Berkshire Hathaway Halts Share Buybacks as Stock Nears Record High

Warren Buffett’s conglomerate refrains from repurchases amid strong stock performance and high valuation

Berkshire Hathaway has put its share repurchase program on hold, marking its longest buyback pause since Warren Buffett gained expanded buyback authority in 2018. The move comes as the stock nears record highs, with analysts suggesting that the company’s valuation may not justify further repurchases at this time.

Berkshire Hathaway Ceases Buybacks for Nearly a Month

According to the company’s latest proxy statement released on March 8, Berkshire Hathaway refrained from repurchasing any shares between February 10 and March 5. This was confirmed by the company’s share count, which remained unchanged at 1.438 million Class A share equivalents, the same figure reported in its 2024 10-K filing on February 10.

The decision to halt repurchases suggests Buffett does not view the current stock price as undervalued. Under Berkshire’s buyback policy, the company only repurchases shares when they are trading below intrinsic value—a principle Buffett has maintained for years.

Stock Performance Outpaces Market Despite Lack of Buybacks

Even in the absence of buybacks, Berkshire Hathaway’s stock has continued to outperform broader market indices. On Friday, Class A shares climbed 1.9% to $771,250, while Class B shares rose 2% to $514.60. Year-to-date, the stock has gained approximately 13%, significantly outpacing the S&P 500, which has fallen 4% in the same period.

Investor confidence in Berkshire remains strong, driven by its diverse earnings base, defensive business model, and massive cash reserves. The company’s cash and equivalents surpassed $300 billion at the end of 2024, providing it with ample liquidity for potential acquisitions or strategic investments.

Valuation Concerns Likely Behind the Buyback Pause

Berkshire Hathaway’s decision to hold off on buybacks appears justified given its current valuation. The stock is trading at approximately 1.7 times its year-end 2024 book value, near its highest level in the past decade. Additionally, it is valued at around 25 times projected 2025 earnings—a premium compared to the S&P 500’s 20 times earnings multiple.

Several analysts believe Berkshire’s intrinsic value closely aligns with its stock price, reducing the incentive for Buffett to deploy capital toward repurchases. Historically, the company has been more aggressive with buybacks when the stock traded at lower valuations relative to its book value and earnings.

Robust Insurance Profits and Cash Reserves Bolster Investor Sentiment

Berkshire Hathaway’s strong financial performance has been a key factor behind its stock’s recent surge. In the fourth quarter of 2024, the company reported a 70% jump in operating profits, largely fueled by its insurance businesses, including GEICO and Berkshire Hathaway Reinsurance Group.

The company’s insurance segment benefited from higher underwriting profits, increased investment income, and rising interest rates, which have boosted returns on its vast bond portfolio. Berkshire’s non-insurance businesses, such as its railroad (BNSF) and energy divisions, also contributed positively, though at a slower pace.

Buyback Policy Remains Flexible but Dependent on Valuation

While Buffett has not ruled out future buybacks, analysts suggest that Berkshire will likely remain on the sidelines unless its stock price declines meaningfully. The company has historically used repurchases as a capital allocation tool during periods of market weakness or when its shares trade at a significant discount to intrinsic value.

Berkshire’s buyback activity has fluctuated in recent years. In 2023, the company repurchased approximately $9 billion worth of shares, a slowdown compared to the nearly $27 billion spent on buybacks in 2021, when the stock was trading at lower valuations.

If Berkshire’s share price remains elevated, analysts predict the company may continue to hold off on stock repurchases throughout the year, opting instead to preserve cash for potential acquisitions or investments.