Grantham disagrees with Buffett on buybacks

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For example, from 2003 through 2012, S&P 500 companies used 54% of their earnings to buy back their own stock and an additional 37% for dividends, leaving a lack of funds for investing in production growth or employees, according to data from the Harvard Business Review.

“Basically our workers have been royally screwed, they’ve not participated in the substantial productivity [growth] since the 1970s, and the main culprit is now completely legal,” Grantham said on a recent episode of the We Study Billionaires podcast. “That is, stockholders bullying management into doing what management always wants to do anyway — live in a world where you control everything and buy your own stock back.”Jeremy Grantham says Warren Buffett’s favorite corporate tactic facilitates ‘stock manipulation’ and hurts the economy

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Worker and Shareholder are not mutually exclusive.

Isn’t the knock on Silicon valley that management and employees are screwing the shareholders with SBC ?

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Good morning, unfortunately I have to admit , the greed at the top has been disgraceful. Why can’t the top net worth capitalists add a billion plus to the pension plans of their employees , would it really matter to Gates, Musk, Bezos, Buffett , etc?

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These guys are doing much more for the society in their lifeline creating millions of jobs and providing goods and services for the world. They will be giving away most of their wealth.

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That’s another issue. Starbucks, MSFT, tsla etc don’t become great without great employees. Guys with 50 billion plus can add a billion to their employee pension plans now and then , just sayin. It would be worth more than that in good will.

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Where will the money come from ?

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May be… Still shareholders/ capital gained/ benefitted at the cost of labor is undeniable. Silicon Valley is not the template or prism in which we should look at this.

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This is a socialism and capitalism debate.

Labor is free to join the union and negotiate for pension. There is a reason GM and airlines go bankrupt repeatedly.

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Absolutely they have nothing to do with totally incompetent, greedy management. It is all the failure of labor? You have no idea of what you are talking about. Specifically study the car manufacturers to understand unions are blamed for many things that is utter failure of the management.

Let us switch the industry, the banks, (ultimate capitalists right) they go down periodically, which union are you going to blame? union of Greedy CEO’s?

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“” Where will the money come from ?”” What? The Walton family, etc takes a billion of its wealth and contributes to the employee pension plan , this is confusing ? I’m a capitalist pal, I took many small cap companies public in the 80s and early 90s, being a , compassionate capitalist, makes me a socialist ? I’m not proposing we put a gun to anyone’s head, compassion and doing right, simple concepts.

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Did you give your employees pension ?

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Who is to say that the Walton family is doing the right thing and Gates helping the poor people in underdeveloped countries is the wrong thing ?

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Small cap companies struggle to survive , and the founders are rarely billionaires, comprende ?

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I suspect that if I had 100 billion, I could do both, and, send you a box of Sees candy for Christmas.

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It’s always good to tell other rich guys what to do with their money.

To some poor kid in underdeveloped country, you are the undeserving rich guy who should give them the money but are too selfish and greedy.

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Whatever credibility Grantham had—has been shot the past 13 years.

He has cost his followers $Billions in opportunity cost.
A broken clock is correct twice a day.

Grantham is correct twice a Quarter Century.

Sidestepping 20% corrections by missing 300% opportunities is just the opposite of Lynch’s “I like to get caught with my pants UP”.

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That workers workers would somehow be better off if companies put more toward dividends rather than buybacks ala Europe…is beyond dumb. It’s apples and oranges.

The buybacks may hurt government tax coffers. That’s it. Its simply a more efficient way to return capital. Jobs is not an issue.

With Berkshire, subsidiaries in growth mode hire people & invest in capital. That’s option #1…always. Or buy a bolt-or….

My God, NOT doing a buyback doesn’t create growth that doesn’t exist.

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“” good morning, let’s not forget Buffett has had too much cash for decades. As a few of us suggested in 2008, he should have authorized a buyback, at material discounts to IV, in 2008 after the donation letter. Brk should have the, right of first refusal, on all brk stock sales by the Gates Foundation, etc. However, net, net, I would argue Buffett has earned his 100k a year the past four decades.

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Buffett’s cash holdings, as referenced, have fluctuated in a comparatively very narrow range relative to the investment portfolio or market cap. Ballpark 15% of market cap–and its been pretty steady–remember half the company is op cos so a % of investment portfolio overstates cash by 50% and is not accurate. No comparison with Grantham–unless you go back 50+ years when Buffett dissolved the partnership.

Grantham has made seismic shifts in and out of cash, and in and out of US equities. It’s really no comparison. And Grantham the past couple decades has only been rewarded during large US equity declines. The opportunity cost has been massive for his clients.
I

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Ha! Yeah, I think he’s earned it.