Warren Buffett Bought $78 Billion of His Favorite Stock Like Clockwork for 6 Years -- but He's Now Gone 9 Months Without Buying a Single Share

This has been a monumental week for investing extraordinaire Warren Buffett and his company, Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B).

This past Saturday, May 3, at Berkshire Hathaway's annual shareholder meeting, the Oracle of Omaha thrust an announcement on the roughly 40,000 in attendance that he aims to step down as CEO by the end of the year and allow his predetermined successor, Greg Abel, to grab the reins. It was an inevitable announcement for the 94-year-old who's overseen a nearly 20% annualized return his company's Class A shares (BRK.A) over 60 years.

Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

What's made Buffett all the more popular is that he's delivered these outsized returns without fancy charting programs or investing software. Berkshire's chief often seeks out time-tested businesses with outstanding management teams that offer sustained competitive advantages and, in many instances, robust capital-return programs. Riding Buffett's coattails over many years or decades has been a formula for success.

However, not all of Warren Buffett's trading activity at Berkshire Hathaway can be found in the company's quarterly filed Form 13F. This is the filing that provides a concise snapshot of what Buffett and his team purchased and sold in the most recent quarter.

To uncover the stock Buffett bought like clockwork for six years -- but suddenly hasn't purchased a share of for nine consecutive months -- you'll need to dig a bit deeper.

Warren Buffett has spent more buying this stock than any other company

Investors wanting to know which stock Warren Buffett has bought more than any other since the midpoint of 2018 would be wise to dig into Berkshire Hathaway's quarterly operating reports. Toward the end of each report, prior to the executive certifications, you'll find detailed purchasing information on the Oracle of Omaha's favorite stock to buy... which happens to be shares of his own company, Berkshire Hathaway.

Before July 2018, share buybacks could only be undertaken if Berkshire's stock fell to or below 120% of book value (i.e. no more than a 20% premium above book value in the most recent quarter). Since Berkshire's stock regularly vacillated between a 30% and 60% premium to book value, Buffett and his now-late right-hand man Charlie Munger weren't able to deploy a single cent for buybacks.

Things changed on July 17, 2018, which is when Berkshire's board amended the company's buyback rules to allow Buffett to get off the proverbial bench. The new criteria allow for buybacks with no ceiling or end date, as long as the two caveats are met. First, Berkshire must have at least $30 billion in cash, cash equivalents, and U.S. Treasuries (combined) on its balance sheet; and secondly, Buffett must view his company's shares as intrinsically cheap.

The built-in ambiguity of the second criterion gives Berkshire's chief the liberty to deploy his company's capital for buybacks as he sees fit.

For a six-year period (July 2018 – June 2024), Buffett repurchased shares of Berkshire Hathaway stock like clockwork. While there were few months here and there where no buybacks were completed, the Oracle of Omaha spent almost $78 billion to repurchase more than 12% of his company's outstanding shares over 24 quarters.

However, what stands out in hindsight isn't this 24-quarter streak of buybacks. Rather, it's the third consecutive quarter (a nine-month stretch) of Berkshire's chief passing on buying shares of his own company.

Image source: Getty Images.

Buffett hasn't bought his favorite stock in nine months (and counting): What gives?

To clear the air, Warren Buffett is an unwavering optimist who'd never bet against the American economy or the stock market. Though he recognizes that economic recessions and stock market corrections are inevitable, decades of investing have wisely taught him that periods of economic growth and bull markets last substantially longer than downturns. As such, he's positioned his company to take full advantage of this simple numbers game.

But just because Berkshire's chief is an unabashed optimist, it doesn't mean he'll chase pricey stocks higher -- and this includes shares of his own company.

Berkshire Hathaway stock spent much of its time vacillating between a 30% and 60% premium to book value (i.e., 130% to 160% of book) over the last 15 years. This range has afforded Buffett ample opportunity to reduce his company's outstanding share count via repurchases.

Yet entering last weekend, Berkshire Hathaway stock was nearing an 80% premium to its listed book value. This is a level Buffett's company hasn't seen in more than 16 years, and it's proved too high of a price for the Oracle of Omaha to pay, even with a record $347.7 billion in cash at the ready.

Warren Buffett passing on buying shares of his favorite stock is part of a bigger problem: historically pricey stock valuations.

S&P 500 Shiller CAPE Ratio data by YCharts.

In December, the S&P 500's (SNPINDEX: ^GSPC) Shiller price-to-earnings (P/E) Ratio (also known as the cyclically adjusted P/E Ratio, or CAPE Ratio) peaked at nearly 39. This valuation tool, which takes into account average inflation-adjusted earnings over the last 10 years, has an average multiple of 17.23, when back-tested 154 years. It entered 2025 at its third-priciest multiple during a continuous bull market in history.

Since January 1871, there have been a half-dozen instances, including the present, where the S&P 500's Shiller P/E topped 30. Following the five prior occurrences, the benchmark index lost 20% or more of its value. This is to say that when stock valuations become overly extended to the upside, big declines have always followed.

Warren Buffett has no intention of attempting to "time" the market. But he does have a knack for identifying price dislocations in amazing businesses, which can include his own in due time. Buffett is very clearly waiting for valuations to become more attractive before putting some of his company's nearly $348 billion in cash to work.

Until Berkshire Hathaway's premium to book value retreats to 60% or below, it's unlikely the Oracle of Omaha will be a buyer.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.