Berkshire Hathaway 1994 Annual Meeting Audience Question # 47

Warren explains the odds of Berkshire buying back its own shares

Warren Buffett:

Zone 6.

Audience Member:

James Pan, New York City. I have a two-parter question.

One, do you think the stock price of Berkshire Hathaway is trading within 15 percent of its intrinsic value currently?

And two, if you think Berkshire Hathaway is undervalued with the amount of cash you have on your balance sheet, would you consider a buyback?

Warren Buffett:

The answer about a buyback is that we generally have felt that market conditions that would make Berkshire attractively priced is probably going to make other things even more attractively priced, because we think our shareholders are more rational than the
shareholders of many companies.

It’s more likely that we will find some wonderful business at a silly price than we will find Berkshire at a silly price as we go along. So… that tends to eliminate repurchases.

But it doesn’t rule them out, but it explains why the circumstances will not arise very often where repurchases would make good sense.

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