The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / The BMW Method


Subject:  Re: BRK Date:  11/28/2012  1:59 PM
Author:  kelbon Number:  40823 of 42233

BRK may be approaching the size at which a stock buyback or dividend payment may provide better investor returns.

It's not so much a question of size, as a question of how much cash is sloshing around and how much excess cash is generated by free cash flow. In the case of Berkshire they have around $40 billion in cash! In spite of which Buffett argues that he is able to provide better returns than most shareholders could if they were paid a dividend.

Investors should note how management intends to increase share holder value and determine whether this approach matches the investors opinion. If it doesn't, then the investor should look elsewhere.

As the subject is Berkshire Hathaway, sure, if you think you're smarter than Buffett; that he's not running the company to your satisfaction, you shouldn't invest. However, If you invest in Berkshire, you have to be comfortable with its somewhat unusual structure and the quirks and omnipotence of Warren Buffett.

Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us