Banter and General Comments .. BRK, page-9703

The board decides how many shares they will buy back. There are limits imposed on the maximum amount per timeframe that a company can buy back without shareholder approval. But even once announced there are no minimums as you correctly point out.

The company has a few considerations on how to use their capital. Do they invest it or do they return it to shareholders, and if they do return it to shareholders how do they do it?

Only the company knows what kind of balance sheet position they need to best tackle upcoming challenges. But they also need to weigh that against the best outcome for shareholders. Sitting on piles of cash is not necessarily the best use of shareholder funds. Hence we have the buy back.

The buy back is one mechanism to return value to shareholders. In essence they are going to shareholders and saying, those of you that have the least faith in us, that value your shares the least, we'll buy them from you. And we'll do that knowing while we give you 1.2c a share, we value the shares at around 4c so are creating 2.8c to be shared by remaining holders. Or put another way, the company is saying, our share price is so darn cheap you'd be crazy not to buy, so we are.

To be clear, buying your own stock only creates value of that stock if price goes up. Swapping 1.2c for a share the market values at 1.2c and cancelling it is a zero sum game. But if the company buys back 20% of its stock at 1.2c the mechanics looks like this...

PreBB
Cash $25m
EV $35m
MC $60m
SOI 5bn
SP 1.2c

PostBB
Cash $13m
EV $35m
MC $48m
SOI 4.0bn
SP 1.2c

But say a land deal unlocks and the market decides actually there is a premium to the EV here. Let's value the unlock and potential to unlock more at $100m. The mechanics look like this.

PreBB
Cash $25m
EV $100m
MC $125M
SOI 5bn
SP 2.5c

PostBB
Cash $13m
EV $100m
MC $113m
SOI 4bn
SP 2.825c

Hopefully those sums are right!