Buffett explains stance on Berkshire's stock buybacks

Source: Xinhua| 2019-05-05 16:40:28|Editor: ZX
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OMAHA, the United States, May 5 (Xinhua) -- U.S. business magnate Warren Buffett on Saturday explained to shareholders of Berkshire Hathaway Inc. his stance on the company buying back its own stocks, saying it will happen when the stock is trading below "its intrinsic value."

"We will buy stock when we think it is trading below a conservative estimate of its intrinsic value," the 88-year-old investor told tens of thousands of shareholders at Berkshire's annual shareholders meeting.

Buffett, who is chairman and CEO of Berkshire, further explained that the intrinsic value is not a specific point. "It's a range in my mind that will have a range or band of probably 10 percent."

"We want to be sure when we repurchase stock that those people that have not sold are better off than they were before," Buffett said.

Berkshire repurchased 1.7 billion U.S. dollars of its own stock during the first quarter, according to a quarterly report the company released Saturday.

Buffett said the amount of the first-quarter buybacks is "nothing like my ambitions." That amount, however, is more than the 1.3-billion-dollar buybacks the company made in the second half of 2018.

"We have no ambition ... to spend a dime unless we think you (shareholders) are going to be better off for us having done so," Buffett said.

Berkshire's Vice Chairman Charlie Munger, who sat side by side on stage with Buffett at the annual meeting, said "I predict we will get a little more liberal in repurchasing shares."

Publicly-traded companies reduce the number of their outstanding shares in order to bolster stock prices, which in turn benefits shareholders. They decide to do so when they consider returning capital to their shareholders to be the best way to spend their money.

Total share repurchases by U.S. companies soared to a record 806 billion dollars in 2018, as companies' cash piles increased after the 1.5-trillion-dollar corporate tax cut in 2017, according to data from S&P Dow Jones Indices.

As of the end of the first quarter, Berkshire's pile of cash and cash equivalents amount to 114.2 billion dollars, up from 111.9 billion dollars at the end of the previous quarter.