- Warren Buffett may have bought back more than $5 billion in Berkshire Hathaway stock in recent weeks.
- The famed investor disclosed his Berkshire stake in a filing last week, suggesting the number of outstanding shares shrunk by about 1.2% between April 23 and July 7.
- “It implies relatively strong buyback activity,” Edward Jones & Co analyst James Shanahan told Reuters.
- Buffett may have spent between $4.9 billion and $5.9 billion on buybacks in the period, or roughly triple the $1.7 billion he spent in the first quarter.
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Warren Buffett may have repurchased more than $5 billion in Berkshire Hathaway stock in recent weeks – triple the value of his buybacks in the first quarter – in an effort to capitalize on his company’s huge cash reserves and depressed stock price.
The famed investor and Berkshire CEO owns 248,734 of his company’s Class A shares and 10,188 of its Class B shares after donating about $2.9 billion in Berkshire stock to charity last week, according to a SEC filing.
Each Class A share can be converted into 1,500 Class B shares. Therefore, Buffett held the equivalent of 248,741 Class A shares at last count.
The filing showed that Buffett’s holding represents 15.54% of Berkshire’s total outstanding shares, which are equivalent to just over 1.6 million Class A shares.
The total number of outstanding Class A and Class B shares on April 23 was equivalent to 1.62 million Class A shares, Berkshire said in its last quarterly filing.
Therefore, it looks like Berkshire’s outstanding share count shrunk by the equivalent of 19,400 Class A shares or 1.2% between April 23 and July 7.
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Assuming that reflects share repurchases, Buffett likely spent between $4.9 billion and $5.9 billion to buy them, based on the range of Berkshire’s Class A stock price during that period.
“It implies relatively strong buyback activity,” Edward Jones & Co analyst James Shanahan told Reuters. He suggested Berkshire may have bought back $5.3 billion in stock, based on the average share price in the period.
If true, that would mean Buffett more than tripled his buybacks compared to the $1.7 billion in stock he repurchased in the first quarter.
Buffett, who has trumpeted the value of buybacks for years, may have decided to spend some of Berkshire’s $137 billion in cash on his company’s shares because they’re relatively cheap.
Berkshire shares are down about 20% this year, compared to the S&P 500’s roughly 2% decline. Berkshire’s market capitalization is also less than 1.2 times its net assets.
Meanwhile, Berkshire shareholders may have sold their stock to Buffett because they’re frustrated with its underperformance this year.
“Berkshire’s stalwart quality shareholders do not sell, so we are seeing a voluntary purging of the shorter-term, lower-quality shareholders,” Lawrence Cunningham, a law professor at George Washington University and the author of several books about Buffett, told Reuters.
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