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No. of Recommendations: 1
"How does this sound?
The perfect outcome for all of us would be wild frequent excursions in price...but crossing fair value frequently."


That might be fair and good for everyone, but it wouldn't be perfect.

For me, it would be perfect if the price dropped about 80% so I could go borrow a lot of money and buy up the whole company. Well, maybe not the whole company. I might keep Warren, Charlie, Ajit, and a few others as partners. :)
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No. of Recommendations: 2
Yo bear! I ain't sold my stock, neither have you.

So...

What's the problem?

Oh I did buy more though. So here's the question to ponder:

Is the "massive dumping" you constantly note a positive for me (and you) or a negative? Or is it meaningless?
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It’s a positive for short stretches of time not 15 plus years.
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No. of Recommendations: 9
quarterly dump of Berkshire. Is it any wonder that this stock has underperformed? It's relentless dumping quarter after quarter.

Did you ever notice that every one of those transactions had a counterparty?
So the following summary is exactly, absolutely, precisely equivalent:
Relentless buying, quarter after quarter.

I realize some people prefer compelling narratives with villains, but unfortunately the foundation sales don't change the stock valuation multiple.
Not even momentarily...they almost certainly use VWAP orders.

Jim
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Buffett gives his shares to the Gates Foundation for the specific purpose of being liquidated, and the resulting cash spent.

Are we really not clear on that after all this time?
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Buffett gives his shares to the Gates Foundation for the specific purpose of being liquidated, and the resulting cash spent.
Are we really not clear on that after all this time?


I think we're all clear on that. Great plan.

Not everybody is clear on the notion that it doesn't affect the share prices.
A person who is willing to buy Berkshire shares at a given price might be motivated by a thousand different things, but it won't be the name of the counterparty.

Jim
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Where would we be if Mr. Buffett had not donated his shares of BRK to the Gates Foundation?
D.
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No. of Recommendations: 8
Where would we be if Mr. Buffett had not donated his shares of BRK to the Gates Foundation?
D.


The correct answer is probably, we would be in exactly the same place, since this donation has no real impact on the share price of Berkshire or any other aspect of the business.

But I wonder whether there is not a subtle, positive impact, by virtue of the fact that Buffett is already 13 years into his scheduled donations, announced in June 2006. The mechanics of this commitment (https://www.berkshirehathaway.com/donate/bmgfltr.pdf) is that, every July, he gives 5% of the 500 million earmarked B-shares to the foundation (the original number was 10 million, but there was a 50:1 split in 2010). This means that 5% less shares are given every year, so last month, he gave 16.875 million shares, down from 25 million in 2006. Of course, the value of those shares has been going up by more than 5% every year, so last year's gift was worth $3.6b instead of $1.5b. If Buffett dies, then the scheme is accelerated in some way that has not been made public.

My point in bringing up this history is that he has now given away about half of his shares. His gift pledge stipulates that, as of 2009, the Gates Foundation must spend an amount equal to the value of each year's gift, plus 5% of the foundation's other assets, which means that the Foundation has no real choice but to liquidate the shares as they receive them. Perhaps this is what has motivated Buffett to start thinking about making sure the share price is somewhat closer to the value he perceives in the business. After all, it would be a shame that his life's work be liquidated below fair value.

A fair objection is that share repurchases have been pretty half-hearted. But the Gates Foundation gift may have at least put Buffett on the path to starting buybacks, and they may increase substantially in the next few years, if better opportunities don't present themselves. So that's something.

dtb
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Mr. Gatesfoundations sells 78,000 shares daily. He comes everyday without fail and does not care what Mr. Market's offer is - up or down.
He is a motivated seller.
Daily volume is 3.5 million.
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No. of Recommendations: 67
Where would we be if Mr. Buffett had not donated his shares of BRK to the Gates Foundation?

Stock price would be the same.
Mr Buffett would have more voting control of Berkshire.
He would be higher up the rank of world's richest people.
A lot more people in poor places would be dead.

