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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: mungofitch 🐝🐝🐝 GOLD
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Number: of 21941 
Subject: Re: A hypothetical for brk brother Jim,
Date: 04/02/25 8:23 AM
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I'm talking IV, NOT, BV, how accretive to IV would a huge buyback be

That's what I addressed.

If you assume that current fair value is (for example) $722k per share (1.6 times known book at the moment), then $100bn of buybacks at 1.3 times book would increase true value per share by 15.9%.
If you think the fair value per share is currently higher than $722k then the gain would be a little bit more, and vice versa.

And probably decrease is by some unknowable amount because of the loss of optionality. There are certain things that are possible with that much ready cash that aren't possible without it.

It's rather moot as there aren't $100bn of shares available for purchase at that price. And Mr Buffett isn't going to reduce the benefit to the foundations for the sake of giving more money to existing shareholders. But it is a fine demonstration that buybacks don't increase value per share very much unless they are both (a) huge and (b) done at a material discount to fair value. They do work, but only at the margin.

Jim
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This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
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