The Zhitong Finance App learned that Berkshire Hathaway (BRK.A.US, BRK.B.US), a subsidiary of “stock god” Buffett, has sped up the pace of repurchasing its own shares, showing that long-time chairman Warren Buffett (Warren Buffett) believes that Berkshire Hathaway's stock is undervalued, and that buying back shares may be one of the best places for Buffett to spend “excess cash.”

According to information, Berkshire Hathaway stated in a document submitted last Friday that as of March 6 this year, the total value of the company's share repurchases was equivalent to 3,808 Class A shares. Depending on the date of the repurchase, the total repurchase amount was about US$2.2 billion to US$2.4 billion. Documents show that nearly three-quarters of Berkshire's share buybacks occurred after February 12.

In the fourth quarter of last year, Berkshire Hathaway repurchased up to $2.2 billion worth of shares and $9.2 billion for the full year of 2023.

The peak year for the company's share repurchases was 2021, when the total amount of repurchases was around $27 billion.

Buffett, 93, has been at the helm of Berkshire Hathaway, headquartered in Omaha, Nebraska since 1965, and is responsible for overseeing share repurchases and other major capital allocation decisions.

The share buyback can be said to have helped Buffett allocate some of Berkshire Hathaway's cash and equivalent. By the end of last year, the total amount of cash and equivalents held by Berkshire Hathaway had reached an astonishing 167.6 billion US dollars, an increase of 10.6 billion US dollars from 157 billion US dollars in the third quarter, mainly because it was difficult for the business group led by Buffett to find deals with attractive valuations.

Berkshire said it will work to maintain a $30 billion cash flow buffer. “Financial strength and excess liquidity will always be critical concepts.”

As of last Friday, Berkshire's stock price has risen by about 14% this year, about double the increase in the US stock index, the Standard & Poor's 500 (Standard & Poor's 500). Berkshire Hathaway Class A and Class B stock prices both hit record highs in February this year, which is enough to see that many believers in the global market “stock god” Buffett continue to spend a lot of money to “recharge their faith.”

Thanks to the strong performance of the insurance business and the increase in investment income, Berkshire Hathaway performed strongly last quarter. Operating profit surged 30%, and net profit doubled year-on-year. According to financial reports, Berkshire Hathaway's net profit for Q4 in 2023 was US$37.574 billion, double that of US$18.08 billion in the same period last year. This includes the book income of US$29.09 billion from Buffett's US$350 billion stock portfolio. Stock earnings mainly come from Apple (AAPL.US), the largest stock company, which accounts for about half of the portfolio.

Difficult to find a suitable target, Buffett continues to hoard cash

Berkshire Hathaway has a record $167.6 billion in cash, and Buffett doesn't seem to think there are many opportunities to use that cash. The stock market is at record levels, with Berkshire net selling $24 billion of shares last year. Acquiring large listed companies is not easy, and the number of large private companies is limited.

Buffett said that the company lacks “meaningful” deals, and only then can such deals give the company a chance to achieve “astonishing results.”

In his annual letter to shareholders, Buffett said, “There are only a few companies in this country that can actually drive Berkshire's development, and we and others have been endlessly selecting these companies.” The company published the letter on Saturday along with the earnings report. “Outside of the US, almost no candidate companies are a meaningful choice for Berkshire capital allocation. All in all, we can't have a jaw-dropping performance.”

Although Berkshire has stepped up its acquisition efforts in recent years, it is still difficult for the company to find many of the big deals that have embellished Buffett, making it impossible for him and his investment associate to deploy more cash quickly.

In the absence of an attractive alternative investment plan, Buffett continues to insist on repaying shareholders with share repurchases, saying these measures are beneficial to shareholders. The company spent $2.2 billion on share buybacks in the fourth quarter of last year, bringing the total number of repurchases for the whole year to about $9.2 billion.

The shareholders' meeting in May of this year will be Berkshire's first shareholders' meeting since the death of Berkshire's vice chairman and Buffett's long-term investment partner Charlie Munger at the end of November.

“Let's attend the Berkshire Annual Gathering on May 4, 2024,” Buffett said in the letter. “On stage, you'll see three managers who now have the main responsibility of leading the company,” he wrote. He meant himself, Ajit Jain and Greg Abel. Jain is responsible for Berkshire's insurance business, and Abel is responsible for overseeing the non-insurance business.

Buffett said, “Our insurance business performed extremely well last year, and we still have a lot of room to grow.”