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Buffett's Berkshire Buyback Plans Boost These ETFs

Shares of Warren Buffett's Berkshire Hathaway Inc . Class BBRK-B popped about 5.3% on Jul 18 - the best single-day performance since September 2011 - after it eased the share repurchase policy. Berkshire raised its repurchase threshold to 1.2 times book value from 1.1 times in December 2012.

The new policy undertaken by Berkshire lets Buffett and Vice Chairman Charlie Munger approve buybacks when both see the repurchase price as " below Berkshire's intrinsic value ." The new policy will not be ready for exercise before the release of its second-quarter results, slated for Aug 3.

Berkshire is cash-rich with about $108 billion of balance as of March-end. So, there have been mounting pressure on the company to share the wealth with investors, especially "given Berkshire has not been able to find attractively valued acquisitions in an expensive market." In recent times, Buffett has deployed some cash to gain a position worth more than $40 billion in Apple Inc.AAPL .

Buyback is Hot Now

Buyback announcements by U.S. companies reached a record level in the second quarter as well. The almost $437 billion in buyback plans were announced in Q2, surpassing the previous quarterly record of $242 billion, per an article published on Financial Times.

As many as 63 companies announced share repurchase of at least $1 billion in the second quarter with Apple leading the way with its record $100-billion buyback announcement in May. Buffett then in fact supported Apple's move, saying the activity is likely to enhance the stock's value (read: Bet On Record Trillion-Dollar Share Buyback With These ETFs ).

President Donald Trump's massive $1.4-trillion tax cut actually enabled companies from almost every sector to boost their dividends as well as share buyback program. Whatever the case, Berkshire's recent move should lift the ETFs that have a large exposure in the stock (read: Let Your Portfolio Mirror Buffett's With These ETF Strategies ).

Berkshire-Heavy ETFs

Oppenheimer Financials Sector Revenue ETF (RWW)

The fund has about 15.4% weight in Berkshire Hathaway, Cl. B - the fund's top exposure. The Zacks Rank #2 (Buy) fund gained more than 0.9% on Jul 18.

Financial Select Sector SPDR Fund (XLF)

Berkshire Hathaway Inc. Class B has the second spot in the fund with about 11.09% exposure. The Zacks Rank #2 fund added about 1.6% on Jul 18 (read: Follow Goldman, Beat Inflation With 4 High-Margin Sector ETFs ).

Davis Select U.S. Equity ETF (DUSA)

The stock takes the third position in the fund with about 9% focus. It has edged up about 0.2% on Jul 18.

iShares U.S. Financials ETF (IYF)

The stock holds the second spot in the Zacks Rank #3 (Hold) fund with about 6.93% exposure. The fund was up about 1.1% on Jul 18.

Davis Select Financial ETF (DFNL)

The stock takes the fourth position in the fund with about 6.16% focus. It has edged up about 1.3% on Jul 18.

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Apple Inc. (AAPL): Free Stock Analysis Report

SPDR-FINL SELS (XLF): ETF Research Reports

REVSHRS FINL (RWW): ETF Research Reports

ISHARS-US FN SE (IYF): ETF Research Reports

DAVIS-SEL US EQ (DUSA): ETF Research Reports

DAVIS-SEL FINL (DFNL): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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