berkshire - cheap?

[vinod1]

The issue here is that this would add one or two hundred billion to berkshire IV, but the market simply doesn't value Berkshire or any insurance this way. Or saying it another way, this boost in value now would likely come at an extreme cost in value growth in the future.

 

This would only add about $90 billion in float value which the float amount at end of 2016. Part of this float value shows up in the goodwill so you have to account for that. Part is always held in cash equivalents always. This part would not have full face value. If you make these adjustments, I think the market is valuing BRK in this manner, at least implicitly from the P/BV multiple.

 

When you estimate value of BRK from various methods they tend to cluster together closely. So float based valuation does not radically increase BRK valuation.

 

Vinod

 

Perhaps I'm being dense here, but if we take $90 billion in float liability and then call it $50 billion in asset (after your adjustments above), it would have well over $100 billion effect in value change from book value, wouldn't it?  In other words, it isn't just discounting it as a liability if you would be willing to pay someone to get it, so it seems like it would be a big swing.

 

I probably did not explain well.

 

Float can be considered as equivalent to debt.

 

Unlike debt, however, float is never really paid back unless the company liquidates or shrinks its insurance business.

 

So we are discounting the debt to a near zero value. Not adding another asset.

 

Vinod

[racemize]

I probably did not explain well.

 

Float can be considered as equivalent to debt.

 

Unlike debt, however, float is never really paid back unless the company liquidates or shrinks its insurance business.

 

So we are discounting the debt to a near zero value. Not adding another asset.

 

Vinod

 

I think where I'm not following is that you are willing to pay for the float.  If Berkshire has it and you would buy the float for face value, then not only is the float not a liability for Berkshire, it is an asset (since they can sell it).  Thus, the logic seems to me to tilt to more than calling the float zero liability.

[rb]

I think where I'm not following is that you are willing to pay for the float.  If Berkshire has it and you would buy the float for face value, then not only is the float not a liability for Berkshire, it is an asset (since they can sell it).  Thus, the logic seems to me to tilt to more than calling the float zero liability.

Nobody buys just float. When an insurance company buys float they also get a whole bunch of assets along with it. Think of the Lloyds deal as a good example.

 

Not even an insane person would pay to take over a in insurance company's liabilities.

 

[racemize]

I think where I'm not following is that you are willing to pay for the float.  If Berkshire has it and you would buy the float for face value, then not only is the float not a liability for Berkshire, it is an asset (since they can sell it).  Thus, the logic seems to me to tilt to more than calling the float zero liability.

Nobody buys just float. When an insurance company buys float they also get a whole bunch of assets along with it. Think of the Lloyds deal as a good example.

 

Not even an insane person would pay to take over a in insurance company's liabilities.

 

I'm not saying they do, I'm extending vinod's thought experiment where he said he would pay for the float.

[LC]

If the float is $100 but only $90 will be paid out, and you can invest it for an extra $5, why not pay $5 for it? Free ten bucks, no?

[rb]

If the float is $100 but only $90 will be paid out, and you can invest it for an extra $5, why not pay $5 for it? Free ten bucks, no?

OMG, we're only talking we're only talking only about float liability here. You can't invest any of that. That's just money going out. The thing you can invest are the securities which were only counted. What we're talking about is the fair value of the float liability, aka the NPV of money that has to be paid out.

[LC]

Yea, I thought it was obvious we were talking about the net value of the float, including the invested assets and any underwriting profits. As you say not even an insane person would pay to assume just the liability. You need to be paid for that.

[rb]

On a more serious note:

 

I really want rb to chime in here, on:

 

1. His thoughts about the discounting of the float liability,

2. His further comments about the piece by SlowAppreciation.

 

- - - o 0 o - - -

 

I hope that rb is just having a good time off the board in the summer period up there in Toronto.

Thanks for asking John. Summer here in Toronto is lovely :). It makes you feel guilty about time you spend inside. The time to read annual reports is in the winter damn it! I'm actually still adjusting back to Toronto. I recently returned from a 3 week holiday in Italy. Posting has been more limited during that time.

 

Now onto the more serious things. Regarding SlowAppreciation's piece. As I've said it's pretty well written. He did miss the float liability, but we've beat on that enough. The other thing i would do different is doing a much deeper dive into the subs, not just group all the op-cos together and then slap a generic multiple on them. BNSF is very different from Sees Candy, which is very different from Clayton.

