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Warren Buffett: Berkshire Hathaway stock price rallies 7% on vaccine news and record buybacks

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  • Berkshire repurchased $9 billion of its shares, much higher than $5.1billion bought back in Q2
  • “The market will be encouraged by the buybacks,” – CFRA analyst says
  • Berkshire Hathaway share price rose about 7% today on buybacks and vaccine news

Warren Buffet’s Berkshire Hathaway (NYSE: BRK) has recorded an all-time high in its stock buyback program in the third quarter, according to the company’s quarterly report.  

Fundamental analysis: Buffett reinvests 

Berkshire repurchased $9 billion of its shares, a figure that’s nearly double from $5.1billion the conglomerate purchased during the prior quarter. For comparison purposes, Buffett’s Berkshire reinvested a total of $15.7 billion in its own stock.

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Analysts at UBS expected total quarterly buyback to amount to $3.2 billion as the Q3 reports shows buying of $2.5 billion of Class A shares and around $6.7 billion of Class B stock.

“The market will be encouraged by the buybacks,” said Cathy Seifert, an analyst at CFRA Research. 

“Many companies halted buybacks to preserve resources during the pandemic, though because Berkshire doesn’t pay a dividend the amount it is returning to shareholders pales bit.”

Berkshire posted an operating profit of $5.48 billion, which is about 32% lower compared to the same period last year. On the other hand, Berkshire’s net profit surged over 82% to $30.13 billion compared to a year ago.

Earlier this year, Buffett laid out conditions that have to be met before Berkshire decides to buy back its stock.

“a) Charlie and I believe that it is selling for less than it is worth and b) the company, upon completing the repurchase, is left with ample cash,” Buffett wrote. 

“Over time, we want Berkshire’s share count to go down. If the price-to-value discount (as we estimate it) widens, we will likely become more aggressive in purchasing shares. We will not, however, prop the stock at any level.”

Technical analysis: Fresh 8-month high printed

Berkshire Hathaway share price rose about 7% today on news that Pfizer and BioNTech’s vaccine candidate showed 90%+ efficacy results in Phase 3 testing. Moreover, buybacks are always a positive development for investors.

Berkshire stock daily chart (TradingView)

Today’s high of $224.46 is the highest the stock traded since February and the pandemic-fueled selloff. The next target for the buyers are levels above $230, where the 2020 high is located. 

Summary

Berkshire Hathaway, a conglomerate founded by legendary investor Warren Buffett, repurchased a record-breaking $9 billion of its shares in a single quarter, the latest quarterly reports showed.