Buffett's Berkshire loosens policy on stock buybacks

Warren Buffett, chairman and CEO of Berkshire Hathaway, speaks at the Fortune’s Most Powerful Women’s Summit in Washington October 13, 2015. REUTERS/Kevin Lamarque/File Photo – TM3ECAA0ZUK01 (Reuters)

Berkshire Hathaway has eliminated a restriction on its ability to buy back its own stock.

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It is a change that could help billionaire Chairman Warren Buffett deploy more of the conglomerate's cash.

The new policy approved by Berkshire's board lets Buffett and Vice Chairman Charlie Munger authorize buybacks when both believe the repurchase price is "below Berkshire's intrinsic value," a determination that would be made "conservatively," according to Reuters.

Buffett has reportedly faced pressure to deploy more than $108 billion of cash and equivalents.

Berkshire's Class A shares closed Tuesday at $288,500, roughly 1.37 times its $211,184 book value per share as of March 31.

Berkshire's old policy said repurchase prices would not exceed 1.2 times book value per share, or assets minus liabilities.


The Class B shares rose 1.5 percent in after-hours trading, following the announcement of the new policy.

Berkshire raised its repurchase threshold to 1.2 times book value from 1.1 times in December 2012.

Munger, for his part, warned that some companies use repurchases simply to prop up their own stock prices.

Berkshire said it would not buy back stock under its new policy until it releases second-quarter results, scheduled for Aug. 3.

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