Berkshire Hathaway steps up share buybacks with $9.6bn of purchases

{"text":[[{"start":9.48,"text":"Berkshire Hathaway chief executive Greg Abel ploughed $9.6bn into buying back his company’s shares in the three months to September, which analysts said was a record for quarterly purchases."}],[{"start":22.214,"text":"The group has now bought back its own shares for three consecutive quarters after spending about $4.7bn in the first six months of the year."}],[{"start":30.818,"text":"Investors said the move by Abel, who took the helm from predecessor Warren Buffett at the start of the year, indicated that the new chief believes the conglomerate’s stock is undervalued. Until recently its shares were lagging behind the S&P 500 index average."}],[{"start":45.68,"text":"“Abel is showing confidence in Berkshire and the prospect of its businesses,” said Christopher Rossbach, chief investment officer of J Stern & Co."}],[{"start":54.96,"text":"Berkshire, which owns everything from Geico and National Indemnity insurers to Duracell batteries, appears to have bought a further $2bn worth of its own stock after the quarter ended, according to analysts’ estimates, which would bring its total spending for the year to more than $16bn."}],[{"start":71.026,"text":"The conglomerate’s financial performance dipped in the third quarter, it disclosed on Saturday. Quarterly operating income — Berkshire’s preferred measure in gauging the performance of its businesses — dropped 5.8 per cent year-on-year to $12.7bn."}],[{"start":86.56,"text":"It was dragged down by its flagship insurance business, which notched a 43 per cent decline in underwriting earnings for the quarter compared with a year earlier."}],[{"start":96.375,"text":"Auto insurers are in fierce competition with one another for market share, and Geico was hit particularly hard as underwriting and advertising expenses rose sharply. It also faced pressures from inflation and struggled to keep up its premium rates."}],[{"start":110.562,"text":"“Geico is an important franchise and it can be an important contributor [to Berkshire revenue],” said Cathy Seifert, an equity analyst at CFRA Research. “Or, in this case, detractor.”"}],[{"start":122.121,"text":"Berkshire’s fall in operating income was exacerbated by foreign exchange losses on its US dollar-denominated debt."}],[{"start":129.419,"text":"The group was relatively inactive in the broader stock market, selling a net $426mn of shares in the three months to September, a reversal from the previous quarter when it became a net purchaser for the first time in several years. Its portfolio of stocks was valued at $336bn, a 12.7 per cent increase year-on-year."}],[{"start":151.36,"text":"Its mammoth cash pile shrunk slightly, down 2.2 per cent quarter-on-quarter to $357bn. That figure excludes the value of US government debt Berkshire bought but has yet to pay for."}],[{"start":null,"text":"

"}],[{"start":165.36,"text":"Berkshire has a record of seeking out value in its deals. The group often holds out for market corrections or financial crises to swoop in and buy stocks or entire companies."}],[{"start":175.47,"text":"“They’re the kind of company that will take advantage if the AI infrastructure [trade] implodes,” said Bill Stone, the chief investment officer for Glenview Trust. “They’ll be out there scooping up pieces of companies.”"}],[{"start":186.72,"text":"Abel’s predecessor Buffett shed stocks on a net basis during his final three years in charge before retiring at the end of last year."}],[{"start":195.372,"text":"In recent weeks the company’s shares have outperformed the S&P 500 index, rising 15 per cent since the start of the year compared with the S&P’s 8 per cent total return. The broader stock market has fallen sharply in recent days as the US midterm elections roiled tech shares."}],[{"start":212.691,"text":"Stone said Berkshire’s stock had been popular in recent weeks because the company was regarded by investors as having a “safe, bulletproof balance sheet”."}],[{"start":221.52,"text":"“It’s a flight to safety,” he added. “It’s the company you don’t have to worry about when things get rough.”"}],[{"start":null,"text":""}],[{"start":225.92,"text":"Shareholders have been closely watching the business for signs of how Abel’s approach to investing and management might diverge from Buffett’s. His predecessor, often affectionately called the Oracle of Omaha, built up the trillion-dollar empire over six decades after taking over what was then a struggling textile maker in 1965."}],[{"start":247.44,"text":"“What you’re losing is the best investor of all time but you still have all these great businesses he put together,” said Chris Ballard, managing director at Check Capital Management. He added that Berkshire had been “ridiculously undervalued” in recent months."}],[{"start":260.433,"text":"In the legendary investor’s latest step to loosen his grip on the business, Berkshire named Howard Buffett as chair in September, replacing his father. The 71-year-old is the middle child of three and had long been expected to take the role."}],[{"start":276.16,"text":"Abel kicked off the year with a series of sizeable deals, including taking part in Alphabet’s $85bn capital raise and the $8.5bn acquisition of homebuilder Taylor Morrison. More recently, Berkshire invested a further $330mn in the technology conglomerate Bending Spoons, which owns online brands such as AOL and Vimeo."}],[{"start":302.48,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794103301_5105.mp3"}