No. of Recommendations: 14
The Foundations will be selling 8-10 billion of Buffett's shares annually the next 10-12 years.
Sure. So?
Do you think this will affect the intrinsic value of a share?
Honest question. Think about it carefully.
Myself, I think it could, by a few pennies, solely because of this situation: some long time holder phones head office to sell some shares. The current price is not far enough below IV to warrant a public market buyback, but management says yes anyway and buys their shares. This means the weighted average cost of all future buybacks might be a hair higher over time than in the counterfactual that no long term shareholders phoned head office to sell.
But other than that...no. If you sell a share to (say) rayvt, or a million shares, my share is worth neither more nor less as a result of that deal. Your extra supply doesn't drive the value down any more than his extra demand drives the value up.
Jim
