Berkshire Share Repurchase -- First Time Since 2000
Today Berkshire Hathaway authorized a share repurchase at 10% over the book value of the stock. This is the first time since the end of the Internet bubble, which was the only other repurchase authorization that Berkshire has made. At that time, the announcement ran the stock up immediately and no shares were repurchased. The same will probably happen now.
This time, Berkshire has authorized a standing repurchase as long as Berkshire maintains cash/equivalent balances of at least $20 billion, which should support the stock price at 110% of book value. (The press release contains the standard disclaimer that the underlying businesses of Berkshire are worth considerably more than this amount, though any such estimate is necessarily imprecise.)
It will be interesting to see if Berkshire actually buys back any stock (I'm betting that if so, it will be not a significant amount).
The main twist that occurs to me is that this announcement opens up interesting possibilities for acquisitions. If the stock market tanks, Berkshire's book value would be affected but its stock might still remain a good acquisition currency because of the repurchase "floor" on the stock. (Berkshire's book value is more than its investment portfolio.) This would let Buffett make deals that would otherwise be out of reach.