December 31, Berkshire Hathawayof (NYSE: BRKA)(NYSE: BRKB) Longtime CEO and billionaire investment guru Warren Buffett has stepped down as CEO and handed the reins to Greg Abel. Even as Berkshire enters uncharted territory without the Oracle of Omaha at the helm, it’s still being guided by someone whose business and investment philosophies align well with the company’s now-former boss.
Recently, Abel’s first big move as CEO was to buy Warren Buffett’s favorite stock. However, investors hoping Abel will end the 13-quarter streak of net stock sales that led to Buffett’s retirement may be disappointed.
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While the quarterly 13F filings reveal information about which stocks Wall Street’s savviest money managers are buying and selling, Warren Buffett’s favorite stocks to buy aren’t found in the 13F forms. Instead, the company’s quarterly operating results detail purchases and sales of the stock. That’s because Buffett’s favorite stocks to buy have always been those in his own companies.
In July 2018, when Berkshire’s board changed its buyback rules to give his former boss greater freedom to repurchase stock, Buffett seized on the bull market and began regularly repurchasing its Class A (BRKA) and B (BRKB) shares. Over six years (July 2018 to June 2024), he spent nearly $78 billion buying back shares.
But in the 19 months before Buffett’s retirement (June 1, 2024 to December 31, 2025) and the first two months of Abel’s taking office, no shares were repurchased. The reason is simple: valuation.
During the six years that Warren Buffett has been buying back shares, Berkshire Hathaway stock has typically traded at a premium of 20% to 50% to book value. When the premium reaches 60% to 80%, he stops buying. Value is critical to Buffett…and Abel!
However, with the release of Berkshire’s fourth-quarter operating results and the subsequent plunge in its stock price, Abel turned on the taps and began buying back. With Berkshire shares briefly touching a 44% premium to book value (roughly a two-year low), the value proposition of Buffett’s favorite stock is back.
While Berkshire Hathaway’s stock value has returned, the same cannot be said for the broader market. The billionaire investing legend at Berkshire Hathaway sold more stocks than he bought for 13 consecutive quarters before retiring, with cumulative net sales totaling nearly $187 billion.
While Abell has a veritable trove of cash — $373.3 billion in cash, cash equivalents and U.S. Treasuries combined — finding bargains in a historically expensive stock market remains challenging.
this S&P 500 Indexof (SNPINDEX:^GSPC) The Shiller price-to-earnings (P/E) ratio has hovered between 39 and 41 for months, more than double the 155-year average of 17.35. During the consecutive bull markets, the Shiller P/E ratio exceeded 30 five times, ending with the S&P 500 falling 20% or more.
Likewise, the market cap to GDP ratio (often referred to as the Buffett indicator) recently hit an all-time high. Since 1970, the cumulative value of all U.S.-listed stocks has averaged 87% of U.S. gross domestic product (GDP), with the ratio reaching nearly 222% in January 2026.
Abel may be buying Buffett’s favorite stocks, but he’s unlikely to be a net buyer of stocks.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
Greg Abel is buying Warren Buffett’s favorite stocks — but he’s unlikely to end Berkshire’s former boss’ 13-quarter streak of net sales Originally published by The Motley Fool