It is emerging that Warren Buffett’s Berkshire Hathaway conglomerate is set to buy back shares.
The group has said that it would be buying back Class A and Class B shares at a premium to book value per share of not more than 10%.
They have also said that their cash reserves would not be allowed to fall below $20 billion from its current $47.9 billion.
This is an extremely rare move by Warren Buffett so has initiated much speculation.
There are thoughts that this could be a way of shoring up Berkshire Hathaway’s value after a recent stock slide.
Another thought is that it is an investor friendly move to pay them back.
Another is that, after recent share price movements Buffett sees the stock as being relatively cheap so a good buy.
On a more downbeat note some suggest that Buffett is concerned about the company’s profit outlook so is using this to boost Earnings Per Share.
The statement by the company said:
“In the opinion of our Board and management, the underlying businesses of Berkshire are worth considerably more than this amount, though any such estimate is necessarily imprecise. If we are correct in our opinion, repurchases will enhance the per-share intrinsic value of Berkshire shares, benefiting shareholders who retain their interest.”