Buybacks for Berkshire?

Shares of Berkshire Hathaway (BRKA) have been up as much as $15,500 today. Even for a $300K stock, that’s a big move. This could be Berkshire’s best day in years.

So what’s the news? It looks like Buffett may finally go through with a share buyback. From Myles Udland at Yahoo Finance:

Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) has just set the table for a new stock buyback.

In a press release late Tuesday, the company said that it has amended its policy regarding share repurchases, now allowing for repurchases of Berkshire stock to be made at the discretion of Buffett and vice chairman Charlie Munger so long as both men “believe that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”

Following this news, shares of Berkshire were up as much as 4%, indicating investors sees the company’s decision to rework its share buyback plan as a sign that repurchases are likely to occur in the months ahead.

Previously the company had said it would not repurchase shares unless they traded at less than or equal to a 20% premium to the stock’s book value. As of Tuesday’s close the stock was trading at a roughly 40% premium to its book value.

Additionally, the company will not repurchase stock in excess of an amount that would reduce its cash and equivalent holdings to less than $20 billion. In its release Tuesday, Berkshire said no repurchases will be made under this new program until after its second quarter earnings are released after the market close on August 3

Posted by on July 18th, 2018 at 1:24 pm


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