Berkshire has sharply accelerated its share buybacks. Should investors buy these shares?

Berkshire Hathaway increased its share buybacks to nearly $10 billion last quarter. This is likely the largest quarterly buyback in the company’s history, according to Barron’s. The acceleration of the buyback may indicate that the company believes its shares—which have significantly outperformed the broader market this year—are undervalued. However, most Wall Street analysts are currently advising investors against buying them.

On November 7, Berkshire Hathaway reported that it had spent $9.6 billion on share buybacks during the third quarter. Despite this, the company’s cash balance increased to $377.4 billion as of the end of September. Berkshire once again became a net seller of shares—during the reporting period, it sold $426 million worth of shares. This marks a departure from the second quarter, when the company, for the first time in several years, bought more shares for its portfolio than it sold.

Quarterly operating profit—Berkshire’s preferred metric for assessing its performance—fell 5.8% in the third quarter to $12.7 billion after taxes, Berkshire reported. The result was in line with analysts’ forecasts, Barron’s notes. The decline in earnings was due to lower underwriting and investment income at the conglomerate’s major insurance divisions. The decline was partially offset by profit growth in the company’s railroad, utility, manufacturing, and service businesses.

The heightened focus on the volume of buybacks stems from Berkshire’s long history of restraint in this area. The company has not repurchased its own shares for nearly two years, even despite record cash reserves and a drop in its stock price following the news that Warren Buffett will step down as CEO in 2025.

The company resumed its share buyback program in 2026, but allocated only $235 million to it in the first quarter and $4.5 billion in the second.

Barron's notes that the buyback volume in the third quarter significantly exceeded analysts' expectations. The acceleration in buybacks may indicate that Berkshire CEO Greg Abel and controlling shareholder Warren Buffett considered the company’s shares to be undervalued, the publication writes.

Berkshire shares have historically been considered a safe haven for investors during periods of market volatility, according to Morningstar. This year, they have risen nearly 14%, significantly outperforming the S&P 500, which recently suffered a sharp decline amid the U.S. midterm elections. Unlike the S&P 500, Berkshire shares remained in positive territory during the first few days of November.

Nevertheless, most analysts consider the stock to be overvalued. Less than 30% of analysts covering Berkshire recommend buying the stock, according to MarketWatch. Morningstar analysts estimate the fair value of the stock at $510—which is 11% below the current market price.

This article was AI-translated and verified by a human editor