Buybacks

Will be interesting a what price level they either slow or stop.

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Will be interesting a what price level they either slow or stop.

Indeed.
We might not find out a precise answer, but it will be fun to tease it out of the available data.
But we know that at least one share was purchased long ago at 1.438 times then-known book per share.

I have found in the past that the known facts about the buybacks are consistent with these rules:

  • For certain periods, no buybacks. No particular connection to valuation.
  • When there are buybacks going on, it appears consistent with buying X% of all volume below some price limit.
    Not more than 4-5% of market volume.

Jim

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At this point stopping buybacks would signal a price cap, so I don’t think they will stop. More likely they will slow if the price gain starts to outstrip IV growth by a significant margin.

It is just as likely that they will stop to signal a price cap, and thereby reap the reward of buybacks at better prices once the price drops from the signal.

I can’t prove it, but some BRK behavior in the past could be construed as doing similar. This deflationary tactic is, for instance, consistent with Jim’s observation that there appears to be a hard cap on the percentage of daily volume for buybacks – i.e., they have a figure at which they’re concerned additional buying will affect the price of the next share bought.

At the end of the day, I think BRK is more concerned with its value 10 years out than the price per share it can provide to a shareholder selling today. And getting shares back to a larger discount would add value to the firm.

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My expectation is buybacks are going to continue at the same pace like past few quarters. What I would really like to see is, there is a pause on buyback. Many weak-hands, those who have jumped in to Berky wagon without long-term view, will get out in hurry and set up a nice buying opportunity.

Hey one can only wish… :slight_smile:

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