REUTERS/Rebecca Cook
- Warren Buffett likely spent $4.4 billion on share buybacks in the first six weeks of 2021.
- Berkshire Hathaway purchased a record $24.7 billion of its stock last year.
- Buffett touted buybacks as a way to boost shareholders’ ownership of a company.
- Visit the Business section of Insider for more stories.
Warren Buffett’s Berkshire Hathaway plowed a record $24.7 billion into stock buybacks in 2020, or almost five times the $5 billion it spent repurchasing shares in 2019, the famed investor revealed in his annual shareholder letter on Saturday.
Buffett appears to be forging ahead with that strategy. Berkshire has spent about $4.4 billion buying back its stock in the first six weeks of this year, based on the decline in its outstanding shares between December 31 and February 16.
Berkshire’s annual report suggests it repurchased around 3,300 of its “A” shares and 13.7 million of its “B” shares in that period. Given the average trading prices of the two share classes, the company probably shelled out around $4.4 billion for those purchases.
At that rate, Buffett’s company is on track to roughly match the $9 billion it spent on buybacks in the third and fourth quarters of 2020.
"Berkshire has now been in the market buying back stock in eleven consecutive quarters, utilizing more than $35 billion to repurchase approximately 7% of outstanding shares," Edward Jones analyst James Shanahan told Insider.
Buffett, who has repeatedly trumpeted the value of buybacks, emphasized in his latest letter that they boost shareholders' stakes at no 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."
Indeed, 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 told his shareholders.