Buffett continues share buyback strategy, sees second quarter operating profit jump 21%

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Warren Buffett’s Berkshire Hathaway has released its results for the second quarter and first six months of 2020 and 2021, reporting second quarter operating profit of $ 6.69 billion, up 21% from $ 5.51 billion from the same period a year ago. Overall profit rose 6.8% year-over-year to $ 28 billion in the second quarter, according to the regulatory record.

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The Omaha Oracle company continued to buy back Berkshire shares, a strategy it championed in its annual letter to shareholders in February:

“Last year we demonstrated our enthusiasm for the spread of Berkshire properties by repurchasing the equivalent of 80,998 ‘A’ shares, spending $ 24.7 billion in the process,” he wrote in the letter. “This action increased your stake in all of the Berkshire companies by 5.2% without affecting your portfolio. Following the criteria Charlie and I have long recommended, we made these purchases because we believed they would both improve intrinsic value per share for continuing shareholders and leave Berkshire with more than enough funds for any opportunities or issues. that he might encounter. We do not believe in any way that Berkshire shares should be redeemed at any price. I emphasize this point because US CEOs have an embarrassing track record of spending more corporate funds on buyouts when prices have risen than when they have fallen. “

Berkshire paid $ 12.6 billion in the first six months of 2021 to repurchase shares of its Class A and B common stock, according to the filing.

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“The buyout was in line with previously set expectations given Berkshire’s recent activity and the fact that they have not been able to deploy their treasury of over $ 100 billion in an acquisition,” Cathy said. Seifert, vice president and equity analyst at CFRA Research, at GOBankingRates. .

In addition, in a research note she sent to GOBankingRates, Seifert wrote that the share buyback program, amended in 2018, “gives Messrs. Buffett and Munger great latitude in the allocation of capital, although we note that Berkshire remains committed to maintaining a $ 20 billion cash position. “

The sentiment was echoed by Eric Schiffer, CEO of The Patriarch Organization, who told GOBankingRates that “Buffett is rational with his takeover of Berkshire after what has been a great title race and will increase capital deployment when valuation is over. more timely “.

Berkshire also touched on the pandemic on the record, saying it affected nearly all of its operations in 2020, and particularly in the second quarter, although the effects have varied widely.

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“The extent of the longer-term effects cannot be reasonably estimated at this time. The risks and uncertainties resulting from the pandemic that could affect our future profits, cash flow and financial condition, including the ability to immunize significant numbers of people in the United States and around the world as well as the long-term effect end of the pandemic on demand for some of our products and services, ”according to the record.

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Last updated: August 9, 2021

This article originally appeared on GOBankingRates.com: Buffett Continues Share Buyback Strategy, Sees Operating Profit Jump 21% in Second Quarter


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