Beyond AI giant Nvidia, no company has drawn more market attention this earnings season than Berkshire Hathaway (NYSE: BRKA / BRKB). This trillion-dollar conglomerate, built by the now-retired CEO Warren Buffett, is closely monitored by value and long-term investors alike. Wall Street's focus is largely on the new CEO, Greg Abel, who has ended a 14-quarter streak of net stock sales that began in Q4 2022. However, the latest quarterly report reveals that the more compelling story is what the new Berkshire leader is actually buying.

Regulatory filings show that since Abel took over, no stock has seen more aggressive buying than Google's parent company, Alphabet (GOOGL / GOOG). After Buffett established a position in the stock last year, Abel more than doubled Berkshire's stake in Alphabet in the first quarter, then added $10 billion through a private placement in the second quarter. Alphabet is now Berkshire's fifth-largest holding. But this is not the stock that should excite investors most.

In the second quarter, Abel made a massive bet on the asset Warren Buffett has always valued most: Berkshire Hathaway stock itself. On the last page of Berkshire's latest quarterly report, before the management certification statement, a monthly breakdown of stock repurchases is available. No buybacks occurred in April, but Abel accelerated the pace in May and June. The company spent approximately $4.53 billion in the quarter to repurchase Berkshire Hathaway Class A (BRKA) and Class B (BRKB) shares. This marks the largest single-quarter buyback for Berkshire in nearly five years. Since the board amended the repurchase rules in mid-2018, Berkshire's total buyback spending has now exceeded $82 billion.

Over $82 Billion in Buybacks: The Multiple Purposes Behind the Strategy

Many wonder why management has spent over $82 billion repurchasing its own stock. There are three core reasons. First, Berkshire Hathaway does not pay dividends. Therefore, when valuations are reasonable, consistent buybacks are the most logical way to return value to shareholders. As the outstanding share count shrinks, each shareholder's ownership percentage is passively increased. Simply put, buybacks encourage a long-term investment mindset and help reduce stock price volatility. Second, for a company like Berkshire Hathaway with stable or growing net profits, stock buybacks boost earnings per share (EPS), making it more attractive to value-focused investors. But the most crucial point is the third reason: the cumulative $82 billion in buybacks since July 2018 is essentially a bet by both old and new management on themselves and the company's future. Buffett designed Berkshire Hathaway to navigate economic cycles and capture long-term economic growth dividends. Abel, similarly, manages the group's assets and portfolio with a value-driven, long-term orientation. The massive buybacks are the strongest signal of confidence. The market widely believes that as long as Berkshire Hathaway's stock price remains at or below a 50% premium to book value, Abel will continue to execute buybacks.