Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 87721 times)

alwaysinvert

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 850
    • värdeinvesteraren
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #430 on: May 22, 2019, 05:23:01 AM »
Ok, so according to Rule 10b-18 the ADTV of As and Bs are lumped together.

However, you don't necessarily have to abide by the stricter repurchasing rules (volume limit, time restrictions, etc) if you aren't outsourcing the repurchasing to a third party. Which we assume that BRK has not been doing lately, as they seem not to have been repurchasing during the quiet periods since last fall. Then it falls under more general rules about market manipulation and insider trading. Is this correctly concluded?
« Last Edit: May 22, 2019, 05:25:24 AM by alwaysinvert »


John Hjorth

  • Hero Member
  • *****
  • Posts: 2594
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #431 on: May 22, 2019, 05:51:43 AM »
Thank you for a very useful elaboration on this complicated stuff, Dynamic,

And after studying the FAQ I think that Dynamic must be correct about not lumping together the two share classes while calculating ADTV, subject to seeking Safe Harbor. It's specifically phrased in A to Q8 in the FAQ in a way, that - at least to me personally - leaves no leeway for interpretation.
”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

Dynamic

  • Hero Member
  • *****
  • Posts: 504
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #432 on: May 22, 2019, 06:12:53 AM »
Yes, I would agree, John, that the SEC's FAQ seems quite explicit that the two classes are treated separately for calculating ADTV, and it's over the previous 4 weeks that ADTV is calculated (whatever precisely the previous 4 weeks means).

But in any case, Berkshire isn't necessarily doing anything wrong if it exceeds 25% of ADTV on any class, especially if it makes a single block purchase on a trading day and no other purchases and thereby complies with Safe Harbor. Or if it engages in trading of a type that is clearly not possible to be construed as stock price manipulation it can happily venture beyond the Safe Harbor provisions anyway providing it complies with all the other rules about disclosure.

John Hjorth

  • Hero Member
  • *****
  • Posts: 2594
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #433 on: May 23, 2019, 03:23:04 PM »
... However, you don't necessarily have to abide by the stricter repurchasing rules (volume limit, time restrictions, etc) if you aren't outsourcing the repurchasing to a third party. Which we assume that BRK has not been doing lately, as they seem not to have been repurchasing during the quiet periods since last fall. Then it falls under more general rules about market manipulation and insider trading. Is this correctly concluded?

Personally, I perceive it as you do here, alwaysinvert,

The last couple of days I've been thinking about to picture what's going on at Berkshire HQ on daily basis in the meaning of daily routines over an "ordinary" year wheel [what ever that may imply] for Mr. Buffett:

Minus 6. Taking care of responses to incoming mail, carefully sorted by a secretary taking care of "a priori defined trivia" sorted out,
Minus 5. Answering phone calls carefully filtered by a competent secretary, who knows exactly how to "filter", refer & delegate,
Minus 4. Sign original filings [presented to him, with the expectation that they are correct & timely],
Minus 3. Take care of all compensation matters for persons referring direct to him,
Minus 2. Write the annual shareholder letter [in cooperation with a professional & experienced editor],
Minus 1. Follow-up on everything inside Berkshire, on which Mr. Buffett wants to do so,

- - - o 0 o - - -

0. And so on, ordered by your personal discretion - please add what ever you prefer, and renumber accordingly, by your personal perception of priority,

- - - o 0 o - - -

1. Berkshire capital allocation [Buybacks and/or deals]

- - - o 0 o - - -

I certainly acknowledge and respect the posts by Dynamic on this matter - But I just can't see Mr. Buffett even considering anything BRK price sensitive on his desk, while at the same time having instructed an employeé to buyback BRK shares.

Based on that, it's extremely fascinating, that your [to me : correct] observations about silent periods vs. actually buybacks provides basis for the opposite.

- - - o 0 o - - -

So, to me, this is the ultimate patience test of shareholders with regard to patience for delayed gratification. We will be opposed to it - or even hate it - until we love it, because of market conditions. [And most likely, when that happens, nobody will talk about opportunity costs.]
”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