Buffett long balked at a buyback, saying he preferred using spare cash to buy companies that would increase his own company’s profit margins. Berkshire, on Monday, said it is willing to pay up to 10 per cent more than book value for its stock.
The company said it would use cash on hand to fund buybacks, but would not buy any shares if doing so took the company’s cash position below $20 billion.
Berkshire had $47.89 billion in cash as of June 30, but has spent at least $15 billion this quarter on acquisitions and investments.
As of June 30, Berkshire’s book value was $98,716 per Class A share, which would suggest the company would be willing to pay up to $108,588 per share in the buyback programme.
If Berkshire spent $10 billion buying stock at a 10 per cent premium, it could end up repurchasing nearly 10 per cent of its Class A shares.
Published 27 September 2011, 14:54 IST