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.
SERIE A FIXTURES
All times UAE ( 4 GMT)
Saturday
Roma v Udinese (5pm)
SPAL v Napoli (8pm)
Juventus v Torino (10.45pm)
Sunday
Sampdoria v AC Milan (2.30pm)
Inter Milan v Genoa (5pm)
Crotone v Benevento (5pm)
Verona v Lazio (5pm)
Cagliari v Chievo (5pm)
Sassuolo v Bologna (8pm)
Fiorentina v Atalanta (10.45pm)
Key Points
- Protests against President Omar Al Bashir enter their sixth day
- Reports of President Bashir's resignation and arrests of senior government officials
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
