Warren Buffett during an interview with CNBC’s Becky Quick on February 24, 2020. It turned out to be one more year during which the billionaire investor avoided game-changing acquisitions in an expensive market even after a sudden cash in the market and since his company had massive cash balance.
Gerald Miller | CNBC
As the coronavirus pandemic went on sale during 2020, Warren Buffett’s Berkshire Hathaway repurchased a record amount of the company’s shares. And the buying march has continued until 2021, according to the conglomerate’s annual letter that was released Saturday morning.
During the fourth quarter, the company repurchased about $ 9 billion worth of Berkshire shares, bringing the total repurchase by 2020 to $ 24.7 billion.
“Berkshire has bought more shares since the end of the year and is likely to further reduce its number of holdings in the future,” its annual letter said.
During the third quarter, the conglomerate repurchased $ 9 billion of its own shares, compared to $ 5.1 billion in the second quarter. The figures compare to the total of $ 5 billion the company invested in rewards in 2019.
Buffett stressed that the company only participates in stock repurchase programs when it believes the shares are listed below their intrinsic value.
“Under no circumstances do we think Berkshire shares should be repurchased at any price,” Buffett said in the annual letter. “I stress this point because U.S. CEOs have a shameful track record of devoting more company funds to rewards when prices have gone up than when they have gone down. Our approach is exactly the opposite.”
Berkshire’s operating income, in which Buffett urges shareholders to concentrate, stood at $ 5.02 billion during the fourth quarter, up from $ 4.42 billion in the same period last year. Throughout the year, operating profits fell 9% to $ 21,922 million as the pandemic affected the Berkshire business conglomerate.
The company’s net profits, which represent Berkshire’s large investments in the public market, rose 23% year-on-year to $ 35.835 billion. However, year-over-year, net income fell 48% to $ 42.521 billion.
Berkshire Hathaway’s Class A shares hit a new all-time high on Thursday, after rebounding 52% from the March 23 low. For the year, shares are up about 5%, surpassing the S&P 500’s 2% gain.
Even after Berkshire’s record repurchase in 2020, the company still has a sizable cash stack of $ 138 billion. The figure dropped to $ 145.7 billion at the end of the third quarter.
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