Share Cannibals

Why they are attractive, and where to find them

"The math isn't complicated. When the share count goes down, your interest in the businesses goes up. Every small bit helps if repurchases are made at value-accretive prices".

Warren Buffett

That was Warren Buffett describing why he likes companies that consume their shares aggressively and pragmatically; i.e. share cannibals. He continues to remark that while Berkshire repurchased 1.2% of their outstanding shares that year, several of Berkshire’s equity positions, notably Apple and American Express, had indirectly “increased Berkshire’s ownership a bit without any cost to us”. In plain English, these companies had repurchased their shares so aggressively, that Berkshire Hathaway, and thus Berkshire’s shareholders, had indirectly increased their stakes in these positions too.

The quotes come from Berkshire’s 2022 shareholder letter, but the oracle has been preaching the same gospel for decades. Now and then you will see the media run with the narrative that share repurchases are “bad” w…