Berkshire Hathaway has stepped up its stock repurchase program, indicating that Warren Buffett (Trades, Portfolio), the company's long-standing Chairman, sees the shares as undervalued and a wise investment of its surplus cash. The company disclosed in its recent proxy filing that it has bought back around 3,808 Class A shares this year up to March 6, investing between $2.2 billion and $2.4 billion.
A significant portion of these repurchases, nearly three-quarters, occurred after February 12. This move is part of a larger trend for Berkshire, which repurchased $2.2 billion of its stock in the last quarter of the previous year and $9.2 billion throughout 2023. The year 2021 saw the peak of its buyback activity, with a total of $27 billion spent on repurchasing its own shares.
Warren Buffett (Trades, Portfolio), who has been at the helm of the Omaha, Nebraska-based conglomerate since 1965, is responsible for these buyback decisions among other major capital allocation strategies. These repurchases serve as a method for Buffett to utilize some of the company's substantial cash reserves, which stood at $167.6 billion at the end of the year. Berkshire has committed to maintaining a $30 billion cash reserve, emphasizing that "financial strength and redundant liquidity will always be of paramount importance."
As of the last report, Berkshire's share price has seen a 14% increase this year, outperforming the Standard & Poor's 500's gain by about double.
