Berkshire shares surge as Buffett wins more power for stock buybacks
By Jonathan Stempel and Trevor Hunnicutt (Reuters) - Berkshire Hathaway Inc shares rallied on Wednesday after the conglomerate's board gave its billionaire chairman, Warren Buffett, more freedom to conduct stock buybacks and whittle down a $108.6 billion stockpile of cash. The company's Class A shares climbed $14,470, or 5 percent, to $302,970 in afternoon trading, while its Class B shares rose $10.32, or 5.4 percent, to $200.73 on the New York Stock Exchange. Berkshire announced late Tuesday that Buffett and Vice Chairman Charlie Munger, who make major decisions on allocating capital, may now repurchase stock when both believe the price is below Berkshire's 'intrinsic value,' a determination that would be made 'conservatively.' The old policy prohibited buybacks when the stock price exceeded 1.2 times book value per share, or assets minus liabilities.
By Jonathan Stempel and Trevor Hunnicutt
(Reuters) - Berkshire Hathaway Inc
The company's Class A shares climbed $14,470, or 5 percent, to $302,970 in afternoon trading, while its Class B shares rose $10.32, or 5.4 percent, to $200.73 on the New York Stock Exchange.
Berkshire announced late Tuesday that Buffett and Vice Chairman Charlie Munger, who make major decisions on allocating capital, may now repurchase stock when both believe the price is below Berkshire's "intrinsic value," a determination that would be made "conservatively."
The old policy prohibited buybacks when the stock price exceeded 1.2 times book value per share, or assets minus liabilities.
Berkshire shares recently traded closer to a 1.4 times multiple. The Omaha, Nebraska-based company has not disclosed any buybacks since December 2012.
"We're surprised that this took so long," wrote Meyer Shields, an analyst at Keefe, Bruyette & Woods who rates Berkshire "market perform."
Shields called the old buyback policy "almost obsolete," saying the recent slashing of the U.S. corporate tax rate materially boosted book value by reducing Berkshire's deferred tax liabilities but "with almost no impact on intrinsic value."
The cash hoard gives Buffett power to make what he calls "elephant" sized acquisitions of whole companies.
He has, however, lamented his inability to find an elephant since paying $32.1 billion for aircraft parts maker Precision Castparts in January 2016.
Buffett signalled a possible policy shift at Berkshire's annual meeting on May 5. He told shareholders that if Berkshire could not deploy capital effectively, buybacks based on intrinsic value might be a means to return capital to them.
"It'd be unlikely we'd do it by special dividend," he said. "It'd be more likely we'd do it by repurchase if the repurchase didn't result in us paying a price above intrinsic value per share. We're never going to do anything that we think is harmful to continuing shareholders."
Buffett in recent months spent some cash to build a more than $40 billion stake in iPhone maker Apple Inc
Berkshire said it will not conduct buybacks that reduce its cash stake below $20 billion. That provides a cushion for potential large claims losses at Berkshire's insurance units.
No buybacks under the new policy will occur before Berkshire releases second-quarter results, scheduled for Aug. 3.
(Reporting by Jonathan Stempel and Trevor Hunnicut in New York; Editing by Steve Orlofsky)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
By Jessica Resnick-Ault NEW YORK (Reuters) - Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. Early in the day crude was boosted by a bullish stock market. Even as equities whipsawed on pandemic worries, oil stayed higher, buoyed by expectations that OPEC could staunch a supply glut
By Tina Bellon and C Nivedita (Reuters) - Tesla Inc will further cut the price of its Model S "Long Range" sedan in the United States to $69,420, the electric carmaker's chief executive, Elon Musk, announced in a tweet https://bit.ly/2H0JCP0 on Wednesday. The anticipated drop marks the second time this week Tesla has cut the price for the high-end sedan, following a 4% cut of the Model S's price in the United States on Tuesday to $71,990.
By Jeff Mason DES MOINES, Iowa (Reuters) - Under siege over his handling of the novel coronavirus pandemic, President Donald Trump on Wednesday cited what he said was his son's mild bout of the virus as a reason why American schools should reopen as soon as possible. Trump made the comment about his son, Barron, as the president swept into Iowa on a mission to shore up support in battleground states that he won in 2016 but is in danger of losing to Democrat Joe Biden barely three weeks before the election. First lady Melania Trump announced in a statement earlier in the day that the virus that struck both her and her husband had also infected their 14-year-old son