Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 59992 times)

rolling

  • Full Member
  • ***
  • Posts: 105
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #330 on: February 15, 2019, 03:40:10 PM »
Upon reading this thread, some points make me raise a few questions:
1) 208 price cap: why would the cap have stayed the same? My guess is he updates the number every quarter, either in an automatic fashion or not. My guess would be a roughly 2% increase every quarter, which would amount to an 8-9% IV increase every year

2) 10% volume cap: why should it be static? It would be much more Buffett like say: 0-10% discount to IV, buy up to 10%, 10-15%, up to 15, 15-20, up to 20%, ovee 20% discount go all in to the 25% limit.

I guess we might soon know some of the answers.
My usual portfolio: Highly concentrated (up to 3 or 4 positions) in smallcaps and microcaps.


gfp

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1600
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #331 on: February 15, 2019, 03:55:23 PM »
Yeah we don't know if its a static / manually adjusted price cap on the plan.  We'll probably be able to reverse engineer the plan rules after a few more quarterly disclosures.  It could very well be that the cap is based on a multiple of last reported BVPS.

Warren would be willing to buy big blocks of shares outside the broker-executed plan when he's not in a restricted period.  For the automatic plan, he really doesn't want to affect the trading price of the stock much - or establish any type of "floor."

Upon reading this thread, some points make me raise a few questions:
1) 208 price cap: why would the cap have stayed the same? My guess is he updates the number every quarter, either in an automatic fashion or not. My guess would be a roughly 2% increase every quarter, which would amount to an 8-9% IV increase every year

2) 10% volume cap: why should it be static? It would be much more Buffett like say: 0-10% discount to IV, buy up to 10%, 10-15%, up to 15, 15-20, up to 20%, ovee 20% discount go all in to the 25% limit.

I guess we might soon know some of the answers.

John Hjorth

  • Hero Member
  • *****
  • Posts: 2318
Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #332 on: February 16, 2019, 03:08:30 AM »
aws posted this in the "General News" topic:

Net buys were only about 1b for the quarter, and unless they got lucky and bought RHT before the IBM news then most of that is probably just a merger arb.  Not exactly swinging for the fences on one of the worst quarters in recent memory.  I wonder if he was expecting it to get a lot worse, or if he was spending all his funds on Berkshire stock.  Berkshire did do relatively well compared to the market up until the start of the year, so maybe he was buying a lot then but has been locked out lately.

I was surprised to see the number mentioned in this post by aws for net buys. However it's true. Attached is my estimation. [EOP 2018Q3 prices used for positions liquidated in 2018Q4, EOP 2018Q4 prices for the rest.]
« Last Edit: February 16, 2019, 03:13:02 AM by John Hjorth »
”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