Warren Buffett has purchased $345 million worth of Berkshire Hathaway stock in the June quarter. This brings the year-to-date total to $2.6 billion and nearly $78 billion since 2018. Regular buybacks suggest that Buffett believes Berkshire stock is often undervalued.
Buffett’s decision to prioritize stock repurchases indicates Berkshire Hathaway’s stable value and his confidence in his own company. Berkshire’s insurance business is a significant factor contributing to its robust financial health. The company leads globally in insurance float, which has generated large sums of investable capital.
Buffett and his team have used these funds wisely, resulting in substantial shareholder value.
Buffett’s strategic stock buyback insights
Berkshire’s per-share intrinsic value increased by 194% over the past decade, outperforming the S&P 500’s 179% return.
Wall Street expects Berkshire’s operating earnings to increase at 17% annually through 2027, making its current valuation look reasonable. In the same quarter, Buffett sold a significant portion of his Apple shares. Apple remains Berkshire’s largest holding, but the sales were due to the likelihood of an increased corporate tax rate in the future.
Buffett anticipates higher taxes will be used to address the historic deficit, thus impacting Berkshire’s earnings and investment gains. Despite being a dominant force in several markets and the largest smartphone manufacturer in the U.S., Apple’s expected earnings growth rate of 8.6% annually over the next three years makes its current valuation look expensive. Given these factors, patient investors might consider a small position in Berkshire Hathaway, especially as Buffett is likely to continue repurchasing shares.
