Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 167815 times)

marazul

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #250 on: December 18, 2018, 01:45:41 PM »
Is there a 25% of daily volume limit on buybacks? Sorry for my ignorance.


John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #251 on: December 18, 2018, 01:56:50 PM »
marazul,

Link to post in this topic by globalfinancepartners, where also the rules were discussed in depth. Personally, I consider globalfinancepartners very well wandered in this space of regulation. Please also note globalfinancepartners' personal comments and opinion in this particular post. What I have simulated, is a maximum. Please make your own assumptions based on that.
« Last Edit: December 18, 2018, 11:10:25 PM by John Hjorth »
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longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #252 on: December 19, 2018, 07:07:50 AM »
My WAG is that they bought around  $10B worth during the quarter. 25% trading volume at average prices during the quarter.

nkp007

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #253 on: December 19, 2018, 08:14:01 AM »
I'm thinking they don't buy back anything substantial.

When the equities they love are selling off like crazy (e.g. financials, Apple, other names across the spectrum), I think they're deploying to those stocks or holding on for more cash expecting more opportunities to emerge, especially as liquidity / financing starts to tighten.

gfp

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #254 on: December 19, 2018, 08:38:19 AM »
I would guess that they are repurchasing around $66 million per trading day that the price is below their cap.  What we don't know is what the current cap price on the plan is, which means we can't estimate how many trading days they were in the market purchasing shares.  We know they purchased some subsequent to quarter end and we know they continued purchasing shares when prices came back down.  It is possible that the price cap on their repurchase plan stayed the same, at around 208 per share B share equivalent, in which case they would be active in the market only on days the B shares traded under 208.  Or it could be that the cap is as high as 218 per B share or thereabouts (if it is based on a simple multiple of last reported book value), in which case they would have been active buying shares for more trading days and would have repurchased more shares.

I do not think they are varying the buying under the plan with the price at 195 vs 207 per B-share.  I think it is a target percentage of average daily volume with a price cap, executed as a 10b5-1 plan by a brokerage firm.

Over time, we should be able to figure out if they based their cap on a simple multiple of last reported book value by looking at the number of days they were active in the market and the corresponding market prices on those days.

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #255 on: December 19, 2018, 09:24:43 AM »
I'll try to reverse engineer the market data for 2018Q3 using my tool. I will need to tweak it a bit to take into consideration blackout periods. I expect to do it between Christmas and New Year. I'll put some charts and diagrams in there, too, to visualize things.

And then repeat the procedure in the beginning of 2019 for the full 2018Q4.
« Last Edit: December 19, 2018, 09:33:03 AM by John Hjorth »
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gfp

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #256 on: December 19, 2018, 09:52:54 AM »
Just to be clear, there wouldn't be any blackout periods since they are purchasing under a 10b5-1 plan.  And we know they are using that type of 'safe harbor' plan because they made repurchases subsequent to quarter end but before filing their 10Q with the SEC.

longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #257 on: December 19, 2018, 09:53:15 AM »
A comment Buffett made at the AGM in the past few years about how CEO’s get it wrong on buybacks (doing it for the wrong reason or simply getting it wrong) has me thinking if the current buyback that is WIP has been assigned to the wards as a developmental opportunity. Thinking Ted and Todd. In essence calculate Intrinsic Business Value. They are likely going to get this task for a longer time to come.

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #258 on: December 19, 2018, 09:57:34 AM »
Just to be clear, there wouldn't be any blackout periods since they are purchasing under a 10b5-1 plan.  And we know they are using that type of 'safe harbor' plan because they made repurchases subsequent to quarter end but before filing their 10Q with the SEC.

Thanks for pointing that out for me, globalfinancepartners,

But for 2018Q3 we discussed some time ago, that the new buyback scheme would not get effective untill a certain date in 2018Q3. Am I right that this date was the release date of 2018Q2 10-Q?
”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

gfp

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #259 on: December 19, 2018, 11:09:43 AM »
A comment Buffett made at the AGM in the past few years about how CEO’s get it wrong on buybacks (doing it for the wrong reason or simply getting it wrong) has me thinking if the current buyback that is WIP has been assigned to the wards as a developmental opportunity. Thinking Ted and Todd. In essence calculate Intrinsic Business Value. They are likely going to get this task for a longer time to come.


They were unusually specific about this:

"Under the amendment adopted by the Board of Directors, share repurchases can be made at any time that both Warren Buffett, Berkshire’s Chairman and CEO, and Charlie Munger, a Berkshire Vice Chairman, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined."

http://www.berkshirehathaway.com/news/jul1718.pdf

Also - because it is a 10b5-1 plan, there is nothing but set a cap for Ted or Todd to do.  The trading decisions have to be made by the broker without interference or they lose the safe harbor of the plan.