Berkshire Hathaway stock price: Here’s where American CEOs are wrong, says Buffett

Written by: Michael Harris
March 1, 2021
  • Beyond Meat stock price closed 1.2% higher on Friday but still more than 9% lower on a weekly basis
  • Warren Buffet’s conglomerate purchased about $9 billion of its own stock in the fourth quarter
  • Shares A of Berkshire Hathaway touched a new all-time high on Thursday

Shares of Berkshire Hathaway (NYSE: BRK.A) are likely to open higher on Monday after Warren Buffett’s company reported strong earnings for the past quarter. 

Fundamental analysis: Net earnings soar, record buybacks

Berkshire reported operating income of $5.02 billion for the fourth quarter, up from $4.42 billion from a year ago. Operating earnings fell 9% to $21.92 billion, while net earnings soared 23% to $35.83 billion.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Berkshire Hathaway continued to buy back its stock in 2021, after purchasing a record amount of shares last year, according to the company’s annual letter published on Saturday. 

Warren Buffet’s conglomerate purchased about $9 billion of its own stock in the fourth quarter, amounting to a total of $24.7 billion the company bought in 2020.

“Berkshire has repurchased more shares since year-end and is likely to further reduce its share count in the future,” the company said in the annual letter. 

Berkshire bought back roughly $9 billion in the third quarter, up from $5.1 billion it purchased in Q2. The conglomerate bought back a total of $5 billion of its stock in 2019.  

Warren Buffet pointed out that Berkshire initiates repurchase programs only when it believes the stock is below its intrinsic value. 

“In no way do we think that Berkshire shares should be repurchased at simply any price,” the company said in the annual letter. 

“I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse.”

Tip: looking for an app to invest wisely? Trade safely by signing-up with our preferred choice, eToro: visit & create account

Technical analysis: Buyers take a step back

Shares A of Berkshire Hathaway touched a new all-time high on Thursday. The conglomerate’s stock surged 5% year-to-date, outstripping a 2% rally in the S&P 500. 

Berkshire Hathaway daily chart (TradingView)

The price action came very close to tagging the long-term target of 127.2% Fibonacci price at $250.00. A rotation lower came amid a wider selloff in stocks, paving the way for Berkshire stock to fall about 4% off the highs. The nearby support is located at $236.00.

Summary

Berkshire Hathaway continued its share repurchase program in 2021 after buying back a record $24.7 billion in 2020, according to the conglomerate’s annual letter.