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 (35) |
Author: StevnFool ✧  😊 😞
Number: of 22352 
Subject: Re: Chevron Buyback & Dividend Raise
Date: 01/27/23 2:02 PM
Post New | Post Reply | Report Post | Recommend It!
No. of Recommendations: 4
As much as I hate having an involuntary taxable event inflicted on me quarterly in the form of a dividend, at least that money -- which was, let's not forget, mine to begin with -- is now out of the grubby hands of managers. I get to choose where and when to reinvest it.

I wonder do you also have a similar choice (with some effort) in the case of buybacks at elevated prices. I'm not 100% sure if this is correct, but consider the following (ignoring taxes).

Company is worth 100B but has market cap of 200B and you own 1% of the shares. The company has 1B cash that they want to allocate to either dividends or buybacks.

Scenario 1: They pay it out as a dividend.

Company is now worth 99B.
Your holding is has a value (not price) of 0.99B
You have 10M cash.

Scenario 2: Company spends it buying 0.5% of their shares back and you immediately sell 0.5% of your holding at the same (double value) price.

Company is now worth 99B
You still own 1% since both the number of shares you own and the total number of shares in the company have reduced by 0.5%.
Your holding is has a value (not price) of 0.99B
You have 10M cash.

So it seems to me that by taking some initiative, you can have exactly the same result (ignoring taxes) and for some when taxes are considered, an even better result.

I do appreciate that most of us don't and won't take this initiative, but it is an option if you really dislike overpriced buybacks.

StevnFool
Post New | Post Reply | Report Post | Recommend It!
Print the post
Members reply directly to StevnFool 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 (35) |


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