WARREN BUFFETT: I would say most of the (share) repurchasing done in recent years, I’ve thought has been foolish, because people have been paying too much. And companies got, in many cases — they would never acknowledge this — but they were buying because they were basically liked — they were trying to give out a buy recommendation when it wasn’t justified.
In the ’70s and early ’80s, Charlie and I would frequently urge people to repurchase shares because it was so much more attractive than other things they could do with their money. The only time we felt strongly that Berkshire should repurchase its shares was in roughly 2000, whenever it was, that we thought it was demonstrably below intrinsic business value. And we wrote we would do it, and it did become self-defeating. There’s clearly a point where if we thought it was demonstrably below — conservatively estimated — intrinsic business value and we notified the stock holders we were going to do it, we would do it. I think again, it would largely be self-defeating. I don’t think that situation exists now. I think — I won’t give any buy or sell recommendations. But I think it ought to be quite compelling.
I think, probably 90 percent of the repurchase activity I’ve seen in the last five years, I did not think was serving the cause of the shareholder. I thought it was being done because management thought it was the thing to do, and their investor relations department told them it was the thing to do, and they were actually buying stock at kind of silly prices. And that was not the case when Charlie and I looked at Teledyne or the Washington Post or Cap Cities Broadcasting doing it many years ago. But I haven’t seen situations like that in recent years. It’s interesting how many companies were buying in their stock at twice present prices that aren’t buying it now. I mean, there are lots of those.
We will never buy in our stock at a silly price. We may make a mistake by not buying it at a cheap price. But we’ll never make a mistake, I don’t think, by buying it at a silly price. And we think a significant percentage of corporate America has done that in recent years, including a few stocks that we’ve owned ourselves.
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"We may make a mistake by not buying it at a cheap price. But we'll never make a mistake by buying it at a silly price." ~Warren Buffett