Warren Buffett’s Berkshire Hathaway Reports Record 2020 Buybacks

By Luigi Wewege Monday, March 1, 2021

Berkshire Hathaway HomeServices storefront.

Berkshire Hathaway, the US-based conglomerate founded by legendary stock market investor Warren Buffett, reported Q4 earnings on Saturday accompanied by the traditional annual letter.

Warren Buffett Is Buying Back More Than Ever

Berkshire Hathaway reported an operating income of $5.02 billion for Q4, representing an increase from $4.42 reported a year ago. On a full-year basis, Warren Buffett’s business titan reported its operating income fell 9% to $21.92 billion, according to figures provided in the annual letter.

“In its brief 232 years of existence ... there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America,” Warren Buffett wrote in a letter.

Net earnings, which show how Berkshire Hathaway’s investments performed, surged 23% to $35.83 billion year-over-year (YOY). The investing business reported a cash pile of $138 billion, lower than $145.7 reported at the end of Q3.

Lower cash reserves are understandable given that Berkshire Hathaway bought back a record amount of its stock. In Q4, Buffett bought back $9 billion of the company’s shares to bring the total amount of repurchased shares to a record $24.7 billion.

However, don’t expect this trend to continue, warns Buffett, as the company’s stock trades near the all-time highs.

“Berkshire has repurchased more shares since year-end and is likely to further reduce its share count in the future,” he said.

“In no way do we think that Berkshire shares should be repurchased at simply any price. I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.”

Warren Buffett also noted that his company owns the biggest amount of US assets by value than any other company. The value of these assets is about $154 billion, followed by AT&T, which owns property, plant, and equipment worth around $127 billion, it is said in the letter.

“Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America,” Warren Buffett added.

Last month, the SEC filing showed that Buffett slashed a stake in Apple while acquiring solid stakes in Verizon Communications, Marsh & McLennan Companies., and Chevron Corporation.

Berkshire Hathaway stock price exceeded the $250 mark for the first time ever on Thursday, February 25.

Summary

Berkshire Hathaway, the investing business titan founded by Warren Buffet, reported a strong performance for Q4 and full 2020, as well as record stock buybacks of almost $25 billion in the past year.

About the Author


Headshot for author Luigi Wewege

Luigi Wewege is the Senior Vice President, and Head of Private Banking at Caye International Bank. Outside of the bank, he serves as an Instructor at the FinTech School which provides online training courses on the latest technological and innovation developments within the financial services industry. Luigi is also the published author of: The Digital Banking Revolution.

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