Berkshire Hathaway: Buffett's Out, Billions In Doubt

(10min)

Summary

  • Reiterating "Hold" on Berkshire, as recent underperformance signals repricing amid leadership transition uncertainties, despite prior outperformance since my January's upgrade.
  • Warren Buffett's impending 2025 retirement and Greg Abel's succession raise concerns over deploying BRK's $347B cash hoard, given Abel's past capital allocation record.
  • Q1 2025 saw operating earnings fall 14%, the steepest since Q3 2020, with insurance vulnerable to catastrophe losses and BNSF facing tariff headwinds.
  • Despite a large Apple stake, BRK's valuation premium may shrink due to transition risks; a 22-24x earnings multiple suggests limited upside from current price levels.
  • I think investors should temper expectations for outsized returns from BRK, as the end of an era and operational challenges point towards more modest future performance.
  • Looking for a helping hand in the market? Members of Beyond the Wall Investing get exclusive ideas and guidance to navigate any climate. Learn More »

Money on the edge

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My Thesis Update

I first wrote about Berkshire Hathaway Inc. (NYSE:BRK.B) (NYSE:BRK.A) (TSX:BRK:CA) in June 2024 with a "Sell" rating, arguing that BRK looked quite overvaluation and too highly concentrated

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This article was written by

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Oakoff Investments is a personal portfolio manager and a quantitative research analyst with 5 years helping readers find a reasonable balance between growth and value by sharing proprietary Wall Street information.

He leads the investing group Beyond the Wall Investing with features that include: a fundamentals-based portfolio, weekly analysis on insights from institutional investors, regular alerts for short-term trade ideas based on technical signals, ticker feedback by request from readers, and community chat. Learn more.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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