Berkshire bought back $9 billion worth of shares, much more than the $5.1 billion bought back in Q2
“The market will be encouraged by the buybacks”, – says a CFRA analyst
Berkshire Hathaway share price up about 7% today due to buybacks and vaccine news
Warren Buffet’s Berkshire Hathaway (NYSE: BRK) share buyback program reached an all-time high in the third quarter, according to the company’s quarterly report.
Fundamental Analysis: Buffett Reinvested
Berkshire bought back $9 billion worth of shares, a figure that almost doubled from the $5.1 billion the conglomerate had acquired in the previous quarter. By comparison, Buffett’s Berkshire reinvested a total of $15.7 billion in its own shares.
UBS analysts expected a total quarterly buyback of $3.2 billion, as third quarter reports show the purchase of $2.5 billion in Class A shares and approximately $6.7 billion in Class B shares.
“The market will be encouraged by the buybacks,” said Cathy Seifert, analyst at CFRA Research.
“Many companies have stopped the buybacks to conserve resources during the pandemic, but because Berkshire is not paying a dividend, the amount it is returning to shareholders is fading a bit,” said Cathy Seifert, analyst at CFRA Research.
Berkshire posted an operating profit of $5.48 billion, down about 32% from the same period last year. On the other hand, Berkshire’s net profit increased by over 82% to $30.13 billion compared to the same period last year.
Earlier this year, Buffett set conditions that must be met before Berkshire decides to buy back its shares.
“a) Charlie and I believe that it will be sold for less than it is worth, and b) the company will have ample cash on hand when the buyback is completed,” Buffett wrote.
“In time, we want the number of Berkshire shares to decline. If the price-to-value discount (as we estimate it to be) widens, we are likely to become more aggressive in buying shares. However, we will not support the stock at any level”.
Technical analysis: Fresh 8-month high printed
Berkshire Hathaway’s share price rose approximately 7% today following the announcement that Pfizer’s and BioNTech’s vaccine candidate has shown efficacy results of over 90% in Phase 3 testing. Furthermore, buybacks are always a positive development for investors.
Daily chart of the Berkshire share (TradingView)
Today’s high of USD 224.46 is the highest value traded since February and the pandemic sell-off. The next target for BRK buyers is levels above $230, where the 2020 high is located.
Berkshire Hathaway, a conglomerate founded by legendary investor Warren Buffett, bought back a record-breaking $9 billion of its shares in a single quarter, according to recent quarterly reports.