Warren Buffett during an interview with CNBC’s Becky Quick on February 24, 2020. It ended up being another year during which the billionaire investor avoided revolutionary acquisitions in an expensive market, even after a sudden cash market and his company’s cash balance huge.
Gerald Miller | CNBC
While the coronavirus pandemic shook markets in 2020, Warren Buffett’s Berkshire Hathaway repurchased a record amount of company stock. And the buying spree continued in 2021, according to the conglomerate’s annual letter released Saturday morning.
During the fourth quarter, the company repurchased about $ 9 billion in Berkshire shares, bringing the total repurchase in 2020 to a record $ 24.7 billion.
“Berkshire has repurchased more shares since the end of the year and is likely to further reduce its share count in the future,” said its annual letter.
During the third quarter, the conglomerate repurchased $ 9 billion of its own shares, compared with $ 5.1 billion in the second quarter. The numbers compare to the $ 5 billion the company spent on buybacks in 2019.
Buffett emphasized that the company only participates in share buyback programs when it believes that the shares are being traded below their intrinsic value.
“In no way do we think Berkshire’s shares should be repurchased simply at any price,” Buffett said in the annual letter. “I emphasize this point because American CEOs have an embarrassing record of dedicating more company funds to repurchases when prices have increased than when they have plummeted. Our approach is just the opposite.”
Berkshire’s operating income, on which Buffett encourages shareholders to focus, was $ 5.02 billion during the fourth quarter, compared to $ 4.42 billion in the same period last year. For the full year, operating profit fell 9%, to $ 21.922 billion, when the pandemic hit the Berkshire business conglomerate.
The company’s net profit – which represents Berkshire’s major investments in the public market – jumped 23% over the previous year, to $ 35.835 billion. For the full year, however, net income fell 48%, to $ 42.521 billion.
Berkshire Hathaway’s class A shares hit a new historic record on Thursday, after jumping 52% from the March 23 low. For the year, shares rose about 5%, exceeding the 2% gain of the S&P 500.
Even after Berkshire’s record buyback in 2020, the company still has a sizeable $ 138 billion cash pile. The figure is less than $ 145.7 billion at the end of the third quarter.
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