Buffett buys back his own shares for billions of dollars
Warren buffett’s investment company berkshire hathaway bought back its own shares for more money than ever before in the corona year 2020.
In total, the conglomerate spent 24.7 billion dollars (20.5 billion euros) on this type of stock price maintenance, according to berkshire hathaway’s annual report released on saturday. In the fourth quarter, the 90-year-old star investor’s holding company invested 9.0 billion dollars in its own shares, almost exactly matching the record volume of the previous quarter. Berkshire hathaway was able to increase its net profit strongly at the end of the year.
While many other companies cut back on their share buybacks due to scarcer funds in the corona pandemic, buffett really took off in the crisis. However, given the enormous cash reserves on which berkshire hathaway is sitting, no restraint is necessary. At the end of the year, the conglomerate had cash and cash equivalents of 138.3 billion dollars; in the final quarter, the cash balance fell by five percent. Buffett has never made a secret of the fact that he would rather invest in shareholdings than in share buybacks, but he does not find suitable takeover targets.
Berkshire increased net income in the fourth quarter by 23 percent to 35.8 billion dollars; for the year as a whole, earnings fell by almost half to 42.5 billion dollars. Since a change in accounting rules, unrealized investment gains and losses must also be reported, but this says little about actual performance. In addition to the quarterly and annual figures, buffett also published his letter to shareholders, which was always eagerly awaited by the financial markets. The investment legend did not comment directly on controversial topics such as politics or the pandemic. Buffett once again reaffirmed his belief in the U.S. Economy, advising investors to "never bet against america.".
Berkshire hathaway owns around 90 companies, as well as various share packages in major corporations listed on the stock exchange, such as coca-cola and apple. The iphone giant is one of buffett’s great favorites, its 5.4 percent stake in the company was recently worth an immense 120 billion dollars, although he had recently reduced the stake somewhat.
The borse guru, known as the "oracle of omaha" because of his nose for lucrative investments, has been running the conglomerate for more than half a century. "Forbes" recently estimated buffett’s private assets at around 92 billion dollars. According to the US magazine, this makes him the fourth richest person in the world. Despite the huge stock buyback, berkshire’s shares rose only 2.4 percent in 2020 – far less than the overall U.S. Benchmark index, the S&P 500.