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Berkshire Hathaway built a position in Constellation Brands $STZ worth $1.2 Billion during the 4th quarter
By: Barchart | February 18, 2025
• Berkshire Hathaway built a position in Constellation Brands $STZ worth $1.2 Billion during the 4th quarter.
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Warren Buffett and Berkshire Hathaway just updated their $267 Billion portfolio
By: Evan | February 14, 2025
• Warren Buffett and Berkshire Hathaway just updated their $267 Billion portfolio.
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Warren Buffett is back!! Berkshire Hathaway just bought an additional $35.7 million worth of $OXY
By: Barchart | February 13, 2025
• Warren Buffett is back!! Berkshire Hathaway just bought an additional $35.7 million worth of $OXY.
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Warren Buffett's Berkshire Hathaway just bought an additional $54 Million worth of $SIRI
By: Barchart | February 9, 2025
• Warren Buffett Insider Trading Alert
Warren Buffett's Berkshire Hathaway just bought an additional $54 Million worth of $SIRI.
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Berkshire Hathaway Inc. (BRK.B) Is a Trending Stock
By: Zacks Investment Research | February 5, 2025
Berkshire Hathaway B (BRK.B) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Shares of this company have returned +3.2% over the past month versus the Zacks S&P 500 composite's +1.7% change. The Zacks Insurance - Property and Casualty industry, to which Berkshire Hathaway B belongs, has gained 2.5% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate Revisions
Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Berkshire Hathaway B is expected to post earnings of $4.43 per share for the current quarter, representing a year-over-year change of +13%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
For the current fiscal year, the consensus earnings estimate of $19.78 points to a change of +15.1% from the prior year. Over the last 30 days, this estimate has changed -0.2%.
For the next fiscal year, the consensus earnings estimate of $19.94 indicates a change of +0.8% from what Berkshire Hathaway B is expected to report a year ago. Over the past month, the estimate has changed -0.2%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Berkshire Hathaway B is rated Zacks Rank #4 (Sell).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth Forecast
While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
For Berkshire Hathaway B, the consensus sales estimate for the current quarter of $88.3 billion indicates a year-over-year change of -5.4%. For the current and next fiscal years, $364.82 billion and $375.35 billion estimates indicate +0.1% and +2.9% changes, respectively.
Last Reported Results and Surprise History
Berkshire Hathaway B reported revenues of $93 billion in the last reported quarter, representing a year-over-year change of -0.2%. EPS of $4.68 for the same period compares with $4.96 a year ago.
Compared to the Zacks Consensus Estimate of $96.62 billion, the reported revenues represent a surprise of -3.75%. The EPS surprise was -2.7%.
Over the last four quarters, Berkshire Hathaway B surpassed consensus EPS estimates three times. The company topped consensus revenue estimates two times over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Berkshire Hathaway B is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom Line
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Berkshire Hathaway B. However, its Zacks Rank #4 does suggest that it may underperform the broader market in the near term.
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BRK.B Stock Lags Industry in 6 Months, Trades at Discount
By: Zacks Investment Research | January 17, 2025
Berkshire Hathaway Inc. (BRK.B) shares have gained 4.7% in the past six months, underperforming the industry’s 13.6% growth, the sector’s increase of 8.7% and the S&P 500 composite’s rise of 7.8%.
Berkshire Hathaway is a conglomerate with more than 90 subsidiaries engaged in diverse business activities. About 40% of Berkshire’s operating earnings came from its insurance underwriting and insurance investment subsidiaries in 2023. Other operations, including utilities and energy, and manufacturing, service and retail, combined accounted for the remaining 60%.
Berkshire Underperforms Industry, Sector & S&P in 6 Months
However, Berkshire shares are trading well above the 50-day moving average, signaling a short-term bullish trend and making it an attractive option for investors from a technical perspective.
BRK.B Price Movement vs. 50-Day Moving Average
Based on short-term price targets offered by four analysts, the Zacks average price target is $496.50 per share. The average suggests a potential 8.3% upside from Thursday’s closing price.
BRK.B Shares are Cheap
BRK.B shares are trading in line with the Zacks Property and Casualty Insurance industry. Its price-to-book value of 1.58X is lower than the industry average of 1.68X.
This insurance behemoth has a market capitalization of $997.3 billion. The average volume of shares traded in the last three months was 4 million.
The stock remains attractively valued compared with other insurers like The Progressive Corporation PGR and The Allstate Corporation ALL.
Downward Estimate Revision
The consensus estimate for 2025 has moved 3 cents south in the past seven days, reflecting analyst pessimism.
Yet, the Zacks Consensus Estimate earnings for 2025 is pegged at $19.94, indicating a 0.8% year-over-year increase on 2.9% higher revenues of $375.4 billion. The expected long-term earnings growth rate is pegged at 7%.
