Berkshire Hathaway accelerates its buyback pace. Will the followers of the "Stock God" continue to "recharge" their faith?

According to the financial news app Zhitong Finance, "Stock God" Warren Buffett's Berkshire Hathaway (BRK.A.US, BRK.B.US) has accelerated its pace of stock buybacks, indicating that Buffett, who has long served as chairman, believes that the stock of Berkshire Hathaway is undervalued, and that buying back stocks may be one of the best uses of Buffett's "excess cash".

It is understood that in a filing submitted by Berkshire Hathaway last Friday, as of March 6 this year, the total value of the company's stock buybacks was equivalent to 3,808 Class A shares, with total buyback amounts ranging from approximately $2.2 billion to $2.4 billion depending on the buyback date. The filing shows that nearly three-quarters of the stock buybacks by Berkshire occurred after February 12.

In the fourth quarter of last year, Berkshire Hathaway repurchased stocks worth as much as $22 billion, and repurchased $9.2 billion throughout 2023.

The peak year for stock buybacks by the company was 2021, when the total buyback amount was approximately $27 billion.

The 93-year-old Buffett has been at the helm of Berkshire Hathaway, headquartered in Omaha, Nebraska, since 1965, overseeing stock buybacks and other major capital allocation decisions.

Stock buybacks can be said to help Buffett allocate some of Berkshire Hathaway's cash and equivalents. As of the end of last year, Berkshire Hathaway held a staggering $167.6 billion in cash and equivalents, an increase of $10.6 billion from the third quarter, mainly because the conglomerate led by Buffett found it difficult to find attractively valued deals.

Berkshire stated that it will strive to maintain a $30 billion cash buffer, emphasizing that "financial strength and excess liquidity will always be a crucial concept."

As of last Friday, Berkshire's stock price has risen by about 14% year-to-date, roughly double the increase of the S&P 500 index, with both Class A and Class B shares of Berkshire Hathaway reaching all-time highs in February this year, demonstrating that the "Stock God" Buffett continues to invest heavily to "recharge faith" for many believers in the global market.

Benefiting from strong performance in the insurance business and increased investment income, Berkshire Hathaway had a strong performance in the last quarter, with operating profit soaring by 30% and net profit doubling year-on-year. The financial report shows that Berkshire Hathaway's Q4 2023 net profit was $37.574 billion, doubling from $18.08 billion in the same period last year. This includes a book profit of $29.09 billion from Buffett's approximately $350 billion stock investment portfolio, with stock gains mainly coming from the largest holding, Apple (AAPL.US), accounting for about half of the investment portfolio Struggling to find suitable targets, Buffett continues to hoard cash

Berkshire Hathaway has a record $167.6 billion in cash, and Buffett seems to believe that there aren't many opportunities to deploy this cash. With the stock market at record levels, Berkshire net sold $24 billion in stocks last year. Acquiring large publicly traded companies is not easy, and the number of large private companies is also limited.

Buffett stated that the company lacks "meaningful" transactions, which are the ones that could give the company a chance to achieve "eye-popping performance."

In his annual letter to shareholders, Buffett said, "There are only a few companies in this country that can truly move Berkshire forward, and we and others have been tirelessly looking for them." The company released this letter along with its financial report on Saturday. "Outside the U.S., there are basically no candidate companies that are meaningful choices for Berkshire's capital allocation. In any case, we cannot have a jaw-dropping performance."

Despite increasing its acquisition efforts in recent years, the company still struggles to find many significant deals that could enhance Buffett's reputation, making it difficult for him and his investment deputies to deploy more cash quickly.

In the absence of attractive alternative investment options, Buffett continues to insist on returning cash to shareholders through stock buybacks, stating that these measures are beneficial to shareholders. The company spent $2.2 billion on stock buybacks in the fourth quarter of last year, bringing the total buyback amount for the year to around $9.2 billion.

This year's May shareholders' meeting will be Berkshire's first since the death of Charlie Munger, Berkshire's vice chairman and Buffett's long-time investment partner, at the end of November.

"Come to the Berkshire annual gathering on May 4, 2024," Buffett said in the letter. "On stage, you will see three managers who now bear the primary responsibility for leading the company," he wrote. He was referring to himself, Ajit Jain, and Greg Abel. Jain is in charge of Berkshire's insurance business, while Abel oversees non-insurance operations.

Buffett said: "Our insurance business performed exceptionally well last year, and we still have a lot of room for growth."