Buffett buybacks: Could Berkshire tender stock?

[Mephistopheles]

Very unlikely Buffett is buying back stock. Too many bargains around

 

He has enough cash to buy back stock at a certain % of daily trading volume (whatever the max without moving the price) AND buy other things.

[John Hjorth]

Very unlikely Buffett is buying back stock. Too many bargains around

 

He has enough cash to buy back stock at a certain % of daily trading volume (whatever the max without moving the price) AND buy other things.

 

Gents,

 

Fascinating exchange! [ : - ) ] -Let's see!

[Guest longinvestor]

Mark Millard is a Berkshire Hathaway Vice President [please see inside back cover page of the 2019 Annual Report], and the provided telephone number appears to be Berkshire's main [desk] number [i.e. also used by Mr. Hamburg as contact node related to Press Releases].

 

Wondering if this number has been ringing during the panicked days of late? Desperate calls from “must sell” types

[alpha]

Very unlikely Buffett is buying back stock. Too many bargains around

 

I agree BRK shares may be cheaper from a few months ago but other businesses/sectors have sold off much more (energy, airlines, etc..) if this keeps up it will be great time to put cash to work buying bargains. Historically BRK has been able to put large sums of cash to work quickly when the markets roll over.

 

 

 

 

 

[DooDiligence]

WEB sounds giddy in the opening of this interview.

 

[rb]

Well BRK is now below 1.2x book with MTM.

[Jurgis]

Well BRK is now below 1.2x book with MTM.

 

Interesting question is what Buffett could be buying instead?

 

There are only few banks that he might be buying without crossing 10%.

Same with airlines.

 

If he's buying AAPL, that's huge balls considering his existing position.

 

What else?

[alpha]

Well BRK is now below 1.2x book with MTM.

 

Interesting question is what Buffett could be buying instead?

 

There are only few banks that he might be buying without crossing 10%.

Same with airlines.

 

If he's buying AAPL, that's huge balls considering his existing position.

 

What else?

 

If he was interested in buying an airline whole, it seems like this would be the time to do it. I know he has publicly stated it is complicated but complications may be worth it at these prices.

[longterminvestor]

Proxy filed today gives shares outstanding as of close of business March 4, 2020.  We already have shares outstanding as of Feb 13, 2020.  That's 14 trading days.  Heres the math: 

 

Feb 13, 2020 Annual Report:

A Share: 700,396

B Share: 1,385,994,959

Converted to B:  2,436,588,959

 

March 4, 2020 Proxy:

A Share:  699,123

B Share:  1,382,352,370

Converted to B:  2,431,036,870

 

Total Buyback from Feb 13 - Mar 4:

A Share:  1,273

B Share:  3,642,589

Converted to B: 5,552,089 

 

[longterminvestor]

For context - last year's repurchase doing the same math from annual report and proxy amount of the B shares (A converted) was 2,617,280 shares.  Roughly a 110% increase YOY. 

[Dynamic]

0.26% of outstanding shares retired from 31 December to 4 March. Not enormous but substantial.

 

There's also a Form 3 out regarding 10% stake in Bank of New York Mellon BK. This seems to be a result of BK buybacks.

[StubbleJumper]

0.26% of outstanding shares retired from 31 December to 4 March. Not enormous but substantial.

 

There's also a Form 3 out regarding 10% stake in Bank of New York Mellon BK. This seems to be a result of BK buybacks.

 

 

What is more encouraging, is if WEB bought 0.26% at ~$220, how much is he buying a few weeks later at $190 or $180?

 

 

SJ

[longterminvestor]

Dynamic - out of respect for your work I feel obligated to be as exact as possible.  When reading your note I noticed my numbers were misleading.  Dates I used were Feb 13-March 4.  I should have included Dec 31 - Feb 13 purchases. There was an additional 847,574 Equivalent B shares purchased during period. 

