As I’m sure you already know, there are quite a few firms that currently scrambling to give back money to some of their share holders prior to the fiscal cliff. But as usual, Warren Buffett decided to surprise many people on Wednesday by buying back $1.2 billion of Berkshire Hathaway stock from one single shareholder.
Prior to the news being released, Berkshire Hathaway’s Class A and Class B shares were halted. But once trading opened in New York, the shares began to rally. Berkshire Hathaway let us know that they bought 9200 class a shares at $131,000 apiece “from the estate of a long-time shareholder.”
Warren Buffett’s investment firm raised its price limits for repurchase to 120% of book value. This means that they can theoretically purchase shares for up to $134,062, which we learned according to Reuters. Warren Buffett had not made any large repurchases such as this during the first nine months of this year.
On a historical level, Berkshire Hathaway and Warren Buffett are typically opposed to making repurchases. They didn’t do so for around for decades, which we learned according to Bloomberg, until Warren Buffett changed his mind during 2011.
There are quite a few companies that have incurred in buybacks and special dividends over the last few weeks so that they can return money to the shareholders ahead of a potential tax increase that will be connected to the fiscal cliff. In quite a few different cases, billionaires are basically paying themselves large bonuses, as is the case with Sheldon Adelson and Las Vegas Sands and Larry Ellison with Oracle.
Warren Buffett, whose company Berkshire Hathaway holds very large positions in Walmart, Wells Fargo, Coca-Cola, and many others, told us that repurchases make perfect sense when a company is well capitalize, and their stock is trading cheaply based on a conservative perspective. Berkshire is cash on hand is $47.8 billion as of the end of the third quarter, we learned according to regulatory filings.
Based on the news of this buyback today, Berkshire Hathaway’s class a stock rallied in gained 2.3% to reach the level of $133,840 by 12 o’clock in the afternoon in New York.