Post #17086 by AdrianC on the Berkshire Hathaway board

Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)

Unthreaded | Threaded | Whole Thread (21)

Post New | Post Reply | Report Post | Recommend It!

No. of Recommendations: 0

Repurchasing shares is inappropriate when the shares are trading comfortably above intrinsic value (which I still think they are). And I think those two things are what lead people to say, "Let's continue to wait, and continue to retain our earnings/cash." But at some point, this can't be the answer - that's why Berkshire's Owners' Manual has the retained earnings test.

I agree the shares are trading somewhat above intrinsic value, perhaps a minority opinion here? That won't always be the case. Who would have thought the market would allow Berkshire to buy back nearly $80B already? It will happen again.

Has Berkshire been passing the revised retained earnings test? And does it even make sense, now that book value is losing its relevence?

https://newsletter.rationalwalk.com/p/berkshire-ha...

The revised retained earnings test requires two conditions to be true: Berkshire’s increase in book value must exceed the performance of the S&P 500 on a five year rolling basis. Although not explicitly stated, I would interpret this to mean book value on a per share basis. Berkshire’s stock must consistently sell at a premium to book value.

Post New | Post Reply | Report Post | Recommend It!

Print the post

Unthreaded | Threaded | Whole Thread (21)

Prev | Next

Announcements

Berkshire Hathaway FAQ

Contact Shrewd'm
Contact the developer of these message boards.

A community forum supporting civilized, and highly helpful, self-educating investors that come together for Shrewdness and merry spirits. These message boards closely follow the look and feel of the old message boards at boards.fool.com prior to the boards redirected to discussion.fool.com. Shrewd'm is not affiliated with the comprehensive and excellent investment website, The Motley Fool (TMF), in any way. The Shrewd commmunity here has owed, and continues to owe, gratitude to The Motley Fool for nurturing a culture of jovial irreverence towards Wall St, and that tradition will continue here.