Berkshire Hathaway 2017 Annual Meeting Audience Question # 47

Warren thinks Berkshire’s stock will go up when he dies

Warren Buffett:

Carol?

Carol Loomis:

The creator of this question, Jim Keifer of Atlanta, has even higher expectations for Warren’s longevity than Charlie does.

“Mr. Buffett, we all hope you win the record as mankind’s oldest living person. But at some point, you and/or Charlie will go, and Berkshire stock may then come under selling pressure.”

“My question is, if Berkshire stock falls to a price where share repurchase is attractive, can we count on the board and top management to repurchase shares?”

“I ask this question both because of past comments you have made about not wanting to take advantage of shareholders and because some of the passages in the owner’s manual lead me to believe this might be an instance when the board does not choose to repurchase shares.”

“Can you clarify what course of action we might expect about repurchases in the circumstances I have outlined?”

Warren Buffett:

Yeah. Well, as far as I’m concerned, they’re not taking advantage of shareholders if they buy the stock when it’s undervalued. That’s the only way they should buy it. And they should…

But in doing so… there were a few cases back when Charlie and I were much younger… where there were very aggressive repurchases… or the equivalent of repurchases… by people. And the repurchases, incidentally, made a lot more sense than they do now.

But they were done by people who either… for various techniques… tried to depress the shares.

And if you’re trying to encourage your partners to sell out at a depressed price by
various techniques, including misinformation… but there’s other techniques… you know, I think that’s reprehensible. But our board wouldn’t be doing that.

I’ll take exception to the first part of it, but I’ll still answer the second. I think the stock is more likely to go up. If I died tonight, I think the stock would go up tomorrow. And there would be speculation about break ups and all that sort of thing.

So, it would be a good Wall Street story that, you know, this guy that’s obstructed breaking up something that… where some of the parts might sell for more than the whole.

They wouldn’t necessarily be… probably be worth less than the whole… but might sell for… temporarily… for more than the whole. And it would happen. So I would bet in that direction.

But if, for some reason, it went down to a level that’s attractive, I don’t think the board is doing anything in the least that’s reprehensible by buying in the stock at that point. No false information, no nothing. It should…

And their buying means that the seller would get a somewhat better price… if there are a lot of sellers… they’d get a mildly better price than if they weren’t buying. And the continuing stockholders would benefit.

So I think that… I think it’s obvious what they would do. And I would think it’s obvious that it’s pro-shareholder to do it. And I think they would engage in pro-shareholder acts as far as the eye can see. I mean, we’ve got that sort of board.

Charlie?

Charlie Munger:

Well, I think you or I might suddenly get very stupid very quickly, but I don’t think our board is going to have that problem.

Warren Buffett:

Well, I want to think about that one.

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