Author Topic: Buffett buybacks: Could Berkshire tender stock?  (Read 148082 times)

longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #190 on: November 03, 2018, 07:38:36 AM »
I think it’s pretty clear (based on his actions), he thinks the stock is attractively priced relative to other alternatives but not substantially attractive. Seems to me that the change in buyback policy probably made because of the accounting change re: investment treatment as opposed to the stock being significantly undervalued currently.


May that opinion dominate in the market (reflected in the stock price) for quite a bit longer while ignoring the earnings growth as an anomaly due to accounting treatment. It has allowed me (& others around here) to buy more shares thinking that the shares are indeed significantly undervalued.


John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #191 on: November 03, 2018, 08:11:13 AM »
So the way I read it is that they were only active for 14 trading days during the quarter: August 7th - August 24th, from which you can estimate the cap price in their repurchase instructions.  During those 14 trading days they repurchased approximately $927.566 million worth of stock, for an average of about $66.25 million worth per trading day.

No further repurchase activity during the quarter.

Then, subsequent to quarter end, up until October 25th, they were back in the market, repurchasing approximately $181 million worth of stock in 8 trading days, for an average of about $22.625 million worth of stock per day.  This is consistent with the estimated cap price that can be divined by the August repurchase activity.

They did not repurchase anything the first day the were allowed to, August 6th, probably because they had a one day delay starting trading on the 10b5-1 plan I assume they are using.

globalfinancepartners,

From you numbers etc, it appears clear to me, the basis for your post is the 2018Q3 10-Q, p. 45, lower part, where we have the facts, right?

1. Why 8 days in October, ref. my emphasis in the quote of your post? [I suppose you perhaps mean 18 trading days instead?]
2. Why is August 6th first day in your opinion for the new buyback regime? The public announcement was July 17th.

I just want to be sure to understand correctly your line of thinking here.
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longinvestor

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #192 on: November 03, 2018, 08:14:16 AM »
So the way I read it is that they were only active for 14 trading days during the quarter: August 7th - August 24th, from which you can estimate the cap price in their repurchase instructions.  During those 14 trading days they repurchased approximately $927.566 million worth of stock, for an average of about $66.25 million worth per trading day.

No further repurchase activity during the quarter.

Then, subsequent to quarter end, up until October 25th, they were back in the market, repurchasing approximately $181 million worth of stock in 8 trading days, for an average of about $22.625 million worth of stock per day.  This is consistent with the estimated cap price that can be divined by the August repurchase activity.

They did not repurchase anything the first day the were allowed to, August 6th, probably because they had a one day delay starting trading on the 10b5-1 plan I assume they are using.

globalfinancepartners,

From you numbers etc, it appears clear to me, the basis for your post is the 2018Q3 10-Q, p. 45, lower part, where we have the facts, right?

1. Why 8 days in October, ref. my emphasis in the quote of your post? [I suppose you perhaps mean 18 trading days instead?]
2. Why is August 6th first day in your opinion for the new buyback regime? The public announcement was July 17th.

I just want to be sure to understand correctly your line of thinking here.


Know the answer to #2: Buffett explicitly stated that no buybacks would happen before earnings release for the quarter.

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #193 on: November 03, 2018, 08:29:30 AM »
Thank you, longinvestor!

I missed that, got it now! [ : -) ]

If one look at a price chart for the B share for 2018Q3, it really looks like a "208 threshold" for the period [2018Q3].
« Last Edit: November 03, 2018, 08:35:56 AM by John Hjorth »
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gfp

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #194 on: November 03, 2018, 11:25:47 AM »
I'm not sure where I got 8 days from, I've been out all day.  Perhaps it was an error in reading my notes.  More likely, with the price cap that appears to have been in place, it was 11 trading days.  If I remember what the hell I was thinking about when I wrote that I'll let you know..

But, yeah, as mentioned earlier - the 10Q on page 45 says, "Period"  "August 7 through August 24:"

And he had mentioned in the original announcement that he would wait until everyone had the same information (after earnings were publicly released).  Then he apparently waited one additional day, potentially for the reason I speculated in my previous post.

The gist is that Berkshire isn't buying back anywhere close to 25% of the average daily volume.  And there appears to be a price cap, likely based on a multiple of book value so it may change quarter to quarter.  Did the 'soft floor' just become a 'soft ceiling' ?  LOL

gfp

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #195 on: November 03, 2018, 11:32:34 AM »
I mean, yeah, "one of the biggest quarters" is correct if you use an almost meaningless headline number under these new accounting rules.  Even lowly Apple Inc just reported a pitiful $14 Billion net income quarter (must be embarrassing I know).  Apple has made over $18 billion in a quarter (Q1) before, hence the "one of" language.  [*edit - Apple made $20 Billion in the quarter ending December 2017]

But if you're going to focus on a meaningless headline number, why not use Berkshire's 2017 Q4, where the tax related gain added $29 Billion to Berkshire's actual earnings for the quarter.


"This is absolutely one of the biggest quarterly earnings reports that has ever come out of a United States corporation," said Bill Smead, chief executive of Smead Capital Management in Seattle, a Berkshire shareholder.

I believe he is talking about the headline number, but is his statement correct?
« Last Edit: November 03, 2018, 11:52:05 AM by globalfinancepartners »

Gregmal

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #196 on: November 03, 2018, 11:34:41 AM »
So in summary what I get, is that just like most value investors, Berkshire is sitting on too much cash and being way too frugal and nitpicky about buying stock.... Like most value investors I'd gander they underperform going forward.

A good example of the cure here would be AAPL. When did they really turn a corner? When Einhorn and Icahn forced them to start deploying excess capital.

John Hjorth

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #197 on: November 03, 2018, 11:39:59 AM »
... Even lowly Apple Inc just reported a pitiful $14 Billion net income quarter (must be embarrassing I know).  ...

lol. Good humor upon Red October.
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Swedish_Compounder

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #198 on: November 03, 2018, 11:53:31 AM »
What I take with me regarding the buybacks is that Warren and Charlie consider that BRK is undervalued at 207 USD.

We do not know the reasons for why they did not buy back more. Perhaps they still prefer to buy other companies and only want to consider buybacks when the cash level gets too high. They appear to have bought other equity securities for 18 BUSD or so during the quarter, which is a lot...



gfp

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Re: Buffett buybacks: Could Berkshire tender stock?
« Reply #199 on: November 03, 2018, 11:58:57 AM »
Yeah - that's what I'm getting at in the other thread.  They purchased $17.657 Billion of equities in the quarter, and around $15 Billion of that is Banks, Insurance, Finance.  And I think 200 million BAC shares is definitely part of it.