Warren Buffett may have bought back a record $7 billion of Berkshire Hathaway stock in the past 3 months
- Warren Buffett seems to have repurchased more than $7 billion of Berkshire Hathaway stock in the last three months.
- The billionaire investor and Berkshire CEO bought back about $5.1 billion of his company's stock in May and June, and Berkshire's shrinking share count points to at least $2 billion of further repurchases in July.
- Buffett's buybacks highlight his willingness to tap Berkshire's $147 billion in cash reserves and suggest he views Berkshire stock as undervalued.
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Warren Buffett appears to have bought back more than $7 billion of Berkshire Hathaway stock over the past three months, underlining the famed investor's willingness to deploy significant amounts of cash and his view that Berkshire shares are a bargain.
The Berkshire CEO and his team bought back about $5.1 billion of stock in May and June, Berkshire's second-quarter earnings show. They also appear to have splurged at least $2 billion more on their company's stock in July.
Berkshire reported the equivalent of 1.59 million "A" shares outstanding as of July 30, a decline of about 8,500 shares from the 1.6 million shares outstanding on June 30.
Assuming stock buybacks are behind the decline, Buffett and his team probably spent between $2.3 billion and $2.5 billion based on the trading range of Berkshire "A" shares in July.
In total, Berkshire's bosses may have shelled out between $7.4 billion and $7.6 billion on Berkshire shares from the start of May to the end of July, smashing their previous record for buybacks in a three-month period.
Buffett's decision to ramp up buybacks suggests he is more than willing to dip into Berkshire's $147 billion cash pile. The company's $10 billion acquisition of most of Dominion Energy's natural-gas assets in early July, and its decision to invest more than $2 billion in Bank of America stock over 12 consecutive trading days to August 4, also support that takeaway.
Moreover, the buybacks indicate that Buffett views Berkshire stock as undervalued, given his policy is to only repurchase it when it trades below a conservative estimate of Berkshire's intrinsic value.
Berkshire's shares are down about 7% this year, lagging the benchmark S&P 500 index's 3% gain. The company's market capitalization is also about 1.3 times its net assets of $397 billion at the end of June — not far off the 1.2 multiple Buffett has previously quoted as an enticing level to buy back shares.