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- Berkshire Hathaway has likely spent $5 billion on stock buybacks this year.
- Warren Buffett's company disclosed a decline in its outstanding shares.
- Berkshire spent a record $25 billion on share repurchases in 2020.
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Warren Buffett's Berkshire Hathaway spent a record $25 billion buying back its stock in 2020. The famed investor's company appears to have spent another $5 billion on share repurchases this year, based on the decline in its outstanding shares from December 31 to March 3.
Berkshire's proxy statement this week suggests it repurchased around 4,200 of its "A" shares and 15 million "B" shares in the period. Given the average trading prices of the two share classes, the conglomerate likely spent just over $5 billion on the buybacks.
It's worth nothing that Berkshire's annual report indicates it spent $4.4 billion on buybacks in the six weeks to February 16. Therefore, it probably slowed its repurchasing in the days to March 3 – perhaps because Berkshire's stock price rose by more than 3% in the second half of February.
Buffett underscored the value of buybacks at the right price in his latest annual letter, arguing they boost shareholders' ownership at zero cost to them.
"The math of repurchases grinds away slowly, but can be powerful over time," he said. "The process offers a simple way for investors to own an ever-expanding portion of exceptional businesses."
The buybacks in 2020 "increased your ownership in all of Berkshire's businesses by 5.2% without requiring you to so much as touch your wallet," Buffett added. The latest repurchases suggest he's seeking a similar result this year.