Berkshire Hathaway (BRK. A, BRK. B) has resumed repurchasing its own shares, marking the first buybacks since May 2024. This decision, made under the leadership of new CEO Greg Abel, reflects a belief that Berkshire's stock is currently undervalued. The buybacks began on March 4th and may help reduce Berkshire's substantial $373.3 billion cash pile.
Abel also disclosed his purchase of 21 Class A shares, worth approximately $15 million. This personal investment, representing the after-tax value of his salary, demonstrates his commitment to Berkshire's long-term success. Abel intends to continue making similar purchases in the future. He consulted with Warren Buffett on both the buybacks and his personal investment.
The resumption of buybacks and Abel's personal investment send a positive signal to investors. It indicates that Berkshire's leadership sees value in its own stock and is willing to deploy its vast cash reserves to benefit shareholders. This move could also alleviate concerns about Berkshire being overly cautious with its capital allocation. The company’s buyback policy dictates repurchases occur when leadership believes the market price is below its intrinsic value.
Berkshire's Class A shares closed 2.7% higher following the announcements. Abel's actions suggest a continuation of Warren Buffett's principles, focused on long-term value creation and alignment with shareholders. The buyback program will continue based on market prices and general conditions.
