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It was interesting to hear from Mr.B that Mark Millard directly repurchased 1.5 billion in shares on Berkshire's behalf. A billion from the Gottesman donation and $500 million from an anonymous source.

It speaks to Warren's integrity that he was willing to pay up for these two lots.

It also makes me wonder if 100% of the Q1 buybacks were related to donated appreciated shares.

I do not believe that there has been a prior quarter with buy-backs and with ZERO B-share repurchases. Repurchase price might be a less useful indicator than previously thought.

" It was interesting to hear from Mr.B that Mark Millard directly repurchased 1.5 billion in shares on Berkshire's behalf. A billion from the Gottesman donation and $500 million from an anonymous source.

It speaks to Warren's integrity that he was willing to pay up for these two lots."

Good morning, can someone provide more clarity with respect to these transactions, I can't find it. What did we pay for the two blocks ? Thank you.

I do not believe that there has been a prior quarter with buy-backs and with ZERO B-share repurchases. Repurchase price might be a less useful indicator than previously thought.

A "zero B" month isn't that unusual. e.g., 5 months in a row of positive A purchases but zero B purchases from July to November 2022. Looking at only the months that both A and B shares were purchased, there seems to have been a slight uptrend in the ratio: hints of a slightly rising preference for A shares.

It also makes me wonder if 100% of the Q1 buybacks were related to donated appreciated shares.

Numerically unlikely, though I guess the $1.5bn we know about is a pretty substantial fraction of the $2.57bn of buybacks in the quarter. As we are told these actions took place the same day (and assuming it was in Q1?), then it had to have been in February, so it would have been 82% of the A shares purchased that month.

However, it's a good point. An individual selling to the company will be the one choosing the date rather than the boss, and it will be a date chosen to be maximum price for the seller rather than minimum for the buyer. From Berkshire's point of view, it need only be a price that isn't unreasonable, so I would read that as a price that is merely not above a fair value estimate--but may or may not include any particular discount for an additional margin of safety.

e.g., for an open market purchase, assume that management's conservative estimate of share value is $X.
They might buy only at $X minus 10% or 15% or some such number for open market purchases, but might still be perfectly happy to say yes at $X for a shareholder selling to the company. Maybe even a bit more: I think some years back there was a pretty firmly implied promise to be a buyer from existing shareholders, with no particular constraint on valuation levels at the time.

Jim

This got posted to the wrong thread initially, sorry:

In the US, the donor would not be taxed on the appreciation (unrealized gain)if the shares were donated.

If the individual sold their shares to Berkshire, they would pay tax on the gain. They would have less (possibly much less)to donate as a result.

I can certainly see the Board of Directors having a policy to buy back the shares from the recipient of the donation at FMV to facilitate transactions like this. And I would approve of such a policy.

It would not be a “normal” buy-back. It would not have any relationship to IV, conservatively calculated.

@LiveWire10k , you’re spot on about this recent buyback. Allowing large shareholders such as the Gottesmans to sell back directly to the company is likely a preferred approach in the burgeoning buyback regime. Besides, the high profile charitable giving as a backdrop here is huge statement. Buffett while gushering over this was also signaling to other large holders to call them first as they face such eventualities. It’s a huge lesson to the world Buffett wants to hear about excess, leftover wealth

When thinking about purchasing large BRK estates through a donation to charity followed by an immediate sale to Berkshire, I think the key is that all sides understand they're getting a fair value for the shares. And who better than Buffett can ensure that this will happen? His integrity is unquestioned.

As Jim points out, buying shares at fair value does nothing directly for BRK shareholders. But it can have significant long term impacts.

It keeps these shares out of the hands of people wishing to gain voting control of BRK. And it strengthens the voting control of BRK family members and loyal shareholders. That seems important to me.

And transferring cash to BRK shares seems likely to yield a higher return long time. But isn't that built into a fair value? Yes but probably discounted in the valuation. I'd take that bet on upside. Here the key would be to be sure that enough ready cash is retained to take advantage of anticipated (or hoped for) elephants. I doubt there will be enough of these estate transfer deals to make this a risk. Particularly where cash now stands on an absolute basis.

Wouldn't charities also want to take that bet? I strongly suspect most of them prefer cash in hand. Donations to already rich institutions such as Harvard or the University of Texas-Austin might prefer to hold the shares. But not churches, hospitals, those providing needed immediate charitable care, etc.

Others on this board can probably think this concept through better than I'm doing. But, in any case, the key is that the shares be transferred at a fair value that all parties can agree to. Who will challenge Buffett's judgment?

Another factor that will be hard to replace with succession. Let's take advantage of it while it is still around.

As Jim points out, buying shares at fair value does nothing directly for BRK shareholders. But it can have significant long term impacts.

FWIW, this old post outlines one view, which might be slightly relevant to why I think that buybacks have continued lately at very slightly richer valuations---
http://www.datahelper.com/mi/search.phtml?nofool=y...

Jim

I think some years back there was a pretty firmly implied promise to be a buyer from existing shareholders, with no particular constraint on valuation levels at the time.

This bit from the 2019 annual letter is what I recall.

“Shareholders having at least 20 million in value of A or B shares and an inclination to sell shares to Berkshire
may wish to have their broker contact Berkshire's Mark Millard at 402-346-1400. We request that you phone Mark
between 8:00-8:30am or 3:00-3:30pm Central Time，calling only if you are ready to sell.”

It’s nice it was used in a couple of charitable transactions as mentioned but it seems to me Berkshire was simply doing what they said they would do.

We really don’t know for certain if there have been similar transactions over the years. Perhaps it was called out specifically this year because it was done at high valuations.


Jeff

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