I think it is likely Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) has continued to repurchase its own stock in the fourth quarter. This prediction is based on past trading activity and the recent increase in value of the corporation's giant equity portfolio.
However, I should clarify that I do not have any inside information to back up this claim. It is just what I think is likely based on the available data.
Berkshire's buybacks
Throughout the fourth quarter, shares in Berkshire have traded in a range of between $273 and $295 (the stock is trading at the high end of this range at the time of writing). Looking back at the group's past SEC filings, we can see that the business has been buying back shares at or around the low end of these levels in the past.
According to the firm's third-quarter SEC report, Buffett was repurchasing the Class B shares at an average price of $278.13 in July of this year, $285 in August and $277 in September. The company was most active in repurchasing securities in September, when it acquired 9.6 million B shares and 1,323 A shares.
We know from Buffett's past comments that he will only buy back shares when he thinks Berkshire is trading at a discount to his conservative estimate of intrinsic value. When the new policy was put in place in 2018, Berkshire announced that it would be repurchasing shares when Buffett and Charlie Munger (Trades, Portfolio) both believe the repurchase price is "below Berkshire's intrinsic value," a determination that would be made "conservatively."
As such, I do not think it is unreasonable to assume shares in the group were selling at a conservative discount to intrinsic value in the third quarter. Of course, that was in the third quarter. Since then, the value of Berkshire's equity holdings has risen, and the company's operating businesses are also likely to have grown in value.
Indeed, in a recent article on Berkshire, I wrote:
"The group has around $150 billion of cash on hand. On top of this, its equity portfolio was worth nearly $300 billion at the end of September. That gives a value of $450 billion for these components alone. BNSF's annual revenues total around $23.2 billion. Peer Union Pacific (UNP) is trading at a price-sales ratio of 7.5. A similar multiple for BNSF would justify a market value of $174 billion. As such, these three components alone are worth $624 billion. Berkshire's current market capitalization is $636 billion. These numbers suggest the market is valuing the rest of the conglomerate's companies, from Dairy Queen to GEICO and from Berkshire Hathaway Energy to Nebraska Furniture Mart, at $12 billion."
Considering all of the above, I think it is likely Buffett has continued to buy back stock in the fourth quarter. There is already some evidence of this. In the company's latest earnings filing, Berkshire reported repurchases of $1.7 billion in the month of October.
So far this year, Berkshire repurchased $7.6 billion of stock in the third quarter, $6 billion in the second quarter and $6.6 billion in the first three months of the year. Further repurchases of $6 billion to $7.6 billion in the fourth quarter would peg total buybacks for the year at just under $28 billion (at the high end of estimates). If the company hits these numbers, it will have retired 4.4% of its outstanding shares in 2021.
The numbers also suggest that Berkshire's own shares are becoming one of Buffett's most significant investments ever. With repurchases of $28 billion this year, and $51 billion in the past two years, he will have spent more on Berkshire stock than any other investment or business holding.
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