Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 153438 times)

longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #460 on: November 04, 2019, 10:14:17 AM »
There was a mention here as well as elsewhere that ďIf Buffett doesnít buy at these prices, why should we?Ē. Itís a fair question after all for this community of value investors but an enormously important one for Omaha. They must hope that most market participants keep this sentiment and donít buy, for as long as possible. Besides large single block purchases, the stock selling below IV is needed. Sentiment driven versus fundamentals. Mungofitch over at TMF points out that per share earnings grew 13.5% yoy. Thatís with only 75% of the engine working. Weíre in a good place, cash pile be da$@ed.


longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #461 on: November 05, 2019, 10:19:25 AM »
With the stock price bonhomie underway, what would be of most interest is if buy backs are continuing, even in dribs as has happened. We will find out in Feb, 2020, won't we?

 
« Last Edit: November 05, 2019, 10:24:10 AM by longinvestor »

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #462 on: November 05, 2019, 10:56:34 AM »
There was a mention here as well as elsewhere that ďIf Buffett doesnít buy at these prices, why should we?Ē. Itís a fair question after all for this community of value investors but an enormously important one for Omaha. They must hope that most market participants keep this sentiment and donít buy, for as long as possible. Besides large single block purchases, the stock selling below IV is needed. Sentiment driven versus fundamentals. Mungofitch over at TMF points out that per share earnings grew 13.5% yoy. Thatís with only 75% of the engine working. Weíre in a good place, cash pile be da$@ed.

Thanks, longinvestor,
  • We [still] don't know what's going on on Mr. Buffett's working desk [actually, as I understand the situation : The desk of the father of Mr. Buffett], day by day [and we never will]. Personally, I'm a firm believer [religious or not? - the reader of this post is to decide] that he isen't spending his time power-napping on a couch in his office.
  • CAPEX spent in the first 9 months in companies already owned by Berkshire : USD 11.193  B, up from same period P/Y : B 10.040 B. The work by among others Mr. Abel - Investing in the future of Berkshire. These investments are investments where internal hurdle rates are met, not purchases of new brushes to toilets, toilet paper or what do I know.
- - - o 0 o - - -

And even what appears miniscule buybacks add up over time, yes.
« Last Edit: November 05, 2019, 11:22:21 AM by John Hjorth »
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valueinvesting101

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #463 on: February 17, 2020, 09:41:16 AM »
Just read this transcript from 1996 AGM:

30. Berkshire businesses worth more than book value
WARREN BUFFETT: Zone 6.

AUDIENCE MEMBER: Mr. Buffett, my name is Steven Tuchner. Iím a shareholder from Toronto,
Canada. And my question concerns the valuation of Berkshire shares.
Given the large number and dollar size of the private businesses recorded at historic cost, which
Berkshire owns, shouldnít the multiple to book that the stock trades at, essentially, expand over
time to reflect the increases in intrinsic value of the private holdings?

And I cite Buffalo News on the books at, essentially, I think around zero. And even GEICO now
will be on the books at, probably, between 3 and 4 billion ó worth more than that ó as
examples of the disparity between intrinsic value and book value?

WARREN BUFFETT: Most of the businesses that we own all of, or at least 80 percent of, are
carried on the books at considerably less than theyíre now worth.

And with some of them, itís dramatic, although itís not dramatic compared to a $40 billion total
market valuation for Berkshire. Itís dramatic relative to the carrying price.

Because when we bought Seeís Candy for an effective $25 million in 1972, it was earning 4
million, pretax. It earned over 50 million, pretax, last year. When we bought the Buffalo News,
it was making nothing. Paid 30 and a fraction million. And itís now earning, maybe, 45 million.
And weíve got a number of businesses. And GEICOís worth more than we carry it for because of
the accounting peculiarities of the first 50 percent.

So, it is true that, overwhelmingly, our businesses are worth something more than intrinsic
value ó than book value ó and, in many cases, very substantially more, although thatís
reflected in the market price of our stock.

I donít think you can go from year to year and trace the intrinsic value precisely by changes in
book value. We use changes in book value as a very rough guide as to movement, and
sometimes I comment.

There have been certain annual reports where Iíve said our intrinsic values grew more than the
proportional change in book value, and thereís been others where Iíve said I thought it was
roughly the same.

So, I donít think you can use it as a ó stick some multiplier on it and come up with a precise
guide ó a precise number. But I do think itís a guide to movement.


Our insurance business, though, is the most dramatic case of dollar difference between book
value and intrinsic value.
I mean, the number has gotten very big over time there. I personally
think it will tend to get bigger, because I think GEICO will grow, and I think our other businesses
will do well.

The trick, of course, is to take the new capital as it comes along ó and not from the issuance of
the B, because thatís relatively small compared to the amount of capital we will just generate
from operations.

Our float will grow from year to year. Our earnings will be retained. And weíve got to go out
and find things to do that three or five years from now that people say, ďWell, thatís worth
more than the book value.Ē And thatís a job. Itís a tougher job than it was. But itís kind of fun.