On the race to the new milestone: $300,000/share!

[Guest longinvestor]

The correct answer is that it doesn't matter.  It's priceless and should never be sold at any price.  The goal of every real Berkshire investor should be to convert their shares to certificated form 1 minute before their death and be buried with them.

In my situation, I don't anticipate too much to go in the box with me. Unless BRK does something outrageous on returns or I live to 130:-)

[Hielko]

I am told by a well informed source that gazillion jillion is a number, so my question is how long until an A share is a gazillion jillion?

Your source is wrong. Vigintillion is a number though, so how long before we reach that? Or duotrigintillion dollars/share?

[Buffett_Groupie]

The Buffett/Munger duo didn't focus on outsmarting others who are smarter than they're, according to Munger, they did it by avoiding doing dumb things the smarter people do as part of "Invert, Always Invert" approach.  He called it "ignorance removal".

 

They're simply humble to say there're a lot more smart people than they're.  What are your thoughts?

[Guest longinvestor]

The Buffett/Munger duo didn't focus on outsmarting others who are smarter than they're, according to Munger, they did it by avoiding doing dumb things the smarter people do as part of "Invert, Always Invert" approach.  He called it "ignorance removal".

 

They're simply humble to say there're a lot more smart people than they're.  What are your thoughts?

Make no mistake they both have very high IQ, incredible memories etc. Which brings us to what smartness really means in the business of large capital allocation. Ignorance removal requires rare qualities like not deluding yourself about what you know while being fiercely independent; keeping it simple, like really really simple; extreme amount of patience etc. Lots of people have IQ but not the EQ. The IQ EQ combination is rare. And then the duo. How much of Buffett's ignorance has Munger helped remove?

[Buffett_Groupie]

That's a darn good answer, thanks for enlightening me!

[Kraven]

The Buffett/Munger duo didn't focus on outsmarting others who are smarter than they're, according to Munger, they did it by avoiding doing dumb things the smarter people do as part of "Invert, Always Invert" approach.  He called it "ignorance removal".

 

They're simply humble to say there're a lot more smart people than they're.  What are your thoughts?

Make no mistake they both have very high IQ, incredible memories etc. Which brings us to what smartness really means in the business of large capital allocation. Ignorance removal requires rare qualities like not deluding yourself about what you know while being fiercely independent; keeping it simple, like really really simple; extreme amount of patience etc. Lots of people have IQ but not the EQ. The IQ EQ combination is rare. And then the duo. How much of Buffett's ignorance has Munger helped remove?

 

This is one of those self-deprecating things Buffett likes to throw around.  I don't believe that either he or Munger really think there are too many people smarter than they are (if anyone at all) nor do they really think they are ignorant of too much.  This is like when a rich person tells a poor person that money really doesn't matter to them.  Or for you baseball fans out there it would be like Mike Trout telling everyone that he really isn't that good yet and doesn't know what he's doing, but he keeps trying and maybe someday he'll know how to play baseball.

[Guest longinvestor]

The Buffett/Munger duo didn't focus on outsmarting others who are smarter than they're, according to Munger, they did it by avoiding doing dumb things the smarter people do as part of "Invert, Always Invert" approach.  He called it "ignorance removal".

 

They're simply humble to say there're a lot more smart people than they're.  What are your thoughts?

Make no mistake they both have very high IQ, incredible memories etc. Which brings us to what smartness really means in the business of large capital allocation. Ignorance removal requires rare qualities like not deluding yourself about what you know while being fiercely independent; keeping it simple, like really really simple; extreme amount of patience etc. Lots of people have IQ but not the EQ. The IQ EQ combination is rare. And then the duo. How much of Buffett's ignorance has Munger helped remove?

 

This is one of those self-deprecating things Buffett likes to throw around.  I don't believe that either he or Munger really think there are too many people smarter than they are (if anyone at all) nor do they really think they are ignorant of too much.  This is like when a rich person tells a poor person that money really doesn't matter to them.  Or for you baseball fans out there it would be like Mike Trout telling everyone that he really isn't that good yet and doesn't know what he's doing, but he keeps trying and maybe someday he'll know how to play baseball.

