Greg Abel Ended Berkshire Hathaway's 6-Quarter Buyback Freeze in Q1 With Just $235 Million. The Q2 Report Shows Whether He Kept Buying.

After a bit of a dry spell during Warren Buffett's last year and a half as chief executive officer before he stepped down at the end of last year, Berkshire Hathaway's (NYSE: BRKA) (NYSE: BRKB) new CEO, Greg Abel, revived repurchases of the conglomerate's own stock.

It wasn't much. The company only bought back $235 million worth of Berkshire shares during Q1, a pittance compared to its current cash hoard of roughly $366 billion and market cap of more than $1.1 trillion.

Still, all big trends start out as small ones. Is that the case here? It certainly looks like it.

But first things first.

Not quite like other companies' stock buyback programs

A stock buyback is precisely what it sounds like -- a publicly traded company repurchases its own shares already issued and outstanding. The purpose is to make the shares that remain in the public float more valuable by virtue of reducing the total number of them without reducing the company's underlying value. They're a relatively common way of adding shareholder value when there's not a great deal of other opportunistic uses for a company's idle cash.

Berkshire's buyback program isn't a particularly specific one. It's quite open-ended, in fact. As an official Securities and Exchange Commission filing in March explained: "Berkshire Hathaway Inc.'s long-standing common stock repurchase policy permits us to repurchase shares of our Class A and Class B Common Stock at any time we believe the repurchase price is below our intrinsic value, conservatively determined."

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Perhaps more important regarding any decision to buy its own stock, there's no predetermined budget or targeted share count reduction either. The same disclosure explains: "Our repurchase policy does not obligate us to acquire any specific number of shares. ... The timing and total amount of stock repurchases will depend on the market prices of our Class A and Class B common shares, market conditions, and other relevant factors." It then adds, "Repurchases may be suspended or discontinued at any time without prior notice."

A well-funded increase in repurchases

And Berkshire's used this flexibility, to be sure.

As noted, after spending tens of billions of dollars on buybacks between 2018 and 2024 (much of which materialized during and because of the COVID-19 pandemic, which upended many stocks, including this one), Berkshire Hathaway suspended repurchases in the latter half of 2024 and all of 2025. It's not like the company turned hyper-aggressive on this front in Q1 of this year either. Again, it only spent $235 million buying back its own stock during that three-month stretch. That's practically nothing compared to the $10.1 billion in operating income the company reported for the same quarter. It was an almost negligible number.

It was also just the beginning, however. During the second quarter, Berkshire Hathaway spent a considerably greater $4.5 billion buying more of its own stock, before scooping up another $3.3 billion worth of its shares just last month, which is not reflected in the company's second-quarter report.

It's a promising development for Berkshire shareholders, though. In the long run, it makes their stakes more valuable by taking some of the company's shares out of circulation. In the near term, however, it confirms this stock is priced below what management believes it's actually worth.

Management may well be right, too. Although its insurance arm had a modest 9% year-over-year dip in Q2 operating income, its breadwinning manufacturing, services, and retailing businesses pumped up their profits by 24% to nearly $4.5 billion. Berkshire Hathaway Energy and privately owned railroad BNSF also saw solid earnings growth, with the former boosting its bottom line to the tune of 27% during Q2. All together, operating profits increased 16% year over year.

Berkshire Hathaway's equity holdings in publicly traded companies like Coca-Cola and Alphabet also had net gains of nearly $12.7 billion in the second quarter of this year.

Still not the top reason to buy it now

The key question for interested investors is whether Berkshire is a buy simply because of the company's newly rekindled and relatively aggressive stock repurchases.

In and of itself, it isn't -- plenty of lousy companies still fund buybacks.

Given everything else Berkshire Hathaway's clearly doing right at this time, though, its ramped-up repurchases certainly bolster the already bullish case. That case is still mostly built on growing operating earnings, and now, the fact that Abel is starting to do something with all of that idle cash. For the first time in a long time, Berkshire bought more stocks for its equity portfolio in Q2 than it sold. Not a whole lot more, mind you -- only about $20 billion worth. But it's a start that a bunch of increasingly impatient shareholders were waiting to see.

It will be interesting to see exactly which stocks Abel bought and sold when those disclosures are filed later this month. But Berkshire Hathaway's still a compelling buy in the meantime, even without that information.

James Brumley has positions in Alphabet and Coca-Cola. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool has a disclosure policy.