No. of Recommendations: 11
Perhaps the quote from the AR that annoyed me the most.
Yes! And a close second would be this:
At Berkshire, we directly increased your interest in our unique collection of businesses by repurchasing 1.2% of the company's outstanding shares. At Apple and Amex, repurchases increased Berkshire's ownership a bit without any cost to us.
The math isn't complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases.
Ok, I don't expect Buffett to publicly chastise Apple management for foolishly repurchasing shares without any regard for price, including last year when they were very expensive. This is not because of expensive investment bankers, it is because Apple's longstanding repurchase arrangement, devised by Luca Maestri and approved by Apple's board, does not even consider share price to be a relevant consideration. It is the polar opposite of what Buffett himself espouses and practises.
And at the least Buffett should not say that this use of Apple's retained earnings is 'at no cost to us', a notion that is antithetical to the view that we are owners of 5% of that business, not just holders of a lottery ticket whose value goes up and down from day to day.
dtb
