Warren Buffett, known as 'the Oracle of Omaha,' led Berkshire Hathaway's stock buyback, which has fallen more than 10% from its peak in May. Despite the U.S. stock market hitting record highs over the past seven years, the stock purchased for a whopping $78 billion (about 108 trillion won) has shown relatively poor performance.
Buffett has halted additional purchases for three consecutive quarters after determining that the stock buyback price is higher than its intrinsic value. His most trusted valuation metric, the 'premium to book value' (the company's actual asset value), has soared up to 80%. This reveals Buffett's philosophy of not buying stocks he deems 'overvalued.'
In principle, Buffett relaxed existing internal regulations that allowed stock buybacks only within 120% of book value in July 2018. Since then, until the first quarter of 2025, he has repurchased approximately $78 billion worth of stock over 24 quarters. This amount exceeds the total investment in Berkshire's representative portfolio stocks, such as Apple, Coca-Cola, and American Express.
Especially during the post-pandemic surge in growth stocks, Buffett has continuously shown confidence in stock buybacks. However, he has stopped buying since last year, and he has not purchased a single share up to the first quarter of this year. This is due to the recent rise of Berkshire's stock price, which has entered an overvalued range of 60-80% compared to book value.
Some market watchers interpret the drop in stock buybacks and the halt in purchases as a sign of 'Buffett's dulled investment sense' or 'judgment errors,' but this is seen as a misunderstanding of his rigorous value investing philosophy.
In past interviews, Buffett has emphasized, 'I never buy anything that exceeds its value.' He has consistently maintained that there are no exceptions for stock buybacks and has recently publicly noted, 'I will buy again if the opportunity arises.'
His cautious stance is interpreted as a warning for the overall market. The 'Buffett Indicator,' which he has mentioned as his preferred valuation metric, currently stands at 212.2%, breaking historical records. This indicator is the ratio of the total market capitalization of all publicly traded U.S. companies to the U.S. gross domestic product (GDP) and is used to assess market overheating.
Considering that the long-term average is about 85%, it can be interpreted that the current stock market is exceeding levels just before past bubbles. In fact, Buffett has maintained a net selling trend over the last 10 quarters, with the total amount of stocks sold during this period exceeding the total amount bought by $174 billion.
Buffett is expected to step down as CEO by the end of this year, with current Berkshire Energy CEO Greg Abel named as his successor. However, the prevailing view in the market is that 'even if the person changes, Buffett's philosophy will remain.'
Despite the decline in stock buybacks and the halt in purchases, Berkshire Hathaway is still regarded as one of the leading value stocks in the U.S. stock market. There are interpretations that Buffett's principle of 'not buying if there is no value' has reached a point of reassessment in the market.