Warren Buffett’s Berkshire Hathaway Appears to Have Bought Back $5 Billion of Stock in 2021
Warren Buffett
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Berkshire Hathaway continued its strong pace of stock buybacks in the first two months of 2021, repurchasing about $5 billion of stock based on a Barron’s calculation.
The repurchases follow the roughly $9 billion of buybacks in both the third and fourth quarter of 2020, as CEO Warren Buffett ramped up the buying.
The company bought back $24.7 billion of its stock, or 5% of the shares outstanding, during 2020. Investors took comfort from the heavy late-year stock buyback as a sign that Buffett viewed the stock as appealing.
Barron’s estimated the year-to-date repurchases by comparing the company’s share count on March 3, the record date for the company’s annual meeting on May 1 as disclosed in Berkshire’s proxy report released Monday, and the shares outstanding as of Dec. 31, 2020.
Berkshire shares have rallied this year, with the class A stock up about 11%, to $388,187, ahead of the S&P 500’s return of 5%.
The class A stock was down 1.7% in Monday’s session after a recent run-up on heavy volume that has spurred speculation that an institutional buyer has been accumulating the supervoting class A stock. The more liquid class B stock was down 1.7% Monday, at $255.70. Berkshire is besting the S&P 500 index so far this year after trailing it by a total of more than 40 percentage points in 2019 and 2020.
Repurchase activity slowed from Feb. 16 to March 3 from the pace in the first six weeks of the year. We calculated that Berkshire bought back about $600 million of stock in that two-week period, based on a comparison of the share count in the 10-K filing to the one in the proxy.
The pace may have slowed because Berkshire stock was rallying and Buffett is price sensitive. Or the company may have slowed down its buybacks ahead of the release of its fourth-quarter earnings and annual report on Feb. 27.
With $5 billion of stock repurchases through March 3, Berkshire would have to ramp up its buybacks in March to match the total for the fourth quarter.
Berkshire is no longer as cheaply valued as it was in 2020. The stock now trades at around 1.35 times its year-end 2020 book value of $287,000 per class A share — in line with the five-year average. Berkshire traded at around 1.2 times book during much of last year.
Write to Andrew Bary at [email protected]
