Share Repurchases - A Common Action Corporate America Buffett Points Out

Each dollar of earnings should be retained a potential increase in market value by at least a like amount. Earnings retention is justified only when capital retained produces incremental earnings equal to or above those generally available to investors, Buffett says. Share buybacks often are intended to prop up a stacking share price and offset the sign-up thing with stock options exercised at much lower prices. Wall Street engineers tried to create securities that would purport to mimic Berkshire's performance but were sold to people lacking an understanding of its investment policy. These clones invest in trust that would buy and sell Berkshire's according to demand for units and trust would have imposed costs on shareholders.