Landmark announcement today: the Berkshire board of directors has approved an “authorization” for a share repurchase program. Berkshire being what it is, it’s a bit different from the usual buyback: there’s no maximum amount, no set period of time and nor is there the obligation to buy any stock at all. There are only two rules: if share purchases do occur, Berkshire will not pay above 110% of book value per share and it must maintain a cash balance superior to US$ 20 billion. As Buffett likes it, there’s no “mandate” other than “intelligent investing”.
We’ve posted last Friday about the very interesting InfoTrends conference, roughly about the state of Brazilian social media. We continue the topic today with notes from Day One, more specifically the videoconference talk by Wikileaks’ Julian Assange (Part 1 is just for his talk). While his speeches are usually quite radical, so is the notion that transparency can change the world’s governance systems for the best – and Wikileaks (along with its offspring organizations) is the most interesting experiment in this realm.
Buffett turns 81 today and, according to Berkshire staff, he’s celebrating it by running the company just like any other day. Almost so: Berkshire has had to issue a press release to counter a Wall Street Journal editorial that came out today. Buffett’s tax editorial caused extreme reactions – some of the harshest coming from the WSJ. We have no problem with differences of opinion. The problem is basing a personal attack story on a factual error. Fact-checking is never out of season…
Two stories in the “Social Media IPO Candidates” realm got us thinking that corporate governance might be under fire. Zynga is reportedly creating a triple-class share structure and Groupon has apparently engaged – voluntarily or not doesn’t matter – in pre-IPO marketing during its quiet period. “Buyer beware” indeed.
Sure there must be incentives for Directors to act on their fiduciary duties, and one possible line to follow is to increase the liability, as argued in this Deal Professor article – but then again “Directors and Officers Liability insurance” is usually part of the benefits package. The larger issue is that this is very hard to judge and there are no rules to ensure a good Board of Directors. Getting to understand the “people” aspect of a company is a case-by-case, long, investigative effort and there’s no substitute for time/experience and hard work.
Quick notes: First, two profiles on the two top execs at Goldman Sachs, CEO Lloyd Blankfein and his heir apparent, COO Gary Cohn. Together they form an interesting picture of the world’s most loved/hated bank. Second, Seth Godin’s post today about quality and how to define it. It appears at first as it’s “more of the same”, but given his background he’s clearly focusing on media/marketing; therefore the “types of quality” framework take on a different, but no less useful, meaning.
An interesting article on the legal feud between hedge funds TCI and 3G Capital and rail operator CSX. It’s a good reminder for us to mention that The Deal Professor column at NY Times’ Dealbook is mandatory reading. There’s much more to “risk” than greek letters, and one aspect of risk is knowing precisely what one is getting into – in this case all possible legal ramifications of a given stake.
Charlie Munger’s presentation at the Wesco annual meeting was his solo act, now possibly gone since Berkshire bought the rest of Wesco it didn’t already own. Even so he did a “farewell” meeting and we have a few links on it. Good reading material as always.
Quick note: interesting video by the Wall Street Journal highlighting executives’ personal use of corporate jets. That said, if it’s part of the compensation package and duly disclosed in Proxy Statements, so be it.
Groupon’s IPO filing is finally here, and the revenues growth curve is staggering. The company makes no money and doesn’t expect to make any so soon (it’s expanding extremely fast). There are plenty of doubts about the sustainability of its business model, competition and – much more importantly – margin of safety, especially given the preliminary level of disclosure and a few corporate governance quirks such as a dual-class share structure and a preference for “earnings before all the bad stuff” metrics. Yet it’s a business that one almost has to follow for insights on how these companies can impact anything from traditional retailing to data analytics. We suggest previous posts in Buysiders.com for background.
