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https://finance.yahoo.com/news/berkshire-hathaway-amends-share-repurchase-220400739.html

 

The Board of Directors of Berkshire Hathaway Inc. has today authorized an amendment to Berkshire’s share repurchase program. The earlier share repurchase program provided that the price paid for repurchases would not exceed a 20% premium over the then-current book value of such shares. Under the amendment adopted by the Board of Directors, share repurchases can be made at any time that both Warren Buffett, Berkshire’s Chairman and CEO, and Charlie Munger, a Berkshire Vice Chairman, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

 

The current policy whereby share repurchases will not be made if they would reduce the value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bills holdings below $20 billion will continue. Berkshire will not initiate any share repurchases under the amended program until it publicly releases its second quarter earnings, currently scheduled after the close of the markets on Friday, August 3, 2018.

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Holy smokes, I am happy to eat my words about buyback not likely to happen at current prices!

 

We’ll now move away from speculating as to how much of a discount the stock really is from IV as Buffett and Munger see it.

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It simply reads too good to be true. There is no announcement on the Berkshire website yet [as of now]. Maybe it'll be there tomorrow. I need to see it there, before I believe this, actually.

 

Here you go:

 

https://www.businesswire.com/news/home/20180717006046/en/

 

Under the amendment adopted by the Board of Directors, share repurchases can be made at any time that both Warren Buffett, Berkshire’s Chairman and CEO, and Charlie Munger, a Berkshire Vice Chairman, believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.

 

 

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Holy smokes, I am happy to eat my words about buyback not likely to happen at current prices!

 

We’ll now move away from speculating as to how much of a discount the stock really is from IV as Buffett and Munger see it.

 

longinvestor,

 

Yes, "Holy smokes", and you're certainly forgiven. Nobody here on CoBF did see this coming. Going forward toward to August 4th will certainly be an interesting ride for Berkshire investors.

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It's kind of interesting to me that the press release says "share repurchases can be made at any time that both Warren Buffett [...] and Charlie Munger [...] believe". So they both have to agree that shares are trading below intrinsic value before they can repurchase. Usually Buffett takes sole responsibility for capital allocation decisions. Munger might give his input, but Buffett is responsible for the decision to buy or sell a business or stock. Here they explicitly share the responsibility for share repurchases.

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According to my calculation BV went up by app. 4,8 % since end of Q1 till today.

 

We are now/today  at app. 147.50 US$ and (KHC adj. at 148.50$)

 

IMO Intrinsic Value shall be minimum 1.4 above Bookvalue, which means marketprice for a B share shall be at app 208 US$

 

Cheers, holy smoke! Bishop John of Denmark, prepare the Omaha Vatican for celebrations. This is maybe not St. Elephants day, but a high rank holiday for the clerus worldwide!

 

 

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I would guess they don't change the number to 1.3 because then the stock will automatically trade above that number. This sounds to me like they are planning to do a buyback and want to actually be able to do so without driving up the price.

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I would guess they don't change the number to 1.3 because then the stock will automatically trade above that number. This sounds to me like they are planning to do a buyback and want to actually be able to do so without driving up the price.

 

With this announcement they did NOT changed the number just to 1.3

 

They changed it to 1.4 , 1.5 or maybe 1.6 x Bookvalue !

 

And it will drive the stockprice up! It did already afterhours.

 

Bizaro is recommanded to do homework on BRK

 

There is just one sense of this announcement: To set the buyback-initial much higher than 1.2 x BV,cause the current marketprice is by far to cheap.

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As a shareholder I am always happy with buybacks, but I was hoping Buffet would pull out the elephant gun with that massive cash pile. He's not getting any younger, this might have been his last chance for a mega deal.

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Hmm... I don't think I disagree with you at all, or that an assumption that I have not valued Berkshire recently is valid. My very recent purchase on a position in in-the-money leaps is one example of that. As a matter of fact, my exposure to Berkshire has tripled in the last month, so my timing appears to be fine.

 

As to valuation, I agree that this isn't the same as saying it's worth 1.3x, and that was my point. If he says 1.3x or 1.4 or 1.5, then the stock will immediately trade up to that number limiting buybacks. If he just says "when it's undervalued" they can buy back at 1.35x or 1.62x or whatever, and actually use it as an opportunity to deploy some cash. By giving the market less information about their intentions they are likely able to buy back more stock.

 

I certainly wasn't saying intrinsic value is 1.3x book, and honestly don't see how my comment could have been interpreted that way.

 

 

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I imagine that instead of stepping down, Mr. Buffett is still looking forward to step up to the plate.

From a 1974 article:

"I call investing the greatest business in the world," he says, "because you never have to swing." You stand at the plate, the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There's no penalty except opportunity lost. All day you wait for the pitch you like; then when the fielders are asleep, you step up and hit it."

 

Somehow, I think that Mr. Buffett is moving reluctantly towards buy-backs but maybe I'm wrong.

Thought the following from 2017 helps put perspective to today's announcement.

https://www.youtube.com/watch?v=TyeHnwxl28I

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