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Berkshire Hathaway may repurchase Class A and Class B shares when its CEO, after consulting the Board Chair, believes the shares are selling below Berkshire’s conservatively estimated intrinsic value. The program also requires Berkshire to retain at least $30 billion in consolidated cash, cash equivalents and U.S. Treasury bills. It does not require the company to buy any shares.
How Berkshire Hathaway’s repurchase program works
Berkshire’s latest reported terms are in its quarterly report for the period ended June 30, 2026, signed August 8, 2026. The report says the CEO makes the purchase decision after consulting the Chairman of the Board. Berkshire may buy shares in the open market or through privately negotiated transactions. Berkshire Hathaway’s Second Quarter 2026 Quarterly Report
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- Price test: Management must judge the share price to be below conservatively determined intrinsic value.
- Liquidity constraint: Berkshire will not repurchase shares if the transaction would reduce consolidated cash, cash equivalents and U.S. Treasury bill holdings below $30 billion.
- No purchase obligation: The program sets no required minimum, stated maximum, expiration date or obligation to repurchase a particular number or dollar amount.
Berkshire reported $4.8 billion of treasury stock acquired in the first six months of 2026, most of it in the second quarter. That is activity for the period reported, not a schedule or commitment for future purchases. Berkshire Hathaway’s Second Quarter 2026 Quarterly Report
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How a buyback can increase value per remaining share
A repurchase uses company cash to retire shares. The cash balance and total shares outstanding both fall; the underlying businesses do not automatically become more productive, and total intrinsic value does not automatically rise. Per-share intrinsic value can increase if the company pays less than the value represented by the shares it retires. Remaining shareholders then own a larger fraction of the business, having surrendered less cash than the value of the retired claim.
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The reverse is also true. If Berkshire pays more than intrinsic value, it gives up more cash than the value of the shares it retires, potentially harming shareholders who keep their shares. A lower share count alone does not prove that a buyback created value, nor does it guarantee that the market price will rise.
Buffett’s historical illustration
In Berkshire’s 1999 shareholder letter, Warren Buffett illustrated the scale of the possible effect: “A repurchase of, say, 2% of a company’s shares at a 25% discount from per-share intrinsic value produces only a ½% gain in that value at most — and even less if the funds could alternatively have been deployed in value-building moves.” The 2% and 25% figures are a hypothetical from that letter, not a current forecast. Buffett’s point is that even a below-value purchase may produce a modest per-share gain, and a more valuable alternative use of the cash can reduce or outweigh it. Berkshire Hathaway Chairman’s Letter – 1999
What Berkshire means by intrinsic value
Berkshire’s Owner’s Manual defines intrinsic value as “the discounted value of the cash that can be taken out of a business during its remaining life.” It is an estimate of future distributable cash, not a directly observable number. The estimate can change as interest rates or cash-flow forecasts change, and reasonable evaluators can reach different estimates. Berkshire Hathaway Owner’s Manual
Intrinsic value is not the same as the stock’s market price, which is the price buyers and sellers currently transact at. Nor is it book value, an accounting measure. Berkshire’s manual cautions that book value is of limited use for valuation, particularly because the book values of controlled businesses can differ substantially from their economic value. Berkshire’s repurchase rule is not a published price-to-book threshold, and the cited materials do not disclose management’s precise intrinsic-value estimate.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to judge a repurchase against other uses of cash
A below-intrinsic-value price is necessary under Berkshire’s stated approach, but it does not by itself establish that repurchasing shares is the best choice. The relevant comparison is the value gained per remaining share against what Berkshire could achieve with the same cash elsewhere. Buffett’s 1999 letter warned that a value-building alternative can make a repurchase less attractive even when the shares are bought at a discount.
- Price versus value: Is the market price below a conservative estimate of intrinsic value?
- Share count and ownership: How many shares are retired, and how much larger does each remaining shareholder’s proportional claim become?
- Liquidity: Would the purchase leave Berkshire above its $30 billion floor for consolidated cash, cash equivalents and U.S. Treasury bills?
- Alternatives: Could the cash create more value if invested in operating businesses or another opportunity?
In its 1999 letter, Buffett summarized the risk to continuing shareholders this way: “Buying dollar bills for $1.10 is not good business for those who stick around.” He also described the policy then as: “We will not repurchase shares unless we believe Berkshire stock is selling well below intrinsic value, conservatively calculated.” Those are historical statements from 1999; the current program terms are set out in Berkshire’s 2026 quarterly report. Berkshire Hathaway Chairman’s Letter – 1999
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