 

This is how I would go about it. A valuation for BNSF, one for BHE, one for Manufacturing, Services, & Retailing (hey you have to use a bucket somewhere), one for financial products and one for underwriting. If you want to be really through I would also split the insurance group into Geico, reinsurance ops, and other primary. Yes that's a gigantic pain in the ass. But Geico is valuable as hell (at least 3x book) and as a shareholder you want to understand that value and the dynamics of it. 

 

- - - o 0 o - - - (I love your use of dividers)

 

Ok. Enough about the blog post. Let's talk about about float discounting.

 

My thoughts are along Vinod1's. Basically the moment you capitalize the underwriting profit, the float liability just becomes zero-coupon debt. Yes it's a revolving fund and all that. But so is most corporate debt - through refinancing. So now that we see it as zero-coupon debt we can go ahead and calculate the discount. The discount will be equal to the capitalized value of the coupon BRK would have to pay to borrow the equivalent of its float.

 

So the formula is D=F*c*(1-t)/r where

 

D=Discount to float face value

F=Float face value

c=coupon BRK would have to pay on debt

t=BRK tax rate

r= hurdle rate

 

So, let's calculate it. We know F=106B, c would probably be between 3-4%, let's go with 4 to be conservative, t is 36%, r is maybe 9%.

 

Then D=106*.04*(1-.36)/.09=30.15. So the discount to float is about 30 billion. From this amount you would have to subtract the goodwill carried by the insurance cos in order to get to valuation.

 

I know this is a bit long.... but you asked for it.

 

Cheers

[rb]

Yea, I thought it was obvious we were talking about the net value of the float, including the invested assets and any underwriting profits. As you say not even an insane person would pay to assume just the liability. You need to be paid for that.

No, we were talking just about the liability side of float. In the model the securities portfolio (which includes the asset side of float) was already counted. The underwriting profits were capitalized, so already added to value. What was left is the liability side of float. So the discussion is about what is the fair value of the liability side of the float.

[John Hjorth]

I really like the approach of yours to the Berkshire float in post #84, rb,

 

Thank you for sharing your thoughts.

 

I had a number inside my head in the same range while I was thinking about doing a calculation based on the information in the 10-Ks and discounting it with a WACC, just by looking on the numbers and without doing the calculations.

 

So in the area of USD 30B it is, give or take a bit.

 

- - - o 0 o - - -

 

Good to have you back.

[vinod1]

I probably did not explain well.

 

Float can be considered as equivalent to debt.

 

Unlike debt, however, float is never really paid back unless the company liquidates or shrinks its insurance business.

 

So we are discounting the debt to a near zero value. Not adding another asset.

 

Vinod

 

I think where I'm not following is that you are willing to pay for the float.  If Berkshire has it and you would buy the float for face value, then not only is the float not a liability for Berkshire, it is an asset (since they can sell it).  Thus, the logic seems to me to tilt to more than calling the float zero liability.

 

My thought experiment is not very "thoughtfull" :)

 

I mean it more as discounting the liability that is going to be paid out over a very long time.

 

Vinod

[racemize]

No, that was my fault, I didn't think through the theoretical book of your thought experiment carefully enough.

[rolling]

Buffett is a buyer at a P/B of 1.2. So does that mean he thinks at P/B = 1.2  buying BRK is like buying a dollar for fifty cents? That would mean at current prices you are getting a dollars worth of BRK for $0.55.

 

No, he doesn't think that.

 

What happened with this forum? Or is it mainly this thread? Where we you guys when berkshire was trading at $70 and it's BV had much more margin of safety?

 

As has been noted, despite being more expensive it might be a much better buy today than it was back then. Unfortunately i went all in brk-b at 87 in Dec2012. It never went that low again and it was an horrible deal (i sold all my portfolio which was composed of only 3 stocks, which went on to be a 15 bagger, a 6 bagger and a small position in a double). Valuations are relative.

