Berkshire restarts buybacks! New CEO supports with $15 million from his own pocket, promises continuous purchases for the next 20 years

Greg Abel, the new CEO of Berkshire Hathaway succeeding Warren Buffett, has responded to market concerns about his leadership with a series of concrete actions: the company announced the resumption of its stock buyback program, Abel himself disclosed the personal purchase of approximately $15.3 million in company stock, and pledged to use his entire annual after-tax salary to increase his holdings in Berkshire each year during his tenure.

After these measures were announced before Thursday’s market open, Berkshire’s Class B shares opened higher and continued to rise, gaining nearly 2.7% at midday at their daily high. This marks Berkshire’s first buyback announcement since Q2 of 2024, after going six consecutive quarters without any share repurchases while its cash reserves soared to about $373 billion. Some investors had expressed dissatisfaction with the lack of capital deployment.

In an interview with the media, Abel stated that the buyback decision was made after assessing Berkshire’s intrinsic value and that he had communicated with Buffett, who remains chairman of the board. He also revealed the company’s decision to proactively disclose the timing of the repurchase was aimed at keeping shareholders well-informed during the leadership transition period.

The size of Abel’s personal purchase is equivalent to his annual after-tax salary. He said he will maintain this commitment each year while serving as CEO, projecting that his cumulative share purchases will reach “several hundred million dollars.” He also expressed his hope that his CEO tenure will last “twenty years.”

Buyback Restart: Value Judgment and Capital Signal

According to documents submitted to regulators, Berkshire began repurchasing both Class A and Class B shares on Wednesday. Company policy allows the CEO, in consultation with the chairman, to initiate buybacks if the repurchase price is considered below Berkshire’s intrinsic value.

Current CEO Abel said this repurchase was advanced after forming a judgment of intrinsic value. "I absolutely communicated with Warren," he said. "My approach is to assess value, come to a judgment on intrinsic value, and then consult with Warren regarding the value and timing."

Macrae Sykes, portfolio manager at Gabelli Financial Opportunities Fund, commented, “The buyback announcement is a positive signal. It not only recognizes the company’s value but also indicates an intention to deploy capital in a context where they are likely to continue generating strong operating earnings into 2026.”

Abel also emphasized that initiating the buyback does not mean the company will forgo other capital allocation opportunities. “Repurchasing stock, acquiring entire businesses, or investing in equity assets—these decisions can be made independently. Buybacks will not crowd out other uses of capital.”

Abel’s Personal Purchases: Strengthening Alignment with Shareholders

At the personal level, Abel disclosed that he bought about $15.3 million worth of Berkshire stock this week, an amount equivalent to his after-tax annual salary. According to FactSet data, before this latest purchase Abel already owned about $164.4 million worth of Berkshire stock.

Abel stated that this move is intended to demonstrate alignment of interests with shareholders. “It is absolutely essential to remain aligned with our shareholders, partners, and owners,” he said. “As CEO, I have absolute faith in Berkshire. I have taken on a company with an outstanding foundation.”

He also revealed that Buffett and the board expressed support for his plan to reinvest his compensation, commenting “That is so Berkshire.”

Christopher Davis, founding partner of Hudson Value Partners, believes, “Greg Abel’s promise of annual personal investment, I believe, will greatly help him build a bond of trust with shareholders that is just as deep as Buffett’s. Today’s interview makes us confident that Berkshire’s investments are in extremely capable hands.”

Market Divergence: Short-Term Boost with Lingering Concerns

Although the market reacted positively to these measures, some analysts remain cautious over whether the stock price rally will be sustained.

Cathy Seifert, an analyst at CFRA Research, noted that Berkshire’s long-term share price growth ultimately depends on whether Abel can improve company fundamentals. “Until we see that, this may just be a short-lived rebound, as the stock is not severely undervalued,” she said.

Berkshire’s share price faced pressure earlier this week after the company reported a roughly 30% year-over-year decline in operating profit for the fourth quarter, with insurance underwriting profit plunging 54%. Year-to-date, Berkshire’s share price is down about 3%, retreating roughly 10% from its all-time high in May of last year.

Abel officially succeeded the 95-year-old Buffett as CEO in January this year. In his first annual shareholder letter released last weekend, he emphasized that Berkshire’s culture of financial conservatism and disciplined investing “will endure in perpetuity,” and essentially ruled out the possibility of a dividend distribution.

Abel said on Thursday, “If we believe we can create more than one dollar of value for shareholders, we will retain that one dollar — that’s our test.”