Warren's Buffett's Berkshire Hathaway Inc. shares had their best day on Wednesday for nearly seven years, when Wall Street welcomed the change in the share buyback policy of the diversified investment holding and was described by an analyst as a "big positive catalyst".
The shares of class B.
BRK.B, + 5.29%
reached $ 9.36, or 4.9% in afternoon trading, and Class A shares
BRK.A, + 4.94%
increased $ 13,065.50 or 4.5%. The Class B shares were traded by the 64 winners of the 68 SPDR Financial Select Sector Stock Components
XLF, + 1.55%
and were the fifth-largest winner in the S & P 500.
Late Tuesday, Berkshire announced that it had approved a change in its share repurchase program, giving Chairman and Chief Executive Officer Chief Executive Buffett and Vice Chairman Charlie Munger, more flexibility in deciding when to buy back shares. The previous program allowed the purchase of shares at a price not exceeding 20% of the book value.
This was a change to the original program, which was announced on September 26, 2011, the first plan under Buffett's guard repurchases should be made at prices not higher than 10% of the book value.
The rally in B-shares was well on its way, in percentage terms since September 26, 2011, when they rose 8.6%. The A-shares were targeting their biggest gain since November 30, 2011 as they climbed 4.9%.
J.P.. Morgan analyst Sarah DeWitt said the new policy would give Berkshire more flexibility in providing surplus cash, which she said would cost $ 86 billion. She said that cash was a "big burden on returns", especially since Buffett and Munger could not find attractively valued acquisitions in an expensive market.
Therefore, DeWitt said she views the new policy as a "very positive catalyst" for the shares, reiterating its overweight and the B-share price target of $ 235, up 18% from the current level  B shares have risen 0.8% since the start of the year and A shares have gained 1.3%, while the financial ETF has slipped 0.2% and the S & P 500 has risen 5.3% [Berkshire] announced in a filing with the Securities and Exchange Commission on Wednesday that Buffett has 183,285 B shares or 0.01% of these outstanding shares, but also 270,644 A shares or 36.25% of these shares are on 17 May.
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This means that Wednesday's price gains would reverse the combined value of Buffett's A and B shares It may have helped him and Munger get started, ei Returning part of the company's money to the shareholders, which was not a priority for the company.
According to Berkshire's Annual Reports, the company has not repurchased shares since the original buyback program was implemented in September 2011. In addition, the company said it has not declared a cash dividend since 1967.