Buffett buyback rules signal views on share value

Berkshire Hathaway Inc. can buy back shares at a higher price after lifting the threshold it will pay for stock, signaling that chief executive Warren Buffett views the shares as undervalued.

Berkshire will pay as much as 120 percent of book value, a measure of assets minus liabilities, the Omaha, Neb-based company said Wednesday in a statement. The limit was 110 percent. Buffett's company repurchased 9,200 Class A shares for $131,000 each from the estate of a longtime shareholder, the company said in the statement.

Buffett, 82, and vice chairman Charles Munger have been weighing buybacks as the company seeks to deploy part of its $47.8 billion cash hoard. Berkshire last year began a buyback program after shunning repurchases for four decades.

"Charlie and I favor repurchases when two conditions are met: first, a company has ample funds to take care of the operational and liquidity needs of its business; second, its stock is selling at a material discount to the company's intrinsic business value, conservatively calculated," Buffett wrote in his most recent letter to shareholders.

Book value was $111,718 per share as of Sept. 30, the company said in a statement on Nov. 2. The stock climbed 2.2 percent to $133,683 Wednesday morning on Wall Street.