Warren Buffett, former CEO of Berkshire Hathaway (BRKA 0.46%)(BRKB 0.38%), has always been a fan of share repurchases. He liked to buy stocks of companies that were active buyers of their own stock, and Buffett liked to have Berkshire repurchase shares when he believed they were trading at a discount to what his team believed was the company's intrinsic value.
Although Buffett is no longer CEO, it appears that Berkshire shares are finally on sale. The company just announced that it has restarted its share buyback program for the first time since 2024.
This is a big deal because in Buffett's final few years as the CEO of the conglomerate, Berkshire didn't buy back many shares. The company repurchased over $9 billion of its stock in 2023, about $3 billion in 2024, and nothing in 2025.
Image source: Getty Images.
That's a stark contrast to the years of 2020 to 2022, when Berkshire collectively purchased $60 billion of its own stock. With Berkshire relaunching the buyback, that's a green light for investors interested in Berkshire stock.
The stock finally came on sale this year
The idea behind repurchasing shares is that it gives investors a bigger piece of the pie. If there are fewer outstanding shares, the current shares an investor owns will receive a greater portion of a company's earnings.
However, investors must remember that companies use their own capital to conduct repurchases, thereby reducing their equity. That's why investors view buybacks more favorably when a stock is trading at a low valuation and less favorably when it's expensive.
When companies buy back shares at a low valuation, they still must use cash or debt to do so, but they also get more bang for their buck and can buy more shares for less, effectively raising book value per share (equity value per share). Buffett, one of the greatest investors ever, knows this well, which is why he and the Berkshire team only buy shares when they trade at a discount to management's perceived view of Berkshire's intrinsic value.
Here was Berkshire's recent ratio of its market price to tangible book value (TBV), which is a common valuation metric for stocks in the financials sector. TBV represents book value minus goodwill and intangible assets:
BRK.B Price to Tangible Book Value, data by YCharts.
As shown above, the company's current market price relative to its TBV has fallen below its five-year average this year. Now, the Berkshire team has its own view of the company's intrinsic value, but if you see the price-to-TBV below the five-year average, there's a good chance Berkshire will buy back stock, especially if it isn't seeing many opportunities in the market.
When a company buys back its own shares, it's a sign of confidence because management thinks the stock is trading at a discount. It should give the market the green light to buy as well.
