Over the past 12 years, Warren Buffett has been gradually giving away his Berkshire Hathaway stock as part of his plan to eventually donate most of his wealth to charity.Buffett still has a huge stake in the company. As of 2016, Buffett still owned 308,261 class A shares, and he gave away 18.63 million class B shares in mid-2017. Based on the A-to-B conversion factor of 1,500, some quick math tells us that Buffett still owns approximately 295,848 of Berkshire's class A shares. As of this writing, this translates to a value of $85.2 billion.
This is a lot of money, but is significantly less than Buffett's stake was worth just a week ago. Over the past week, Berkshire's stock price has fallen by 11.6% as part of the overall stock market correction. Overall, Buffett's Berkshire Hathaway stake, which makes up virtually all of his net worth, has fallen in value by $11.2 billion.
The market correction could give Berkshire incentive to finally solve one of its biggest problems -- what to do with its $109 billion cash hoard. Berkshire would love to acquire companies, add to its stock positions, or buy back its own stock if and only if the price is right. While Berkshire's acquisition and investment evaluation process is a well-guarded secret, it's fair to assume that most potential targets look more attractive to Berkshire's team than they did just a week ago.
As far as share buybacks go, Berkshire's current threshold is 1.2 times book value, which is still far below the company's valuation. However, Berkshire has gone from about 1.74 times book value to a multiple of just 1.54 because of the market's decline. Buffett has indicated that Berkshire's board might be willing to adjust the buyback threshold if the cash stockpile keeps building, and this could certainly make doing so more attractive -- especially if the market (and Berkshire) continues to fall.
Fool.com
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