Ajay ji
Since mid-2018, Buffett has authorised repurchases of nearly $78 billion worth of Berkshire Hathaway stock, a capital outlay that surpasses the estimated $47 billion he used to build the company’s five largest publicly traded equity positions. The buybacks, which ran uninterrupted for 24 consecutive quarters through June 2024, have reduced Berkshire’s outstanding share count by around 12.5%.
This sustained buying spree only became possible after Berkshire’s board revised its stock repurchase policy in July 2018. Previously, Buffett could only authorise buybacks if the stock traded below 120% of book value — a threshold it rarely crossed. The amended policy gave him discretion to repurchase shares whenever he deemed them undervalued, so long as Berkshire maintained at least $30 billion in cash, cash equivalents, and U.S. Treasuries.
With those limits removed, Buffett began steadily acquiring Berkshire shares — a move that ultimately eclipsed his investments in some of the most prominent names in American business.
While Apple, Bank of America, Coca-Cola, American Express, and Chevron account for nearly 64% of Berkshire’s $268 billion equity portfolio by market value, the cost to acquire those holdings was far lower.
Coca-Cola and American Express, both long-standing holdings acquired in the late 1980s and early 1990s, were bought for about $1.3 billion each. Bank of America’s stake, built largely through the exercise of warrants in 2017, cost an estimated $17.5 billion. Chevron’s shares were bought for roughly $15.4 billion, while Apple’s remaining stake came at a cost of approximately $11.9 billion.Together, these five holdings cost Berkshire roughly $47 billion to acquire — about $30 billion less than what Buffett has spent repurchasing his own company’s stock. And while their combined market value now exceeds $170 billion, the amount Buffett actually spent on them still trails the $78 billion he’s poured into Berkshire Hathaway buybacks.The repurchases don’t appear in Berkshire’s 13F filings. Instead, monthly buyback figures are disclosed in the company’s quarterly operating results, just before the executive certifications.
Buffett’s reasons for favouring his own stock are consistent with his long-held investment principles. Share repurchases reward long-term shareholders by increasing their ownership percentage. For a profitable company like Berkshire, they also drive up earnings per share, potentially boosting long-term value. And above all, the size of the buyback program signals Buffett’s deep confidence in the business he built with Charlie Munger.
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That conviction, however, has limits. Buffett ended the buyback streak in the second half of 2024 as Berkshire stock reached its highest price-to-book multiple since 2008. The break in Buffett’s six-year buyback streak is a reminder that, even for his favourite stock, valuation still matters.
For now, Berkshire Hathaway remains the true apple of Buffett’s eye. But the buying will likely resume only when the price is right.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
