Recent posts

#91

Off the Record / Re: Brexit and the waning days...

Last post by Tamas - August 09, 2022, 07:05:42 PM

Europe should frack.

In general we don't do anything that could undermine our feeling of moral superiority. Instead we buy stuff from backward auticrscies who have no such environmental qualms, thereby preserving moral superiority without sacrificing any comforts. Until it bites us in the face of course, as evidenced.

#92

Off the Record / Re: Brexit and the waning days...

Last post by Admiral Yi - August 09, 2022, 06:45:31 PM

Europe should frack.

#93

Off the Record / Re: Brexit and the waning days...

Last post by Tamas - August 09, 2022, 06:37:08 PM

I think it should be acknowledged (it kind of already is) that high energy prices are the cost of resisting Russia, a sort of economic war that is going to save a lot of lives and even more money o the long run, not to mention that it's the right thing to do.

But then people shouldn't be left to deal with that cost on their own. Yeah it's not going to help with fighting inflation but, again, we are in a form of war, why only the poorest should pay the price.

#94

Off the Record / Re: What does a BIDEN Presiden...

Last post by OttoVonBismarck - August 09, 2022, 06:15:17 PM

I'd point out, while it is just one data point--Berkshire and Buffett don't believe in dividends and do believe in share buybacks. Additionally, because essentially all of his wealth is tied exclusively to his vast ownership of BRK.A shares, Buffett isn't really playing compensation games. His compensation, unlike the typical compensation of a board-hired executive, is basically a flat salary with some security and travel benefits (he does not get incentive-based stock grants--his total comp is $100,000 in salary and around $250,000 in fringe benefits, mostly related to corporate travel and security arrangements.)

The way I've seen Buffett make his argument is his "ideal" Berkshire shareholder is someone who buys and holds the shares basically their entire lives, and he thinks the primary use of the vast cash his companies throw off (a lot of it is insurance float) is to invest in something that will provide a nice return, which will ultimately push the share price up. His argument is when he cannot find good investments, or his cash holdings are simply too large, it is more efficient to raise shareholder value with share buybacks vs dividends. I believe Buffett has also said he only favors buybacks when he has reason to know that Berkshire shares are being offered at "less than intrinsic value" on the market.

#95

Off the Record / Re: Brexit and the waning days...

Last post by OttoVonBismarck - August 09, 2022, 05:55:58 PM

Green Hydrogen has serious questions about its viability and scaling; nuclear has scale problems in the West in that we've spent a generation retiring nuclear plants instead of building them, and consequently we have also seen a generation of trained nuclear engineers and experts age out and retire, without nearly as many coming through to replace them. But on the flipside, nuclear at scale is not even new technology, and is well demonstrated to be feasible, something we can't say for unproven tech.

#96

Off the Record / Re: What does a BIDEN Presiden...

Last post by Admiral Yi - August 09, 2022, 05:44:18 PM

The treasury shares are just like authorization to reissue shares.

#97

Off the Record / Re: What does a BIDEN Presiden...

Last post by DGuller - August 09, 2022, 05:39:44 PM

The 80 shareholders did not suddenly own 1/80th each, they still only own 1/100th of the company.

Right?

They own 1/100th of the company, but the company consists of 20% of the company, so they also own 1/100th of 20% of the company.  However, 20% of the company also consists of 20% of 20% of the company, so they also own 1/100th of 20% of 20% of the company.  However, 20% of 20% of the company also consists of 20% of 20% of 20% of the company, so they also own 1/100th of 20% of 20% of 20%.  If you keep adding it up, 0.01 + 0.002 + 0.0004 + 0.0008 + ... = 0.0125, which incidentally makes up 1/80th of the company.

#98

Off the Record / Re: What does a BIDEN Presiden...

Last post by alfred russel - August 09, 2022, 05:19:31 PM

One obvious difference is choice.  As an investor, I would much rather have the choice of where to invest my dividend money (or spend it) rather than suffer an artificial pump so that the executive suite can exercise a lucrative and perfectly timed dump.

Remember the thesis in favour is that buy backs put cash in the pockets of shareholders.  That notion does not hold up to scrutiny.

I don't know why I'm going to try, but here we go:

assume that a company is worth $100 and has 100 shareholders with one share each. Each share is obviously worth $1 a share.

The company has $20 of excess cash that it can't invest. If it pays that as a dividend, each shareholder gets a $0.20 dividend. The share price is reduced to $0.80 because the company is only worth $80 after the dividend.

If it uses that for a stock buyback, it buys 20 shares with the $20. Now the company is worth $80 as before, but there are only 80 shareholders. So the remaining shareholders didn't get a dividend, but because there are only 80 shareholders at the reduced price the shares are now still worth $1 a share.

So shareholders should be indifferent between a buyback and dividend. At the end of the day, they either have an $0.80 share and $0.20 of cash, or no cash but a $1.00 share.

Hmmm.

In the first case, each shareholder owned 1% of the company.

When the company bought back those shares, they shares didn't disappear - they just became owned by the company - the company owned itself. It could resell those shares.

The 80 shareholders did not suddenly own 1/80th each, they still only own 1/100th of the company.

Right?

Nope. They own 1/80th of the shares outstanding. The 20 shares of treasury stock held by the company are effectively collectively held by the shareowners.

If you disagree...well when you read about earnings per share and things and PE ratios, those are calculated on the basis of shares outstanding and don't include any treasury stock. The same for when the market capitalization of companies is calculated: the calculations are based on shares outstanding and exclude treasury stock as well.

#99

Off the Record / Re: What does a BIDEN Presiden...

Last post by Berkut - August 09, 2022, 05:12:18 PM

One obvious difference is choice.  As an investor, I would much rather have the choice of where to invest my dividend money (or spend it) rather than suffer an artificial pump so that the executive suite can exercise a lucrative and perfectly timed dump.

Remember the thesis in favour is that buy backs put cash in the pockets of shareholders.  That notion does not hold up to scrutiny.

I don't know why I'm going to try, but here we go:

assume that a company is worth $100 and has 100 shareholders with one share each. Each share is obviously worth $1 a share.

The company has $20 of excess cash that it can't invest. If it pays that as a dividend, each shareholder gets a $0.20 dividend. The share price is reduced to $0.80 because the company is only worth $80 after the dividend.

If it uses that for a stock buyback, it buys 20 shares with the $20. Now the company is worth $80 as before, but there are only 80 shareholders. So the remaining shareholders didn't get a dividend, but because there are only 80 shareholders at the reduced price the shares are now still worth $1 a share.

So shareholders should be indifferent between a buyback and dividend. At the end of the day, they either have an $0.80 share and $0.20 of cash, or no cash but a $1.00 share.

Hmmm.

In the first case, each shareholder owned 1% of the company.

When the company bought back those shares, they shares didn't disappear - they just became owned by the company - the company owned itself. It could resell those shares.

The 80 shareholders did not suddenly own 1/80th each, they still only own 1/100th of the company.

Right?

#100

Off the Record / Re: Russo-Ukrainian War 2014-1...

Last post by Legbiter - August 09, 2022, 05:08:52 PM

Well looks like a bunch of vatniks are running away from Crimea after Ukraine hit their base this morning...

Could just have been a careless smoker...