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Investment Analysis Clubs / The BMW Method
|Subject: Re: BRK||Date: 11/28/2012 1:59 PM|
|Author: kelbon||Number: 40823 of 42006|
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.
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