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It seems strange that within two weeks, two major stockholders decide to buyback stock.
With financial markets volatile, this seems somewhat news worthy.
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First THIS dated September 13, 2011
GE to buy back shares from Berkshire Hathaway
NEW YORK (AP) — General Electric Co. says it is offering to pay $3.3 billion to buy back preferred shares bought by Warren Buffett‘s Berkshire Hathaway Inc. during the depths of the financial crisis.
GE said in a regulatory filing Tuesday that it has mailed its offer to Berkshire, which is based in Omaha, Neb.
The $3.3 billion price for the shares includes a 10 percent premium. GE, based in Fairfield, Conn., is also offering to pay accrued and unpaid dividends through the redemption date of Oct. 17.
Berkshire invested $3 billion in GE in October 2008. The move amounted to a huge vote of confidence in the iconic company that had been battered by the financial meltdown.
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Then, exactly two weeks later, the BBC in the UK announces this…..
27 September 2011
Buffett’s Berkshire Hathaway to launch share buyback
Berkshire Hathaway, the firm owned by Warren Buffett, has said it is to launch its first share buyback programme.
The company said it may purchase shares in the open market or through privately negotiated transactions.
Berkshire said it would pay a maximum of a 10% premium on the current book value of the shares.
The move comes after repeated complaints from investors that the company’s stock was undervalued.
“If we are correct in our opinion, repurchases will enhance the per-share intrinsic value of Berkshire shares, benefiting shareholders who retain their interest,” the company said in a statement.
Deep pockets
The company said that it would use “cash on hand” to fund the repurchases.
“The repurchase program is expected to continue indefinitely and the amount of purchases will depend entirely upon the levels of cash available,” it said.
However, it said that buybacks would be stopped if the company’s cash reserves fell below $20bn (£12.9bn).
Berkshire had $47.9bn in cash reserves as of 30 June, but has used almost $15bn on acquiring new business or making investments.
The latest of those came earlier last month, when it announced a $5bn investment in Bank of America.
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Stock Buyback
A company may decide to perform a stock buyback for many reasons and a buyback may have consequences for the remaining shareholders. If one of your stock holdings institutes a stock buyback and you want to participate, you will need to know what questions to ask and the process you will need to follow.
Definition
A stock buyback is when a publicly traded company buys back shares from its investors. For example, assume a company has issued 100 million shares of stock to the public. Later, it may decide that it wants to buy back ten percent, or ten million shares, from the public. The company will issue a statement of its intentions and set a buyback price that it will pay for the shares. The shareholders have the opportunity to sell their shares back to the company, but they are not required to do so. If the company gets offers for more shares than it wants to buy back it may limit the number of shares each shareholder can sell back.
Why Do Companies Buy Back Stock?
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Companies buy back their stock for a number of reasons. A company may use a buyback to increase the earnings per share. After a buyback there are fewer shares trading publicly. As a result, a company’s earnings per share, which is total profits divided by number of shares, will look better after a buyback. Assume that a company has ten million dollars in profits and it has 100 million shares outstanding. The company’s earning per share is ten cents per share. If the company buys back 20 percent of its shares, leaving it with 80 million shares outstanding, the earnings per share will increase to 13 cents per share. In this example the buyback increased the earnings per share by 30 percent while actual profits remained the same.
Read more: What Is a Stock Buyback? | eHow.com http://www.ehow.com/about_5233914_stock-buyback_.html#ixzz1Z9Ql5Dkm
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RELATED LINK
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By Bill Wilson — The Obama Administration has turned to billionaire Warren Buffett, chairman and chief executive of financial giant Berkshire Hathaway, to make the case for raising taxes on the rich because, says Buffett, he can afford it. On Aug. 22, the White House reportedly chatted with Wall Street’s most famous investor to get his thoughts about the sputtering economy.
What likely got the Administration’s attention was Buffett’s oped in The New York Times. Buffett proposed that “It’s time for our government to get serious about shared sacrifice.” He implied he would like to see the capital gains be treated equally as income.
To wit, he wrote of the so-called “super-rich,” which he apparently defines as households earning $1 million or more a year: “Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.” Isn’t that nice of Mr. Buffett?
But if he were truly sincere, perhaps he might simply try paying the taxes the Internal Revenue Service (IRS) says his company owes? According to Berkshire Hathaway’s own annual report — see Note 15 on pp. 54-56 — the company has been in a years-long dispute over its federal tax bills.
According to the report, “We anticipate that we will resolve all adjustments proposed by the U.S. Internal Revenue Service (‘IRS’) for the 2002 through 2004 tax years at the IRS Appeals Division within the next 12 months. The IRS has completed its examination of our consolidated U.S. federal income tax returns for the 2005 and 2006 tax years and the proposed adjustments are currently being reviewed by the IRS Appeals Division process. The IRS is currently auditing our consolidated U.S. federal income tax returns for the 2007 through 2009 tax years.”
Americans for Limited Government researcher Richard McCarty, who was alerted to the controversy by a federal government lawyer, said, “The company has been short-changing the tax collection agency for much of the past decade. Mr. Buffett’s company has not fully settled its tax bills from 2002-2009. Yet he says he’d happily pay more. Except the IRS has apparently been asking him to pay more going on nine years.”
Apparently, not paying taxes in full is an annual occurrence under Buffett’s watch. Considering the size of the company, the amount of unsettled taxes could total in the tens of millions.
McCarty explained, “The rough translation of the report is that Berkshire Hathaway did not pay all the federal taxes that it was required to for 2002 through 2004. The IRS examination team caught Berkshire Hathaway on at least some issues. Instead of paying up, Berkshire Hathaway is threatening the IRS with protracted litigation and is in the process of cutting a deal with the IRS Appeals office.”
