Compounder,

Yes, exactly. Buybacks is only a part the whole allocation task at Berkshire. Last time I made a calculation about JPM, I think I ended up with Berkshire could put about USD 30 B to work by building a full 10 percent position in JPM.
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SwedishValue

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #396 on: April 04, 2019, 10:31:48 PM »
Question for clarification: was there a silent period in which Buffett could not file the specific form to permit repurchases during the month leading up to the the release of the 10-k? Think I know the answer but Id rather have some American hero help me out.

nickenumbers

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #397 on: April 05, 2019, 05:25:12 AM »
This might have already have been discussed, but it was a little obscure to me and so I didn't want to attempt to search the thread.


If BRK was to repurchase shares directly from a shareholder with a large position, like THE GATES Foundation:

  • When BRK transfers money to The Gates Foundation [or their stock agent] in exchange for the shares, would the transaction have to be reported into the public markets at the end of the day?
  • If not at the end of the day when would it have to be reported?
  • Can some thoughtful person speculate if there would be strategy to tranfering the money at the end of some period or reporting date so as to benefit BRK?  What strategy might there be in the timing of the purchase?

In common old Virginia talk-  If BRK is buying from The Gates foundation $2B a week for 10 weeks, when and how will we know?  If BRK doesn't want to tip its hand, does it just wait until the end of some regulated deadline and do the transfer for $20B at the last minute?  Why?  So as to not bid up the price and force BRK to potentially pay more?


Thank you in advance Super Brains of CoBF.
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DooDiligence

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #398 on: April 05, 2019, 05:53:15 AM »
This might have already have been discussed, but it was a little obscure to me and so I didn't want to attempt to search the thread.


If BRK was to repurchase shares directly from a shareholder with a large position, like THE GATES Foundation:

  • When BRK transfers money to The Gates Foundation [or their stock agent] in exchange for the shares, would the transaction have to be reported into the public markets at the end of the day?
  • If not at the end of the day when would it have to be reported?
  • Can some thoughtful person speculate if there would be strategy to tranfering the money at the end of some period or reporting date so as to benefit BRK?  What strategy might there be in the timing of the purchase?

In common old Virginia talk-  If BRK is buying from The Gates foundation $2B a week for 10 weeks, when and how will we know?  If BRK doesn't want to tip its hand, does it just wait until the end of some regulated deadline and do the transfer for $20B at the last minute?  Why?  So as to not bid up the price and force BRK to potentially pay more?


Thank you in advance Super Brains of CoBF.

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aws

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #399 on: April 05, 2019, 11:03:06 AM »
I just cannot imagine any chance of that happening.  It would just look shady to an outsider and I cannot imagine either party agreeing to that.  Imagine you didn't know the parties involved and heard that:

A CEO transferred stock to a private foundation and claimed a massive tax deduction, then using his control of a corporation negotiated buying back the same stock he personally donated, and the foundation despite supposedly being independent of both parties agreed to the sale outside of the market.

It would look like a CEO is funneling billions of dollars of shareholder money from a corporation he controls but does not own outright, to a private foundation, all while claiming billions of dollars of tax deductions, and raising questions if the transactions happened at fair prices under the circumstances.