 

Today i think brk is a better deal then it was back then. It is trading at a 15-20% discount to a 10% return (190-200$). How much is this worth? Choose a discount rate and you'll have the answer. An appropriate discount rate for this risk would likely be near 6%, but i don't think anyone would pay that:

-active investors seak much more

- passive investors don't see an insurance stock as a bondlike investment

 

Anyway, the discount to the 10% hurdle and the likelihood of that result make it a very interesting investment relative to the few alternatives available. I keep brk in my radar in case I stop finding other options.

[Guest longinvestor]

Buffett is a buyer at a P/B of 1.2. So does that mean he thinks at P/B = 1.2  buying BRK is like buying a dollar for fifty cents? That would mean at current prices you are getting a dollars worth of BRK for $0.55.

 

No, he doesn't think that.

 

What happened with this forum? Or is it mainly this thread? Where we you guys when berkshire was trading at $70 and it's BV had much more margin of safety?

 

The closest Buffett has come to suggesting or hinting how the buyback threshold relates to IV was in the 2011 AR when it was 1.1x; See below. Berkshire is a different company six years hence. Heck, the relationship between BV and IV has gotten so meaningless that Buffett has actually changed the parameters in the IV discussion where Market Value and Earnings have taken the place of BV. How can one be so sure that he is not suggesting that the 1.2x represents a 50 cent dollar.

 

 

Share Repurchases

Last September, we announced that Berkshire would repurchase its shares at a price of up to 110% of book

value. We were in the market for only a few days – buying $67 million of stock – before the price advanced beyond

our limit. Nonetheless, the general importance of share repurchases suggests I should focus for a bit on the subject.

Charlie and I favor repurchases when two conditions are met: first, a company has ample funds to take

care of the operational and liquidity needs of its business; second, its stock is selling at a material discount to the

company’s intrinsic business value, conservatively calculated.

We have witnessed many bouts of repurchasing that failed our second test. Sometimes, of course,

infractions – even serious ones – are innocent; many CEOs never stop believing their stock is cheap. In other

instances, a less benign conclusion seems warranted. It doesn’t suffice to say that repurchases are being made to

offset the dilution from stock issuances or simply because a company has excess cash. Continuing shareholders

are hurt unless shares are purchased below intrinsic value. The first law of capital allocation – whether the

money is slated for acquisitions or share repurchases – is that what is smart at one price is dumb at another. (One

CEO who always stresses the price/value factor in repurchase decisions is Jamie Dimon at J.P. Morgan; I

recommend that you read his annual letter.)

Charlie and I have mixed emotions when Berkshire shares sell well below intrinsic value. We like

making money for continuing shareholders, and there is no surer way to do that than by buying an asset – our

own stock – that we know to be worth at least x for less than that – for .9x, .8x or even lower. (As one of our

directors says, it’s like shooting fish in a barrel, after the barrel has been drained and the fish have quit flopping.)

Nevertheless, we don’t enjoy cashing out partners at a discount, even though our doing so may give the selling

shareholders a slightly higher price than they would receive if our bid was absent. When we are buying,

therefore, we want those exiting partners to be fully informed about the value of the assets they are selling.

At our limit price of 110% of book value, repurchases clearly increase Berkshire’s per-share intrinsic

value. And the more and the cheaper we buy, the greater the gain for continuing shareholders. Therefore, if given

the opportunity, we will likely repurchase stock aggressively at our price limit or lower. You should know,

however, that we have no interest in supporting the stock and that our bids will fade in particularly weak markets.

Nor will we buy shares if our cash-equivalent holdings are below $20 billion. At Berkshire, financial strength

that is unquestionable takes precedence over all else.

 

[StevieV]

How can one be sure that Mr. Buffett is not suggesting that 1.2 book is a 50 cent dollar?  Below is what he had to say in the 2014 letter (published in early 2015).

 

This cheery prediction comes, however, with an important caution: If an investor’s entry point into

Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares

have occasionally reached – it may well be many years before the investor can realize a profit. In other

words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire

is not exempt from this truth.

 

That at least certainly implies that 2.4x book value would not be fair value and, thus, that 1.2 book would not be a 50 cent dollar.  IV may have moved more away from book value in the last 2 years, but not significantly enough to change that.

 

Also, IMHO, all valuation methods point to 1.2 book not being a 50 cent dollar.  For example, SlowAppreciation's solid write-up does not arrive at a conclusion that BRK is worth anything near 2.4x book.

