Warren Buffet’s Berkshire Hathaway Inc repurchased $928 million of its stock in Q3. This is a pretty rare move and it could be quite indicative of the Chairman’s vision for more appealing investment opportunities that would certainly benefit from his company’s massive available liquidity.
Now, Berkshire Hathaway has not made any type of major acquisition since the $32 billion acquisition of Precision Castparts Corporation, in 2016. Of course, Buffet is commonly known as a value investor who looks for deals to strike when prices drop. Unfortunately, we are nearly a decade into a bull market and he has struggled to find attractively-large investments large enough to pull his interest.
You might be aware that Berkshire Hathaway did make a small purchase of Apple stakes—several billion dollars-worth over the past two years—but the firm is doing pretty well since its core business investments (BNSF Railway, Geico, Duracell, among others) continue to generate cash quickly.
This buyback decision came at a time before market slumps in October started to reveal investor concern over interest rates and slow tech company growth. At that time, actually, the stock market had reached levels near their past peaks. And then this week, the stock indexes managed some slight recover from those October drops, led by a 2.4 percent jump in the S&P 500, which was its best week since March.
Analysts advise that even though Berkshire Hathaway’s buybacks might only be slight in relation to its far more substantial balance sheet, the move represents a shift in the company’s readiness to return cash to his investors. Indeed, the last time the firm committed to a buyback strategy like this was in 2012, when they bought back upwards of $1.3 billion in stock; but most of that was only from a single shareholder.
It is also very important to note that US companies have been buying back, and continue to buy back, stock this year in record numbers, thanks to the recent tax law overhaul.
All in all, then, Berkshire Hathaway reports its Q3 net earnings have skyrocketed, boosted largely by unrealized gains in equity investments. The firm also reported a net earnings of $18.5 billion, which is a big jump from last year’s $4.07 billion.