There’s good news for Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) shareholders who’ve been growing increasingly frustrated with the company’s ever-growing pile of cash. It’s finally doing something with it! It’s not the something most shareholders were likely expecting. But something is better than nothing. That is, for the first time since May 2024, Berkshire is repurchasing its own stock, making any shares remaining in investors’ hands worth at least a little more.
It’s not a massive buyback, for the record … at least not yet. All told, the company disclosed the recent repurchase of a little over $200 million worth of its own equity. For perspective, Berkshire’s current cash hoard is a little over $370 billion, while the entire organization’s market cap right now is just over $1 trillion.
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This initial repurchase isn’t the end of the buybacks, though. And new CEO Greg Abel has indicated that future repurchases won’t be announced until after they’re made, to be disclosed in the company’s regular quarterly filings.
Even without committing to any specific amount of stock buybacks in the foreseeable future, Abel’s decision to make a rarely seen stock repurchase is telling in and of itself. Chief among the takeaways is that it signals Berkshire shares were (and still are) priced below their intrinsic value.
To be clear, there’s no official or published intrinsic valuation for Berkshire Hathaway’s stock, which also reflects the value of dozens of privately owned, not publicly traded businesses like Duracell batteries, Dairy Queen, and insurer Geico. There’s also no official policy that requires the company to repurchase its own shares when they fall below what’s considered to be their intrinsic value, for that matter.
Regardless, the fact that the conglomerate is making the decision to do so now indicates that Abel — in agreement with still chairman and former CEO Warren Buffett — believes this ticker is demonstrably undervalued. Interested investors may want to consider taking that hint.
Then there’s the less-direct, unintended message being delivered by the company’s recent actions. While Berkshire made some relatively small purchases of other equities last quarter in addition to paring back the size of some of its existing positions, mostly the organization did nothing to significantly alter its portfolio’s overall allocation; it’s seemingly done little in the meantime as well.