Invest your own money, let compound effect be your leverage, and avoid debt like the plague.
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 16
pretty wild if accurate
https://www.acquired.fm/episodes/10-years-of-acqui...Michael Lewis on
@AcquiredFM
says he bought Berkshire shares in 2008.
Then as Lewis is writing his SBF book, he has a discussion with a publicist who knew Buffett.
Exchange goes something like this:
Publicist: "Warren wants to know if you’re the Michael Lewis that bought shares in 2008. Warren says that's the cheapest P/B anyone paid in years."
Lewis: "Yeah, that's me."
Publicist: "So you are the Michael Lewis that sold shares 2 years ago and 4 years ago?"
Lewis: "Yeah that's me."
Publicist: "Warren would like to know why you sold..."
Unbelievable.
Buffett - in his 80's or 90's at this point - is studying the shareholder registry and has recall of immaterial buying/selling over a ~10-15 year period.
Lowenstein shared a similar story in his biography about Buffett having an intimate understanding of tiny shareholders in Berkshire - but that was decades earlier.
Just unbelievable the guy would be so dialed in this late in life.
One of one.
No. of Recommendations: 2
No. of Recommendations: 1
"Publicist: "Warren wants to know if you’re the Michael Lewis that bought shares in 2008. Warren says that's the cheapest P/B anyone paid in years."
I don't get it, did Buffett ever disclose why HE didn't authorize a buyback in 2008 and buy brk with both hands?
No. of Recommendations: 19
I don't get it, did Buffett ever disclose why HE didn't authorize a buyback in 2008 and buy brk with both hands?
I suspect it’s because he had an ingrained prejudice against it which he had to work to overcome. I recall an interview in the long ago where he said he didn’t want to “buy shares from his shareholders” because he felt that he would be taking advantage of them (by buying shares he knew were underpriced.)
So while he could rationalize other corporations doing it - because he wasn’t involved - he didn’t want to do it himself and potentially fracture the relationship he carefully built over the years with his “other owners.”
I also suspect that after watching the price slump in 2008 and barely return after three years - through no fault of Berkshire - he finally overcame his own objection and set about doing some buybacks: timidly at first in 2011, then with greater enthusiasm as the teens rolled along until there was a directive agreed by the board in 2018 to pursue it as a strategy if/when the price made sense.
Just reading tea leaves, obviously. He hasn’t called me to explain his thinking in just months now.
No. of Recommendations: 7
Think Buffett was giving priority to preserving Berkshire and surviving the crisis over shrinking the equity. Remember they had the equity index derivative exposure and that was a pain during the gfc. Buffett was not as aggresive those days as most believe.
No. of Recommendations: 1
" I suspect it’s because he had an ingrained prejudice against it which he had to work to overcome. I recall an interview in the long ago where he said he didn’t want to “buy shares from his shareholders” because he felt that he would be taking advantage of them (by buying shares he knew were underpriced.)"
How embarrassing is that? If the stock was 90 bid and he offered to buy 5 billion at 95, that wouldn't benefit the sellers? Some of this stuff makes me ill. Thank you.
No. of Recommendations: 2
Good morning, Jim, let's be serious for a moment.
Can you please explain how a public company authorizing a buyback and acting on that buyback can ever be detrimental to the sellers of that security?
Thank you.
No. of Recommendations: 29
"Can you please explain how a public company authorizing a buyback and acting on that buyback can ever be detrimental to the sellers of that security?" - Harold
This was all explained years ago when Warren was discussing Berkshire buybacks initially. Since you were on The Fool, how did you miss the discussion that went on for months?
Anyway, at the time Warren made it clear that as an insider, he felt he had access to information that others did not have. So he felt that if he was buying (through BRK), he felt like he was taking advantage of the other party through asymmetric information availability. That is why the initial buybacks were only done in a mechanical manner (1.1 and later 1.2 times book value). He even put in some language saying if someone was selling at those levels they should be aware that the buyer could be him (through BRK).
At the time, a vast majority of the Fool posters wanted more aggressive buybacks, but everyone pretty much understood Warren wanting to be noble and not take advantage of exiting shareholders (even though if Warren did not do it, someone was going to). The thought was, one of the reasons to invest in Berkshire was the nobility of the management. It was better to have a management that was too noble for it's own good than not noble enough. So it was accepted as one of Warren's quirks that made him who he was.
No. of Recommendations: 2
everyone pretty much understood Warren wanting to be noble and not take advantage of exiting shareholders (even though if Warren did not do it, someone was going to). The thought was, one of the reasons to invest in Berkshire was the nobility of the management. It was better to have a management that was too noble for it's own good than not noble enough.