Jim
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No. of Recommendations: 6
My point in bringing up this history is that he has now given away about half of his shares. His gift pledge stipulates that, as of 2009, the Gates Foundation must spend an amount equal to the value of each year's gift, plus 5% of the foundation's other assets, which means that the Foundation has no real choice but to liquidate the shares as they receive them. Perhaps this is what has motivated Buffett to start thinking about making sure the share price is somewhat closer to the value he perceives in the business. After all, it would be a shame that his life's work be liquidated below fair value.


One of the best things about Berkshire Hathaway is that the CEO's interests are perfectly and equally aligned with the shareholders. He shares the upside and downside same as the shareholders (not counting his measly salary, which is a drop in the ocean of his wealth). What other public company offers that?

Rational CEO. Sound capital allocation skills. Phenomenal understanding of risk. Has same upside and downside as shareholders. What more could you ask for?
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No. of Recommendations: 5
"Rational CEO. Sound capital allocation skills. Phenomenal understanding of risk. Has same upside and downside as shareholders. What more could you ask for?"

A market price that more often matches intrinsic value"
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What more could you ask for?

That he be 20 years younger.
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"What more could you ask for?"

A market price that more often matches intrinsic value



Well, I suppose the attractiveness of that varies by 1) whether you're a net buyer vs net seller, and 2) whether or not you're able to take advantage of the occasional swings to well-below IV, such as buy occasional trading, or various options strategies. I know I would not have done as well if Berkshire had always just traded exactly at IV, and from prior comments he has made, sounds like Jim has more than doubled his returns on Berkshire by taking advantage of price swings. I guess a #3 might be that at some point--likely after Buffett is gone--that having the price at least some of the time well-below IV will allow more attractive buybacks.

So I guess what you're asking for would only be better for someone who is a simple buy-and-hold investor and who needs/wants to sell shares on a regular basis?
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"So I guess what you're asking for would only be better for someone who is a simple buy-and-hold investor and who needs/wants to sell shares on a regular basis?"

Yes that is me now. Recently retired and wouldn't mine higher prices once a year to drawdown some over time. No need anytime soon due to ample cash and other income.
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No. of Recommendations: 4
I know I would not have done as well if Berkshire had always just traded exactly at IV, and from prior comments he has made, sounds like Jim has more than doubled his returns on Berkshire by taking advantage of price swings. ...

So I guess what you're asking for would only be better for someone who is a simple buy-and-hold investor and who needs/wants to sell shares on a regular basis?



More frequent excursions towards or even beyond intrinsic value would also help people (like me) who scale the size of their positions as a function of valuation, buying more when when the price is low (we’ve had lots of that) but also taking profits when price exceeds value (we’ve had precious little of that, lately). It is actually the buy and hold investor who does fine with continuous undervaluation by the markets, not the active trader.

Dtb
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No. of Recommendations: 7
A market price that more often matches intrinsic value

The only thing I can think of that would make someone want price to be close to IV would be that they don't have the courage of their own convictions.

Rationally, you want the thing to be low when you buy it and high when you sell it. If you think you know something about price, you want it to be volatile, to have wild gyrations about an IV. Then you can set margins above IV for your sales and margins below IV for your buys, and be richer than other people for your efforts.
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No. of Recommendations: 18
More frequent excursions towards or even beyond intrinsic value would also help people ...

How does this sound?
The perfect outcome for all of us would be wild frequent excursions in price...but crossing fair value frequently.

Jim
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Since we still have a good 'til cancel "sell" waiting to execute, lets cross fingers for a wild fluctuation upward in the near future!

lol

;-)
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"How does this sound?
The perfect outcome for all of us would be wild frequent excursions in price...but crossing fair value frequently."


That might be fair and good for everyone, but it wouldn't be perfect.

For me, it would be perfect if the price dropped about 80% so I could go borrow a lot of money and buy up the whole company. Well, maybe not the whole company. I might keep Warren, Charlie, Ajit, and a few others as partners. :)
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"How does this sound?
The perfect outcome for all of us would be wild frequent excursions in price...but crossing fair value frequently."

Sounds like arriving in Paradiso with Beatrice for you.
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