No. of Recommendations: 10
nola622 wrote:
In a quarter like this one, where there were no b-shares repurchased at all, I think it is quite likely that the A-shares purchased were the result of incoming calls and not "open market" purchases. I think when a large block of A-shares is offered to Warren / Mark Millard, they take the block. There might not be a ton to read into the price they pay, except that it was probably the market price at the time.Jim wrote:
FWIW, I don't believe this.
Sure, I think it's entirely likely that the occasional shareholder phones up and *offers* the shares.
But I think Mr Buffett is perfectly capable of saying "no thanks, please go ahead and sell them on the open market at the current bid, because I don't like 'em enough at that price".
Maybe you're right, but I definitely don't take it as a certainty that he has the company take everything offered. By extension, there is a valuation level at which he'll say "no".I think nola622 and Jim are probably both right. I assume (hope) Jim is correct that there is some valuation level at which Mr. Buffett will say "no." The complete lack of repurchases in June lends some credence to that view.
At the same time, I think nola622 is generally correct that if a large block of A-shares is offered, Berkshire will purchase them at the current market price if that price is reasonable (even if it is not a discount to intrinsic value).
At the annual meeting this year, Warren had this to say in the context of Ruth Gottesman's $1B donation to the Albert Einstein College of Medicine:
But I have to say one thing that was astounding is that the same day we bought a billion dollars worth of Berkshire Class A stock from Ruth… So that… And I guess we were actually buying it from the school at that point because she’d just given [it to] them. And then… So the transaction was with them. But Mark Millard in our office bought a billion dollars from them, but he also bought $500 million worth of stock from somebody else that nobody will ever have heard of, and in a different state.https://steadycompounding.com/investing/brk-2024/Ruth Gottesman's donation was announced at the end of February, so I assume these two transactions were completed in February. With these two transactions totaling $1.5B, they account for most of the $1.8B in repurchases in February (2,945 A-shares at an average price of $621,187.44). And the February repurchases were significantly higher both in quantity and price than the repurchases in January (863 A-shares at an average price of $555,126.46). So, my guess is that Mr. Buffett was not buying A-shares at $621,187.44 in February because he thought they were a good deal, but rather because Ruth Gottesman and the other donor offered two large blocks of A-shares.
