No. of Recommendations: 38
From my notes, in Jan 2010 Buffett finally split the Bs to provide the liquidity required to be added to the indexes, brkb was 73ish at the time. By March 5 2010 Brk was added to the spy and had huge volume and moved up to 85 ish. 3/30/2010 we had sokolgate stock dropped back to 75 ish in four weeks. 9/26/2011 Buffett finally authorized the buyback. The 1.1 xs BV limit was designed to goose the stock above 1.1 xs BV, so that he wouldn’t be expected to actually buyback many shs. The limit was lifted to 1.2 xs BV for the same purpose, goose the stock above 1.2 xs BV where he was happy to sell off his life’s work, way to cheap. He finally changed the buyback hurdle to , material discount to IV , when he realized his error of not being an aggressive buyer from 2008 on. Those are the facts for those interested in history, whether we like the facts or not.
Those must be some interesting notes. These facts that you have jotted down in your notes include some things most people here would call 'facts' and a number of things that might be more accurately described as 'conjectures'.
The split of the Bs was explained at the time as a gesture to outgoing BNSF shareholders to allow them to convert to BRK.B shares at a similar price, without being paid cash on for the value of their holdings corresponding to less than one previous Berkshire B share. The fact that the B-share price moved up from $73 to $85 in the following few months (and back down to $70, by June, and finishing the year at $80, you might have added), could be attributed to any number of things, including changes in the general stock market (the S&P followed a similar pattern over 2010), or because of the BNSF acquisition, or Sokol's ouster, or because of a million other causes. I see nothing to support one particular explanation, which is that Buffett did the split to 'goose' the stock price (despite his claims of a different reason), nor anything to suggest that this tactic actually succeeded.
In 2011, Buffett did authorize the buyback, but once again, maybe not to 'goose the stock above 1.1xBV', but rather for the reason Buffett stated, which is that Berkshire shares under 1.1xBV actually represented a very good deal for ongoing Berkshire shareholders, better than anything else that he might have bought with the huge cash pile. Unfortunately for us, he was not able to buy many shares at this low price, and eventually increased the threshold to 1.2xBV, and as shares moved beyond that ratio, eventually to any price that he and Munger thought represented a good deal for shareholders, with a margin of safety. This sounds to me much more like Buffett chasing the price as it went uup, rather than Buffett pushing the price up. But everyone is free to interpret it as they wish (although this would not make their viewpoint a 'fact'.)
If there is one thing that Buffett has done consistently, throughout his career, it is to obstinately refuse to promote the purchase of Berkshire stock, with a few exceptions when the price seemed ridiculously low. It is ironic that the one person who exemplifies this shareholder-friendly behaviour nevertheless gets accused of goosing the stock. But it's a (mostly) free country, so Buffett can behave as impeccably as you like but some guy on the internet is always free to say the opposite.
dtb
