Warren Buffett blasted public figures who label stock buybacks as harmful to investors — here are 3 of his holdings that reward owners with generous repurchases

During his State of the Union address last month, Biden called big oil companies’ profits ‘outrageous’ and slammed their buybacks.

“They invested too little of that profit to increase domestic production and keep gas prices down. Instead, they used those record profits to buy back their own stock, rewarding their CEOs and shareholders,” Biden said, proposing to quadruple the tax on corporate stock buybacks.

Whether you like share repurchases or not, they serve as a means for companies to return cash to investors. Here’s a look at three major holdings in Buffett’s portfolio that are particularly generous with buybacks.

Apple

Apple (AAPL) is Buffett’s largest publicly traded holding, representing around 40% of Berkshire’s portfolio by market value.

In the latest earnings conference call, management revealed that the company’s active installed base has surpassed two billion devices.

While competitors offer cheaper devices, millions of users don’t want to live outside of the Apple ecosystem. The ecosystem acts as an economic moat, allowing the company to earn oversized profits.

The company is returning some of that profits to shareholders through buybacks. In the quarter ended Dec. 31, 2022, Apple spent $19.48 billion on share repurchases.

Given the amount of cash that the tech gorilla has, more buybacks could be on the way. At the end of December, Apple’s cash, cash equivalents, and marketable securities totaled $165.45 billion.

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American Express

American Express (AXP) is the fourth-largest holding at Berkshire Hathaway. Owning 151.6 million shares of AXP, Berkshire’s stake is worth around $26.3 billion.

The company stands to benefit in an inflationary environment.

American Express makes most of its money through discount fees — merchants are charged a percentage of every Amex card transaction. As the price of goods and services increases, the company gets to take a cut of larger bills.

In Q4 of 2022, the company repurchased 4 million of its common shares, reducing the number of shares outstanding from 747 million to 743 million.

Buffett highlighted what American Express and Apple have been doing in the shareholder letter.

“At Apple and Amex, repurchases increased Berkshire’s ownership a bit without any cost to us.”

Chevron

Chevron (CVX) is one of the big oil companies that gushed huge profits last year.