Berkshire Hathaway Shares Jump 6 Percent on Buyback

Shares of Berkshire Hathaway jumped 6.5 percent to $106,500 after Warren Buffett's conglomerate announced its first-ever share buyback.

Shares of the Omaha-based company's Class B tracking stock rose more than 7 percent, to $71.25.

Berkshire Hathaway, which reported cash and investments exceeding $47 billion on June 30, said its shares "are worth considerably more than this," in announcing the buyback.

Among Buffett's holdings are Geico Insurance, the Buffalo Evening News, BNSF Railway, Fruit of the Loom and a recently acquired preferred stake in Bank of America.

Buffett, 81, presides over a handpicked board of directors that includes his long-time business partner, Charles Munger, as well as Microsoft Chairman Bill Gates.

Over the 40 years Buffett has built Berkshire Hathaway into a diversified conglomerate, he has used its cash to buy other companies or to acquire strategic minority stakes in desirable targets, often with premiums not available to the average investor.

During the third quarter, Berkshire said General Electric will buy back preferred shares it bought in 2008 for $3.3 billion, plus unpaid dividends, on Oct. 17. The deal affords Berkshire Hathaway a $1.2 billion profit. GE needed the cash during the 2008 cash squeeze.

The Berkshire Hathaway share scheme is indefinite but will cease if its available cash dips below $20 billion, the board said.

Last week, Berkshire Hathaway shares fell below $100,000 for the first time since early 2010 in the overall market slump.

The buyback could reflect the Omaha CEO's thinking that there are no current attractive investments. Or it may reflect a plan for succession. This month, Buffett named Ted Weschler, 50, a Virginia money manager, as a Berkshire investment manager, nearly a year after he appointed Todd Combs, 40, a Connecticut money manager to handle part of the portfolio.

Berkshire Hathaway appears to still be finding targets: last week, the company boosted its stake in British supermarket chain Tesco to 3.6 percent from 3.2 percent.

Despite his friendship with Gates, Buffett has shunned technology investments because he doesn't understand the sector.