Berkshire spent about $9.6 billion buying back its own shares in the third quarter, including about $5.4 billion in September alone. The average repurchase price for its Class B shares that month was $506.64. The shares closed at $570.89 last Friday, nearly 13% above that average.
Berkshire only buys back shares when management believes the purchase price is below the company’s intrinsic value. With the stock near $570, I’d give less weight to the support from continued buybacks. The earnings report disclosed how much Berkshire bought back over the past few months, but not the amount it plans to repurchase next quarter.
Operating earnings were about 6% lower than a year earlier in the third quarter, with both insurance underwriting profits and investment income down. Buybacks reduce the number of shares outstanding, which can help earnings per share. But to value the business more highly, I’m more focused on whether the insurance business can make up for what it has earned less.
Berkshire only buys back shares when management believes the purchase price is below the company’s intrinsic value. With the stock near $570, I’d give less weight to the support from continued buybacks. The earnings report disclosed how much Berkshire bought back over the past few months, but not the amount it plans to repurchase next quarter.
Operating earnings were about 6% lower than a year earlier in the third quarter, with both insurance underwriting profits and investment income down. Buybacks reduce the number of shares outstanding, which can help earnings per share. But to value the business more highly, I’m more focused on whether the insurance business can make up for what it has earned less.