Historically, Berkshire Hathaway Has Only Bought Back Stock Below Its Intrinsic Value. Here's How Investors Can Apply Warren Buffett's Discipline to Their Own Portfolios.

Warren Buffett handed off the CEO job at Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) to hand-picked successor Greg Abel at the start of 2026. Abel has worked with Buffett for years and is steeped in the ways of the so-called Oracle of Omaha. But Abel is doing something unusual right now; he's buying back Berkshire Hathaway stock. Here's what investors should know, and how you might use this as a lesson for your own portfolio.

Buffett was careful with his investments

Buffett had a value bias, preferring to buy companies only when he believed their prices were attractive. New CEO Abel appears to be following that same path with his first major acquisition. Wall Street roundly considered Taylor Morrison Home a good value based on the $6.8 billion Abel paid. But Taylor Morrison Home isn't the only thing that Abel is buying.

Image source: Getty Images.

The new CEO has also been buying Berkshire Hathaway stock. Buffett was just as fastidious about stock buybacks as he was about buying other companies. It is fair to assume that Abel is only buying Berkshire Hathaway stock because he believes it is undervalued. You could follow that lead and buy Berkshire Hathaway stock, too. But there's more to consider here when it comes to your broader portfolio.

Take advantage of Mr. Market's mercurial mood swings

Buffett was trained by famed value investor Benjamin Graham. Graham often talked about Mr. Market. Essentially, Mr. Market (Wall Street) is rational most of the time, but on occasion, there are mood swings that just don't make much sense if you have a long-term investment view. When Mr. Market is overly enthusiastic, you can sell at a premium price. When Mr. Market is overly pessimistic, you can buy and get a good value.

It is a simple concept, but one that Buffett used to great effect. He treated Berkshire Hathaway stock like any other company. Abel is likely viewing his Berkshire Hathaway buybacks in the same way. As noted, you could tag along for the ride. But you could also apply this same logic to your entire portfolio.

It is hard to find good companies that you believe have long-term investment appeal. If a stock you own falls over the short-term for a reason you believe is temporary, it could be a good idea to add to your position.

For example, Enbridge (NYSE: ENB) fell alongside energy stocks during the coronavirus pandemic as oil prices declined. But Enbridge's business is fee-based, so volume moving through its pipeline system is more important than commodity prices. The company barely skipped a beat and, notably, continued to pay a large and growing dividend right through the pandemic. The stock recovered all of the ground it lost and moved on to new highs. If you owned Enbridge during the pandemic, that sell-off was an opportunity to add to your position.

Learn from what the experts do

As stated several times, you could just follow along and buy Berkshire Hathaway stock with Greg Abel. Or you can take the lessons that Buffett passed on directly to Abel, and more broadly through his comments, and apply them to your own investing. In that case, keeping a close eye on your own portfolio and buying more of what you own when it appears Mr. Market has become irrationally morose is the real takeaway here.

Reuben Gregg Brewer has positions in Enbridge. The Motley Fool has positions in and recommends Berkshire Hathaway and Enbridge. The Motley Fool has a disclosure policy.