Is Buffett Delivering On Promise To Buy Back Berkshire Stock?

Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) is reportedly one step closer to fulfilling a February pledge to buyback a "significant" portion of its own stock, the Financial Times reported.

What Happened

Berkshire Hathaway bought back $1.3 billion of its own stock in 2018, and CEO Warren Buffett told FT that time is right to increase the buyback program to as much as $100 billion.

Buffett said he accepts the concept of Berkshire buying back its own stock only when shares are trading at a price that is lower than the company's true value.

While there was no specific time frame offered, the Oracle of Omaha did say a "nightmare" of his is when Berkshire's stock is trading at a fair price at a time when other companies' stocks are expensive.

Berkshire investors hoping for a dividend to be included as part of a large-scale capital return program are likely to be disappointed. Buffett said in the interview that a dividend is inconsistent with the company's objectives: Berkshire prefers compounding its capital rather than giving it away to investors.

Why It's Important

Back in 2014, Berkshire investors voted against a proposal for the company to pay a dividend, FT reported.

At that time, Berkshire was a smaller company with less cash, which has some analysts questioning if the same sentiment would hold true today if Buffett was no longer at the helm.

What's Next

Buffett said he isn't "bothered by the thought of my death," and the 88-year old said he continues to "jump out of bed" every morning. He still loves what he does and said he believes he has "more fun" than any other 88-year old in the world.

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