Warren Buffett is in the news again.
Yesterday, it was announced (link opens PDF) that his company, Berkshire Hathaway (BRK.A -0.28%) (BRK.B -0.68%), will repurchase $1.2 billion of Berkshire stock from the "estate of a longtime shareholder." Going forward, moreover, the company said that it will now repurchase shares anytime they trade for less than 120% of book value, up from its previously announced price floor of 110%.
For those of you wondering how effective the new policy will be, check out the chart below. After Berkshire announced the original 110% price floor in September of last year, shares never once traded below that level. And this is despite the fact that Berkshire spent only $67.5 million on share buybacks, a rounding error for a company of Berkshire's size.
Misgivings aside, it should be no surprise that investors are thrilled at the decision. According to Whitney Tilson, a co-founder and managing director of T2 Partners: "Needless to say, I'm even happier having this as my largest position -- and added to it this morning the moment I saw the announcement." For at least the foreseeable future, in turn, I think it seems safe to assume that the current, albeit higher, floor can expect to hold.