Warren Buffett Issued a Stark Warning About His Favorite Stock 11 Years Ago. He and His Successor, Greg Abel, Then Proceeded to Pile $82 Billion Into It.

It's been a year of historic change for the trillion-dollar company that Warren Buffett and Charlie Munger built, Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB).

On Dec. 31, the Oracle of Omaha officially retired as CEO after more than half a century, turning the reins of the company's $354 billion investment portfolio over to longtime understudy, Greg Abel. Then, on Sept. 18, a press release and attached letter from Warren Buffett to shareholders announced his transition from chairman of Berkshire's board to chair emeritus, with his son, Howard Buffett, becoming the new chairman of the board.

With Warren Buffett a fixture for decades, change is an uncommon theme for Berkshire Hathaway's shareholders. But one theme endures, whether Buffett or Abel is running the show: an unwavering focus on value.

Warren Buffett has always been a stickler for value. Image source: Getty Images.

The Oracle of Omaha once issued an ominous warning about his favorite stock

Throughout Buffett's decades as CEO, he penned many a letter and offered no shortage of investing wisdom. But he was also willing to bend and break his own unwritten investing rules from time to time.

For instance, the billionaire money manager most commonly associated with long-term investing scooped up shares of Activision Blizzard in 2022 as a merger-arbitrage play, given Microsoft's (NASDAQ:MSFT) $95-per-share all-cash offer for Activision. He also made the debt-laden Occidental Petroleum (NYSE:OXY) a core holding.

However, neither Warren Buffett nor his late right-hand man, Charlie Munger, would chase after investment opportunities that weren't perceived as bargains. This includes (drum roll)... buying shares of his company, Berkshire Hathaway.

Berkshire Hathaway repurchased ~$4.2 billion of stock in Q2 FY26

The highest level of quarterly repurchases at Berkshire in three years pic.twitter.com/bYbWgCH81b

— Alex Morris (TSOH Investment Research) (@TSOH_Investing) August 8, 2026

Long before Buffett penned his transition to chairman emeritus, he published a special letter to shareholders in February 2015 ("Berkshire – Past, Present and Future"). In discussing Berkshire's next 50 years, the Oracle of Omaha laid out a compelling case for its per-share intrinsic business value to increase over time.

But his words of long-term optimism also came with a stark warning:

If an investor's entry point to Berkshire stock is unusually high -- at a price, say, approaching double book value, which Berkshire shares have occasionally reached -- it may well be many years before the investor can realize a profit. In other words, a sound investment can morph into a rash of speculation if it is bought at an elevated price. Berkshire is not exempt from this truth.

Although there was a 21-month hiatus between June 2024 and February 2026, during which neither Buffett nor Abel spent a dime on share buybacks, this dynamic duo has piled more than $82 billion into share repurchases since mid-July 2018. Historically, Berkshire's bosses have been comfortable buying back Berkshire's stock at or below a 50% premium to book value (i.e., 150% of book value). During the 21-month hiatus, Berkshire regularly traded at a 60% to 80% premium.

BRK.A Price to Book Value data by YCharts

There's no question that a steady diet of buybacks has been beneficial to Berkshire's long-term shareholders. Lowering the company's outstanding share count is boosting its earnings per share and incrementally increasing investors' ownership stakes, thereby promoting the buy-and-hold ethos that Buffett loves.

But at the heart of this catalyst is value. That's the lesson that will echo on for decades to come.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Microsoft. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.