Post New

https://www.berkshirehathaway.com/owners.html

Due for an update, or timeless principles?

Thanks for another walk down memory lane.

" We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely.
We continue to pass the test, but the challenges of doing so have grown more difficult. If we reach the point that we can't create extra value by retaining earnings, we will pay them out and let our shareholders deploy the funds."

Just in case a board member is reading the board. If I were a current board member of brk I would suggest we do a mailer to 40-50 fund managers, globally.

Simple questions,

IF brkb initiated a quarterly div to yield 1 % at current market valuations, and agreed to increase the div 5 % per year until we got our cash balance below 150 billion, agreed to buyback brk with less stringent hurdles, and Gregg committed to never do a major deal on a handshake but instead would always hire a forensic accounting firm before ever closing a deal, and team Greg committed to visiting every wholly owned sub to take a deep dive into current operations would you be more likely to add brkb to your portfolio?

If brk is currently short of funds I would be happy to pay the postage. Rather than ask current shareholders their opinion why not ask fund managers who can actually increase demand for brk common and help to absorb the selling via the foundations, going forward? How many of the fund managers sold the 5 MAG 7 stocks when they initiated a small dividend? WHY did those high PE companies initiate a small div, are they all poor capital allocators?

IF brk did that questionnaire the stock revisits 490 in a hurry. BTW, it's 2026 on the west coast in America, Buffett is going to be a huge seller for the next 10-12 years, he no longer wants a 20 % sell off. THINK!

I believe brk was a buyer below 480 last week, we shall know soon enough.

Sorry about the typo - teach me to post from the iPad.

I did notice there is no direct link to the owner's manual on the Berkshire homepage anymore, and it has not been included in the annual report since 2017.

https://www.berkshirehathaway.com/

https://www.berkshirehathaway.com/2017ar/2017ar.pd...

So, I guess the Owner's Manual is indeed obsolete. Be nice if Greg revised it for the new era.

Thanks for another walk down memory lane.

I figured that's what you were referring to with your comment in the other thread:
"Seriously bud, I have little interest in what Buffett said in 1999, 1979, or 1809 comprende?"

Your quote from the Owner's Manual:
"We feel noble intentions should be checked periodically against results. We test the wisdom of retaining earnings by assessing whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained. To date, this test has been met. We will continue to apply it on a five-year rolling basis. As our net worth grows, it is more difficult to use retained earnings wisely.

We continue to pass the test, but the challenges of doing so have grown more difficult. If we reach the point that we can't create extra value by retaining earnings, we will pay them out and let our shareholders deploy the funds."

In the 2009 AR he added this:
I should have written the “five-year rolling basis” sentence differently, an error I didn’t realize until I received a question
about this subject at the 2009 annual meeting.

When the stock market has declined sharply over a five-year stretch, our market-price premium to book value has sometimes
shrunk. And when that happens, we fail the test as I improperly formulated it. In fact, we fell far short as early as 1971-75,
well before I wrote this principle in 1983.

The five-year test should be: (1) during the period did our book-value gain exceed the performance of the S&P; and (2) did
our stock consistently sell at a premium to book, meaning that every $1 of retained earnings was always worth more than $1?
If these tests are met, retaining earnings has made sense.

Berkshire has failed this test most years in the last 13. Ravi has written about it:
https://newsletter.rationalwalk.com/p/berkshire-ha...

According to Ravi they failed 2013-2017 and 2020-2022.
Since book value gains lagged the S&P500 in 2023, 2024, and likely 2025, it's probable the test was failed in these years also.

Two thoughts: Buffett de-emphasized book value as a performance measure in 2018, and they did return some earnings to shareholders via buybacks (nearly $80 billion).

whether retention, over time, delivers shareholders at least $1 of market value for each $1 retained....
Simple questions, IF brkb initiated a quarterly div ...


Another good question to add to your list---

Given that the market value of each share of Berkshire rose by $1.97 for each dollar retained in the five years ending at the date of the most recent financial statements, and that test is therefore clearly still being met with flying colours, would you as a fiduciary be comfortable getting for your beneficiaries less than a dollar worth of dividends for each dollar allocated to dividends, instead of around $1.97 of increased market value of shares?

Jim

"So, I guess the Owner's Manual is indeed obsolete. Be nice if Greg revised it for the new era."


AdrianC, good morning bud, to be serious, congratulations you join the long list of 3 critical thinkers on the board.

Events change over time, let me ask you a few questions the old-time deep thinkers here have refused to answer.

WHO bought the googl?

Were T and T prevented from buying brkb by Buffett the past 12 years?

Historically Why do firms pay for order flow?

Does it matter WHO the sellers are in any given security?

When googl , nvda, and Meta initiated a small quarterly dividend were those very poor capital allocation decisions by their boards? Did their common sell off on that news? Have they traded poorly since the dividends were initiated? Did the dividend DECREASE DEMAND for their common or reduce demand for their common shares?

Now could you please confirm my math since these are very big numbers.

Buffett plans on selling his position over the next 10 years if the selling doesn't disrupt the market.

