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Understanding Why Buffett Crazy Repurchase Treasury Shares

Nov 18, 2014

Investment guru Warren Buffett at the helm of Berkshire Hathaway • (BerkshireHathaway) 12 announced that has "long-term shareholder" buy back $ 1.2 billion of treasury shares, and the repurchase price increase of aluminum, paving the way for more stock repurchase not only imply the stock was undervalued, Buffett also plans to assist the successor to the capital returned to shareholders established.

Berkshire said it has since in the hands of a long-term shareholder to $ 131,000 per share, buy 9,200 shares of Berkshire A shares. The repurchase price ceiling increase announced last year since 110% to 120% of book value, display Buffett believes Berkshire shares were undervalued and could not find a sufficient rate of return match with Berkshire's own stock investment target .

Berkshire on November 2, said a statement released by the book value per share on September 30 was $ 110,000 1,718. According to this figure, the price of Berkshire's stock repurchase of up to $ 130,000 4,062, which motivate the 12th Berkshire A shares rose 2.4 percent to close to $ 134,000 per year, an increase of 17%.

StifelNicolaus analyst Xi Desi said: "repo rules more generous, should push up the stock of basic values." Berkshire said its board had approved will pay a higher price when the future implementation of the treasury shares.