Grenville Posted December 12, 2012 Share Posted December 12, 2012 Sold to beat the coming tax hikes? Most likely! And a nice public advertisement to any other large blocks of stock who now know they can lock in a 15% rate on a lifetime's worth of appreciation at 13x,000/share with a call to Omaha. I hope there are more in the next few weeks. Did not think about that. I hope other's bite! Link to comment Share on other sites More sharing options...
gokou3 Posted December 12, 2012 Share Posted December 12, 2012 So at $1.2B, Buffett just bought back a little more than one month's worth of cash generation ;). Link to comment Share on other sites More sharing options...
ourkid8 Posted December 12, 2012 Share Posted December 12, 2012 Yup and our pecentage ownership in the company just increased by .5%! I love it... :) So at $1.2B, Buffett just bought back a little more than one month's worth of cash generation ;). Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted December 12, 2012 Share Posted December 12, 2012 Sold to beat the coming tax hikes? Most likely! And a nice public advertisement to any other large blocks of stock who now know they can lock in a 15% rate on a lifetime's worth of appreciation at 13x,000/share with a call to Omaha. I hope there are more in the next few weeks. this is a one off imo. in fact the media is going to roast buffett for doing this to help a friend avoid paying higher taxes. he doesn't want to buy back a lot of stock at these levels. this is a token amount. Link to comment Share on other sites More sharing options...
gfp Posted December 12, 2012 Share Posted December 12, 2012 What makes you think he doesn't want to buy back a lot of stock at these levels? He just changed his recently-made rules in order to do so. Sold to beat the coming tax hikes? Most likely! And a nice public advertisement to any other large blocks of stock who now know they can lock in a 15% rate on a lifetime's worth of appreciation at 13x,000/share with a call to Omaha. I hope there are more in the next few weeks. this is a one off imo. in fact the media is going to roast buffett for doing this to help a friend avoid paying higher taxes. he doesn't want to buy back a lot of stock at these levels. this is a token amount. Link to comment Share on other sites More sharing options...
Parsad Posted December 12, 2012 Share Posted December 12, 2012 Sold to beat the coming tax hikes? Most likely! And a nice public advertisement to any other large blocks of stock who now know they can lock in a 15% rate on a lifetime's worth of appreciation at 13x,000/share with a call to Omaha. I hope there are more in the next few weeks. this is a one off imo. in fact the media is going to roast buffett for doing this to help a friend avoid paying higher taxes. he doesn't want to buy back a lot of stock at these levels. this is a token amount. The optics don't look particularly good, but at the same time, if he can't find better investments than his own company, then you can't fault him. I just think the timing wasn't great. He could have bought the same 9,200 shares on the market for less...no reporting, nothing. The fact that there is tax savings for a long-time investor, after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. Cheers! Link to comment Share on other sites More sharing options...
gfp Posted December 12, 2012 Share Posted December 12, 2012 He couldn't have bought the shares in the market without publicly changing his rules, which would push the market price above his self imposed cap almost immediately. It took about 10 minutes to get above the "Buffett put" price today, presumably while people used their calculators... - also, the 'long-time shareholder' / presumed friend could have easily liquidated their shares in the market at the same tax rate (even if it required converting to B's to get the necessary liquidity to do it in time) Link to comment Share on other sites More sharing options...
Parsad Posted December 12, 2012 Share Posted December 12, 2012 He couldn't have bought the shares in the market without publicly changing his rules, which would push the market price above his self imposed cap almost immediately. It took about 10 minutes to get above the "Buffett put" price today, presumably while people used their calculators... I thought the original comment about what "price to book" they would buy was silly too. Why tell everyone that you are willing to buy back stock at 110% of book? He's never blatantly given away his intrinsic value for Berkshire, so why do it now and handicap yourself to that specific buyback price? If it's a mandate for the board, so they don't even have to think about what to do with capital when he's gone, then fine...but keep it internal so quick adjustments to the threshold don't look silly like this one because they are discussed publically. All he had to do is tell shareholders at the annual meeting or in the letter that we've got a certain threshold that changes over time where we will buy back shares in Berkshire. Simple...just like he stated back in 2000. Cheers! Link to comment Share on other sites More sharing options...
