Berkshire releases Buffett to buy back shares as cash increases

The company's previous buyback program stipulated that the price paid could not be more than 20% higher than the current book value of the shares. The book value is a measure of the asset less the liability, which Buffett has described as useful "intrinsic value" of his conglomerate, or what it actually is worth.

Buffett, 87, began a buyback program in 2011 buyouts for four decades. But opportunities to acquire shares remained rare as the company initially banned purchases at prices above 110% of book value. He raised the limit to 120% in December 2012. Since then, some investors have considered the threshold as a floor under the stock – keeping the price out of reach for redemptions.

Buffett had been playing with the idea of ​​relaxing the rules further, saying in a February interview with CNBC that the company might need to adjust the equation. He pointed out that he generally prefers to buy back shares than to issue a dividend.

Even under the changes announced on Tuesday, Berkshire said he would not buy back shares if it reduced the value of his cash holdings to less than $ 20 billion. One of the main activities of the company is insurance, which can result in significant loss costs.

"We will never do anything that, in our opinion, hurts permanent shareholders. So we think the stock is intrinsically worth X, and we should pay a multiple – a modest, even higher – multiple to buy back shares, "Buffett said in May in Omaha, Berkshire, an annual meeting of shareholders [19659006] Decision "late"

Aside from acquisitions, Berkshire also invests in shares of other companies.Its portfolio includes tens of billions of dollars in Apple, Wells Fargo & Co. and Coca -Cola Co. But a long bull market has made it harder to find good deals.

Raising the ceiling is "late," Meyer Shields, an analyst at Keefe Bruyette & Woods, said in an interview. Berkshire's accountant was not as useful a measure of the intrinsic value of the company as Buffett pursued more transactions for the operating companies, according to Shields.

"C & # 39; is something of which we for years, "said Shields. "This ever-increasing pile of cash is now overwhelming."