Berkshire 2030

[ValueMaven]

What does Berkshire 2030 look like?  Have we made another major acquisition at this point?  Has GEICO overtaken State Farm?  Is headquarters paying a dividend?  What does the float look like?!  Interested in what folks have to say!

[Xerxes]

Not a prediction but just to state that Buffet about a year ago did state in an interview with FT that Berkshire will return in aggregate a sum close to $100 billion to shareholders.

I am guessing his view might be that Berkshire machine will throw off so much cash that it cannot dispose of it fast enough through investments.

One thing for sure the 2021 AGM will be a super interesting event.

[John Hjorth]

Xerxes,

What's your source for that particular USD 100 B number? [ I don't recall having read or heard of it it anywhere.]

Facts :

2017:

Net cash flow from operating activities :  USD 45.728 B
Net cash flow from investing activities  : USD -41.009 B
Net cash flow from financing activities : USD -1.398 B

2018 :

Net cash flow from operating activities :  USD 37.400 B
Net cash flow from investing activities  : USD -32.894 B
Net cash flow from financing activities : USD 5.812 B

2019 :

Net cash flow from operating activities :  USD 38.687 B
Net cash flow from investing activities  : USD -5.621 B
Net cash flow from financing activities : USD 0.730 B

2020H1 :

Net cash flow from operating activities :  USD 17.466 B
Net cash flow from investing activities  : USD -42.551 B
Net cash flow from financing activities : USD -2.820 B

- - - o 0 o - - -

So, - in short -, if Mr. Buffett at some time said so, he was at that time misguiding the reader / listener, [because he was misleading the reader / listener  into mental projections & regressions] - He does not even know what he will do personally within the next twelve months!


[- & btw, That does not rule out, that Mr. Buffett may have said something in the lines of what you posted.]

[longinvestor]

I’d like to speculate, why not?

Intrinsic value at 8-10% growth rate should be near the million mark on the A share basis.

Should the stock keep trading below IV until then, they would have retired 300k -400K A share equivalents. They have bought back approximately 50,000 A shares to date.

Apple will be a wholly owned sub, ha.

[DooDiligence]

www.reuters.com/article/us-berkshire-buffett-buyback/warren-buffett-says-berkshire-could-buy-back-100-billion-stock-ft-idUSKCN1S12PA

[John Hjorth]

www.reuters.com/article/us-berkshire-buffett-buyback/warren-buffett-says-berkshire-could-buy-back-100-billion-stock-ft-idUSKCN1S12PA

I’d like to speculate, why not?

Intrinsic value at 8-10% growth rate should be near the million mark on the A share basis.

Should the stock keep trading below IV until then, they would have retired 300k -400K A share equivalents. They have bought back approximately 50,000 A shares to date.

Apple will be a wholly owned sub, ha.

Thank you to Jeff for posting the link to the Reuters piece,

Well, it has been possible - subject to market volume etc. - for some years now -because Berkshire has now held more than USD [120 B - 20 B] for a few years.

- - - o 0 o - - -

longinvestor,

Naturally, it's OK to speculate away. However, what matters is what Mr. Buffett [or his successor] will do in the future [The difference between "saying" and "actually doing" - especially ref. the post by XerXes [, though giving credit to "Not a prediction but just to state that..."]].

The Berkshire buyback discussion has been going here on CoBF for now years - nobody here on CoBF has cracked the code [as far as I understand things from reading CoBF].

- - - o 0 o - - -

In short : "Buffett hot air".

[Xerxes]

Here is the FT article.

https://www.ft.com/content/40b9b356-661e-11e9-a79d-04f350474d62

I believe this to be the excerpt.

"In 2014, Berkshire’s shareholders rejected a proposal that the company should start paying a dividend. But at the time, the company had a far smaller cash pile than today. And analysts wonder if stockholders would vote the same way if Buffett were no longer in charge.

The only way Buffett will countenance reducing the company’s massive pile of shareholder equity is to buy back shares when they are selling at a price he thinks is lower than their true value. This amounts, in his view, to buying out a partner at an attractive price. He says the time may come when the company buys back as much as $100bn of its shares (it bought back $1.3bn last year).

But what happens when Berkshire’s shares are trading at a fair price, and companies and stocks look expensive too? “That’s my nightmare,” Buffett says."

[John Hjorth]

Thanks for the quote, Xerxes,

It basically says it all : The nightmare of being old [read : less time to act] and loaded with cash, and at the same time with an almost life long pledge to do what's best for the long term partners / co-shareholders for the future.

There is to me, however, some comfort in that I could easily construct a worse nightmare for a nonagenarian person.

[Xerxes]

John
I think of Buffet comment about $100 billion return in the same vein as I do of Watsa being able to pull something close Teledyne’ buyback program. More or less as aspirational goals.

[StubbleJumper]

John
I think of Buffet comment about $100 billion return in the same vein as I do of Watsa being able to pull something close Teledyne’ buyback program. More or less as aspirational goals.

I don't view it that way. 

FFH has had no shortage of places to allocate its capital (some have been good, some have been disappointing), but it has been chronically in need of more to fund its acquisitions, pay that annual divvy and to (not) repay debt.  Prem's assertions about buybacks require a fundamental shift in corporate strategy, which is not an impossible outcome but as they say, I'm from Missouri. 

In contrast, BRK generates about $40b of cash from operations per year, and the investment portion of its SCFP and the cash balance sadly demonstrates a lack of opportunities to deploy that capital.

So, FFH might be willing to initiate a long-term significant return of capital, but it is largely unable to do so without a drastic change in corporate strategy.  BRK is *fully able* to return $20B per year, but is seemingly unwilling to do so.  The outcome has been similar, but the underlying problem is quite different.  I would not describe Prem's or Warren's statements as "aspirational" but rather as "disingenuous" in both cases.


SJ