Berkshire’s cash hoard is undeniably impressive, but it can easily create a false impression of cheapness. Having massive buyback firepower is not the same thing as the stock trading at a genuine discount.

Normalize Berkshire’s book value to $100, and the structure becomes clear: roughly $50 sits in cash and short-term T-bills, while another $40+ consists of MTM equities, all while the market prices the company at $145. You cannot simply back out those liquid assets to isolate the operating businesses, since insurance float supports a substantial portion of the asset base and the insurance franchise itself carries immense intrinsic value. Nevertheless, this breakdown shows why a headline 1.45× P/B may make Berkshire look cheaper than it really is.

Buffett’s own discipline reinforces the point. In 2024, Berkshire repurchased only about $3B of its own stock despite sitting on roughly $318B of cash and T-bills.

The issue is not capacity, but valuation. Share repurchases build intrinsic value per share when executed at a meaningful discount; without that discount, a buyback largely just exchanges cash for shares without creating a dime of economic value.