Author Topic: Share Repurchases  (Read 41461 times)

Valuehalla

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Re: Share Repurchases
« Reply #20 on: July 17, 2018, 05:16:58 PM »
I would guess they don't change the number to 1.3 because then the stock will automatically trade above that number. This sounds to me like they are planning to do a buyback and want to actually be able to do so without driving up the price.

With this announcement they did NOT changed the number just to 1.3

They changed it to 1.4 , 1.5 or maybe 1.6 x Bookvalue !

And it will drive the stockprice up! It did already afterhours.

Bizaro is recommanded to do homework on BRK

There is just one sense of this announcement: To set the buyback-initial much higher than 1.2 x BV,cause the current marketprice is by far to cheap.
« Last Edit: July 17, 2018, 05:52:01 PM by Valuehalla »
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alpha

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Re: Share Repurchases
« Reply #21 on: July 17, 2018, 06:34:53 PM »

As a shareholder I am always happy with buybacks, but I was hoping Buffet would pull out the elephant gun with that massive cash pile. He's not getting any younger, this might have been his last chance for a mega deal.

bizaro86

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Re: Share Repurchases
« Reply #22 on: July 17, 2018, 06:39:14 PM »
Hmm... I don't think I disagree with you at all, or that an assumption that I have not valued Berkshire recently is valid. My very recent purchase on a position in in-the-money leaps is one example of that. As a matter of fact, my exposure to Berkshire has tripled in the last month, so my timing appears to be fine.

As to valuation, I agree that this isn't the same as saying it's worth 1.3x, and that was my point. If he says 1.3x or 1.4 or 1.5, then the stock will immediately trade up to that number limiting buybacks. If he just says "when it's undervalued" they can buy back at 1.35x or 1.62x or whatever, and actually use it as an opportunity to deploy some cash. By giving the market less information about their intentions they are likely able to buy back more stock.

I certainly wasn't saying intrinsic value is 1.3x book, and honestly don't see how my comment could have been interpreted that way.


Cigarbutt

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Re: Share Repurchases
« Reply #23 on: July 17, 2018, 06:47:13 PM »
I imagine that instead of stepping down, Mr. Buffett is still looking forward to step up to the plate.
From a 1974 article:
"I call investing the greatest business in the world," he says, "because you never have to swing." You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it."

Somehow, I think that Mr. Buffett is moving reluctantly towards buy-backs but maybe I'm wrong.
Thought the following from 2017 helps put perspective to today's announcement.
https://www.youtube.com/watch?v=TyeHnwxl28I

Valuehalla

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Re: Share Repurchases
« Reply #24 on: July 17, 2018, 07:02:32 PM »
Bizaro, than we totally agree on your point of view. sorry.
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bizaro86

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Re: Share Repurchases
« Reply #25 on: July 17, 2018, 07:10:10 PM »
Bizaro, than we totally agree on your point of view. sorry.

No worries at all. I find this news quite exciting (both as a Berkshire-follower and for personal financial reasons) so I may not have expressed myself very well initially. That seems especially likely given that two respected members interpreted it the same way, so obviously I wasn't clear.

gfp

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Re: Share Repurchases
« Reply #26 on: July 17, 2018, 07:20:22 PM »
Yeah, Bizaro had it right - a flexible plan is the only way they actually get a meaningful repurchase done.  Sadly, they won't be buying until August (if the price stays low) -

"Berkshire will not initiate any share repurchases under the amended program until it publicly releases its second quarter earnings, currently scheduled after the close of the markets on Friday, August 3, 2018."

longinvestor

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Re: Share Repurchases
« Reply #27 on: July 17, 2018, 09:33:38 PM »
While we wait for some color on this from Buffett, I am wondering if this marks the end of BV multiple as the most fitting method of valuation? There have been a few signals to this effect with how the IV section of the annual letter has morphed over the past few years.

scorpioncapital

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Re: Share Repurchases
« Reply #28 on: July 17, 2018, 10:03:37 PM »
Could this signal some belief that intrinsic value and BV are further disconnected by Inflation?

rb

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Re: Share Repurchases
« Reply #29 on: July 17, 2018, 10:06:53 PM »
Yeah, Bizaro had it right - a flexible plan is the only way they actually get a meaningful repurchase done.  Sadly, they won't be buying until August (if the price stays low) -

"Berkshire will not initiate any share repurchases under the amended program until it publicly releases its second quarter earnings, currently scheduled after the close of the markets on Friday, August 3, 2018."
My guess is that they're gonna have a monster Q2.