I guess nobility is in the eyes of the beholder. I think it is more noble to oppose a silly idea like this one (that repurchasing shares could be taking advantage of share sellers) than to espouse the idea when it makes no sense. Noble is not a synonym for futile.
I don’t really see how shareholders would be reassured that Buffett espouses an illogical idea just because, if it were logical, it might be ethical.
No. of Recommendations: 9
I believe this is true in large part. But, it's also self serving on Lewis' part. Quoting a publicist, with no name, that he somehow shares with Buffett. Buffett saying allegedly that Lewis bought at the lowest p/b ever (an obvious, look at me I'm so smart). Why did he sell? For charity, also making himself look good (Lewis). I'm not saying it isn't true, but Lewis is always shady to me.
Also, later on in that pod, the hosts talk about the "Too hard pile"- anybody, ANYBODY, who follows Berkshire for any length of time knows that expression, Lewis never heard of it...weird to me.
No. of Recommendations: 2
I believe this is true in large part. But, it's also self serving on Lewis' part. Quoting a publicist, with no name, that he somehow shares with Buffett. Buffett saying allegedly that Lewis bought at the lowest p/b ever (an obvious, look at me I'm so smart). Why did he sell? For charity, also making himself look good (Lewis). I'm not saying it isn't true, but Lewis is always shady to me.
Good points. I also find it weird that he "sold" A shares to fund charities. That doesn't make any sense to me; it makes much more sense to convert A to Bs and gift the Bs to charities directly.
And Lewis claims he bought "a bunch" of As in 2008 subtlety telling listeners "look at me, how rich I am".
No. of Recommendations: 1
" I guess nobility is in the eyes of the beholder. I think it is more noble to oppose a silly idea like this one (that repurchasing shares could be taking advantage of share sellers) than to espouse the idea when it makes no sense. Noble is not a synonym for futile."
Many here would have us believe that when brk had no authorized buyback, Buffett was a man of honor.
When the buyback had a 1.1 xs BV limit he was still, a good man.
At a limit of 1.2 xs BV, still a good man.
Now, at material discount to IV, which he obviously has a huge edge at determining, he is no longer a man of honor.
Reading many of these people is better than three weeks on Naked and Afraid with Jlo!!
ucmtsu,no way.
No. of Recommendations: 14
"Many here would have us believe that when brk had no authorized buyback, Buffett was a man of honor.
When the buyback had a 1.1 xs BV limit he was still, a good man.
At a limit of 1.2 xs BV, still a good man.
Now, at material discount to IV, which he obviously has a huge edge at determining, he is no longer a man of honor." - Harold
There is no one here who believes any of that.
It is insane just how poorly you are at describing your opponent's positions.
No. of Recommendations: 14
"I guess nobility is in the eyes of the beholder. I think it is more noble to oppose a silly idea like this one (that repurchasing shares could be taking advantage of share sellers) than to espouse the idea when it makes no sense. Noble is not a synonym for futile.
I don’t really see how shareholders would be reassured that Buffett espouses an illogical idea just because, if it were logical, it might be ethical." - DTB
You are missing the point. As a human, Buffett is an imperfect person. He is going to have his little quirks and his hangups just like everyone else. Given that which would you prefer, his quirks and hang ups bend towards not taking advantage of shareholders (even if it borders or irrationality)? Or his quirks and hangup bend towards taking advantage of shareholders to squeeze every extra dollar he can?
Yes, I think every shareholder would prefer that Buffett be perfectly logical all of the time (is that even really arguable?). When him and Charlie put their minds together they probably had a better batting average at being perfectly logical way more than most, but there were still not perfect. Given the expected imperfection, I would much rather have the person managing a large portion of my life savings have their hang ups be little quaint ones that make it clear he tries his hardest not to take advantage of shareholders.
No. of Recommendations: 9
I would much rather have the person managing a large portion of my life savings have their hang ups be little quaint ones that make it clear he tries his hardest not to take advantage of shareholders.
I’m confident that we agree that it is very important that the CEO should behave in a rational way AND not take advantage of shareholders. I guess the question comes down to judging whether it is better to have a well-meaning attitude which actually harms shareholders because it is irrational (like this particular attitude of Buffett’s, although it has admittedly evolved in the right direction), or one that is rational but seems less ethical (by owning shares in the defence sector, for instance).
I would rather have someone who just stays rational, to hell with irrational people that may not like it, which I would call the Munger attitude. But opinions can reasonably differ, and some may prefer the Buffett attitude. Both can work, and the combination of the two was really great!