We can believe all we want about Buffett and Munger.

 

For me, I have not heard much of, or seen in their actions much that suggests that they are throwing around disdain, contempt or anything like that. In fact, they trust their subsidiaries' abilities much more than is typically done, trust their long term shareholders etc. Self deprecation yes, but no cynicism on my part as to their intentions.

 

 

[Palantir]

 

This is one of those self-deprecating things Buffett likes to throw around.  I don't believe that either he or Munger really think there are too many people smarter than they are (if anyone at all) nor do they really think they are ignorant of too much.  This is like when a rich person tells a poor person that money really doesn't matter to them.  Or for you baseball fans out there it would be like Mike Trout telling everyone that he really isn't that good yet and doesn't know what he's doing, but he keeps trying and maybe someday he'll know how to play baseball.

 

I don't doubt that Buffett is likely extremely arrogant, you need to be if you want to do what he does. If you do not believe that you are the best capital allocator in the world, why would you continue to be CEO of Berkshire? I think that most extremely successful people are to some degree...a little bit twisted.

 

[Buffett_Groupie]

If it doesn't reach the milestone tomorrow, one of you can simply place an order for $200,000 to make me happy! LOL  :)

 

I was just going to reply to the thread by telling you to put yourself out of your misery and put in a market order at the open for $200k.  ;D

If you're lucky with an M.O. you may get it for $210k.  :P

 

It's well past $210K now and the next target is $225,000 based on Tilson's estimate.  You can be assured it will blow past that sooner than expected! LOL  ;)

[Guest longinvestor]

If it doesn't reach the milestone tomorrow, one of you can simply place an order for $200,000 to make me happy! LOL  :)

 

I was just going to reply to the thread by telling you to put yourself out of your misery and put in a market order at the open for $200k.  ;D

If you're lucky with an M.O. you may get it for $210k.  :P

 

It's well past $210K now and the next target is $225,000 based on Tilson's estimate.  You can be assured it will blow past that sooner than expected! LOL  ;)

 

Something unique about the BRK stock price. Literally from the day they announced the 1.1x BV buy back, the stock price never traded below that threshold. Same with the 1.2x. Mr. Market does not seem ready to call the "bluff" to see if the buyback will happen. The opportunity to buyback has simply not been there. Is there any other stock that gets priced this way?

 

[ourkid8]

That's why I am a bit disappointed Buffett set a threshold to repurchase stock.  He should have left it open similar to Fairfax and they can repurchase stock opportunistically.  It is truly a lost opportunity for long term shareholders. 

 

Tks,

S

 

If it doesn't reach the milestone tomorrow, one of you can simply place an order for $200,000 to make me happy! LOL  :)

 

I was just going to reply to the thread by telling you to put yourself out of your misery and put in a market order at the open for $200k.  ;D

If you're lucky with an M.O. you may get it for $210k.  :P

 

It's well past $210K now and the next target is $225,000 based on Tilson's estimate.  You can be assured it will blow past that sooner than expected! LOL  ;)

 

Something unique about the BRK stock price. Literally from the day they announced the 1.1x BV buy back, the stock price never traded below that threshold. Same with the 1.2x. Mr. Market does not seem ready to call the "bluff" to see if the buyback will happen. The opportunity to buyback has simply not been there. Is there any other stock that gets priced this way?

[Liberty]

That's why I am a bit disappointed Buffett set a threshold to repurchase stock.  He should have left it open similar to Fairfax and they can repurchase stock opportunistically.  It is truly a lost opportunity for long term shareholders. 

 

I think he obviously did it because he felt bad buying from his shareholders without giving them all the warnings possible that they were selling cheap. Just another way that he's trying to look out for all his shareholders, even those who want to sell.

[ourkid8]

Wouldn't a bold statement in the annual report would suffice? 

 

That's why I am a bit disappointed Buffett set a threshold to repurchase stock.  He should have left it open similar to Fairfax and they can repurchase stock opportunistically.  It is truly a lost opportunity for long term shareholders. 

 

I think he obviously did it because he felt bad buying from his shareholders without giving them all the warnings possible that they were selling cheap. Just another way that he's trying to look out for all his shareholders, even those who want to sell.

