Buffett takes 'mildly attractive' path with US$27B buybacks
BNN Bloomberg
Warren Buffett’s Berkshire Hathaway embraced a “mildly attractive” way to deploy its vast cash pile last year via a record-breaking level of buybacks -- and showed little sign of changing course.
Warren Buffett’s Berkshire Hathaway Inc., lacking the blockbuster deals that have galvanized the billionaire investor’s renown, embraced a “mildly attractive” way to deploy its vast cash pile last year via a record-breaking level of buybacks -- and showed little sign of changing course.
Berkshire bought back a total of US$27.1 billion in 2021, the highest annual level since Buffett began more aggressively repurchasing stock in 2018. The buybacks helped chip away at the near-record US$146.7 billion cash pile amassed at the firm Buffett runs with long-time business partner Charlie Munger, a measure that made “good sense’ amid less attractive alternatives, Buffett said in his annual letter Saturday.
“Charlie and I have endured similar cash-heavy positions from time to time in the past. These periods are never pleasant; they are also never permanent,” Buffett wrote in his closely-watched missive. “Fortunately, we have had a mildly attractive alternative during 2020 and 2021 for deploying capital.”
Buffett’s favorite method of capital deployment options-- dealmaking -- has been stymied in recent years by high valuations for good businesses and the impact of low interest rates on those prices. That reality has also forced Buffett to loosen his buyback policy and dig deeper into technology stocks, which he had typically resisted. On Saturday, the chief executive officer was blunt about Berkshire’s deal prospects, stating that little excites the company’s executives when it comes to acquisition opportunities.
“Alas, there was little action of that sort in 2021,” Buffett said in the letter. “We did, though, make reasonable progress in increasing the intrinsic value of your shares. That task has been my primary duty for 57 years. And it will continue to be.”
Of the US$27.1 billion in buybacks in 2021, US$6.9 billion of those repurchases occurred during the last three months of the year. The conglomerate didn’t stop there, with about US$1.2 billion of stock being bought back from year-end to February 23, Buffett said.
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