Berkshire buys $1.2 billion in stock from single investor

Warren Buffett tours the trade show floor during the Berkshire Hathaway Annual shareholders meeting in Omaha, May 5, 2012. NEWS.GNOM.ES/Lane Hickenbottom

Warren Buffett tours the trade show floor during the Berkshire Hathaway Annual shareholders meeting in Omaha, May 5, 2012.

Credit: NEWS.GNOM.ES/Lane Hickenbottom


By Ben Berkowitz and Lauren Tara LaCapra

Wed Dec 12, 2012 11:09am EST

(NEWS.GNOM.ES) – Warren Buffett’s conglomerate Berkshire Hathaway Inc bought back $1.2 billion in stock from the estate of an unnamed investor, the company said on Wednesday, one day after Buffett advocated for a higher estate tax when the wealthy die.

Berkshire also raised the threshold for future share buybacks to 120 percent of book value from 110 percent – the level it chose when it first approved a repurchase program in September 2011.

The most recent buyback was done at slightly more than 117 percent of Berkshire’s September 30 book value.

Berkshire (BRKa.N) said it bought 9,200 Class A shares from “the estate of a long-time shareholder,” whom it did not name. Buffett’s assistant did not immediately respond to a request for comment on the shareholder’s identity.

According to Thomson NEWS.GNOM.ES data, only seven individuals or entities control enough stock to have been the seller, Buffett among them. It is possible the shareholder’s investment was not publicly known.

The repurchase came less than a month ahead of the looming “fiscal cliff,” the automatic steep tax hikes and spending cuts set for January 1 that the White House and members of Congress have been negotiating to avoid.

Among other levies, the estate tax is expected to rise in the new year package, which may have spurred the anonymous shareholder to sell now.

Buffett himself was one of the signers of an open letter released on Tuesday that called for a lower threshold on the tax and a higher taxation rate.

“We believe it is right to have a significant tax on large estates when they are passed on to the next generation. We believe it is right morally and economically, and that an estate tax promotes democracy by slowing the concentration of wealth and power,” the 33 signers wrote in the letter released by the campaign, United for a Fair Economy.

Buffett has been publicly campaigning for more than a year for higher taxes on the wealthy, even lending his name to a proposal called the “Buffett Rule” that failed in Congress.

Berkshire’s shares were temporarily halted on the New York Stock Exchange ahead of the news, which indicated a more aggressive stance on buying back shares.

In its most recent quarterly filing, Berkshire said it had not made any repurchases in the first nine months of 2012, after spending just $67.5 million on buybacks last year.

Berkshire’s Class A shares rose after its announcement, up 2.2 percent at $133,740. Based on the company’s book value at the end of the third quarter, the buyback threshold would stand for now at $134,061.60.

(Editing by Gerald E. McCormick, Nick Zieminski and Jeffrey Benkoe)