"We're as confident as we've ever been." These aren't empty words from RH (NYSE: RH) CEO Gary Friedman. The company is backing up its confidence with one of the boldest moves I've ever seen: In the three months leading up to July 29, it spent $1.2 billion repurchasing its own shares. For perspective, its market capitalization is less than $6 billion.

In this article, I'll explain why this bet is contrarian, what could go right, and how it could all go terribly wrong.

In May, business conglomerate Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) revealed that it had sold its entire investment in RH stock -- nearly 2.4 million shares valued at over $600 million at the time. Forbes took this and ran the headline, "Bad Omen For Home Furnishings As Berkshire Hathaway Dumps Its RH Stock," showing how this was perceived by the market.

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Source Fool.com