Periodically, as alternative paths become unattractive, repurchases make good sense for Berkshire’s owners. During the past two years, we therefore repurchased 9% of the shares that were outstanding at yearend 2019 for a total cost of $51.7 billion. That expenditure left our continuing shareholders owning about 10% more of all Berkshire businesses, whether these are wholly-owned (such as BNSF and GEICO) or partly-owned (such as Coca-Cola and Moody’s).
I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value. We don’t want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire. As of February 23, 2022, since yearend we repurchased additional shares at a cost of $1.2 billion. Our appetite remains large but will always remain price-dependent.
bet he was buying back as the Bs dropped to $300 or so
I don’t think so. Typically they always pause buybacks in February in the 2-3 weeks leading up to earnings release and the most recent dip would have occurred in this period.
bet he was buying back as the Bs dropped to $300 or so
I don’t think so. Typically they always pause buybacks in February in the 2-3 weeks leading up to earnings release and the most recent dip would have occurred in this period.
We know how much he repurchased 1/1 - 2/14: Approximately $560 million (my guess on avg price) worth (very slowed pace). And we know that the number increased to approximately $1.2 Billion 1/1 - 2/23. So Between 2/14 and 2/23 the repurchase activity was greatly increased. So it looks like Berkshire bought the dip and doesn’t have to pause if price-sensitive purchase plans are already in place.
I don’t think so. Typically they always pause buybacks in February in the 2-3 weeks leading up to earnings release and the most recent dip would have occurred in this period.
Probably true in general, but we know there were some serious purchases in the stretch Feb 15-23, 6 trading days.
The share count was down by 1288 shares Jan 1 through Feb 14 inclusive.
But he mentions in the letter that bought $1.2bn worth by Feb 23.
Unless they paid over $900k per share, there must have been substantial purchases after Feb 14: about the same number as Jan 1 - Feb 14, given the information available.
And at a substantially higher per-day rate than during the Jan 1-Feb 14 stretch.
If they were buying at the average market price in each stretch,
my guess is they bought 1288 shares (known) at 471178 each Jan 1 - Feb 14 (avg price),
then another 1258 shares (guess) at 471559 each Feb 15-23 (avg price).
That guess makes the Dec 31 and Feb 14 share counts work out, as well as the total dollars spent Jan 1 - Feb 23.
Meaning that, at a guess, the share count as of market close Wednesday Feb 23 would be about 1474884.
Down about 2545 from December 31. 0.17%.
If that’s right, it means they were buying the equivalent of over 200 shares a day Feb 15-23.
Average around $100m/day.
Quote on minimum cash…seems super conservative…one might call it fortress like…and they never get close to this number anyway.
AR page K-104
“The program continues to allow share repurchases in the open market or through privately negotiated transactions and does not specify a maximum number of shares to be repurchased. However, repurchases will not be made if they would reduce the total value of Berkshire’s consolidated cash, cash equivalents and U.S. Treasury Bill holdings below $30 billion.”
“there must have been substantial purchases after Feb 14”
This also gives us a lower limit on Warren’s conservative estimate of IV. Buffett has stated that he would not repurchase shares at a “mere” 95% discount to IV, and the lowest intraday price from Feb 15 to Feb 23, inclusive, was $464,400. That puts Warren’s estimate of IV, at a minimum, at $489K/A-share. If Warren also bought shares at, say, $471, which he almost certainly must have, then his conservative estimate of IV is somewhere north of $496K/A-share. This gives us a good check on our own IV estimates.
Wow, that was a LONG annual report, approximately 30 pages longer than usual. Lot more narrative detail about BRK’s businesses, with some additional financial detail. Out of nothing more than idle curiosity, I would like to see the financial details on NetJets, but understand that detailed financial reporting on each BRK business would mean seeing the report approach 4 figures in length. Given the dramatically different format and tone in the narrative descriptions of BRK companies in this year’s annual report, I wondered if this was Abel’s coming out party. I haven’t checked, but I strongly suspect that BHE’s reports to regulators are much more detailed, with a feeling of full disclosure and transparency than what has been in past annual reports. Not a criticism. The annual reports and regulatory filings serve vastly different purposes and audiences.
Wow, that was a LONG annual report, approximately 30 pages longer than usual.
Best thing I’ve read this year. I learned quite a bit. It also provided some comfort to me in these unusually challenging times. I’m glad that BRK is my largest holding.
Buffett has stated that he would not repurchase shares at a “mere” 95% discount to IV, and the lowest intraday price from Feb 15 to Feb 23, inclusive, was $464,400. That puts Warren’s estimate of IV, at a minimum, at $489K/A-share.
Technically/mathematically correct, but you might agree that “not… at a ‘mere’ 5% discount” does not mean 5% is a sharp binary threshold, that he was not saying at 5.1% repurchases suddenly would make sense for him.
I see this statement less about mathematics than about saying “Share repurchases for me make sense when I do NOT have to calculate, when it’s clear that we are cheap, not when it’s about a percent more or less.”
I therefore always inverted “not at a ‘mere’ 5% discount” as “has to be clearly higher than 5%” => at least 10% => minimum(!) IV of $510k-$520k.