[Liberty]

Wouldn't a bold statement in the annual report would suffice? 

 

Apparently, he didn't think that was enough for him.

 

I think at most companies, it would be more than you can be expected. But Berkshire has cultivated a certain shareholder culture over decades ("we're partners", "We'll give you the information that we wish we had if we were in your place",etc), and this seems consistent with that.

[ourkid8]

That's my only negative, other then that I have nothing but praises in being a 'partner' in Berkshire!  My only regret is not buying when I first started investing and when I did take a position in Berkshire I wish I bought more!  Lesson learned.

 

Tks,

S

 

Wouldn't a bold statement in the annual report would suffice? 

 

Apparently, he didn't think that was enough for him.

 

I think at most companies, it would be more than you can eve expect. But Berkshire has cultivated a certain shareholder culture over decades ("we're partners", "We'll give you the information that we wish we had if we were in your place",etc), and this seems consistent with that.

[thefatbaboon]

Wouldn't a bold statement in the annual report would suffice? 

 

Apparently, he didn't think that was enough for him.

 

I think at most companies, it would be more than you can be expected. But Berkshire has cultivated a certain shareholder culture over decades ("we're partners", "We'll give you the information that we wish we had if we were in your place",etc), and this seems consistent with that.

 

I've always struggled with Buffett's interpretation on this matter.  Yes, disclosure should be very open and fair (which it is) but beyond that his job is to look after those who wish to partner with him rather than those who are selling and do not.  I think one can make a very good case that he did a disservice to his loyal shareholders in the way he handled the buyback. 

[peter1234]

I think he really, really dislikes buying back shares or paying a dividend since this might signal running out of growth opportunities.

 

;)

[Liberty]

I've always struggled with Buffett's interpretation on this matter.  Yes, disclosure should be very open and fair (which it is) but beyond that his job is to look after those who wish to partner with him rather than those who are selling and do not.  I think one can make a very good case that he did a disservice to his loyal shareholders in the way he handled the buyback.

 

I think it depends on how you interpret that part I bolded. I think to him, if these shareholders don't want to sell anymore after he says that at "1.X of book the stock is undervalued enough to buy back", then after getting the information that he'd like to have if he was in their place, these people aren't sellers anymore, they've decided to remain partners. If they only sell because they don't have that information (imagine an alternate universe), then he's actually doing a disservice to people who actually want to remain his partners. (did that make sense? not sure I phrased this well...)

[100 Shares]

Buffett has stated before that if he could have it his way, Berkshire stock would be open to trade one day a year at a price set by himself and Charlie. I think this attitude is carried over from his days running the Buffett Partnerships. Some of his shareholders only own BRK because of him (especially true when he shut down the partnerships and moved his money into BRK), not because they are investors that buy and sell. He has a duty to protect them and keep them informed.

 

The disservice to continuing shareholders is very small. If you do the math and he buys back 1% of stock at a 25% discount to intrinsic value, then the IV of the company increases by 0.25%. If he is buying back 1% of stock that is about $3.4B at this price that could have been used in other ways. Just because Berkshire is undervalued, doesn't mean its the appropriate thing to buy, its all opportunity cost.

 

I'd like it to get to below 1.2BV so I can buy more not because I care if Buffett does.

[thefatbaboon]

Buffett has stated before that if he could have it his way, Berkshire stock would be open to trade one day a year at a price set by himself and Charlie. I think this attitude is carried over from his days running the Buffett Partnerships. Some of his shareholders only own BRK because of him (especially true when he shut down the partnerships and moved his money into BRK), not because they are investors that buy and sell. He has a duty to protect them and keep them informed.

 

The disservice to continuing shareholders is very small. If you do the math and he buys back 1% of stock at a 25% discount to intrinsic value, then the IV of the company increases by 0.25%. If he is buying back 1% of stock that is about $3.4B at this price that could have been used in other ways. Just because Berkshire is undervalued, doesn't mean its the appropriate thing to buy, its all opportunity cost.

 

I'd like it to get to below 1.2BV so I can buy more not because I care if Buffett does.