 

Anyway, I think that BRK is a solid company and may be a good investment here.  However, when I say a good investment, I am talking about 8-11% growth in IV/year plus, perhaps, a little multiple expansion depending upon when you sell. 

[racemize]

I came to post that as well.  No way 1.2 is 50 cents.  Probably 70.

 

First and definitely foremost, I believe that the chance of permanent capital loss for patient Berkshire shareholders is as low as can be found among single-company investments. That’s because our per-share intrinsic business value is almost certain to advance over time.

 

This cheery prediction comes, however, with an important caution: If an investor’s entry point into Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares have occasionally reached – it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire is not exempt from this truth.

 

Purchases of Berkshire that investors make at a price modestly above the level at which the company would repurchase its shares, however, should produce gains within a reasonable period of time. Berkshire’s directors will only authorize repurchases at a price they believe to be well below intrinsic value. (In our view, that is an essential criterion for repurchases that is often ignored by other managements.)

 

For those investors who plan to sell within a year or two after their purchase, I can offer no assurances, whatever the entry price. Movements of the general stock market during such abbreviated periods will likely be far more important in determining your results than the concomitant change in the intrinsic value of your Berkshire shares. As Ben Graham said many decades ago: “In the short-term the market is a voting machine; in the long-run it acts as a weighing machine.” Occasionally, the voting decisions of investors amateurs and professionals alike – border on lunacy.

 

Since I know of no way to reliably predict market movements, I recommend that you purchase Berkshire shares only if you expect to hold them for at least five years. Those who seek short-term profits should look elsewhere.

 

Another warning: Berkshire shares should not be purchased with borrowed money. There have been three times since 1965 when our stock has fallen about 50% from its high point. Someday, something close to this kind of drop will happen again, and no one knows when. Berkshire will almost certainly be a satisfactory holding for investors. But it could well be a disastrous choice for speculators employing leverage.

[SlowAppreciation]

How can one be sure that Mr. Buffett is not suggesting that 1.2 book is a 50 cent dollar?  Below is what he had to say in the 2014 letter (published in early 2015).

 

This cheery prediction comes, however, with an important caution: If an investor’s entry point into

Berkshire stock is unusually high – at a price, say, approaching double book value, which Berkshire shares

have occasionally reached – it may well be many years before the investor can realize a profit. In other

words, a sound investment can morph into a rash speculation if it is bought at an elevated price. Berkshire

is not exempt from this truth.

 

That at least certainly implies that 2.4x book value would not be fair value and, thus, that 1.2 book would not be a 50 cent dollar.  IV may have moved more away from book value in the last 2 years, but not significantly enough to change that.

 

Also, IMHO, all valuation methods point to 1.2 book not being a 50 cent dollar.  For example, SlowAppreciation's solid write-up does not arrive at a conclusion that BRK is worth anything near 2.4x book.

 

Anyway, I think that BRK is a solid company and may be a good investment here.  However, when I say a good investment, I am talking about 8-11% growth in IV/year plus, perhaps, a little multiple expansion depending upon when you sell.

 

I'd agree here (and thanks for the compliment). It's not going to compound at 20%/yr, but I think 8-12% is spot on. And that's nothing to sneeze at. If you have $500k today and it compounds at 10%/yr for the next 30 years you can easily retire.... 

[Guest longinvestor]

Investing is an act of arrogance that everybody is wrong.

 

With BRK this won't be the first time that everybody is wrong. Funny that the world always finds that out in hindsight. This time won't be different. 

 

I do look forward to the day when we do buy that 50 cent dollar. Now that is a happy thought in my mind with my (very) large position.

 

btw: As John Hjorth has posted before, SemperAugustus has done the finest job with their in depth analysis of BRK. I re-read the section on under-reported earnings buckets at BRK that in effect add over $100 B of IV.  ;)

[valueinvesting101]

Did Buffett mention during last AGM that he will buy stock at higher multiple of 1.25 or 1.24 if large block of share were available? I feel like I heard that but could not find it in the transcript.

[John Hjorth]

valueinvesting101,

 

I'm pretty sure, you can't find that in the Yahoo clip.

[John Hjorth]

Investing is an act of arrogance that everybody is wrong.

 

With BRK this won't be the first time that everybody is wrong. Funny that the world always finds that out in hindsight. This time won't be different. 