Palantir Posted December 12, 2012 Share Posted December 12, 2012 Yeah I don't think he should have released the price he's willing to buy at. It keeps a floor, but it can also become a ceiling, furthermore, it doesn't necessarily mean that a buy at 1.15*BV is a bad idea for Berk to pursue. I think he should have just kept quiet and rapidly bought back stock whenever the price moved too low. But that's just IMO. Link to comment Share on other sites More sharing options...
link01 Posted December 12, 2012 Share Posted December 12, 2012 He couldn't have bought the shares in the market without publicly changing his rules, which would push the market price above his self imposed cap almost immediately. It took about 10 minutes to get above the "Buffett put" price today, presumably while people used their calculators... I thought the original comment about what "price to book" they would buy was silly too. Why tell everyone that you are willing to buy back stock at 110% of book? He's never blatantly given away his intrinsic value for Berkshire, so why do it now and handicap yourself to that specific buyback price? If it's a mandate for the board, so they don't even have to think about what to do with capital when he's gone, then fine...but keep it internal so quick adjustments to the threshold don't look silly like this one because they are discussed publically. All he had to do is tell shareholders at the annual meeting or in the letter that we've got a certain threshold that changes over time where we will buy back shares in Berkshire. Simple...just like he stated back in 2000. Cheers! i think WEB is very sensitive-even hyper-sensitive- to to abusing any informational advantage he might have as ceo to filch shares on the cheap from less informed, not to mention, less sophisticated shareholders. overly so, imo. but thats WEB... i also think he has a stronger preference for buying co's in his twilight yrs than he does for increasing intrinsic value per share at the cost of shrinking brk's equity & putting his decreased equity at risk should things go to hell in a handbasket, particularly with regard to his large insurance CAT exposures or the ability to swoop down fast & decisively to write tons of insurance in a panic. these are times where panic & opportunity are no more than a flutter of butterfly wings away. Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 12, 2012 Share Posted December 12, 2012 here comes some criticism Warren Buffett Comes Down the Buyback Chimney . http://professional.wsj.com/article/SB10001424127887324296604578175674249042746.html?mod=WSJ_hp_LEFTWhatsNewsCollection ... The mystery around Berkshire's moves is even greater since the company didn't disclose the identity of the selling shareholder. That leaves open questions of the seller's connections, if any, to Mr. Buffett. Also, there is the lurking question of whether the billionaire's move helped someone sell out before tax rates potentially increase in the New Year. While that is, again, unclear, it would be incongruous given Mr. Buffett's calls for the wealthy to pay more in taxes. ... Link to comment Share on other sites More sharing options...
jay21 Posted December 12, 2012 Share Posted December 12, 2012 here comes some criticism Warren Buffett Comes Down the Buyback Chimney . http://professional.wsj.com/article/SB10001424127887324296604578175674249042746.html?mod=WSJ_hp_LEFTWhatsNewsCollection ... The mystery around Berkshire's moves is even greater since the company didn't disclose the identity of the selling shareholder. That leaves open questions of the seller's connections, if any, to Mr. Buffett. Also, there is the lurking question of whether the billionaire's move helped someone sell out before tax rates potentially increase in the New Year. While that is, again, unclear, it would be incongruous given Mr. Buffett's calls for the wealthy to pay more in taxes. ... The release said estate so I instantly thought it might be a charitable estate. This maneuver ould make more sense to me if that was the case. Link to comment Share on other sites More sharing options...
boilermaker75 Posted December 13, 2012 Share Posted December 13, 2012 here comes some criticism Warren Buffett Comes Down the Buyback Chimney . http://professional.wsj.com/article/SB10001424127887324296604578175674249042746.html?mod=WSJ_hp_LEFTWhatsNewsCollection ... The mystery around Berkshire's moves is even greater since the company didn't disclose the identity of the selling shareholder. That leaves open questions of the seller's connections, if any, to Mr. Buffett. Also, there is the lurking question of whether the billionaire's move helped someone sell out before tax rates potentially increase in the New Year. While that is, again, unclear, it would be incongruous given Mr. Buffett's calls for the wealthy to pay more in taxes. ... The release said estate so I instantly thought it might be a charitable estate. This maneuver ould make more sense to me if that was the case. Or someone recently deceased like Albert Ueltschi. Link to comment Share on other sites More sharing options...
