Warren Buffett, the CEO of Berkshire Hathaway, has not authorized any stock buybacks in the past five quarters, despite approving $77.8 billion for buybacks between 2018 and mid-2024. The company’s valuation and upcoming leadership change may be factors in Buffett’s decision. Buffett will step down as CEO at the end of this year, but will remain chairman.

Berkshire Hathaway, under Buffett’s leadership, has seen significant growth, with a $500 investment in the company in 1965 growing to $22.3 million by 2024. The conglomerate currently holds a $311 billion portfolio of publicly traded stocks and a record $381 billion in cash. Despite this, there have been no stock buybacks in recent quarters.

The reasons behind Berkshire’s substantial cash holdings and lack of buybacks include the conglomerate’s strong operating profits and dividend income from its subsidiaries and stock portfolio. Additionally, Buffett has been reducing Berkshire’s exposure to stocks and may be waiting for his successor, Greg Abel, to make decisions on how to deploy the cash.

Possible reasons for the lack of buybacks include Berkshire’s high valuation compared to historical averages and the impending leadership change with Buffett stepping down as CEO. Buffett’s value investing approach and desire to get a good deal for shareholders may also be influencing the decision. Buffett may be waiting for Abel to decide how to utilize Berkshire’s cash pile.

Investors considering Berkshire Hathaway should note that the company’s stock has consistently outperformed the market, with a compound annual return of 19.9% compared to the S&P 500’s 10.4%. The lack of buybacks in recent quarters could be attributed to Berkshire’s premium valuation and the pending leadership change.

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