Berkshire buyback--at 120% of book

[gfp]

89.40 is much closer to correct than the 91.5x numbers.  Remember that large equity holdings are down since the favorable Q3 mark and that he did spend 1.2 billion dollars of that shareholders equity to reduce the share count.  Retained earnings are somewhat predictable and GEICO and Re losses for Sandy should be over a Billion dollars.

 

Although, you seem to mix two separate issues.  1) is it appropriate to include non-controlling interest in the shareholder BV calculation?  and 2) how should one adjust the reported Q3 equity to approach a current BV estimate?

 

My $89.40 BRK.b buyback price reflects a no on #1 and does no adjustment to the reported Q3 numbers.  It may be appropriate to make adjustments as you noted to get to a more accurate "current" BV.  But, I haven't done that.

 

straight from the Q3 10Q:

shareholder equity = $184,602 million

shares outstanding = 1.652 million (A equivalents)

BV/A Share = $111,745

Buyback = 1.2 x BV = $134,093

1,500 B shares per A share ==> $89.40

 

Right - it is correct not to include non-controlling interests and use only Berkshire Hathaway shareholders equity.  It is also correct to use the new lower share count (not 1.652m) since he just repurchased 1.2 B. worth of shares.  It is also correct to deduct the 1.2 Billion cash he used to do it.

[zarley]

Right - it is correct not to include non-controlling interests and use only Berkshire Hathaway shareholders equity.  It is also correct to use the new lower share count (not 1.652m) since he just repurchased 1.2 B. worth of shares.  It is also correct to deduct the 1.2 Billion cash he used to do it.

 

There has been a little bit of this debate (how much adjusting from reported BV is warranted for purposes of determining a more precise estimate of the current buyback price) on the TMF BRK board.  Since I'm lazy, I don't view the buyback price as a floor, and roughly right is good enough for me, I land in the 'just use reported BV' camp.  Your adjustments would be reductions to overall BV and the buyback price, so they're a bit more conservative and arguably more correct.  But, I'd guess the net effect is pretty close to negligible (although I haven't done the math). 

[Palantir]

So....anyone buying? We're at that level again.

[gfp]

http://www.sec.gov/Archives/edgar/data/1067983/000118143112066401/xslF345X03/rrd364227.xml

 

Ron Olsen is in for another $1.575 million worth following Warren's announcement.

[Guest rimm_never_sleeps]

So....anyone buying? We're at that level again.

 

brk has been tracking the s & p ever since the "announcement". if you want this trade to work, better hope the index doesn't go down. what buffett did by buying back a tiny amount of stock was to signal to buyers that the stock is a trading a bit cheaper than it should be. and if you look at a 3mo chart vs. the 500 index you will see that he accomplished his mission.

[redskin]

Buffett has said in the past that he doesn't like to be more than 10% of the average volume of a stock when he is accumulating.  Therefore, he is probably able to purchase $40-50 million worth of Berkshire per day when it is trading below the $134,000/share level.

[wknecht]

So....anyone buying? We're at that level again.

 

brk has been tracking the s & p ever since the "announcement". if you want this trade to work, better hope the index doesn't go down. what buffett did by buying back a tiny amount of stock was to signal to buyers that the stock is a trading a bit cheaper than it should be. and if you look at a 3mo chart vs. the 500 index you will see that he accomplished his mission.

I don't think this should be of concern, unless you have derivatives with nearby expiries or plan to sell shares in the near term.