gfp Posted December 13, 2012 Share Posted December 13, 2012 I'd bet you are right Boilermaker. He and his family took all "A" shares in '96, as you know. If it's not his estate, it's probably an early Omaha investor. Link to comment Share on other sites More sharing options...
bookie71 Posted December 13, 2012 Share Posted December 13, 2012 Since it is an estate, taxes would have nothing to do with purchase. Taxes are based on the value of the estate at time of death or at an alternative date a few months later (it used to be nine months, but I believe it has changed). It might have been a liquidity problem and the estate needed cash to pay taxes. Link to comment Share on other sites More sharing options...
compoundinglife Posted December 13, 2012 Share Posted December 13, 2012 Since it is an estate, taxes would have nothing to do with purchase. Taxes are based on the value of the estate at time of death or at an alternative date a few months later (it used to be nine months, but I believe it has changed). It might have been a liquidity problem and the estate needed cash to pay taxes. It's 6 months now. Link to comment Share on other sites More sharing options...
twacowfca Posted December 13, 2012 Share Posted December 13, 2012 Since it is an estate, taxes would have nothing to do with purchase. Taxes are based on the value of the estate at time of death or at an alternative date a few months later (it used to be nine months, but I believe it has changed). It might have been a liquidity problem and the estate needed cash to pay taxes. Yeah. A financial advisor probably told the heirs they should diversify. With the Buffett Put, BRK has too much up volatility. :) Link to comment Share on other sites More sharing options...
twacowfca Posted December 13, 2012 Share Posted December 13, 2012 Sold to beat the coming tax hikes? Most likely! And a nice public advertisement to any other large blocks of stock who now know they can lock in a 15% rate on a lifetime's worth of appreciation at 13x,000/share with a call to Omaha. I hope there are more in the next few weeks. this is a one off imo. in fact the media is going to roast buffett for doing this to help a friend avoid paying higher taxes. he doesn't want to buy back a lot of stock at these levels. this is a token amount. The optics don't look particularly good, but at the same time, if he can't find better investments than his own company, then you can't fault him. I just think the timing wasn't great. He could have bought the same 9,200 shares on the market for less...no reporting, nothing. The fact that there is tax savings for a long-time investor, after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. Cheers! Raising the repurchase price makes perfect sense. Long term shareholders have been ticked off at Warren for some time for pumping for higher taxes on them. This is Warren's biggest Christmas present ever! Thank you Warren, and Merry Christmas to you and yours. May God bless you in the coming new year. :) Link to comment Share on other sites More sharing options...
Parsad Posted December 13, 2012 Share Posted December 13, 2012 ....after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. It is business, not charity. What Buffett does in his personal capacity in politics and charities SHALL NOT affect his investment/business decisions. Seem to have forgotten why we like him so much? Do you still remember GE and GS deals in 2008, why did you not call him a loan shark or a blood sucker then? Complete disconnect in what you are saying. Not only did he pay more by not buying in the open market, the purchase provides a huge tax windfall for someone who obviously does not need one. It wasn't business...it was charity for a long-time shareholder! The GE, GS and BAC deals were business...I have no problem with that. Cheers! Link to comment Share on other sites More sharing options...