15 billion a year at say 480 per share is how many shares weekly from his control block?



What is the weekly monetary value of those sold shares? Please confirm my math, thank you and welcome to a very select club, let's see how you do partner.

Now that you see the numbers do any of those numbers seem, material to you? Thank you.

I forgot, dear brother Jim :), you are always welcome to share your fair and balanced opinions on these critical issues. Thank you.

Now could you please confirm my math since these are very big numbers.

Buffett plans on selling his position over the next 10 years if the selling doesn't disrupt the market.

15 billion a year at say 480 per share is how many shares weekly from his control block? [620k B shares]

What is the weekly monetary value of those sold shares? [$298 million] Please confirm my math, thank you and welcome to a very select club, let's see how you do partner.

Now that you see the numbers do any of those numbers seem, material to you? Thank you.

He will be donating 620k B shares per trading week, value of $298 million. What do you get?

What is the average weekly trading volume of B shares? 25 million?

What would be a material % of trading volume? 5%? 10%? I don't know, I'm asking.

Given that the market value of each share of Berkshire rose by $1.97 for each dollar retained in the five years ending at the date of the most recent financial statements, and that test is therefore clearly still being met with flying colours, would you as a fiduciary be comfortable getting for your beneficiaries less than a dollar worth of dividends for each dollar allocated to dividends, instead of around $1.97 of increased market value of shares?

Well, I can't tell you how many retirees I talk to that love their dividend portfolio because "that way I'm not touching my nest egg".

There's something psychological about selling shares for cash. So, they'd rather get less in dividends than a higher share price.

" He will be donating 620k B shares per trading week, value of $298 million. What do you get?

What is the average weekly trading volume of B shares? 25 million?

What would be a material % of trading volume? 5%? 10%? I don't know, I'm asking."

Thanks that's what I got. Don't forget many old timers who have held brk for decades will be selling since Buffett is giving up control. Others may sell into trumps tax rates before a Dem wins in 2028 etc.

I have to get to the park for what's really important, later bud.

BTW, Buffett asking his indoctrinated shareholders their opinion of a div years ago was insulting. Ask fund managers who don't own the stock, this is complicated?


ucmtsu,no way.

There's something psychological about selling shares for cash. So, they'd rather get less in dividends than a higher share price.


It also helps with market volatility - a regular predictable income stream is attractive to many. (but there are lots of other places to get that)

tecmo
...

Well, I can't tell you how many retirees I talk to that love their dividend portfolio because "that way I'm not touching my nest egg".

There's something psychological about selling shares for cash. So, they'd rather get less in dividends than a higher share price.


That makes for an even more interesting question.

"Given the fact that every $1 of retained earnings has been providing much more than $1 in share value, and given the fact that shareholders have overwhelming voted against receiving dividends, but cognizant of the fact that some retirees prefer dividends despite their disadvantages, do you intend to follow the rational wishes of the majority of shareholders and continue not paying a dividend, or do you intend to heed the irrational wishes of a minority of shareholders and pay one?"

" He will be donating 620k B shares per trading week, value of $298 million. What do you get?

What is the average weekly trading volume of B shares? 25 million?

What would be a material % of trading volume? 5%? 10%? I don't know, I'm asking."

Thanks that's what I got.

So, Buffett's donations will be 620k/25M * 100 = 2.5% of trading volume, if they are sold.

Is that a lot?

I have to get to the park for what's really important, later bud.

Can't fault you there. Just got back myself.

Your "more interesting question" reads more like one created for a politically leaning survey.

Your "more interesting question" reads more like one created for a politically leaning survey.

Without a doubt it's a leading question. Unabashedly so. It leads one in the direction of reality, like a Socratic dialogue.

How so?
It's entirely reasonable for someone to advocate a dividend if they like, as there are lots of reasons some people like dividends. But one can't argue for a dividend and argue for it increasing long run total returns.

Jim

" How so?
It's entirely reasonable for someone to advocate a dividend if they like, as there are lots of reasons some people like dividends. But one can't argue for a dividend and argue for it increasing long run total returns.

Jim"


Jim, you should bring a comedy act to Vegas bud. Can you name the last three major buys of public companies that Buffett has made that do not pay a dividend? WHO bought div paying google and why?

Thank you.

Well, I can't tell you how many retirees I talk to that love their dividend portfolio because "that way I'm not touching my nest egg".

There's something psychological about selling shares for cash.

Not just retirees.

I think the psychological thing is "They give me money without me having to do anything." So to many of them it feels like free money.

Jim, you should bring a comedy act to Vegas bud. Can you name the last three major buys of public companies that Buffett has made that do not pay a dividend? WHO bought div paying google and why?

We all know you want a dividend, and are immune to anything that doesn't reach that conclusion, including simple arithmetic. I'd have thought it was pretty obvious that most people would rather have $1.97 instead of $1.00, but clearly I'm wrong about that assumption and you'd rather have the $1.00, minus tax. And you want all of the rest of us to be in that poorer boat, too.

