Hi, Shrewd!        Login  
Shrewd'm.com 
A merry & shrewd investing community
Best Of BRK.ABest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd
Search
Shrewd'm.com Merry shrewd investors
Search
Best Of BRK.ABest OfAll BoardsThe Shrewd’m WeeklyLearn to InvestHow to Become Shrewd


The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
Answer this questionContinue to Shrewd'mThis note won't appear again
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
Unthreaded | Threaded | Whole Thread (14) |
Author: mungofitch ✹✺ SILVER
SHREWD
  😊 😞

Number: of 22354 
Subject: Re: A hypothetical for brk brother Jim,
Date: 04/02/25 8:23 AM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 15
I'm talking IV, NOT, BV, how accretive to IV would a huge buyback be

That's what I addressed.

If you assume that current fair value is (for example) $722k per share (1.6 times known book at the moment), then $100bn of buybacks at 1.3 times book would increase true value per share by 15.9%.
If you think the fair value per share is currently higher than $722k then the gain would be a little bit more, and vice versa.

And probably decrease is by some unknowable amount because of the loss of optionality. There are certain things that are possible with that much ready cash that aren't possible without it.

It's rather moot as there aren't $100bn of shares available for purchase at that price. And Mr Buffett isn't going to reduce the benefit to the foundations for the sake of giving more money to existing shareholders. But it is a fine demonstration that buybacks don't increase value per share very much unless they are both (a) huge and (b) done at a material discount to fair value. They do work, but only at the margin.

Jim
Post New | Post Reply | Report Post | Recommend It!
Print the post
Members reply directly to mungofitch here — and replies get answered. Reading is free; so is joining the conversation. Join Shrewd'm »
This community has written 21,861 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 58 recs · 2023
Summary of 2Q 2026 · 55 recs · 2026
3Q Summary · 53 recs · 2024
Unthreaded | Threaded | Whole Thread (14) |


Announcements
Berkshire Hathaway FAQ
Contact Shrewd'm
Contact the developer of these message boards.

Best Of BRK.A | Best Of | Favourites & Replies | All Boards | Followed Shrewds | Open Questions | Moving a community