In his annual letter to investors, Berkshire Hathaway chairman Warren Buffett said the company bough back a record $24.7 billion of its own stock last year. Reuters
In his annual letter to investors, Berkshire Hathaway chairman Warren Buffett said the company bough back a record $24.7 billion of its own stock last year. Reuters
In his annual letter to investors, Berkshire Hathaway chairman Warren Buffett said the company bough back a record $24.7 billion of its own stock last year. Reuters
In his annual letter to investors, Berkshire Hathaway chairman Warren Buffett said the company bough back a record $24.7 billion of its own stock last year. Reuters

Berkshire Hathaway buys back a record $24.7bn of own stock in 2020


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Warren Buffett’s Berkshire Hathaway bought back a record $24.7 billion of its own stock last year and said there’s more to come, as the conglomerate struggled to find other ways to deploy its enormous pile of cash.

The company’s purchase of $9bn of shares in the fourth quarter matched a record set in the previous three-month period, Mr Buffett said on Saturday in his annual letter to investors.

“Berkshire has repurchased more shares since year-end, and is likely to further reduce its share count in the future,” Mr Buffett, 90, said. “That action increased your ownership in all of Berkshire’s businesses by 5.2 per cent without requiring you to so much as touch your wallet.”

Mr Buffett’s letter, a closely watched missive from one of the world’s most renowned investors, devoted large portions to the impact of repurchases, one of Berkshire’s biggest capital-deployment moves last year as it “made no sizable acquisitions”. He also shared his thoughts on the strategy of conglomerates, praising businesses such as Berkshire’s insurance operations and railroad.

There was a small amount of progress in paring the cash pile, which fell 5 per cent in the fourth quarter to $138.3bn. Mr Buffett, known as the "Oracle of Omaha", has struggled to keep pace with the flow in recent years as Berkshire threw off cash faster than he could find higher-returning assets to snap up.

Apple is one of Berkshire’s top three most-valuable assets, at $120bn, Mr Buffett said. The technology company has said it intends to repurchase its own shares as well.

“The math of repurchases grinds away slowly, but can be powerful over time,” Mr Buffett added. “The process offers a simple way for investors to own an ever-expanding portion of exceptional businesses.”

Separately, Mr Buffett acknowledged that the $11bn writedown Berkshire took last year was almost entirely due to what he conceded was a “mistake” in 2016, when he paid too much for Precision Castparts. Precision is a fine company, Mr Buffett said, but he admitted he made a big error.

“I was wrong, however, in judging the average amount of future earnings and, consequently, wrong in my calculation of the proper price to pay for the business,” he said.

The math of repurchases grinds away slowly, but can be powerful over time

Swings in Berkshire’s massive $281.2bn stock portfolio feed into the company’s net income because of an accounting technicality. That drove the figure up 23 per cent to $35.8bn in the fourth quarter from a year earlier.

For all of 2020, Berkshire's operating income fell 9 per cent to $21.92bn, while net income fell 48 per cent to $81.42bn. Reuters reported.

Berkshire’s Class A shares gained roughly 2.4 per cent last year, falling short of the 16 per cent increase in the S&P 500.

The billionaire only briefly touched on one of the largest questions looming over Berkshire — how long he might stay at the helm. He once again referenced a favourite chief executive, Rose Blumkin, who founded Nebraska Furniture Mart. She worked until she was 103 – “a ridiculously premature retirement age as judged by Charlie and me”, Mr Buffett wrote, referring to Charlie Munger, 97, a Berkshire vice chairman.

Roll of honour

Who has won what so far in the West Asia Premiership season?

Western Clubs Champions League - Winners: Abu Dhabi Harlequins; Runners up: Bahrain

Dubai Rugby Sevens - Winners: Dubai Exiles; Runners up: Jebel Ali Dragons

West Asia Premiership - Winners: Jebel Ali Dragons; Runners up: Abu Dhabi Harlequins

UAE Premiership Cup - Winners: Abu Dhabi Harlequins; Runners up: Dubai Exiles

West Asia Cup - Winners: Bahrain; Runners up: Dubai Exiles

West Asia Trophy - Winners: Dubai Hurricanes; Runners up: DSC Eagles

Final West Asia Premiership standings - 1. Jebel Ali Dragons; 2. Abu Dhabi Harlequins; 3. Bahrain; 4. Dubai Exiles; 5. Dubai Hurricanes; 6. DSC Eagles; 7. Abu Dhabi Saracens

Fixture (UAE Premiership final) - Friday, April 13, Al Ain – Dubai Exiles v Abu Dhabi Harlequins

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THREE POSSIBLE REPLACEMENTS

Khalfan Mubarak
The Al Jazira playmaker has for some time been tipped for stardom within UAE football, with Quique Sanchez Flores, his former manager at Al Ahli, once labelling him a “genius”. He was only 17. Now 23, Mubarak has developed into a crafty supplier of chances, evidenced by his seven assists in six league matches this season. Still to display his class at international level, though.

Rayan Yaslam
The Al Ain attacking midfielder has become a regular starter for his club in the past 15 months. Yaslam, 23, is a tidy and intelligent player, technically proficient with an eye for opening up defences. Developed while alongside Abdulrahman in the Al Ain first-team and has progressed well since manager Zoran Mamic’s arrival. However, made his UAE debut only last December.

Ismail Matar
The Al Wahda forward is revered by teammates and a key contributor to the squad. At 35, his best days are behind him, but Matar is incredibly experienced and an example to his colleagues. His ability to cope with tournament football is a concern, though, despite Matar beginning the season well. Not a like-for-like replacement, although the system could be adjusted to suit.