Saturday, November 7th, 2020
The corona crisis has so far not done much to harm the billion dollar fortune of US investor Warren Buffet. In order to increase the share price of his investment company, the multi-billionaire is now buying back shares in his company for a record sum. For Buffett a departure from old principles.
Warren Buffett’s investment company Berkshire Hathaway is increasingly relying on share buybacks in the Corona crisis. In the three months to the end of September, the conglomerate said it spent around 9 billion dollars on Saturday, the equivalent of around 7.6 billion euros, to buy back its own shares. In the third quarter alone, more was spent on this type of share price maintenance than ever before in a full calendar year. Over the course of the year, the amount already adds up to around 16 billion dollars.
Many other corporations have capped their share buybacks to keep the money together in the pandemic. But Buffett sat with Berkshire Hathaway most recently on cash of 145.7 billion dollars. The cash holdings therefore only decreased slightly compared to the previous quarter. The 90-year-old star investor would actually much rather spend the money on investments – for a long time he largely refused to buy back shares to maintain prices. But Buffett has been struggling to find suitable takeover targets for some time.
The day-to-day business of Berkshire Hathaway continues to suffer from the Corona crisis. Operating profit fell 32 percent year-on-year to $ 5.5 billion, with the major insurance business making a loss. The net result, however, benefited strongly from the stock market rally and increased from 16.5 billion to 30.1 billion dollars. Buffett himself, however, always advises not paying much attention to this indicator. Since unrealized investment gains and losses are shown here, there are strong fluctuations that say little about the actual course of business.
Berkshire Hathaway owns around 90 companies, plus various blocks of shares in large listed corporations such as Coca-Cola, Wells Fargo or Apple – the iPhone company in particular has become one of Buffett’s favorites in recent years. The investment legend, known as the “Oracle of Omaha” because of its good smell for lucrative investments, has led the conglomerate for more than 50 years. “Forbes” recently estimated Buffett’s personal wealth at around $ 79 billion. According to the US magazine, he is the fourth richest person in the world.