Warren Buffett shuns stock buybacks even as Berkshire lags the market. Here's why

Berkshire Hathaway did not repurchase any shares in the first nine months of 2025, despite its cash pile reaching a record $382 billion, consistent with Warren Buffett's policy of buying back stock only when significantly undervalued. UBS analysts suggest that even with a recent 12% share price decline and underperformance against the S&P 500, Berkshire's stock is still trading at or above intrinsic value and 1.6 times book value, deterring repurchases. This indicates the conglomerate is preserving its substantial cash for future strategic opportunities or buybacks should the stock price reach a more compelling discount, with UBS forecasting no repurchases through 2026.

Analysis

Berkshire Hathaway (BRK.A) did not repurchase any shares in the first nine months of 2025, despite its cash reserves swelling to a record $382 billion. This aligns with Warren Buffett's stated philosophy of repurchasing stock only when it trades below his estimate of intrinsic value and leaves ample cash. The absence of buybacks indicates management does not currently view the stock as significantly undervalued.

UBS analysts estimate that BRK.A shares are not trading at the 15% discount to intrinsic value typically required for buybacks, even after a 12% decline from early May highs. The stock is currently near 1.6 times book value, higher than the 1.3 times book value when buybacks resumed in 2018. This suggests current valuations, despite recent underperformance against the S&P 500 (SPY), do not meet Buffett's criteria.

BRK.A Class A shares are up only 5% year-to-date, significantly underperforming the S&P 500's 16.3% gain, with an 11% decline in the past six months against the S&P's 23% advance. This underperformance worsened following news of Buffett's planned retirement, contributing to a "moderately negative" sentiment. UBS forecasts no repurchases through 2026, implying the substantial cash pile will remain available for strategic deals or future buybacks if a meaningful discount emerges.

Key Decisions for Investors

• Investors should monitor BRK.A's valuation metrics, particularly its price-to-book ratio and any widening discount to intrinsic value, as these are key triggers for potential share repurchases.
• Given the record cash pile and absence of buybacks, investors should consider the implications for future capital allocation, including potential large acquisitions or increased dividends, if buyback conditions remain unmet.
• The underperformance relative to the S&P 500 and the "moderately negative" sentiment, exacerbated by CEO transition news, warrant careful consideration of BRK.A's role in a diversified portfolio, especially for those seeking market-beating growth.