Tag Archives: price earnings ratio

Buffett’s first stock repurchase their own bets the U.S. economic recovery

The recent global financial market is a mess, Warren Buffett is frequently shot, including doing a number of U.S. banks, including billions of dollars worth of investment, its head of Berkshire finally a real eye the big guy – its own.

Monday, Berkshire said it would not exceed 10% of the net book value of its stock repurchase premium, until the company’s cash holdings fell to $ 20 billion. And said that Berkshire’s current stock price is undervalued, buy back shares may be thickening of the intrinsic value, to the benefit of shareholders. By the end of June the company held cash and cash equivalents calculation of the amount of $ 83.7 billion, the potential size of the investment up to 600 billion U.S. dollars.

More market concern is whether this means that Buffett acknowledged the current limited investment opportunities. This is Buffett took over Berkshire stock repurchases after the first time, after it has been evading the issue of dividends and repurchases, and tend to use cash on hand for acquisitions. In the 2011 annual meeting of shareholders, Buffett said that if when Berkshire invested $ 1, but can not create a dollar value, dividends and other actions to be considered.

Is Buffett’s attitude changed? From the current situation, more like the market environment has changed. 2008 financial crisis, the performance of Berkshire steady recovery, but has failed to meet the pre-crisis levels. AdvancedMC, Performance of the company declined again this year, first half net profit fell 13 percent, the share price plummeted. Only 1 times book value, price-earnings ratio of about 17 times.