| Posted: 12 Feb 2007 14:32 | |
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The idea is to buy undervalued stocks right?
Therefore whenever Warren is buying we all know he is buying on the "cheap" right? o.k now. if the stock becomes undervalued because a market irrationality it is the time to jump in and if Warren (and/or we) is taking advantage of this I guess it is o.k (is the stock market) BUT the answer to my question becomes a bit more complex whenever he buys a private company . Don't the seller is being taking advantage off knowing (he/she must know since is Buffet who is buying) that he/she is selling on the "cheap" and knowing that why whould they sell to him don't he/she have other options (an ipo maybe?) so what do you guys think? 
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| Posted: 12 Feb 2007 16:25 | |
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Quote:
Don't the seller is being taking advantage off knowing (he/she must know since is Buffet who is buying) that he/she is selling on the "cheap" and knowing that why whould they sell to him don't he/she have other options (an ipo maybe?) so what do you guys think? That's an interesting angle... I suspect, without looking into the nuances of private companies that have been assimilated by BH, that the price paid was likely "fair" -- because you're right, I can't imagine too many owners selling for a "cheap" price. I think what could happen is that over time, the "fair" price paid may seem (in retrospect) to have been "cheap" relative to the present day value of the company. I'd be curious as to what others think, too.
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| Posted: 19 Feb 2007 05:42 | |
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A Seller buys and a Buyer sells , at an agreed upon price and terms based on value at that moment in time to both . Did my best friend unfairly profit when I sold him 1/2 acre of Florida land for $6.5 K that he recently sold for 36K ? Absolutely not . The deal between us was fair at the time , he simply made a good investment .
Best Regards, TBB43
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| Posted: 20 Feb 2007 05:46 | |
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I believe it is an interesting question. Knowing that Warren Buffett only buys fair or undervalued companies, would that cause the prospective seller to reconsider?
First of all, allied to the owner’s manual published every year in his annual report, as well as the explicitly defined “acquisition criteria”; Buffett outlines those qualities he wishes his companies to possess and what the shareholders should expect in a company. The most important issue is one where a prospective seller approaches him with a viable offer, that offer must already contain an offering price! Whilst Warren, as all of us dealing with the stock market everyday, is free to accept or reject that offer. The price has already been determined by the business owner and as such would be fair in his eyes, ceteris paribus. If Buffett accepts, then both their respective values are co-incident. But once having learned that Buffett thinks that your company – at the offered price – is worthy, what then? Should the owner have second thoughts thereby submitting to greed, he can always change his own terms. Then what kind of business partner would one be dealing with anyway. And since Buffett possesses the talent to discern honorable businessmen, I would assume that this case is rare at best In addition, within the realm of any stock exchange around the world, the daily spot prices for securities (on average) represent an equal number of sellers and buyers at play (without this equilibrium of numbers the price would either continue up forever or go all the way down to zero). Pessimistic sellers and optimistic buyers – ALWAYS! Scarborough
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| Posted: 27 Feb 2007 11:30 | |
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I would have to assume that they are selling at a fair rate since they have the right to sell to him in the first place.
It is like this if I make you an offer it is your descion to accept or decline. Unless I am hanging you over a balcony 500 feet up by your ankles.
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