I should point out one ironic aspect of my estimate: If Berkshire had NOT repurchased any shares, my estimate for book value per share would have been $112,810 rather than $112,711 using exactly the same assumptions. So, by executing a transaction that pretty much everyone seems to think was a good value creating move, book value per share may be around $100 LESS than it otherwise would have been. That's tiny in percentage terms for Berkshire. Ending the year at $112,711 rather than $112,810 means that the year's gain in book value would be 12.87% rather than 12.97%. In theory, the P/B buyback threshold would have to be adjusted upward as the open ended "authorization" is used to account for the fact that buybacks themselves have a depressing effect on book value when executed at P/B levels above 1.0. To the extent that management and the board believes that such buybacks are actually value creating rather than destructive (an implicit assumption or the transactions would not be taking place), some adjustment in the P/B buyback threshold would have to be made to AT LEAST account for the downward effect on book value as a consequence of the buybacks themselves.In addition, to the extent that IV is progressing at a higher rate than BV in general, the threshold would have to be adjusted upward as well but this is a more subjective question. In contrast, the upward revision of the threshold based on the buyback transactions themselves can be easily calculated.
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