Berkshire Hathaway to Buy Back Shares

September 26, 2011

Warren Buffett’s conglomerate Berkshire Hathaway said it will launch a share buyback program, an extremely rare move from Buffett that comes after months of investor complaints that the stock was undervalued.

Berkshire said it would buy back Class A and Class B shares at a premium of no more than 10 percent to book value.

The company said it would use cash on hand to fund the buybacks, but would not buy any shares if doing so took the company’s cash position below $20 billion. Berkshire had $38.23 billion cash at June 30 but has spent at least $15 billion this quarter on acquisitions and investments.

Berkshire shares rose 3.8 percent in premarket trading on the news of the planned buybacks. The more actively traded Class B shares are off 17.2 percent this year, compared with a 9.6 percent decline for Buffett’s preferred benchmark, the S&P 500 index.

That underperformance has led analysts and investors to insist that Berkshire shares were at their most undervalued point in perhaps a generation.

(Reporting by Ben Berkowitz; Editing by John Wallace)

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