2019: How does Berkshire decide how much stock to repurchase?

WARREN BUFFETT: OK. Jay Gelb from Barclays. Barclays just had a proxy contest of sorts, didn’t it?

JAY GELB (INSURANCE ANALYST, BARCLAYS): That’s right, Warren. (Laughs)

I also have a question on Berkshire Hathaway — I’m sorry — on share buybacks.

Warren, in a recent Financial Times article, you were quoted as saying that the time may come when the company buys back as much as $100 billion of its shares, which equates to around 20 percent of Berkshire’s current market cap. How did you arrive at that $100 billion figure? And over what time frame would you expect this to occur?

WARREN BUFFETT: Yeah. I probably arrived at that $100 billion figure in about three seconds when I got asked the question. (Laughter)

It was a nice round figure and we could do it. And we would like to do it if the stock was — we’ve got the money to buy in $100 billion worth of stock.

And bear in mind, if we’re buying in $100 billion stock, it probably would be that the company wasn’t selling at 500 billion. So, it might buy well over 20 percent.

We will spend a lot of money. We’ve been involved in companies where the number of shares has been reduced 70 or 80 percent over time. And we like the idea of buying shares at a discount.

We do feel, if shareholders — if we’re going to be repurchasing shares from shareholders who are partners, and we think it’s cheap, we ought to be very sure that they have the facts available to evaluate what they own.

I mean, just as if we had a partnership, it would not be good if there were three partners and two of them decided that they would sort of freeze out the third, maybe in terms of giving him material information that they knew that that third party didn’t know.

So, it’s very important that our disclosure be the same sort of disclosure that I would give to my sisters who are the imaginary — they’re not imaginary — but they’re the shareholders to whom I address the annual report every year.

Because I do feel that you, if you’re going to sell your stock, should have the same information that’s important, that’s available to me and to Charlie.

But we will — if our stock gets cheap, relative to intrinsic value, we would not hesitate.

We wouldn’t be able to buy that much in a very short period of time, in all likelihood. But we would certainly be willing to spend $100 billion. Charlie?

CHARLIE MUNGER: I think when it gets really obvious, we’ll be very good at it. (Laughter)

WARREN BUFFETT: Let me get that straight. What’d you say, exactly?

CHARLIE MUNGER: When it gets really obvious, we’ll be very good at it.

WARREN BUFFETT: Oh, yeah. I was hoping that’s what you said. (Laughter)

Yeah, we will be good at it. We don’t have any trouble being decisive. We don’t say yes very often. But if it’s something obvious — I mean, Jay, if you and I are partners, you know, and our business is worth a million dollars and you say you’ll sell your half to me for 300,000, you’ll have your 300,000 very quickly.