 

Dec 31, 2020 Annual Report (page K-103 on Annual Report)

A Share:  701,970

B Share:  1,384,481,533

Equivalent B:    2,437,436,533

 

Feb 13, 2020 Annual Report (Page 1 of Annual Report):

A Share: 700,396

B Share: 1,385,994,959

Equivalent B:  2,436,588,959

 

Total Buyback from Dec 31 to Feb 13:

A Share:  1,574

B Share:  (1,513,426) - Some A must have been converted to B for the increased share amount

Equivalent B: 847,574

 

TOTAL Buyback from Dec 31 to March 4:

A Share:  2,847

B Share:  2,229,163

Equivalent B: 6,499,663

 

Outstanding share count reduction was more like 0.26666%. 

[valueinvesting101]

Buffett's Berkshire Hathaway reduces share count, suggesting possible buybacks

 

https://www.reuters.com/article/us-berkshire-buffett-stock-idUSKBN24B2CZ?taid=5f08a57256bb3f000175c765

[Guest longinvestor]

A comment by Buffett at the annual meeting that Buybacks are never meant to move the stock price, yet the presence of Omaha as an "incremental buyer" does just that. By buying steadily quarter after quarter, the incremental buyer thing is important to Berkshire's stock price over the long term. It puts a floor of sorts. Of course, the posture will change once the stock starts trading above IV. 

[aryadhana]

What if they dividended puts?  Strike price doesn't matter so much, as long as he's happy about being exercised at that price, since they would go out to existing shareholders.  Doing this solves the tension between appropriate consideration for selling versus continuing shareholders. 

[gfp]

"Approximately $9 billion was used to repurchase Berkshire shares during the third quarter "

 

9/30 share count 1,570,636 A share equivalents

10/26 share count 1,563,152 A share equivalents.

 

So looks like an additional $2.38 Billion worth of repurchases completed after quarter end up to 10/26.  Quite the clip compared to his previous dribs and drabs.

 

Looks like he sold some AAPL near the top.  Have to dig into the numbers more but AAPL shares owned by BRK down to about 964.5 million shares instead of what would have been slightly over a billion shares post-split.  Maybe sold ~ $4.7 Billion at market value in the Q ?

 

Consolidated cash at $145.7 Billion after $9 Billion in repurchase activity in the Q

[thepupil]

~7% annualized, not bad at all.

[SwedishValue]

Some data.

 

For July, Berkshire bought back 1 965 A-shares. During July a total of 7 652 A-shares were traded at the NYSE, so this would correspond to Berkshire Hathaway repurchasing 25,7% of the going volume of A-shares.

 

For July, Berkshire bought back 10 521 719 B-shares. During July a total of 126 051 720 B-shares were traded at the NYSE, so this would correspond to Berkshire Hathaway repurchasing 8,3% of the going volume of B-shares.

 

For August, Berkshire bought back 2 531 A-shares. During July a total of 8 064 A-shares were traded at the NYSE, so this would correspond to Berkshire Hathaway repurchasing 31,4% of the going volume of A-shares.

 

For August, Berkshire bought back 10 846 595 B-shares. During July a total of 102 380 036 B-shares were traded at the NYSE, so this would correspond to Berkshire Hathaway repurchasing 10,6% of the going volume of B-shares.

 

For September, Berkshire bought back 3 670 A-shares. During July a total of 9 396 A-shares were traded at the NYSE, so this would correspond to Berkshire Hathaway repurchasing 39,1% of the going volume of A-shares.

 

For September, Berkshire bought back 11 387 889 B-shares. During July a total of 115 358 782 B-shares were traded at the NYSE, so this would correspond to Berkshire Hathaway repurchasing 9,9% of the going volume of B-shares.

 

What conclusions can we draw from this? I guess they most likely have bought A-shares (maybe also a few B-shares) off-market. I believe there were some provision which made Berkshire unable to repurchase more than a set proportion of daily trading volume? Maybe someone better informed in American securities law can inform me!

[Dynamic]

There is a Safe Harbor rule which exempts companies from Insider Trading or Stock Manipulation investigations for their buyback activity which limits buying to certain times and certain average daily volumes. Berkshire is clearly not following that rule unless it has negotiated some pretty large off market purchases.