(BRK.A), (BRK.B)
Berkshire Hathaway, the multinational conglomerate headed by the legendary investor Warren Buffett, has continued its trend of buying back its own stock in the first quarter of 2023. The company committed $4.4 billion to the repurchase of shares of both Class A and Class B common stock. This represents an increase from the $2.6 billion that was spent on stock buybacks in the fourth quarter of 2022.
This move by Berkshire is a continuation of the company’s buyback program that started in 2011. In 2022, Berkshire Hathaway bought back a total of $7.9 billion of its stock. The recent purchase of $4.4 billion shows the company’s continued confidence in its own business prospects.
Warren Buffett has long been a proponent of share buybacks, and he defended Berkshire’s buybacks in his recent Chairman’s Letter. He wrote, “The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices.”
Buffett has also been critical of those who oppose share buybacks. He has referred to them as “economic illiterates” or “silver-tongued demagogues” who do not understand the benefits of the practice. He believes that buybacks can be a useful tool in returning value to shareholders and that they should be conducted when the company’s shares are undervalued.
Berkshire Hathaway’s commitment to share buybacks reflects its confidence in its own business prospects and its belief that the company’s shares are undervalued. For investors, this move may signal a positive outlook for Berkshire Hathaway’s future performance.
© 2023 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.