Berkshire will buy back shares if stock trades below ‘intrinsic value’, says Warren Buffett successor Greg Abel
Berkshire Hathaway will buy back its shares if the stock trades below what it believes is its “intrinsic value,” Greg Abel was quoted as saying by Reuters. He is the conglomerate’s designated successor to Warren Buffett.
Market watchers and analysts are closely watching whether the company will continue buybacks, an important capital allocation tool it uses when shares are trading below its intrinsic value estimate.
Berkshire reported fourth-quarter earnings on Saturday, marking the final quarter for Buffett. It was also the thirteenth consecutive quarter in which Berkshire sold more shares than it bought, and the sixth quarter with no share buybacks, Reuters news agency reported.
What does the ‘intrinsic value’ of a stock mean?
Abel said the company will continue to buy back Berkshire’s shares until they reach their intrinsic value, which calculates the “true,” or fundamental, value of a company’s shares.
It is determined by analyzing financial performance, cash flows and growth potential rather than the current market price. Intrinsic value also serves as a benchmark to determine whether a stock is undervalued, overvalued, or fairly priced.
Abel plans to head the company for a long time
On Saturday, Abel also said he plans to remain Berkshire’s CEO for a long time. He also said that in about two decades, he will retain ‘a fraction’ of Buffett’s 60-year tenure.
In his first annual letter to Berkshire shareholders, Abel paid tribute to his mentor, calling Buffett “an extraordinary CEO” and “arguably the greatest investor of all time” and promising to maintain his discipline in determining how to invest Berkshire’s capital. Reuters reported.
Berkshire’s 4th quarter profit
Berkshire Hathaway said today that operating profit fell in the fourth quarter due to lower revenue from its insurance operations and wrote off a long-held investment in Occidental Petroleum, the agency said.
The multinational holding company also reported ending 2025 with $373.3 billion in cash, giving Abel the financial firepower to pursue the kind of big acquisitions that Buffett has failed to achieve in the past decade.