If you want a dividend, that's fair, your desires are your own. But you do have to recognize that you own probably the single stock in the world most famous for rationally not paying one. A humble suggestion would be to suggest you do get your dividend with dividend paying stocks. Of you want a cat, get a cat, don't complain that your dog doesn't meow.

Failing all the above, perhaps post about it less than once a month?

Jim

I think the psychological thing is "They give me money without me having to do anything." So to many of them it feels like free money.

I think it's also paired with the notion that all stock prices are random anyway: "the stock price was going to do the same thing with or without the dividend, so it's obviously free money on top". It follows that only a chump would own a stock that doesn't pay a dividend, as they're turning down free money.

Pointing out the obvious drop in share price and market cap (and obviously value per share) every time a stock goes ex-dividend doesn't seem to register.

Jim

" If you want a dividend, that's fair, your desires are your own. But you do have to recognize that you own probably the single stock in the world most famous for rationally not paying one. A humble suggestion would be to suggest you do get your dividend with dividend paying stocks. Of you want a cat, get a cat, don't complain that your dog doesn't meow.

Failing all the above, perhaps post about it less than once a month?

Jim"

Once upon a time, decades ago, you told me that if I want a stock with an authorized buyback don't buy brk, remember? Could you be wrong, again?

To repeat again, in English, why do nvda, google, and meta pay a small dividend? Is that a trick question? Thank you.

Once upon a time, decades ago, you told me that if I want a stock with an authorized buyback don't buy brk, remember?

Dude, get a grip. I never said that, and somewhere in your irascible heart you know it.

You are just unable to face the concept that 1.97 is bigger than 1, not smaller. It will remain true even if you come up with a new red herring every day for the rest of your life.

Obviously things could change. We could see the market stop recognizing Berkshire as capable at allocating cash usefully and new retained earnings might stop getting a multiple. Market price might start rising no faster than the cash piles up. Hasn't happened yet, though.

Write 1.97 on your fridge. Really think about what it means.

Jim

To repeat again, in English, why do nvda, google, and meta pay a small dividend? Is that a trick question? Thank you.

People are trying to tell you to keep your OCD to yourself. Could you? Please?

Can you name the last three major buys of public companies that Buffett has made that do not pay a dividend?

I fail to see how that is at all relevant. When Buffett evaluated a company, he presumably evaluated the *entirety* of the company, not just whether they paid a dividend or not. He could have easily disliked that the company paid a dividend, but still bought shares because the other, positive attributes of the company outweighed the negative of the dividend (and other negatives, no company’s perfect in every way).

Just as it’s dumb to buy shares of a company solely because they pay a dividend, it’s dumb to *not* buy shares of a company solely because they pay a dividend. Buffett’s not dumb.

Brian

"Once upon a time, decades ago, you told me that if I want a stock with an authorized buyback don't buy brk, remember? Could you be wrong, again?" - Harold

That is simply not true. Jim never said any such things. You are lying.

"To repeat again, in English, why do nvda, google, and meta pay a small dividend? Is that a trick question? Thank you." - Harold

People have answered this question for you in its various forms many times. Why do you ignore the previous answers and keep asking it over and over?

Charlie once said he hopes he is not around for the sad day when brk. declares a dividend.

They want to be dividend aristocrats one day? They want to appeal to ‘equity income buyers’ who cares why they want it?

Are you the writer of Buffett watch?

Thanks that's what I got. Don't forget many old timers who have held brk for decades will be selling since Buffett is giving up control. Others may sell into trumps tax rates before a Dem wins in 2028 etc.

VERY few will sell. They are mostly old folks who held on for decades and they have massive capital gains in the stock. When you're that old, you don't sell and pay capital gains taxes, instead, you die (eventually) and everything has the basis reset to FMV.

They want to be dividend aristocrats one day? They want to appeal to ‘equity income buyers’ who cares why they want it?

It's absolutely clear that they are gunning to become a dividend aristocrat. Look at Apple for example, raises the quarterly dividend by about a penny each year. If they keep it up, in 12 years or so (?) they will join the dividend aristocrat list.

“ VERY few will sell. They are mostly old folks who held on for decades and they have massive capital gains in the stock. When you're that old, you don't sell and pay capital gains taxes, instead, you die (eventually) and everything has the basis reset to FMV.” What? People in their 80s and 90s die every day and the heirs get the stepped up basis, are they obligated to hold another 30 years with Buffett gone? Come on bud. Many of our kids have credit card debt, student debt, want to buy a house etc, real world 101.

“ VERY few will sell. They are mostly old folks who held on for decades and they have massive capital gains in the stock. When you're that old, you don't sell and pay capital gains taxes, instead, you die (eventually) and everything has the basis reset to FMV.” - Mark

"What? People in their 80s and 90s die every day and the heirs get the stepped up basis, are they obligated to hold another 30 years with Buffett gone? Come on bud. " - Harold

Right, but you were talking about selling for capital gains reasons remember? There heirs do not pay capital gains. Keep up old man. Maybe take a nap before reading the boards.

Just put him in the penalty box. I recommend this to all readers of this board. He's not a serious person and there is nothing productive that will come of this.

Post New

Berkshire Hathaway FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.