BerkshireHathaway Inc. would be eager to repurchase stock if its shares evertrade for lower than 1.2x book value, Chairman, President and CEO WarrenBuffett said April 30.
The conglomerate has maintained an open-ended buybackprogram since 2011, where it could repurchase stock if the price dips below adefined threshold. Berkshire originally set that threshold at 1.1x book value, beforelater increasing it to 1.2x book value. The company has no immediate plans toraise its standard again, Buffett said, but he admitted that it will becomeincreasingly difficult for Berkshire to find opportunities big and attractiveenough to invest in.
"If it really becomes apparent that we cannot usecapital effectively within the company … then at some point the threshold mightbe moved up a little," he said at Berkshire's annual shareholders meeting.
Buffett added that the company has not yet even had anopportunity to repurchase shares at its current standard. The conglomerate hadlong hesitated to return cash to shareholders, saying it preferred to spend onnew investments rather than buying out its investors. Yet from a financialstandpoint, Buffett said, there would be little downside to purchasing stockwhen it becomes undervalued.
"The odds are extremely high that we would buy a lot ofstock at 1.2x or less, but we would do it in a manner where we were notpropping the stock at any given level," he said. "If it happens,it'll be very good for the stockholders that continue."