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Charlie Munger issue of stock repurchase at current level is smart



<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Charlie Munger, Vice-President of Berkshire Hathaway ( BRK-A & BRK-B ) and Warren Buffett's right hand spoke Thursday from the Daily Journal's ( DJCO ) Annual Meetings in Los Angeles on a number of issues, including the controversial issue of share buybacks and presidential candidates proposing tight restrictions. "data-response time =" 22 "> Charlie Munger, Vice-President of Berkshire Hathaway (BRK-A, BRK-B) and Warren Buffett & His right hand spoke Thursday from the Daily Journal's (DJCO) annual meeting in Los Angeles on a number of issues, including the controversial issue of share buy-ins and presidential candidates suggesting tight restrictions.

"In general, I am maintained in my enthusiasm for politicians who tell businesses what to do," said Munger in response to a question about withdrawals from Yahoo Finance.

"But I want to say this – as it was a very good idea for companies to buy their stock back, they didn't do much. And the stocks were priced so high, it created a bad idea. They do it a lot. to the adult life. That's it, "said Munger." But it is doubtful at the present level whether much it is smart. "

<p class =" canvas-atom canvas text Mb (1.0em) Mb) – sm Mt (0.8em) – sm "type =" text "content =" During his reply, he appointed hedge fund manager Eddie Lampert and Sears ( SHLDQ ). "data-reactid =" 25 "> Under his reply he named hedge fund manager Eddie Lampert and Sears (SHLDQ).

"Is Eddie Lampert smart to buy back so much Sears Roebuck? No. And many of those who allowed the kind of mistake that has been made."

Buybacks have come into focus after Senate morality leader Chuck Schumer (D -NY) and Senator Bernie Sanders (I-VT) introduced legislation this month to prevent the repurchase of company shares unless the companies primarily employ employees, including a minimum of $ 15, seven days of paid sick leave and health and pension benefits.

<p class = "canvas-atom canvas-text Mb 1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In a published publication last week , & nbsp; The couple slammed $ 1 trillion worth buying shares in 2018 as a "practice of corporate complacency." The reason it is problematic, they argue that buybacks do not benefit most Americans because a small percentage In addition, many managers receive share-based compensation and will benefit from share buy-backs, claiming that buybacks limit a company's ability to invest in wages, R&D, training, and other benefits. -reactid = "28"> In a published release last week, the pair beat the $ 1 trillion value of stock purchases in 2018 as a "corporate self-satisfaction practice." The reason why it is problematic, they argue, that withdrawals do not benefit most Americans because a small percentage of people own a majority of the shares. In addition, many managers receive share-based compensation and will benefit from share buy-backs. They also claim that buybacks limit a company's ability to invest in salaries, R&D, training, and other benefits.

At the annual Berkshire Hathaway Annual Meeting, Munger said that some companies use share repurchases to keep up the stock price he called "insane" and "immoral".

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0)) – sm" type = "text" content = " In Berkshire Hathaway's 2016 yearbook Buffett wrote t hate buyback discussions are "often heated." He made a case that repurchase only makes sense to long-term shareholders if "the shares are purchased at a price below intrinsic value." "Data response time =" 30 "> In Berkshire Hathaway & # 39; s 2016 letter, Buffett wrote that buyback discussions are "often heated." He made a case that repurchase only makes sense to long-term shareholders whose "shares are bought at a price below intrinsic value."

"As the repurchases have been boiled, some have come close to calling them un-American – characterizing them as corporate abuses that redirect the necessary funds to productive efforts. This is simply not the case: both US companies and private investors are in Today, flooded with funds seeking to be properly implemented, I am not aware of any tempting project which in recent years has died for lack of capital, "Buffett wrote at the time.

Buffett also wrote that there are two cases where withdrawals should not take place. The company needs capital for long-term investments in its business and does not want to add more debt. And secondly, if the company needs the money for an acquisition or other investment opportunity that would offer "far greater value than the undervalued shares of the potential buyer."

<p class = "canvas-atom canvas text Mb ( 1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" [19659009] Julia La Roche is Finance Minister at Yahoo Finance. Follow her on Twitter. "data -reactid = "33"> Julia La Roche is Finance Minister at Yahoo Finance. Follow her on Twitter.


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