Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) ramped up its stock repurchasing program in the third quarter, nearly doubling the company’s record buyback from the second quarter.
Warren Buffett’s holding company bought back $9 billion of its own stock, it was revealed Saturday in its third-quarter earnings report. That’s up sharply from the $5.1 billion worth of stock buyback during the second quarter.
Berkshire Hathaway’s total buybacks now amount to $15.7 billion for 2020. Berkshire repurchased more than $2.5 billion in Class A shares and $6.7 billion in Class B stock during the quarter.
Buffett’s stock repurchase spree comes amid a tough time for its operations as the global economy struggles to recover from the Covid-19 pandemic, directly impacting the company’s wholly-owned businesses which include railroads, utilities and insurance.
For the third quarter, Berkshire Hathaway said its operating earnings came in at $5.48 billion, down more than 30% from the year-earlier period. But the company’s net earnings — which account for Berkshire’s big investments in companies such as Apple — skyrocketed more than 82% on a year-over-year basis to $30.12 billion.
Buffett defended the practice of stock buybacks at the Berkshire Hathaway annual meeting held this past May.
"When the conditions are right, it should also be obvious to repurchase shares and there shouldn’t be the slightest taint to it any more than there is to dividends," he said.
Despite a nearly 20% comeback in the third quarter by Berkshire Hathaway’s class A shares, the stock is still widely underperforming the S&P 500 this year. Berkshire’s shares have lost 8% in 2020, compared to a 10% total return for the S&P 500 index.
Even after the record stock buybacks, Berkshire Hathaway’s cash pile still stood at $145.7 billion through the end of the third quarter.
