Buffett is buying back more Berkshire shares this year after a record $ 25 billion buyback in 2020

Buffett is buying back more Berkshire shares this year after a record $ 25 billion buyback in 2020

Warren Buffett during an interview with Becky Kwik on CNBC on February 24, 2020. It turns out to be another year in which the billionaire investor has moved away from game-changing acquisitions in an expensive market even after he made a surprise cash in the market and because his company has an enormous cash balance. .

Gerald Miller | CNBC

As the coronavirus pandemic hits the market during 2020, Warren Buffett’s Berkshire Hathaway has repurchased a record amount of the company’s shares. The buying wave continued into 2021, according to the giant company Annual speech Released Saturday morning.

During the fourth quarter, the company repurchased nearly $ 9 billion of Berkshire stock, raising its total repurchase for 2020 to a record high of $ 24.7 billion.

“Berkshire has repurchased more shares since the end of the year and is likely to reduce its stake in the future,” read his annual letter.

During the third quarter, the group repurchased $ 9 billion of its shares, up from $ 5.1 billion in the second quarter. The numbers compare to the total $ 5 billion the company spent on buybacks in 2019.

Buffett emphasized that the company only participates in stock buyback programs when it believes the shares are trading for less than their intrinsic value.

“We do not in any way believe that Berkshire shares should be repurchased at any price,” Buffett said in the annual letter. “I stress this point because US CEOs have an embarrassing record of allocating more corporate money to buybacks when prices are higher than they were when they were low. Our approach is the exact opposite.”

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Berkshire’s operating income, which Buffett is urging shareholders to focus on, was $ 5.02 billion during the fourth quarter, up from $ 4.42 billion over the same period the previous year. For the full year, operating profits tumbled 9% to $ 21.922 billion as the pandemic hit the Berkshire group of companies.

The company’s net profit – which accounts for the sizeable Berkshire investments in the public market – jumped 23% year-on-year to $ 35.835 billion. But for the full year, net profits were down 48% to $ 42.521 billion.

Class A shares in Berkshire Hathaway hit a new all-time high on Thursday, after bouncing 52% from the March 23 low. For the year, the stock is up roughly 5%, outpacing the S&P 500 gain of 2%.

Even after Berkshire’s record buyback of 2020, the company still had a sizeable cash pile at $ 138 billion. The number decreased from $ 145.7 billion at the end of the third quarter.

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