Berkshire Hathaway restarts buybacks! The new CEO personally invests $15 million to support, promising to continue increasing holdings over the next 20 years

Replacing Warren Buffett as Berkshire Hathaway’s new CEO, Greg Abel responded to market concerns about his leadership with a series of concrete actions: the company announced a restart of stock buybacks, and Abel himself disclosed that he personally purchased approximately $15.3 million worth of company stock. He also pledged that during his tenure, he would allocate his after-tax salary in full each year to increase his holdings in Berkshire.

After the announcement was released before Thursday’s market open, Berkshire B shares opened higher and continued to rise, reaching a new intraday high of nearly 2.7% by midday. This was Berkshire’s first buyback announcement since Q2 2024; prior to this, the company had not repurchased any shares for six consecutive quarters, holding cash reserves of about $373 billion. Some investors expressed dissatisfaction with the lack of capital deployment.

In an interview with the media, Abel stated that the buyback decision was made after evaluating intrinsic value and that he had communicated with Warren Buffett, who remains Chairman of Berkshire’s Board. He also revealed that the company disclosed the buyback initiation proactively to ensure transparent communication with shareholders during the leadership transition.

Abel’s personal increase in holdings is roughly equivalent to his annual after-tax salary. He said he would maintain this commitment annually during his CEO tenure, with a total personal stock purchase amounting to “several hundred million dollars.” He also expressed a hope for a “twenty-year” CEO tenure.

Buyback Restart: Value Judgment and Capital Signal

According to documents filed with regulators, Berkshire began repurchasing Class A and B shares on Wednesday. Under company policy, the CEO can initiate buybacks after consulting with the Chairman if they believe the buyback price is below the company’s intrinsic value.

Current Berkshire CEO Abel stated that the buyback was driven by an assessment of intrinsic value. “I definitely communicated with Warren,” he said. “My approach is to evaluate the value, form a judgment on intrinsic value, and then discuss the timing and value with Warren.”

Macrae Sykes, portfolio manager of Gabelli Financial Opportunities Fund, commented, “The buyback announcement is a positive signal, reflecting recognition of the stock’s value and indicating the company’s intent to deploy capital in a context where it expects to generate substantial operational earnings through 2026.”

Abel also emphasized that initiating buybacks does not mean the company will abandon other capital allocation opportunities. “Acquiring stocks, acquiring entire businesses, investing in equity assets—these decisions can proceed independently, and buybacks won’t crowd out other directions for capital.”

Abel’s Personal Purchases: Strengthening Stakeholder Alignment

On a personal level, Abel disclosed that he bought about $15.3 million worth of Berkshire stock this week, an amount comparable to his after-tax annual salary. Prior to this purchase, FactSet data shows Abel held approximately $164.4 million in Berkshire shares.

Abel said the move was intended to demonstrate alignment of interests with shareholders. “It’s absolutely critical to be in complete alignment with our shareholders, partners, and owners,” he said. “As CEO, I absolutely believe in Berkshire—I am taking over a company with a solid foundation.”

He also revealed that Warren Buffett and the board support his plan to reinvest his compensation, and he described it as “very Berkshire.”

Christopher Davis, founding partner of Hudson Value Partners, commented, “Greg Abel’s commitment to making personal investments each year will greatly help him build a trust bond with shareholders comparable to Warren Buffett’s. Today’s interview reassures us that Berkshire’s investments are in very capable hands.”

Market Divergence: Short-term Boosts and Underlying Concerns

Although the market responded positively to these measures, some analysts remain cautious about whether the stock price can sustain its upward trajectory.

CFA Research analyst Cathy Seifert pointed out that Berkshire’s long-term stock growth ultimately depends on Abel’s ability to improve the company’s fundamentals. “Until we see that, this might just be a short-term rebound because the stock isn’t severely undervalued,” she said.

Earlier this week, Berkshire’s stock faced pressure after the company disclosed that its Q4 operating profit declined by about 30% year-over-year, with insurance underwriting profit dropping 54%. Year-to-date, Berkshire’s stock has fallen approximately 3%, about 10% below its all-time high reached in May last year.

Abel officially succeeded 95-year-old Warren Buffett as CEO in January. In his first annual letter to shareholders released last weekend, he emphasized that Berkshire’s culture of financial conservatism and disciplined investment principles would be “perpetuated,” and he largely ruled out the possibility of paying dividends.

Abel stated this Thursday, “If we believe we can create more than $1 of value for shareholders, we will retain that $1—that’s our standard.”

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