Buyback question for Buffett...hope it gets asked

[ugadawg_98]

I know this has been discussed on the “tender” thread, but I’d love to hear WB’s answer to the following:

 

“Warren, both you and Charlie have (on more than one occasion) praised the late Dr Henry Singleton of Teledyne as one of the greatest allocators of capital of all time. Dr Singleton was known for numerous cash tenders for Teledyne stock. Given that Berkshire has changed its buyback policy, would the company consider a cash tender?”

[ugadawg_98]

For those unfamiliar with the history, I attach a couple links:

 

http://csinvesting.org/wp-content/uploads/2015/05/Dr.-Singleton-and-Teledyne-A-Study-of-an-Excellent-Capital-Allocator.pdf

 

https://acquirersmultiple.com/2017/07/henry-singleton-the-best-capital-deployment-record-in-american-business-warren-buffett/

[valueinvesting101]

Was Singleton as forthcoming as Buffett when it came providing information to value the company? I think I read in outsiders (may be some other place) that Singleton wasn't very open in providing information to value Teledyne. This information asymmetry can explain his ability to buy 90% of the outstanding shares at advantageous prices. This would especially be handicap for non-professional investors during 1960-1980 era when information disseminated slower than today.

 

 

[SwedishValue]

I’ve mailed pretty much this exakt question to the journalists asking questions. I did this months ago. I’ve tweeted Becky Quick with this exact question.

 

I think the question deserves to be asked.

[ugadawg_98]

Was Singleton as forthcoming as Buffett when it came providing information to value the company? I think I read in outsiders (may be some other place) that Singleton wasn't very open in providing information to value Teledyne. This information asymmetry can explain his ability to buy 90% of the outstanding shares at advantageous prices. This would especially be handicap for non-professional investors during 1960-1980 era when information disseminated slower than today.

 

Two things here: First, you are exactly correct that in 1960s to 1980s, info did disseminate slower than today.

 

On the other hand, as far as valuation and dissemination of that valuation, we don’t really know what WB thinks BRK is worth, nor, in fact, do we actually know if he is buying and how much. Let me give a recent illustration of this gap between reality and what people *thought* they knew:

 

Recall that when BRK modified its buyback structure, there were initial purchases made around $207. When the market fell in December, there was belief that WB was buying heavily as BRK had fallen into the $190s. Later, we learned this assumption was false. My point here is that the “information gap” still exists, if somewhat narrowed by technology.

 

From a transparency standpoint, a tender is better than open market purchases because you’re being told what’s being offered. I would note that Buffett’s repeated praise of Singleton and his tenders was never qualified by fairness concerns.

[SwedishValue]

One reason this question is so important is that I really don’t understand how Buffett could deploy cash through repurchases fast enough to offset Berkshire operating earnings - UNLESS there is a possibility of a tender offer or something similar.

[nickenumbers]

We all agree that WEB will certainly get asked A buyback question, and probably several of them rephrased.  They will be influenced by the number of additional shares that were/were not repurchased over the previous months.

 

I would love to hear your Singleton question.  Singleton was really impressive.

 

However, Buffett is the master of side stepping those hard questions.  He says a little of what you want and then he does some verbal jiu jitsu stuff and we are all sitting there with heads spinning.  He won't say anything that he doesn't want to say.