Berkshire shares rise on aggressive buybacks and strategic pivot
Berkshire Hathaway shares are up 13% year-to-date, outperforming the S&P 500, as the company executes aggressive buybacks. Management's confidence in intrinsic value is signaled by a large liquidity position and increased share repurchases.
Berkshire Hathaway shares are up 13% year-to-date, outperforming the S&P 500's 9% gain. The company reported a 6% drop in operating quarterly profit to 12.7 billion dollars, with insurance profits falling 43%, but BNSF earnings rose 90%. In Q3, Berkshire bought back 9.6 billion dollars of its own stock, more than double the previous quarter, with an additional 2 billion dollars in October. The company holds approximately 350 billion dollars in liquidity and short-term US Treasuries. CEO Greg Abel, who took over from Warren Buffett, is betting on the company's intrinsic value. The B-share trades at around 570 dollars, a P/E of 24, or 16 excluding cash. UBS estimates intrinsic value at 543 dollars. Analyst price targets range from 510 to 628 dollars. The company holds significant positions in Apple and Alphabet, and its energy division benefits from data center power demand. The narrative suggests a rotation from tech hype to substance, with Berkshire's buybacks and cash pile signaling management confidence in undervaluation. It was noted that "Berkshire does this traditionally only when management believes its shares are cheaper than their intrinsic value."