Berkshire Hathaway Bought Back Its Own Stock at About $488 a Share in June. Should You Buy It Near $557?

Berkshire repurchased about $4.5 billion of its shares in Q2, including 7.1 million Class B shares at an average $487.98, while Q2 operating income rose 16% to $13 billion and first-half operating income increased 17% to $24.3 billion. The stock has climbed about 14% since the Q2 buybacks and was at $557 on Nov. 3, up about 11% year to date; Morningstar’s analysis puts it at a 10% premium to its estimate of value. The article’s author nevertheless calls Berkshire a buy ahead of its Nov. 7 earnings.

Analysis

The Q2 repurchase is a backward-looking signal, not a valuation floor: management’s willingness to buy at lower prices does not establish that the shares remain attractive after the subsequent rerating. The key test is whether operating earnings—not portfolio mark-to-market gains—support the current price, and whether Abel can deploy retained capital at returns that justify keeping Berkshire’s no-dividend policy. If attractive reinvestment opportunities are scarce, buybacks become more important; if shares are above management’s conservative intrinsic-value estimate, the absence of repurchases could expose the opportunity cost of holding cash.

The near-term catalyst is the Nov. 7 earnings release. Focus on segment-level operating income and management’s capital-allocation commentary; aggregate growth alone may conceal weaker contributions from cyclical businesses or insurance volatility. Over 6–18 months, the transition from Buffett’s capital-allocation record to Abel’s is the larger multiple risk: a premium for stewardship is vulnerable if deployment discipline or operating consistency disappoints. Contrarian point: Berkshire’s diversification may cushion economic stress, but that does not make the stock immune to valuation compression, and the Q2 buyback should not be treated as endorsement of today’s price.

Key Decisions for Investors

• Do not chase on the stale Q2 buyback signal. For existing holders, maintain a core position through earnings; consider adding only after a pullback or if results show durable operating-income growth without relying on investment gains.
• Treat Nov. 7 as a verification point, not a foregone catalyst: monitor segment results, insurance performance, and Abel’s explanation of buybacks versus other uses of capital. Reassess if operating earnings weaken or management signals that repurchases are unattractive at current levels.
• Watch for a post-earnings price reaction that outruns operating fundamentals. A sustained premium alongside slowing operating income would falsify the defensive-value thesis and raise downside from multiple compression; a decline accompanied by resilient segment earnings could offer a better entry.