Warren Buffett in an interview with CNBC’s Becky Quick on February 24, 2020. It turns out that it is another year. After experiencing a sudden market cash-out, the billionaire investor avoided game-changing acquisitions in the expensive market, and his company holds a large cash balance.
Gerald Miller | CNBC
With the coronavirus pandemic in 2020, Warren Buffett̵
In the fourth quarter, the company repurchased approximately $9 billion in Berkshire stock, bringing the total repurchase in 2020 to a record $24.7 billion.
His annual letter said: “Berkshire has repurchased more shares since the end of the year and may further reduce its number of shares in the future.”
In the third quarter, the conglomerate repurchased $9 billion of its own stock, up from $5.1 billion in the second quarter. These figures compare with the total amount of US$5 billion the company spent on repurchases in 2019.
Buffett emphasized that the company only participates in the stock repurchase program when it believes that the stock transaction price is lower than its intrinsic value.
Buffett said in his annual letter: “We should definitely not buy back Berkshire stock at any price.” “I emphasize this because the US CEO has an embarrassing record of when prices rise rather than fall. Use more company funds for repurchases. Our approach is just the opposite.”
Buffett urged shareholders to focus on Berkshire’s operating income, which was US$5.02 billion in the fourth quarter, up from US$4.42 billion in the same period last year. With the pandemic hitting Berkshire’s corporate groups, operating profit for the year fell 9% to 21.922 billion U.S. dollars.
The company’s net profit (accounting for Berkshire Hathaway’s huge investment in the public market) increased by 23% over the same period last year, reaching $35.835 billion. However, the full-year net profit fell 48% to 42.521 billion US dollars.
Berkshire Hathaway’s Class A shares hit a record high on Thursday after rebounding 52% from the low of March 23. During the year, the stock rose by about 5%, outperforming the S&P 500’s 2% gain.
Even after Berkshire’s record 2020 repurchase program, the company still has considerable cash reserves of $138 billion. This figure is lower than the $145.7 billion at the end of the third quarter.
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