Why do people read so much into share repurchase? One of the reasons I hold Berkshire is its ability to purchase, at great prices, large stakes or entire companies that will generate excess returns on capital over time. I would rather BRK keep as much dry powder ready for a truly wonderful opportunity, which is not to say that BRK at these levels may not be truly wonderful ... though I thought that it was truly wonderful at 1800, 1700, and 1600.
Do the people who understand the nature of BRK need to be reassured? Who is losing confidence in BRK because some morons are willing to sell it at ever-lower prices -- to go buy some tech stock that "will double in two years"? When the share repurchase is over, what then? If one were to be announced, I would argue that BRK would be ostracized for the magnitude of it (Too big, what about the SuperSuper Cat? Too small, why doesn't he really show us how confident he is?) In short, what does share repurchase do for us the shareholders who hold BRK for returns over time?
I assume it is business as usual in Omaha. No one can time the market and the odds of it dropping are about 33 1/3%. That said, given people's disdain for BRK and their blind love of high multiples and technology, the environment feels to me like one where it is more than prudent to hold cash & equivalents.
--Duker (not to be confused with Duke, though that would have been my first choice!) |
