You knew this was coming. From an interview with Becky Quick
Buffett told Becky Quick that there are only four things you can do with cash: stocks buybacks, dividends, acquisitions, or "sitting with it."
"I went through the logic of each thing. He told me they would not have the chance to make big acquisitions that would require lots of money… And then I asked him the question, I said .. ‘I would use it for buybacks if I thought my stock was undervalued.’ And I said, ‘How do you feel about that?’ The stock was 200-and-something. He said, ‘I think my stock is very undervalued.’ I said, ‘Well, what better to do with your money?’ And then we talked awhile. And, he didn’t do anything, and of course, he didn’t want to do anything. He just liked having the cash.
And, so I ask you again shareholder. Who owns/owned Apple – you or Steve Jobs?
Whose whimsy dictates what is to be done?
Whose utility function is being maximized?
7 comments
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Tuesday ~ February 28th, 2012 at 9:39 am
Matthew Yglesias
Steve Jobs is dead, so I don’t think it’s him.
Tuesday ~ February 28th, 2012 at 12:41 pm
Edwin Perello
Their conversation happened a couple of years ago… #readingfail
Tuesday ~ February 28th, 2012 at 9:50 am
tjic (@tjic)
Damn. Yglesias beat me to it.
Wednesday ~ February 29th, 2012 at 1:01 pm
MR
If Apple follows Buffet’s GEICO they can advertise Apple’s new product until its so over exposed that each ads causes backlash
Saturday ~ March 3rd, 2012 at 9:55 am
Steve Roth
I think you hit here on a hugely important misconception.
Shareholders don’t “own” a corporation’s assets. (They can’t ask for their share, or determine their disposition, except through thoroughly emasculated voting rights.)
They own a very limited *legal claim* on those assets and the production from those assets.
And in the ecosystem of publicly traded companies, *nobody* thinks like a business owner, has the incentives of a business owner. So much for the butcher and the baker…
Sunday ~ March 4th, 2012 at 10:59 am
afuhz
“And, so I ask you again shareholder. Who owns/owned Apple – you or Steve Jobs?”
But haven’t the shareholder’s already answered? I don’t really understand what the mystery is. Apple doesn’t pay out to it’s shareholders so the share price is undervalued. They treated Steve in the way basic finance suggests they would.
Sunday ~ March 4th, 2012 at 11:29 am
Steve Roth
I have no complaints (none!!!) about how Apple has treated me as a shareholder. If I did, I’d have the option of instantaneous exit. Unlike a business owner.
I do think it’s important to realize that the ecosystem of publicly traded companies is absolutely nothing like Adam Smith’s imaginary village, and that public policy geared toward our collective well-being should not operate under the childish assumption that it is.