Berkshire Hathaway has reduced a sizable chuck of share count through buybacks in recent years as Warren Buffett views the repurchase program as an effective way to reward long-term shareholders. Over the past five and a half years (22 quarters), the conglomerate has repurchased nearly $75 billion worth of its common stock, eliminating more than 10% of the company's total shares outstanding, according to Greggory Warren, Berkshire analyst at Morningstar. The "Oracle of Omaha" initiated a buyback program in 2011 and relied on repurchases in recent years during a competitive dealmaking environment and an expensive stock market.
Buffett believes buybacks are beneficial to shareholders for one simple reason: You don't need to spend a dime to increase your percentage of shares held. "Through that simple act, we increase your share of the many controlled and non-controlled businesses Berkshire owns," Buffett said in his 2021 annual letter. "When the price/value equation is right, this path is the easiest and most certain way for us to increase your wealth.
" The Omaha-based Berkshire will only buy back shares when two conditions are met: 1) Buffett thinks the stock is selling for less than it's worth; 2) Berkshire will still have ample cash after the proposed buybacks. The 93-year-old legendary investor believes that it would be "value-destroying" if he overpaid for Berkshire shares. "If you're repurchasing shares above a rationally calculated intrinsic value, you are harming your s.