Nothing like ‘too much’: Warren Buffett cites Mae West to defend share buybacks

Nothing like 'too much': Warren Buffett cites Mae West to defend share buybacks

There are many criticisms of corporate share buybacks, but Warren Buffett is certainly not one of them.

In its latest annual letter to shareholders, the Oracle of Omaha revealed that its holding company, Berkshire Hathaway (BRK-A, BRK-B), has spent nearly $ 25 billion to buy back Class A shares. Buffett said the action “demonstrated our enthusiasm for the spread of Berkshire” from large holdings, which include large companies like Apple (AAPL), Bank of America (BAC), Coca-Cola (KO) and Merck (MRK) .

“Berkshire has bought more shares since the end of the year and is likely to reduce its number of shares further in the future, ”Buffett said, building on his affinity for the controversial practice.

The legendary billionaire investor was so effusive in his praise of buyouts that he referred to an old quote attributed to Mae West, the “sultry” actress of the 20th century: “Too many good things can be… wonderful.”

According to Buffett’s logic, the buybacks were made to “increase intrinsic value per share for permanent shareholders and would leave Berkshire with more only sufficient funds for the opportunities or problems that it may encounter. “

He criticized companies that buy back stocks “at any cost”, calling the strategy “embarrassing” and the exact opposite of what Berkshire likes to do.

He cited Apple stock – which he first bought at the end of 2016 at a cost of $ 36 billion – as an example where his approach has paid literal dividends. By July 2018, Berkshire …

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