The Warren Buffet-owned Berkshire Hathaway Inc. spent more than $16 billion in buying back its own stock during the first nine months of 2020, according to Bloomberg. This is more than triple its previous annual record.
This buyback strategy sees Berkshire Hathaway outspend some of its largest investments, including the 2019 Occidental Petroleum Corp. financing deal. It also outweighs the total amount that Berkshire Hathaway spent in one year on Apple Inc. stocks.
The corporation’s latest trend of buying back its own stocks represents a stark contrast from its strategy at the start of the year, when Buffett remained conservative in his market actions and decided to dump his existing stakes in major U.S. airlines.
While the 90-year-old billionaire has displayed an interest in securing a lucrative large-scale investment, no such opportunity has arisen in recent times. That being said, CFRA Research’s Cathy Seifert shed light on his buyback decision, explaining that “share buybacks all of a sudden look like a very pleasant option” compared to the aforementioned large-scale investments.
What made Berkshire Hathaway’s buybacks so affordable was the drop in the company’s shares beginning in March. While the corporation’s shares have steadily risen since their initial fall, Berkshire Class A shares remain 7.6% down through Friday’s stock market close.
