Markets

Shares of Buffett's Berkshire Hathaway rise after conglomerate buys back a record amount of stock

Key Points
  • Berkshire Hathaway stock rose after the conglomerate announced that it purchased a record amount of its own equity in the second quarter.
  • Berkshire, led by Chairman and CEO Warren Buffett, said it repurchased $5.1 billion worth in stock in May and June.
Warren Buffett, Chairman and CEO of Berkshire Hathaway.
David A. Grogan | CNBC

Berkshire Hathaway stock rose on Monday after the conglomerate announced over the weekend that it purchased a record amount of its own equity in the second quarter.

Berkshire, led by Chairman and CEO Warren Buffett, said it repurchased $5.1 billion worth in stock in May and June, split between $4.6 billion of Class B shares and $486.6 million in Class A shares.

Berkshire's Class B stock gained 1% on Monday, the first day of trading following the buyback announcement.

The second-quarter buybacks were more than double the $2.2 billion the conglomerate spent to buy back equity in the final quarter of 2019 and exceeds the entire value of stock Buffett repurchased in all of 2019. 

The action could indicate Buffett felt Berkshire's stock was undervalued earlier in the year, when Class A and Class B shares plunged more than 19% in the first quarter and lagged the S&P 500 during the second quarter with declines of more than 1%.

Management has attributed much of that drop to the impact of the coronavirus, which has weighed on U.S. manufacturing and industrial output since the spring.

Reflecting this broader trend, Berkshire's operating income fell 10% during the second quarter. The company also took a charge of approximately $10 billion from Precision Castparts, Berkshire's largest business within its manufacturing segment.

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

VIDEO1:2601:26
Invest like Warren Buffett