Personal Finance / Macroeconomic Trends & Risks
No. of Recommendations: 24
I think the the recent talk on this board about Warren "still being in charge", or at the least still having a major, if not veto vote on major decisions such as buybacks, potential dividends, etc seems a bit ridiculous for the following reasons:
1) Buffett has a 60 year history saying what he means and meaning what he says. He says Abel is now the CEO. I take that at 100% Face Value.
2) Buffett and Charlie had plenty of time to work with Abel to make this CEO decision. I don't think Abel is in any typeof "intern" position.
3) Warren and Charlie are both smart enough to know that any CEO worthy of the title at Berkshire wouldn't agree to anything less than being CEO in practice as well as title.
4) Warren had his run, and likely over stayed his welcome by least 15 years. I think in hindsight he may even realize that.
To many any conjecture that Buffett is managing from the sideline is a completely made up belief and should not be spread as fact.
Sure, the Chairman comes to work every day because he loves it, it keeps him alive, and he has wisdom and knowledge to share.
But he aunty running the place any more.
No. of Recommendations: 4
" Warren Buffett told CNBC's Becky Quick that he remains closely involved in investment decisions at Berkshire Hathaway even after stepping down as chief executive.
The 95-year-old investor said he recently made a "tiny" new purchase.
Buffett said he speaks with Mark Millard, Berkshire's director of financial assets, before the opening bell to discuss market developments.
The 95-year-old investor, in an interview with Becky Quick on "Squawk Box," said he still comes into the office daily and stays engaged with markets, working alongside colleagues on trades. Buffett described a routine that includes calling Mark Millard, Berkshire's director of financial assets, before the opening bell to discuss market developments."
nuf said.
No. of Recommendations: 4
From the last quarterly report:
“Berkshire’s common stock repurchase program currently permits Berkshire to repurchase shares any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
Greg needs Mr. Buffett’s permission?
No. of Recommendations: 5
“Berkshire’s common stock repurchase program currently permits Berkshire to repurchase shares any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
Greg needs Mr. Buffett’s permission?
There's a lot of people on this board who post their iv estimates. They vary.
I remember Warren and Charlie talking about how they would come to different iv's. They were in the same ballpark but not the same.
So, I'm sure Greg has one figure Warren another.
I'd find it hard to believe he's asking permission to repurchase. More likely just bouncing his figure off Warren. Just like Warren and Charlie did.
And Warren is probably at the point he just defers back to Greg.
No. of Recommendations: 2
"I'd find it hard to believe he's [Greg] asking permission to repurchase. More likely just bouncing his [IV] figure off Warren. Just like Warren and Charlie did."
The decision has to be pretty easy right now, with the stock selling at 1.39x Mar 31 BV. In March Berkshire repurchased stock at 1.47x Dec 31 BV, or 1.43x Mar 31 BV. The only question now is how much they are repurchasing. My guess would be similar to the pace in March.
No. of Recommendations: 1
“ The only question now is how much they are repurchasing. My guess would be similar to the pace in March.“ My guess is they will buyback ten xs more Brk in q-2, or Buffett is still in total control, which would be very, Bearish into year end.
No. of Recommendations: 4
The annual report says:
“Berkshire’s common stock repurchase program currently permits Berkshire to repurchase shares any time that Berkshire’s Chief Executive Officer, after consultation with the Chairman of the Board, believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
AdrianC sees that and asks:
Greg needs Mr. Buffett’s permission?
Raplh responds:
No. At least that is not what the annual report says. It says he needs to talk to Buffett before he does the buyback. Maybe Warren says "yeah see what you mean" and Greg goes forward with the repurchase. Maybe Warren says "No. No! What are you nuts?" and Greg goes forward with the buyback. Either way Greg has consulted with the the Chairman of the Board before doing the buyback.
R:
No. of Recommendations: 4
The decision has to be pretty easy right now, with the stock selling at 1.39x Mar 31 BV. In March Berkshire repurchased stock at 1.47x Dec 31 BV, or 1.43x Mar 31 BV. The only question now is how much they are repurchasing. My guess would be similar to the pace in March.
The decision about how many involves more than just IV. They want to buyback under a certain multiple of IV or BV. But even though it is unsaid (I think), they also will only buyback such that it doesn't affect the market trading inordinately. And there's an art to doing that. First off, I think they prefer buying back A shares rather than B shares (but will, of course, buy back B shares as well). And A shares have relatively small volume of only a few hundred a day. So even if they've been buying A shares each day since the end of their self imposed blackout, they may have gotten perhaps 1000 A shares. That's less than $1B. The B shares usually trade 3 to 5 million a day. So even if Berkshire was able to take 5% of the volume, then that's only 4 to 7 million B shares. And that's under $2B. So I'd guess that the buyback is well under $5B, maybe even under $4B this time around.
It's not so easy to buyback large amounts of shares of a relatively thinly traded company. For a company like Apple, on the other hand, because it trades 40, 50, even 90 million a day sometimes, it's a lot easier to buyback A LOT of shares in a single quarter.
And it stands to reason that Berkshire is relatively thinly traded. Because a very large percentage of holders are long-term and much fewer are short-term holders. I always liked the idea of Berkshire buying back from estates that "have to" sell long held shares. And I'm still mystified why there was no deal for Berkshire to easily be able to buyback shares from the foundations when they sell each year.
No. of Recommendations: 12
And I'm still mystified why there was no deal for Berkshire to easily be able to buyback shares from the foundations when they sell each year.
Price.
Berkshire retains the power to decide when and if shares are repurchased. Even for a thinly traded security, the range of market prices in any 12 month period is very large. In theory, the current set-up (no commitment to foundations or estates, but both can trade at will) allows the possibility of the sellers getting a good high price, and Berkshire's buybacks getting a good low price.
Since shares are fungible, if you like you can think of all the repurchases to date as having been bought from that sort of seller. It doesn't much matter if someone else held a specific share for a few months in between.
Of course, from a broader perspective, what does it matter? A share is only worth so much, and it will trade within broad spitting distance of that level no matter who owns it. It seems unlikely that Berkshire will buy back enough of the company, at a big enough discount to fair value, to matter much more than a few percent to the value of a share relative to important things like how the businesses are doing.
Jim
No. of Recommendations: 0
So we are in agreement that Warren is Greg’s Charlie? What’s wrong with that?
