Warren Buffett’s Berkshire Hathaway reached a $700 billion market cap in the first week of January, despite his aggressive buyback strategy in 2021.

                By                    Yaёl Bizouati-Kennedy

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Buffett has struggled to find deals and acquisitions recently in order to deploy his huge pile of cash, an issue Bloomberg described as a “high-class problem of having too much money in Berkshire’s pockets and not enough chances to put that to work in higher-returning assets.”

Buffett, however, has  defended his buyback strategy — notably in his annual letter to shareholders in February.

“Last year we demonstrated our enthusiasm for Berkshire’s spread of properties by repurchasing the equivalent of 80,998 ‘A’ shares, spending $24.7 billion in the process,” he wrote in the letter. “That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet. Following criteria Charlie and I have long recommended, we made those purchases because we believed they would both enhance the intrinsic value per share for continuing shareholders and would leave Berkshire with more than ample funds for any opportunities or problems it might encounter. In no way do we think that Berkshire shares should be repurchased at simply any price. I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked.”

Learn: Warren Buffett-Backed Nubank Hits Stock Exchange With Hyped $41B IPO: Should You Invest? Explore: Warren Buffett’s 15 Biggest Money Mistakes — and What You Can Learn From Them

In June, Berkshire Hathaway made a $500 million investment in digital bank Nubank — a bank recently recognized as one of the most influential companies in the world by TIME — a move that could seem surprising at first glance, but makes sense from a strategic perspective, some experts say.

In December, the bank went public– under the ticker “Nu” on the New York Stock Exchange (NYSE) — in a $41.5 billion valuation. This valuation makes the Nubank move one the largest initial public offerings (IPOs) of the year.

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