Warren Buffett's Berkshire Hathaway gains $35 billion in market value on stock purchases, record buybacks, and Pfizer vaccine

Berkshire Hathaway chairman Warren Buffett.

REUTERS/Rick Wilking

  • Berkshire Hathaway stock rose as much as 7% on Monday after Warren Buffett’s conglomerate revealed on Saturday that it splurged on stocks and buybacks in the third quarter.
  • Berkshire’s gained as much as $35 billion in market value after Pfizer and BioNTech announced their COVID-19 vaccine proved effective in more than 90% of participants in a final-stage trial.
  • Widespread distribution of a vaccine could fuel a global economic recovery and revitalize Berkshire’s businesses, which include See’s Candies, Geico, and Precision Castparts.
  • Buffett’s company bought a net $4.8 billion of stocks and spent a record $9 billion repurchasing its own shares last quarter, signaling the investor is splashing Berkshire’s cash again after a quiet few months.
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Shares in Warren Buffett’s Berkshire Hathaway jumped as much as 7% on Monday as investors cheered its stock purchases and record spending on buybacks in the third quarter.

The stock rally, which added as much as $35 billion to Berkshire’s market capitalization, also reflected the news that a vaccine developed by Pfizer and BioNTech protected more than 90% of participants in a final-stage trial from being infected with COVID-19.

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Buyers of Berkshire shares are likely betting the vaccine will accelerate the global economic recovery and revitalize demand for the conglomerate’s businesses, which include See’s Candies, Geico, Duracell, the Burlington Northern railroad, and Precision Castparts.

Both classes of Berkshire shares, “A” and “B,” gained as much as 7% on Monday. Each A share is worth the equivalent of 1,500 B shares.

The surging demand for Berkshire stock is likely a response to the company’s more aggressive spending in the third quarter. Buffett and his team made $4.8 billion of net stock purchases in the period, after selling a net $12.8 billion of stock in the second quarter. They also repurchased an unprecedented $9 billion worth of Berkshire stock, and appear to have bought back more than $18 billion worth already this year.

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Investors may be especially excited about Berkshire’s deployment of its massive cash pile because Buffett exercised extreme caution for several months as he navigated the pandemic.

For example, the investor and his team exited Berkshire’s positions in the “big four” US airlines and slashed its financial holdings in the second quarter. However, after they gained a better sense of the threat from the pandemic, they announced $19 billion worth of investments in the third quarter.

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