Berkshire Hathaway Stock Buyback
The Dynamic Wealth Report
September 27, 2011
by Corey Williams, Editor
In Warren Buffett’s annual shareholder letter in February he said, “Our
elephant gun has been reloaded, and my trigger finger is itchy.”
At the time, Mr. Buffett was bullish on the economy and on the hunt for a
major acquisition. Investors liked what they heard and sent shares of
Berkshire Hathaway (BRK/A) soaring to a 52-week high of $131,400 on
March 1st.
He eventually pulled the trigger on a deal to buy chemical maker
Lubrizol (LZ) for $9.7 billion on March 14th. But since then, the economy
has weakened and stocks have been in freefall.
-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?
Our own small-company specialist, Robert Morris, has found a
way to 'sniff out' tiny penny stocks on the verge of a major breakout. And
the timing for this has never been better.
You see, the system takes advantage of an obscure SEC regulation that
sends penny stock prices through the roof.
We've seen some stocks gain 852%... 5,450%... even 17,496% in no time
flat.
Click here
for the details...
-----------------------------------
Just look at this chart of BRK/A…
As you can see, the shares shed a whopping $32,448 from the March high
to the recent low of $98,952.
That’s an eye popping 25% selloff!
Obviously, the Oracle of Omaha isn’t happy to see Berkshire’s stock in
the tank.
He just couldn’t stand to see the market mis-value BRK/A any longer. As
he put it, “The underlying businesses of Berkshire are worth
considerably more than this amount.”
In other words, BRK/A shares are cheap.
Thing is, Berkshire has more than $48 billion in cash. So Buffett
doesn’t have to accept the market’s valuation. He can do something about
it… And that’s exactly what he did.
Yesterday, he announced Berkshire will repurchase shares for as much as
110% of their book value. Not surprisingly, BRK/A shares jumped more
than 8% higher on the news.
Look, this is the first time Buffett has ever authorized a share repurchase
for Berkshire. That means he thinks his stock is dirt cheap right now.
In the shareholder letter, he said there’s only one way to justify a
stock buyback.
“First, the company has available funds beyond the near-term needs of
the business and, second, finds its stock selling in the market below
its intrinsic value, conservatively calculated,”
In other words, Buffett thinks 1.1x book value is way too cheap for
Berkshire shares. So he’s putting his money where his mouth is and
buying the stock.
I think this is a great move… It basically puts a floor under the stock.
According to
Capital IQ, BRK/A was trading at 1.1x book value on June
30th. And the stock closed at $116,105. That means Buffett should
continue buying BRK/A up to $116,105. That’s another 7% higher than
yesterday’s closing price.
Clearly, there’s still plenty of upside for BRK/A. And don’t worry if
the price tag on the Class A shares are too pricey. The Class B shares
(BRK/B) offer just as much upside. And they’re only trading for $72.
Take a look at BRK/A and BRK/B shares for your portfolio today. After
all, the greatest investor of all time thinks these shares are dirt
cheap.
Share This Story:
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map