On Dec. 31, Berkshire Hathaway‘s (NYSE: BRKA)(NYSE: BRKB) longtime chief and billionaire investment guru, Warren Buffett, stepped down as CEO and handed the reins to Greg Abel. Although Berkshire has entered uncharted territory without the Oracle of Omaha steering the ship, it’s nevertheless being guided by someone whose business and investment philosophy meshes well with the company’s now-former boss.
Recently, Abel made his first big move as CEO by purchasing shares of Warren Buffett’s favorite stock. However, investors who get their hopes up that Abel will end the 13-quarter streak of net stock sales that led up to Buffett’s retirement are likely to be disappointed.
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Although quarterly filed Form 13Fs spill the beans about which stocks Wall Street’s savviest money managers were buying and selling, Warren Buffett’s favorite stock to buy isn’t found in a 13F. Rather, the company’s quarterly operating results detail purchases and sales of this stock. That’s because Buffett’s favorite stock to buy was always shares of his own company.
In July 2018, when Berkshire’s board amended the rules governing buybacks to give its now-former boss more liberty to repurchase shares, Buffett took the bull by the horns and began buying back his Class A (BRKA) and B (BRKB) shares with regularity. Over six years (July 2018 – June 2024), he spent nearly $78 billion repurchasing shares.
But in the 19 months leading up to Buffett’s retirement (June 1, 2024 – Dec. 31, 2025), along with the first two months of Abel’s tenure, no shares were repurchased. The reason why is simple: valuation.
During the six years Warren Buffett repurchased shares, Berkshire Hathaway stock commonly traded at a 20% to 50% premium to book value. When it reached a 60% to 80% premium, he stopped buying. Value is of the utmost importance to Buffett… and Abel!
However, following the release of Berkshire’s fourth-quarter operating results and its subsequent share price swoon, Abel turned on the spigot and kick-started buybacks. With Berkshire stock briefly hitting a premium to book value of 44% (roughly a two-year low), the value proposition of Buffett’s favorite stock had returned.
But while value has returned to Berkshire Hathaway stock, the same can’t be said of the broader market. Berkshire’s billionaire investing legend sold more stocks than he purchased for 13 consecutive quarters leading into his retirement, totaling close to $187 billion in cumulative net selling.