He continued, “For 2005 and 2006, Berkshire Hathaway again did not pay all the federal taxes that it was required to. Again, the IRS examination team caught Berkshire Hathaway on at least some issues. Now, Berkshire Hathaway is again threatening the IRS with protracted litigation and is trying to cut a deal with the IRS Appeals office.”
McCarty concluded, “And, finally, the IRS has opened another examination of Berkshire Hathaway’s tax returns for 2007 through 2009, but has not officially sent Berkshire Hathaway the bill yet for taxes that Berkshire Hathaway failed to pay for those years. One would expect they will find yet more issues.”
Now, most Americans, when they receive a tax bill from the government, they pay it. They don’t get an attorney. They don’t appeal the bill. They pay it — on time and in full. But not Buffett’s company, which apparently takes years to settle its liabilities.
Since this appears to be an ongoing pattern at the company, it becomes reasonable to ask: Is this some sort of internal company policy to delay paying taxes on time? If so, could this be construed as a form of tax evasion?
[…snip ]
Reporters should ask him, “If you’re so interested in paying more in taxes, why doesn’t your company settle its tax bills from the past decade now?”
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Jeffrey Immelt the CEO of GE is one of Obama financial advisors.
BUT……
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GE rakes in profits but pays no taxes
March 28, 2011
The wealthy real estate magnate Leona Helmsley once said, “Only the little people pay taxes.” She was dubbed “the Queen of Mean” and went to prison for tax evasion.
What a coincidence. Turns out General Electric, which had $14.2 billion in profits last year, pays no taxes, either, according to a news report. But no one is calling CEO Jeffrey R. Immelt names. And he won’t be doing time in a cell: President Obama made him a liaison to the business community and appointed him to lead the president’s council on jobs and competitiveness.
How’d that happen? As always, it’s who you know and what you know. And GE has excelled at drawing the best and brightest to protect its profits: A million-dollar lobbying team that includes former Treasury and IRS officials, and the savviest ex-Congressional staffers around.
The company now makes most of its money from lending abroad, not from appliances and light bulbs, all the better for its bottom line: As long as those profits stay off U.S. shores, the IRS has no claim.
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So Obama wants the wealthy to pay their fair share.…..yet, has Jeffrey Immelt as a financial advisor, who is the CEO of GE that keeps company profits offshore to pay ZERO taxes and Buffett that tells Obama to stop coddling the rich and tax them who has evaded paying all his federal taxes for nearly a decade as his tax mentor.
As an aside…..
Excerpt…..
Soros may be the biggest political fat cat of all time. Convicted in France of insider trading, Soros specializes in weakening or collapsing the currencies of entire nations for his own selfish interests. He is known as the man who broke the Bank of England. His power is such that his statements alone can cause currencies to go up or down. Other people suffer so he can get rich. But journalists don’t want to examine the questionable means by which he achieved his wealth because they share his goal of electing Kerry and the Democrats. Curiously, once he made his fortune he became a global socialist, endorsing global taxes on the very means he employed to get rich ? international currency speculation and manipulation.
The media consistently ignore the fact that this so-called “philanthropist” has had several brushes with the law as he has laid siege to national economies and currencies. Hard-working U.S. businessmen understand how Soros has made his money. In protesting a Soros appearance hosted by the University of Toledo, Edwin J. Nagle III, president and CEO of the Nagle Companies, highlighted “the immoral and unethical means by which he achieved his wealth.” He added, “I certainly didn’t see included in his bio the stories on how he collapsed whole country’s currencies for his own self interests so that many may suffer.”
Here, Soros signed a consent decree in United States District Court, in a Securities and Exchange Commission case involving stock manipulation, and was fined $75,000 by the Commodity Futures Trading Commission for holding positions “in excess of speculative limits.” Stories about Soros rarely, if ever, mention any of his legal problems.
Despite his vision of an “open society,” he operates an unregulated “hedge fund,” open only to the super-rich, and is currently fighting a proposal from the Bush-appointed chairman of the Securities and Exchange Commission to regulate and monitor these offshore entities. House Speaker Dennis Hastert said on national television that no one really knows where the Soros money comes from.
Soros has categorically denied receiving money from drug cartels or any form of criminal activity. The fact remains, however, that at least some of his financial operations have been based offshore, in banking and financial centers that are widely reported to be considered conducive to money-laundering. The Soros fund is based in the Netherlands Antilles, a self-governing federation of five Caribbean islands. A CIA factbook describes the region as “a transshipment point for South American drugs bound for the US and Europe; money-laundering center.”
Soros reportedly purchased a major stake in one of Colombia’s biggest banks, at a time when the Drug Enforcement Administration, in its study, “Colombian Economic Reform: The Impact on Drug Money Laundering within the Colombian Economy,” was documenting how major drug kingpins were taking advantage of the liberalization of the economy to put illicit drug revenue into legitimate businesses. The report stated: “U.S. and Colombian Government authorities have evidence of drug proceeds being deposited in every major bank in Colombia… A Colombian source indicated that many banks and businesses are owned covertly by principal members of the Cali cartel.”
His complex web of financial interests, companies and foundations makes Halliburton look like a Mom & Pop operation.
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Obama’s ideology to taxpayers is DO AS I SAY, NOT AS I DO.
HYPOCRISY AT ITS FINEST.
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Why is it that every time we meet yet another socialist-loving, left-winger he ends up being an utter hypocrite? This time it’s tax-whiner — and now known tax shirker — Warren Buffet, the investment giant that has been telling anyone that will listen that “the rich” don’t pay enough in taxes.
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