 

I do look forward to the day when we do buy that 50 cent dollar. Now that is a happy thought in my mind with my (very) large position.

 

btw: As John Hjorth has posted before, SemperAugustus has done the finest job with their in depth analysis of BRK. I re-read the section on under-reported earnings buckets at BRK that in effect add over $100 B of IV.  ;)

 

With regard to the first sentence of your post, longinvestor, I just have to steal the content of a very short post made by rb here on CoBF recently in another topic: "I'll steal that line!" [Please feel free to call it "double-stealing" - for my part! [lol]].

 

That first line of yours, in your last post in this topic  - is to me - just so true. It is all about being consistent to your thesis, and at the same time being factual, looking at the facts, as is.

 

The facts that matters to you, may be totally different between each of us. We simply can't all be right on this, nor all be wrong.

 

- Again, I hereby nominate you, longinvestor, as candidate to the CoBF poster of this week.

 

- - - o 0 o - - -

 

"The real problem" here is, what's going on in ones brain with regard to "opportunity cost" - the techs have been smoking BRK dearly for quite some time. It's just so increadibly hard to cope with, mentally.

 

Personally, I think I'm getting better at this game, - mentally -, over time.

 

That does not imply, that I'm good at it, yet, nor that I'll ever be.

 

- - - o 0 o - - -

 

It's just such a fascinating experience to push ones own mind absolutely to the limit, which is to me, what I'm doing here.

[CassiusKing1]

Great conversation. Good stuff all around. Thanks for sharing.

[SlowAppreciation]

Did Buffett mention during last AGM that he will buy stock at higher multiple of 1.25 or 1.24 if large block of share were available? I feel like I heard that but could not find it in the transcript.

 

JAY GELB: Berkshire’s cash and Treasury bill holdings are approaching $100 billion. Warren, a year ago, you said Berkshire might increase its minimum valuation for share buybacks above 1.2 times book value if this occurred. What are your latest thoughts on raising the share with purchase threshold?

 

WARREN: When the time comes—and it could come reasonably soon—even while I’m around, but we really don’t think we can get the money out in a reasonable period of time into things we like. We have to re-examine, then what we do with those funds that we don’t think can be deployed well. And at that time, it would make a decision and it might include both. But it could be repurchases, it could be dividends.

 

There are different inferences that people draw from a dividend policy than from a repurchase policy in terms of expectations that you won’t cut a dividend and that sort of thing. So you have to factor that all in. But if we felt that we had cash that was unlikely to be used—excess cash—in a reasonable period of time and we thought repurchases, at a price that was still attractive to continuing shareholders was feasible in a substantial sum—that could make a lot of sense.

 

At the moment, we’re still optimistic enough about deploying the capital that we wouldn’t be inclined to move to a price much closer where there’s only a narrow spread between an intrinsic value and the repurchase price. But, at a point the burden of proof is definitely on us. I mean, the last thing we like to do is own something that a hundred times earnings where the earnings can’t grow. As you point out, we got almost $100 billion. It’s $90 billion plus invested in a business—we’ll call it a business—where we’re paying almost a hundred times earnings and it’s kind of a lousy business.

 

CHARLIE: It’s more after every tax earnings.

 

WARREN: Yeah, so we don’t like that and we shouldn’t use your money that way for a long period of time. And then, the question is, are we going to be able to deploy it? And I would say that history is on our side, but it would be more fun if the phone would ring instead of just relying on history books. I am sure that sometime in the next 10 years—and it could be next week or it could be nine years from now—there will be markets in which we can do intelligent things on a big scale.

 

But it would be no fun if that happens to be nine years off—and I don’t think it will be—but just based on how humans behave and how governments behave and how the world behaves. But like I say at a point, the burden of proof really shifts to us big time and there’s no way I can come back here three years from now and tell you that we hold $150 billion or so in cash or more snd we think we’re doing something brilliant by doing it. Charlie?

 

CHARLIE: Well, I agree with you and the answer is maybe.

 

WARREN: He does have a tendency to elaborate

[StevieV]

"The real problem" here is, what's going on in ones brain with regard to "opportunity cost" - the techs have been smoking BRK dearly for quite some time. It's just so increadibly hard to cope with, mentally.

