Warren Buffett didn't authorize buying back a single share of Berkshire Hathaway (BRKA +0.85%) (BRKB +0.93%) during his last six quarters as CEO of the conglomerate. His successor, Greg Abel, reversed course almost immediately after taking the helm.
Interestingly, though, Berkshire's share price is higher than it was during much of the period when Buffett refused to repurchase shares. Did Berkshire's new CEO just break from Buffett's playbook?
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The intricacies of intrinsic value
Unlike most publicly traded companies, Berkshire Hathaway doesn't require the board of directors to authorize a stock buyback. The CEO can do so when he "believes that the repurchase price is below Berkshire's intrinsic value."
Buffett obviously didn't think Berkshire's share price was below its intrinsic value in the second half of 2024 and all of 2025. However, Abel believes it is now. But why would he when Berkshire is trading higher than it was throughout much of Buffett's last year and a half as CEO? The answer lies in the definition of intrinsic value.
Perhaps the best definition of intrinsic value is that it's the inherent, true value of a stock based on an objective analysis. Importantly, though, the true value of a stock is largely dependent on external factors. For example, a gold stock will have a higher intrinsic value when gold prices are higher.
I suspect that Abel looked at the current market dynamics and concluded that Berkshire's businesses are worth more than they were in the past in different prevailing conditions. I also think that his comments in the annual shareholder letter are telling. Abel wrote that he expects BNSF's operating margins to improve significantly over the next few years. His confidence in this improvement could have contributed to his rosier view of Berkshire's intrinsic value.
Skin in the game
Berkshire Hathaway shareholders should appreciate that Abel isn't just using the company's cash to scoop up the conglomerate's shares. He is also personally investing in Berkshire Hathaway.
Abel revealed that he bought 21 Berkshire Class A shares in the first quarter of 2026 for around $14.6 million. That amounts to the after-tax value of his $25 million annual salary. He now owns 249 Class A shares valued at roughly $187 million.
NYSE: BRKA
Key Data Points
There's more to the story, too. In an interview with CNBC, Abel said he planned to continue investing all of his after-tax salary in Berkshire Hathaway as long as he remains CEO. And he hopes to remain at the helm for the next two decades.
I think that Abel's skin in the game makes his decision to authorize stock buybacks after a lengthy hiatus more reassuring. He told CNBC, "Absolute alignment with our shareholders, our partners, our owners, is critical. I already have some shares, but the goal was to continue to demonstrate alignment with them." He seems to have achieved that goal.
Buffett's playbook, Buffett's blessing
Did Abel break from Buffett's playbook? Absolutely not. We know that to be a fact because of one simple reason: Buffett gave his blessing to the repurchase of Berkshire Hathaway shares.
Abel confirmed in the CNBC interview that he talked with Buffett before buying back shares. Indeed, the stock repurchase program was amended by Berkshire's board last year, giving the CEO authority to repurchase shares only "after consultation with the Chairman of the Board." Buffett continues to serve as Berkshire's chairman, and, according to Abel's annual letter to shareholders, is "in the office five days a week."
In 2021, Buffett's longtime business partner, Charlie Munger, declared that "Greg will keep the culture" intact at Berkshire Hathaway. Abel recalled that comment in his annual letter to shareholders and mentioned how much it meant to him. The culture Buffett instilled at Berkshire remains in place under Abel's leadership. And so does his playbook.
