I think a lot of this fed into Buffett's reluctance to buy back shares. Most of us recognize that it was an anathema to him for it to appear that company executives were managing or influencing the stock price. He knew that once Berkshire started buying back shares somewhat regularly that it wouldn't be too hard for people to figure out at what valuations Berkshire would buy at and that valuation would result in a fairly solid floor (by floor I am saying the stock would generally trade above that valuation for most of the time and even when it traded below that it was never drastically below it). As a result, he only wanted Berkshire to be a buyer when the stock price got to be a bit ridiculous from valuation standpoint. He didn't want the valuation to be conservatively measured; he wanted it to be CONSERVATIVLY measured.

He knew the more stock Berkshire bought back, the less opportunities going forward Berkshire would have to buy back stock. Buying back stock at more aggressive valuations than the real conservative valuation he used meant he would mostly only get opportunities in the future to buy back at those aggressive levels. It was a self reinforcing mechanism that just generally reduced the value of buying back shares. Like you mentioned, the more aggressively it is done, the less value it brings, even going forward.

This does makes some sense, but I don't think it explains Buffett's reluctance. First of all, he often mentioned his admiration for the master of share repurchases, Henry Singleton, who managed to repurchase over 90% of Teledyne's shares, between 1971 and 1984.

in John Train's 1980 book, The Money Masters..., Buffett famously stated that "Henry Singleton of Teledyne has the best operating and capital deployment record in American business". He went on to criticize business schools for failing to study Singleton's brilliant method of buying back Teledyne's undervalued stock.

The negative feedback mechanism you describe, where shareholders cotton on to what management is doing with its repurchases, sure didn't seem to stop Singleton. Was this because Teledyne was small and its buyback program avoided observation? No, Teledyne was 10 times as big as Berkshire in 1971 ($1b market cap as opposed to Berkshire's $100m), and by 1982, when Berkshire passed $1 billion, Buffett could have put the same sort of strategy into place. By the way, in 1980-1982, Berkshire had a price to book ratio of less than 1.1, so Buffett's reluctance doesn't seem to be because Berkshire share prices were too high.

I think Buffett's reasons for not wanting to repurchase shares probably had something to do with his desire to make the conglomerate grow big, but what he actually said, nonsensical as it may now appear (to me, anyways) is that he didn't want to take advantage of the selling shareholder, who had less information than Berkshire management. I say this is nonsensical to me because (a) there are constantly sellers who want to sell for any number of reasons, and offering to buy their shares is giving them a better price, not a worse price, and (b) the information imbalance is true of any company, not just Berkshire. How can it be a wonderful thing that Teledyne, Apple, American Express or Coca-Cola repurchase their shares (applauded by Buffett on multiple occasions), but ethically problematic for Berkshire?