Skip to main content
This Board Has Moved

This board has been migrated to our new platform! Check out the new home page at discussion.fool.com or click below to go directly to the new Board on the new site.

Go to the New Site
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
The short term impact on shareholders is that Buffett demonstrates by actions that he believes the stock is undervalued

I disagree. The buybacks have nothing to do with signaling the market.

he does so only when the lack of other opportunities and the pressure of excess cash makes it acceptable in his eyes.

If Berkshire and WEB are going to do buybacks, only opportunistically, then they basically are not going to be making any meaningful buybacks and the buybacks will not be the long-term driver for the valuation.

The way I see is, Berkshire has gigantic cash pile and clearly no clear plan for deploying them or a need. The business is gong to be producing cash and at some point there is going to be some divestments, together they are going to be producing as much as $20 to $30 B excess cash per year, which will be returned to shareholders, regularly.

It starts with buybacks and eventually a dividend will also be added to return cash to the shareholders.

Berkshire managed to delay returning cash to the investors so far, and WEB had created a compounding machine by hoarding the cash, now those days are going to be soon over, and returning cash has started.

Buffett is unique, not Berkshire. There is no system, a bench of capital allocators who can carry on Buffett's playbook in the future with the same success and discipline. It is nothing to do with the skills of 4 or 5 people at the top, it is just a recognition of Buffett.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.