Buffett Knows When to Break His Rules
NEW YORK (TheStreet) -- Sometimes, even Warren Buffett breaks his own rules.
As he has explained in the past, Buffett has traditionally been opposed to his investment companies issuing new shares of company stock to fund debt or participate in mergers and acquisitions. Additionally, the investor has said he does not believe in stock splits, claiming that the action simply cuts one pie into more pieces.
His disapproval stems from the fact that these actions can come with side effects that are detrimental for shareholders. By flooding the market with additional shares, the value of the stock can take a hit and shareholder power is diluted.
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