It used to be the Oracle of Omaha surprising Wall Street, but now Wall Street is stunning Berkshire Hathaway CEO Warren Buffett. Berkshire Hathaway ($BRK.B) recently joined the exclusive trillion-dollar club after eclipsing a $1T valuation, though this milestone comes with a catch. Following a period of aggressive stock repurchases, the multinational holding firm has slowed its buyback program to its lowest level since 2018, purchasing only ~$345M of its own shares in the second quarter of this year — the lowest quarterly figure since 2018 and a far cry from the $9B in quarterly repurchases seen in late 2020. The company’s recent rally has pushed its valuation to a point that even Warren Buffet is reconsidering.

• Berkshire’s Class B shares have surged 24% YTD, outperforming the S&P 500’s 18% gain. Meanwhile, the company’s cash reserves reached ~$277B by the end of June.
• However, Buffett warned in his February letter to shareholders that the conglomerate’s immense size and the lack of attractively priced companies to acquire indicate there’s “no possibility of eye-popping performance.”

Too hot to handle: Berkshire’s buyback slowdown aligns with its policy of only purchasing shares when they are below intrinsic value. The introduction of a new 1% tax on stock buybacks last year might also be contributing to this cautious stance. Still, investors are left wondering if the slowdown hints at overvaluation concerns. Morningstar’s Greggory Warren noted, “That tells you a lot too about the valuation if Buffett’s not willing to go out there and buy the stock at these prices” (WSJ). Global Investments’ Aash Shah adds, “If Buffett’s not buying his own stock, then why should we?”