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No. of Recommendations: 1
If you look at trading volume of B shares, you are not going to get decent amount of shares at $260. You have to assume at least 20%, 25% higher.


I certainly wouldn't argue too strenuously with your view. Between WEB's personal holdings and the shares owned by long-term shareholders, there might be 30-40% of the shares owned either by people who would not tender under any circumstance, or who would face a massive income tax bill if they tendered their shares. It's possible that there might be a relatively small percentage of shares that would be available at any sort of "reasonable" price. If only 50-60% of the shares are available and you wish to purchase 7% or 8% of the shares outstanding through a tender, you might very well be correct that it could require $300+/sh to actually get $50 billion worth. That kind of price really would call into question whether such a move would be beneficial to continuing shareholders (ie, if you believe that IV is say, $310 or $320/sh would this be the best use of capital?).



I think a Dutch auction is not going to work. A sustained multi-year buyback, and the willingness on the part of Berkshire to accept a slightly higher multiples or price.


I'd say $5b to $10b per quarter in open market repurchases (ie, 1% to 2% of the market cap per quarter) should be sustainable for the next couple of years. When WEB passes and his shares go to the Bill and Melinda Gates Foundation, it might be possible to buy them from the foundation in larger quarterly or annual blocks for a few years, in addition to the small-ish open market purchases.


SJ
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