 

Rubbish.  I love Mr Buffett and probably owe all my life's financial success to his influence, but he had the opportunity for all of 2011 and 2012 to benefit his shareholders by repurchasing significantly.  Somewhere between 10% and 20% of shares outstanding ($20bn to $40bn).  It didn't affect me because I was happy to use margin costing less than 1% to lever my position which i probably would not have done if Berkshire was run tighter - but many shareholders would not have used leverage and his decision to not repurchase has probably cost them somewhere between 10% and 25%. 

[Liberty]

Rubbish.  I love Mr Buffett and probably owe all my life's financial success to his influence, but he had the opportunity for all of 2011 and 2012 to benefit his shareholders by repurchasing significantly.  Somewhere between 10% and 20% of shares outstanding ($20bn to $40bn).  It didn't affect me because I was happy to use margin costing less than 1% to lever my position which i probably would not have done if Berkshire was run tighter - but many shareholders would not have used leverage and his decision to not repurchase has probably cost them somewhere between 10% and 25%.

 

How do you know that as soon as buybacks were announced the price wouldn't jump up? I doubt he'd be able to buyback any significant amount, unless it's at a time when other things are more attractive anyway (2009).

[thefatbaboon]

Well obviously I don't know for sure but it would only have been 10% of daily vol to acquire 5% of shares outstanding per annum. (And of course I'm not referring to 2009 when there were much better deals available than BRK!  Hence why I said 2011 and 2012.)  FYI, Warren bought 10% of daily vol when buying IBM and 30% of daily vol when buying Coca Cola,  and Sirius and IBM both routinely run their repurchases around 10% of vol.  I think it's reasonable to assume that he could have bought a very decent amount between $70 and $90.

[Liberty]

Well obviously I don't know for sure but it would only have been 10% of daily vol to acquire 5% of shares outstanding per annum. (And of course I'm not referring to 2009 when there were much better deals available than BRK!  Hence why I said 2011 and 2012.)  FYI, Warren bought 10% of daily vol when buying IBM and 30% of daily vol when buying Coca Cola,  and Sirius and IBM both routinely run their repurchases around 10% of vol.  I think it's reasonable to assume that he could have bought a very decent amount between $70 and $90.

 

If he wasn't him, sure. But he's set the precedent of announcing buybacks ahead of time to be fair to his shareholders, so he couldn't have bought much. Even if he hadn't said anything (and the big buyback program approval hadn't tipped people off), maybe it would have worked for a quarter, but as soon as there's a filing showing he's buying a lot, price would run up.

[thefatbaboon]

Don't agree and I wasn't suggesting he proceed in secret.  I think he could in 2011 announced an authorization, told the market he thought the price was undervaluing the business - i.e.. exactly what he did, except without specifying 110% ratio.  Of course, if you're right and he ran the price all the way from the mid 60s to 90 within a quarter, well, no harm done, he tried.  Personally I doubt that would have happened but anyway so what, it's not an argument against trying.  Singleton managed to buy 90% of his float through repeated tenders and people kept selling to him, Malone"s done more than 50% in L and it doesn't cause the stock to explode every time he announces a buyback; more than a billion b shares were bought and sold over 2011 and 2012 at an average price around $80 - thats pretty deep.  IBM and XOM didn't explode upwards (except maybe a few percent on the day) when it was announced he'd made big investments.  Not sure why you think a share repurchase that was only taking 10% vol would have pushed BRK up 30%.  Anyway this hypothetical debate is rather pointless.

[Liberty]

I just think that Buffett's capital allocation skills are so well known and that his every move is so scrutinized, different rules apply to him than most others (front page news, on every financial channel every time he opens his mouth) that he couldn't do what Singleton and Malone did, not at that scale (for different reasons -- Singleton wasn't known and respected by markets at the time and nobody knew much about buybacks, and Malone likes to create a complexity discount when he buys, which he later reverses when he wants to close the gap, something that Buffett tries very hard to avoid). Maybe a few percents of outstanding shares could have been bought, but but I doubt anything in Malone or Singleton territory. Maybe a few decades ago he could have done something like that.

 

But of course it's speculation. I'm just sharing my thinking on it, not pretending I can read the tea leaves.