Subject: Re: Repurchase price
Is it possible that Mr. Buffett hasn't criticized Apple's repurchases because he doesn't believe the repurchases have been done at an overly expensive price? It's been several quarters since I've listened to an Apple earnings call, but there was a time when Luca Maestri specifically said that Apple management thought shares were undervalued. I think Maestri and Cook understand the implications of repurchasing shares at prices above intrinsic value.


Certainly the shares were undervalued when the repurchase program was initiated, and the majority of repurchases have been arguably below intrinsic value, so I'm not criticizing the immense value added by this program. But last year, I would say that there were strong arguments for believing that AAPL shares had gotten ahead of intrinsic value, and that last year's repurchases removed value. That is why I object to Buffett's praise of Apple's repurchase program in 2022, especially the notion that this use of retained earnings 'cost us nothing'.

If Apple thinks shares are still trading below intrinsic value, then fine, but I (and, I would think, Buffett) believe that there are prices where this will no longer be the case, and the repurchase program should make some provision for this, rather than just specifying a fixed dollar amount of repurchases, as the program stands. Buffett does this with Berkshire shares, with his condition that shares will only be repurchased when they trade at least x% below his assessment of their intrinsic value, even though he has not explicitly said what that value might be. Likewise, Apple need not say up to exactly what price they would go, but I would like for them to at least admit the principle that there might be a price that high enough to suspend the repurchases, and a mechanism for doing so.

dtb