No. of Recommendations: 14
The buybacks do stack up over time.
Since the buybacks really started mid 2018 they've bought back 208781 A share equivalents at a weighted average price of $371207. But because of inflation that's not a very meaningful number.
The weighted average price paid has been $428,502 in today's money (using CPI 313.049), and today's price is certainly much higher than that. Viewed as a trade, the mark to market profit to date is (after inflation, but ignoring tax) $52.58 billion.
I suppose one could try to look for a more depressing way to look at it.
Ummmm....
During the BNSF purchase, Berkshire issued 94,915 A-share equivalents. All the buybacks from August 2018 up to some time in December 2020 were "undoing" that issuance, at an average price paid of $303956, total $28.85 bn.
The stock price was $111,500 at the time of the BNSF deal closing, so the market value of those shares at the time was $10.58 bn, the headline number for that portion of the purchase.*
So, our depressing view: the BNSF purchase ultimately cost $18.27bn more than it "appeared" to cost at the time. To someone trying to diss Berkshire, for two and a half years all the buybacks were just the horrendous cost of undoing the excessive share issuance done early.
Lots of things wrong with that logic, of course...Berkshire had the use of the $28bn for quite a while, and there is no inflation adjustment, and everybody knew the shares were undervalued at the time of the BNSF purchase but that was the cost of getting the deal done. Personally I estimated that at the time they were worth $2.9bn (28%) more than the market price on closing day.
Jim
* in case anybody is interested, the three parts of the BNSF purchase price were, in billions:
10.579 Then-current market value of shares issued
6.586 Cost of original shares, 76,777,029@85.78 see 2009 AR
15.870 Cash cost of remaining shares
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33.035 Total unleveraged cost, with issued shares at market value
-8 financing
25.035 Total leveraged/out-of-pocket cost, with issued shares at market value
I haven't checked lately, but I believe the dividends to date from BNSF exceed both of those purchase cost totals?
