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Summary
- Berkshire Hathaway Inc (NYSE:BRK.A, BRK.A:US) purchased a record US$ 24.7 billion of its own stock in 2020, owner Warren Buffett recently announced in a letter to investors.
- The 90-year-old entrepreneur added in the annual letter that the company is set to make more such repurchases this year.
- Berkshire Hathaway bought about US$ 9 billion of its shares in the fourth quarter of 2020.
American conglomerate holding company Berkshire Hathaway Inc (NYSE:BRK.A, BRK.A:US) purchased a record US$ 24.7 billion of its own stock in 2020, owner Warren Buffett recently announced in a letter to investors. The number is reportedly five times the buybacks recorded a year earlier.
The 90-year-old entrepreneur added in the annual letter, released on Saturday, February 27, that the company is set to make more such repurchases this year.
Berkshire Hathaway bought about US$ 9 billion of its shares in the fourth quarter of 2020, following a similar record set of buyback in the third quarter last year. The company appears to have made a repurchase of an additional US$ 4 billion or so in 2021 so far.
Warren Buffett’s Annual Letter – Key Highlights
Warren Buffett’s letter, which stressed largely on the impact of its stock repurchases, noted that the company “made no sizable acquisitions” in 2020. The letter also saw Buffett acknowledging that Berkshire’s US$ 11 billion writedown in 2020 was almost entirely due to the “mistake” of paying “too much” for industrial parts maker Precision Castparts.
©Kalkine Group 2021
The letter focused on different aspects of Berkshire’s operations, while avoiding any comments on controversial issues such as politics and the pandemic, a point that has attracted some flak from critics.
Berkshire reported a 14 per cent year-over-year rise in its operating income of US$ 5.02 billion in the fourth quarter of 2020, up from US$ 4.42 billion in Q4 2020. Its net income for Q4 2020 rose 23 per cent YoY to US$ 35.84 billion. Its cash pile, however, fell by 5 per cent YoY to US$ 138.3 billion in the latest quarter.
The Omaha-based holding company said that it noted “significant” revenue and earnings boost in several business branches, including manufacturing, service and retail, from its pandemic lows in Q2 2020.
Buffet pointed that tech giant Apple Inc (NASDAQ:APPL, APPL:US), at US$ 120 billion, is one of Berkshire’s most valuable assets, Buffett said. But like Berkshire itself, the iPhone maker is also reportedly looking into repurchasing its own shares from investors.
Berkshire’s Stock Portfolio
Berkshire’s Class A shares have gained about 5.6 per cent year-to-date and roughly six per cent in the past year. The stock posts a return on equity (ROA) of about 8.51 per cent and a return on assets (ROA) of 4.27 per cent.