 

Surprised that you would say that.  BRK doesn't seem like a particularly hard hold to me.  It does not face any clear existential threats.  The intrinsic value marches steadily upwards and the stock price has moved up reasonably as well.

 

If you hold a retailer in today's environment, you may have real concerns about the business model.  Restaurants are hard to hold - something like KONA mentioned here.  A high flyer like Tesla.  As I understand it, Tesla loses money on every car.  Will that turn around at some point?  Will government incentives be reduced and hit adoption?  Will Tesla be the winner?

 

If you are looking for 20% CAGR returns over the longer term, you don't hold BRK.  There will most certainly be stocks that outperform BRK over the next 2, 5 and 10 years.  Some stocks will double over the next 2 years.  I hold some that I think have that potential.  BRK stock will not double.

 

On the other hand, BRK is reasonably predictable.  It will not only likely survive, but would likely become more valuable if the economy hits the skids (through deals, stock purchases and acquisitions).  Very likely to trade materially higher than today in 5 and 10 years.

[Guest longinvestor]

Did Buffett mention during last AGM that he will buy stock at higher multiple of 1.25 or 1.24 if large block of share were available? I feel like I heard that but could not find it in the transcript.

 

JAY GELB: Berkshire’s cash and Treasury bill holdings are approaching $100 billion. Warren, a year ago, you said Berkshire might increase its minimum valuation for share buybacks above 1.2 times book value if this occurred. What are your latest thoughts on raising the share with purchase threshold?

 

WARREN: When the time comes—and it could come reasonably soon—even while I’m around, but we really don’t think we can get the money out in a reasonable period of time into things we like. We have to re-examine, then what we do with those funds that we don’t think can be deployed well. And at that time, it would make a decision and it might include both. But it could be repurchases, it could be dividends.

 

There are different inferences that people draw from a dividend policy than from a repurchase policy in terms of expectations that you won’t cut a dividend and that sort of thing. So you have to factor that all in. But if we felt that we had cash that was unlikely to be used—excess cash—in a reasonable period of time and we thought repurchases, at a price that was still attractive to continuing shareholders was feasible in a substantial sum—that could make a lot of sense.

 

At the moment, we’re still optimistic enough about deploying the capital that we wouldn’t be inclined to move to a price much closer where there’s only a narrow spread between an intrinsic value and the repurchase price. But, at a point the burden of proof is definitely on us. I mean, the last thing we like to do is own something that a hundred times earnings where the earnings can’t grow. As you point out, we got almost $100 billion. It’s $90 billion plus invested in a business—we’ll call it a business—where we’re paying almost a hundred times earnings and it’s kind of a lousy business.

 

CHARLIE: It’s more after every tax earnings.

 

WARREN: Yeah, so we don’t like that and we shouldn’t use your money that way for a long period of time. And then, the question is, are we going to be able to deploy it? And I would say that history is on our side, but it would be more fun if the phone would ring instead of just relying on history books. I am sure that sometime in the next 10 years—and it could be next week or it could be nine years from now—there will be markets in which we can do intelligent things on a big scale.

 

But it would be no fun if that happens to be nine years off—and I don’t think it will be—but just based on how humans behave and how governments behave and how the world behaves. But like I say at a point, the burden of proof really shifts to us big time and there’s no way I can come back here three years from now and tell you that we hold $150 billion or so in cash or more snd we think we’re doing something brilliant by doing it. Charlie?

 

CHARLIE: Well, I agree with you and the answer is maybe.

 

WARREN: He does have a tendency to elaborate

 

;D ;D The last exchange between them.

 

In another exchange, they were goading each other as to the size of the next elephant deal. Buffett said "something like $150B" and Munger chimed "Now you're talking". They are surely not thinking buybacks at all. If the market does give it to them, they'll do it but but they are still-a-hunting. It would be kind of silly if they retire shares and soon after this $150-200 B deal comes up and they have to issue shares. They would be in a position of Buffett's disavowed "being under the mercy of the kindness of strangers" in a sense because the price at the time may be value destroying to shareholders.

 

Something tells me that the 1.2x buyback is there to make it easier for the next guy. That poor bastard will have one hell of a time stepping into the shoes; besides will have something like $400 B to allocate in his first decade. Buffett is perhaps setting up a return-of-capital-scenario to make him somewhat of a hero to the shareholder community.