Discover more from Winvesta Crisps
📈 Did Warren Buffett Find His Next “Value Investment”?
Berkshire Hathaway is on a buyback spree
Hey Global Investor, here's what you need to know before the US markets open.
Market Snapshot 📈
S&P 500 (Monday Close) 3,550.50 +41.06 (1.17%)
NASDAQ (Monday Close) 11,713.78 −181.45 (1.53%)
FTSE 100 (5 PM IST) 6279.82 +93.53 (1.51%)
NIFTY 50 (Today's Close) 12,631.10 +170.05 (1.36%)
USDINR (5 PM IST) 74.24 (1 Year +3.73%)
Did Warren Buffet Find His Next “Value Investment”?
Berkshire Hathaway repurchased over $9B of its stock in Q3, taking the overall number to $16B for the year.
Background: Warren Buffet and Charlie Munger need no introduction. A couple of years ago, Berkshire authorized a buyback of its shares at any time chairman Warren Buffett and vice chairman Charlie Munger felt the stock is trading for a discount.
In search of an “elephant-sized” deal, Berkshire has invested in Japan’s five leading trading companies: Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. Later in September, the company participated in Snowflake’s IPO, investing $735M and notching up almost an $800M gain. During the pandemic, Berkshire sold its stake in major US airlines.
It seems like Warren Buffett might have just spotted that his next “elephant-sized” deal.
What Happened?: The $16B buyback is more than triple its last annual record. This amount eclipses Berkshire’s investment in Occidental Petroleum in 2019. It’s more than what the company has ever spent in a year purchasing its favorite stock – Apple.
The Wall Street consensus of $3.2B in buyback in Q3 turned out to be nowhere near the actual numbers.
The company reported an operating profit of $5.47B, down 32% from the year before. But Berkshire’s net earnings, which account for the company’s investments in the market, surged 82% on a Y-o-Y basis to $30.13B.
Buffett’s repurchase spree comes amid a tough time for its operations as the global economy struggles to recover from the coronavirus, directly impacting its wholly-owned businesses, including railroads, utilities, and insurance.
Even after the jumbo-sized repurchase, Berkshire reported cash reserves of $145.7B. If Buffet and his team think the stock is a bargain, this buyback won’t be the last.
Market Reaction: Berkshire Hathaway’s Class A shares are up nearly 20% in the Q3. However, the stock is still widely underperforming the S&P500 index this year. The stock has lost 8%, compared to a 10% total return for the S&P500.
Company Snapshot 📈
BRK.B $221.50 +12.65 (6.06%)
Analyst Rating (6 Ratings) BUY 50% HOLD 50% SELL 0%
Vaccine Hopes: Pfizer COVID-19 vaccine could be given by the end of the year: Fauci (PFE +7.69%)
Not Lovin' It: Beyond Meat stock plummets more than 25% as COVID-19 takes bite out of earnings (BYND -4.05%)
Who Needs Video Comm: Zoom Founder Drops $5 Billion as Vaccine Hits Covid Winners (ZM -17.37%)
More Losses: Nikola’s Losses Widen as Executives Try to Regain Momentum, Develop First Truck (NKLA -4.85%)
Later Today 🕒
Before Market Open: Advance Auto Parts Inc. (AAP)
After Market Close: Datadog Inc (DDOG)
Fun Fact of The Day 🌞
If you search for "askew" in Google, the content will tilt slightly to the right.
You can start investing in US stocks with platforms like Winvesta. Get an account in as little as 15 minutes and start building your global portfolio today.