No. of Recommendations: 12
It is quite obvious that his thinking about buybacks has evolved over the years, not just in terms of value, but also in terms of ethics. I think those buyback thresholds were just evolutionary stages in his thinking about the ethics of buybacks more than they were stages in his valuation of Berkshire.
Yes, an evolution in thinking about the ethics, which he oddly used to explain why Berkshire didn't repurchase shares, while applauding when companies he owned repurchased their shares.
But I suspect even more than this, apart from just the fact that the cash keeps building up without good things to buy with it, is that he prefers buying things and making Berkshire bigger rather than just optimizing the returns for shareholders. Buying more companies makes Berkshire more diversified, more robust (given the fact that it is an insurance company, after all) and it also makes Berkshire a more influential company. Buffett enjoys celebrity, but it is the celebrity that comes from having built a big, successful company that is a model for corporate behaviour, rather than just the celebrity of being humongously rich. You wouldn't give away 5% of your shares every year if you just wanted to be the richest guy on Earth (and he would probably still be the richest had he never given any money away.)
But once you've started repurchasing shares, and have used tens of billions of dollars to repurchase shares at less than 120% of book value, you might as well change the goal and try to optimize shareholder returns after all, as that marker for success has not suffered from the buybacks so you can still win that game.
dtb
