The stock buyback drought continues at Berkshire Hathaway.
The company didn’t repurchase any shares from Feb. 10 until March 5, Barron’s calculates, based on the Berkshire proxy statement released late Friday that included a share count for March 5.
Barron’s compared the shares outstanding on March 5 with those outstanding on Feb. 10, the date of the 2024 10-K report.
That means that Berkshire hasn’t repurchased any stock since May 2024—the longest period of inactivity since CEO Warren Buffett got expanded buyback authority in 2018. There were about 1.438 million shares outstanding on March 5, with Class B shares converted into an equivalent amount of Class A stock.
The lack of buybacks indicates Buffett, 94, doesn’t view the stock as cheap. He has authority to repurchase shares when he “believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined,” according to the Berkshire annual report.
The lack of buybacks has occurred as Berkshire stock continues to climb this year and outpaces the S&P 500 index by a wide margin. Investors favorably view the company’s diverse earnings power and defensive characteristics with over $300 billion of cash and equivalents. Fourth-quarter operating profits were up about 70% on strength in the company’s big insurance operations.
Berkshire’s Class A shares gained 1.9% Friday to $771,250, and trade near their recent record high. The stock is up about 13% this year, way ahead of the S&P 500, which is down 4%. The Class B shares were up 2% Friday to $514.60.
The absence of buybacks hasn’t deterred investors, who continue to pile into the stock.
The lack of buybacks is understandable because several analysts peg the company’s intrinsic value at close to the current stock price. Buffett doesn’t let on publicly what he thinks the stock is worth.
The stock now trades for 1.7 times its year-end 2024 book value—near the highest level in the past decade—and for about 25 times this year’s projected earnings, a premium to the S&P 500, which trades for around 20 times.
If the share price remains elevated, it’s possible that there will be few or no stock buybacks this year at Berkshire.
Write to Andrew Bary at andrew.bary@barrons.com