ERICOPOLY Posted December 13, 2012 Share Posted December 13, 2012 ....after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. It is business, not charity. What Buffett does in his personal capacity in politics and charities SHALL NOT affect his investment/business decisions. Seem to have forgotten why we like him so much? Do you still remember GE and GS deals in 2008, why did you not call him a loan shark or a blood sucker then? Complete disconnect in what you are saying. Not only did he pay more by not buying in the open market, the purchase provides a huge tax windfall for someone who obviously does not need one. It wasn't business...it was charity for a long-time shareholder! The GE, GS and BAC deals were business...I have no problem with that. Cheers! The tax windfall was that at the time of death the US government resets the cost basis to present market value. Thus, all the BRK shares can be sold without any taxes at all. Warren really had no hand in helping anyone out here -- except that if he had instead paid a cash dividend then some shareholders would owe tax on the dividend. So he managed to return cash to all shareholders in a tax-efficient manner. The higher dividend tax never matters when you instead just buy back shares, eh Warren? Link to comment Share on other sites More sharing options...
twacowfca Posted December 13, 2012 Share Posted December 13, 2012 ....after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. It is business, not charity. What Buffett does in his personal capacity in politics and charities SHALL NOT affect his investment/business decisions. Seem to have forgotten why we like him so much? Do you still remember GE and GS deals in 2008, why did you not call him a loan shark or a blood sucker then? Complete disconnect in what you are saying. Not only did he pay more by not buying in the open market, the purchase provides a huge tax windfall for someone who obviously does not need one. It wasn't business...it was charity for a long-time shareholder! The GE, GS and BAC deals were business...I have no problem with that. Cheers! The tax windfall was that at the time of death the US government resets the cost basis to present market value. Thus, all the BRK shares can be sold without any taxes at all. Warren really had no hand in helping anyone out here -- except that if he had instead paid a cash dividend then some shareholders would owe tax on the dividend. So he managed to return cash to all shareholders in a tax-efficient manner. The higher dividend tax never matters when you instead just buy back shares, eh Warren? You are an astute observer, Eric. The impending higher taxes on income and dividends will bypass long term shareholders whose holding period is "forever". :) Link to comment Share on other sites More sharing options...
ERICOPOLY Posted December 13, 2012 Share Posted December 13, 2012 Yup. Even if the tax rate is 70% on income/dividends you just need a plan, like Warren did... you know, back when he started Berkshire when the tax was 70%. No, you can't do a Personal Holding Company to hold your passive investments -- you'd be hit with the undistributed profits tax. A few things your holding company needs (to avoid the Personal Holding Company label): 1) you need to hold your passive investments in financial subsidiaries (insurance companies will do). 2) you need other shareholders -- BRK passes this test Not sure if there were other criteria, but there you have it. Take away the insurance subs and have Warren & Charlie as the sole shareholders and BRK would either have to pay a dividend or get slapped with the undistributed profits tax. Nice job Warren! Oh yeah, and you guys thought Warren managed the money of his partners "for free" 8) Without you guys, he'd be paying those taxes. That's his management fee. Link to comment Share on other sites More sharing options...
Palantir Posted December 13, 2012 Share Posted December 13, 2012 ....after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. It is business, not charity. What Buffett does in his personal capacity in politics and charities SHALL NOT affect his investment/business decisions. Seem to have forgotten why we like him so much? Do you still remember GE and GS deals in 2008, why did you not call him a loan shark or a blood sucker then? If it is is "business" then why did he not buy these shares on the open market? Link to comment Share on other sites More sharing options...
ERICOPOLY Posted December 13, 2012 Share Posted December 13, 2012 ....after Buffett so adamantly stated that taxes for the super-rich should rise, is kind of hypocritical. It is business, not charity. What Buffett does in his personal capacity in politics and charities SHALL NOT affect his investment/business decisions. Seem to have forgotten why we like him so much? Do you still remember GE and GS deals in 2008, why did you not call him a loan shark or a blood sucker then? If it is is "business" then why did he not buy these shares on the open market? The next time he buys a subsidiary using BRK shares as currency, he can reassure the seller that his/her heirs will be able to unload them upon death. Classy way to treat the people -- just like agreeing to never trade away the company purchased. This cultivates better transactions in the future by showing the world that any business owners willing to sell their company to Berkshire will be treated well till death do us part. Link to comment Share on other sites More sharing options...
Munger_Disciple Posted December 13, 2012 Share Posted December 13, 2012 The tax windfall was that at the time of death the US government resets the cost basis to present market value. Thus, all the BRK shares can be sold without any taxes at all. Ericopoly, Doesn't the estate still need to pay estate tax to the govt? Link to comment Share on other sites More sharing options...
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