Berkshire Hathaway's Share Buyback: What You Need To Know

At a time when share buybacks are at or near record highs, one company has been notably absent from the trend — until now.

What Happened

Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) just bought back close to $1 billion of its own stock. The company hasn't bought back shares since 2012, but did during a strong third quarter, according to the Wall Street Journal

The company led by billionaire investor Warren Buffett said over the weekend that its Q3 operating profit doubled from $3.44 billion in the same period a year ago to $6.88 billion.

The business benefited from lower taxes, while the insurance business performed better than expected as a result of lower payouts for recent hurricanes. 

Why It's Important

Smead Capital Management CEO Bill Smead told the New York Times that Berkshire reported "one of the biggest quarterly earnings reports" in U.S. corporate history.

"[Buffett] is the most successful value investor of all time, and his company's stock in relation to book value is at an extreme value in a world where value is incredibly attractive." 

What's Next

At a time when investors are net sellers of stock, corporations including Berkshire are net buyers of their stock, Tigress Financial Partners' Ivan Feinseth said in his daily newsletter. 

The analyst's advice is simple: "buy what they're buying," Feinseth said.

In other words, he wrote, if companies are buying their own stock, investors may want to follow suit.

Related Links:

Buybacks On The Rise, But Buyback ETFs Are Lagging

What Happens If American Companies Stop Repatriating Overseas Cash?

Public domain photo via Wikimedia. 

Posted In: Bill SmeadIvan FeinsethNew York TimesTigress Financial PartnersWall Street JournalWarren BuffettAnalyst ColorNewsBuybacksAnalyst RatingsMedia