Starinvestor Warren Buffett
Buffett is buying back his own shares for billions of dollars
Warren Buffet would love to invest in new investments. But his investment company Berkshire Hathaway lacks worthwhile acquisition targets. The solution: increase the number of own shares.
Warren Buffett’s investment company Berkshire Hathaway bought back shares in Corona for more money than ever before.
Overall, the conglomerate spent $ 24.7 billion (€ 20.5 billion) on this type of price maintenance, according to Berkshire Hathaway’s annual report published on Saturday. In the fourth quarter, the holding of the 90-year-old star investor put $ 9.0 billion in its own shares, which was almost exactly the record volume from the previous quarter. Berkshire Hathaway was able to increase net profit strongly at the end of the year.
While many other companies restricted their share buybacks due to tighter funds in the corona pandemic, Buffett really got off to a flying start during the crisis. In view of the enormous cash reserves that Berkshire Hathaway is sitting on, no restraint is necessary. At the end of the year, the conglomerate had cash and cash equivalents of $ 138.3 billion; in the final quarter, cash holdings fell by five percent. Buffett has never made a secret of the fact that he would rather invest in equity investments than share buybacks, but he cannot find any suitable takeover targets.
Berkshire increased net income 23 percent in the fourth quarter to $ 35.8 billion, and for the full year earnings fell nearly half to $ 42.5 billion. Since unrealized investment gains and losses have to be reported since a change in accounting rules, this says little about the actual business. In addition to the quarterly and annual figures, Buffett also published his letter to shareholders, which has always been eagerly awaited in the financial markets. The investment legend did not comment directly on controversial topics such as politics or pandemics. Buffett once again reiterated his belief in the US economy and advised investors: “Never bet against America”.
Berkshire Hathaway owns around 90 companies, plus various blocks of shares in large listed corporations such as Coca-Cola and Apple. The iPhone giant is one of Buffett’s biggest favorites, its 5.4 percent stake in the company was recently worth an immense 120 billion dollars, although it recently reduced the stake a little.
The stock market guru, known as the “Oracle of Omaha” because of his smell for lucrative investments, has been running the conglomerate for over half a century. “Forbes” recently estimated Buffett’s personal fortune at around 92 billion dollars. According to the US magazine, he is the fourth richest person in the world. Despite the huge share buybacks, Berkshire’s shares rose just 2.4 percent in 2020 – far less than the US benchmark index S&P 500 as a whole.