Warren Buffett is taking a cautious approach with Berkshire Hathaway’s financial strategies, as the company refrained from repurchasing any shares during the first nine months of 2025. This decision comes even as Berkshire’s cash reserves soared to a remarkable $382 billion, highlighting Buffett’s long-held commitment to maintaining financial discipline.
Buffett’s philosophy on buybacks, articulated in his 2018 letter to shareholders, emphasizes that shares will only be repurchased if they are perceived as undervalued and if the company retains a sufficient cash buffer afterward. He outlined two key criteria for buybacks: first, that he and his late partner Charlie Munger must believe the shares are trading for less than their intrinsic value, and second, that the company remains in a strong cash position post-repurchase.
Historically, Buffett has been selective, typically entering the market to buy back Berkshire shares only when the stock is offered at least a 15% discount to his intrinsic value assessment. When buybacks resumed in 2018, shares were approximately 13% undervalued, and the company became more aggressive as that discount widened to about 20%. However, despite a 12% drop in shares since their high in early May, following the announcement of Buffett’s planned retirement, no buybacks have occurred. Class A shares are currently up only 5% this year, significantly lagging behind the S&P 500, which gained 16.3%.
The underperformance has been particularly stark in the past six months, with Berkshire’s stock falling nearly 11% compared to the S&P 500’s increase of nearly 23%. Earlier in the year, Berkshire shares had reached record highs as investors sought refuge amidst market volatility, buoyed by the conglomerate’s considerable scale and stability. However, as the market sentiment shifted back towards riskier assets, Berkshire’s stock faced a sharp decline, exacerbated by concerns over Buffett’s impending retirement.
Currently, UBS analysts assert that Berkshire’s shares align closely with their intrinsic value, providing little rationale for buybacks at this moment. The investment bank had predicted that no buybacks would take place in the third quarter, a forecast they believe will hold true through 2026. Moreover, even when evaluated by book value—a common metric for assessing stock valuation—Berkshire shares do not appear to be offered at a significant discount; they now trade at about 1.6 times book value, a steep increase since 2018 when Buffett had been more liberal with repurchases at a valuation of around 1.3 times book value.
As cash continues to accumulate, both Buffett and his prospective successor, Greg Abel, are poised with significant financial resources that could be utilized for future acquisitions or buybacks, should the company’s stock return to what is deemed a bargain price in the market.