Factors Favoring Berkshire
Berkshire’s insurance operations contribute around one-fourth of its top line. Increased exposure, prudent underwriting standards and better pricing poise the insurance business for long-term growth. However, underwriting profitability and in turn the combined ratio gets affected due to catastrophes.
Continued insurance business growth fuels an increase in float, drives earnings and generates maximum return on equity.
The Utilities and Energy, and Manufacturing, Service and Retail businesses are economically sensitive non-insurance businesses. Thus, their performances are linked with the health of the economy. Given improving economic health, these businesses are poised to grow.
The Utilities and Energy business has grown with increased revenue contributions from Burlington Northern SantaFe Corp. However, unfavorable changes in the business mix and lower fuel surcharge revenues are areas of concern. Lower fuel costs are expected to limit any downside. Nonetheless, demand for utilities is expected to be strong in the future and will drive earnings growth.
Collectively, these have driven revenues and facilitated margin expansion over the past many years.
With a huge cash hoard, we believe Berkshire Hathaway will successfully continue its acquisition spree, acquiring entities that have consistent earnings power and boast impressive returns on equity. While big acquisitions open up more business opportunities for the company, bolt-on acquisitions ramp up the earnings of the existing business.
Warren Buffett has always eyed acquisitions or made investments in properties that are undervalued or have growth potential. Investments in Coca-Cola, American Express, Apple, Chevron and Occidental Petroleum show the investment acumen of Warren Buffett.
This insurer distributes wealth to shareholders through share buybacks. Berkshire Hathaway bought back shares worth $2.9 billion in the first nine months of 2024.
Berkshire’s Return on Capital Compares Unfavorably With Industry
Return on equity (“ROE”) in the trailing 12 months was 6.9%, underperforming the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders. It's noteworthy that though BRK.B’s ROE lags the industry average, the company has successfully improved the same.
Its return on invested capital (ROIC) has increased every year since 2020. This reflects BRK.B’s efficiency in utilizing funds to generate income. However, ROIC in the trailing 12 months was 5.5%, lower than the industry average of 5.8%.
What Should Investors Do Now?
Holding shares of Berkshire Hathaway renders dynamism to shareholders’ portfolios. Also, it has Warren Buffett at its helm, who has been creating tremendous value for shareholders over nearly six decades with his unique skills. However, unfavorable return on capital and downward estimate revisions keep us cautious.
Thus, investors who already hold Berkshire shares should continue to retain this Zacks Rank #3 (Hold) stock in their portfolio, while others can wait for some more time as this behemoth is unlikely to disappoint any time.
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Here’s what Warren Buffett’s updated stock portfolio looks like
By: Evan | January 18, 2025
• Here’s what Warren Buffett’s updated stock portfolio looks like.
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Big spot for the Oracle of Omaha. $BRK.B
By: TrendSpider | January 13, 2025
• Big spot for the Oracle of Omaha. $BRK.B.
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Why Does Warren Buffett Hold So Much Cash?
By: Barchart | January 5, 2025
Given the financial environment in which cash is sometimes considered as useless, Warren Buffett's approach of keeping large cash reserves stands out and generates investor interest and speculation. Renowned for his sharp investing style, Buffett's decision to retain large wealth in a market of growth invites more research. One of the most successful investors in the world would pick liquidity over instant gratification for why? Analyzing his strategy helps us to find the ideas guiding such a choice, so providing insightful information for those wishing to replicate Buffett's famed financial acumen. As of December 2024, Warren Buffett's Berkshire Hathaway holds a record $325 billion in cash.
The Philosophy Of Cash Reserves
Long stressing the value of cash not only as a reserve but also as a strategic asset fundamental to Warren Buffett's whole investing style. Historically, Buffett has argued for keeping large capital on hand to guarantee Berkshire Hathaway's capacity for quick and forceful response when prospects present themselves. From this vantage point, cash is a tool in the investment playbook for both defense and attack. From a defensive standpoint, it provides a barrier against financial uncertainty, enabling the business to withstand economic downturns free from the agony of selling other assets at bad times.
Cash gives unmatched flexibility on demand. It helps Buffett to seize unanticipated prospects requiring swift response, often during market crashes or when unusual assets lose value. Buffett's ability to buy significant interests or entire businesses at reasonable prices free from outside financing depends on this flexibility. Buffett makes sure (BRK.B) can always make decisions others, who might be over-leveraged or cash-strapped, cannot by keeping liquidity. This strategy emphasizes a basic aspect of his philosophy: cash as a tool to take advantage of the inefficiencies in the market, not as a static part of his portfolio. Buffett’s strategic use of cash reserves is (BRK.B)'s purchase of Alleghany Corporation in 2022. This acquisition is a classic demonstration of how Buffett uses his cash holdings to make significant moves without relying on external financing.
Strategic Considerations For High Cash Holdings
Buffett's approach to market values and his ability to seize value opportunities highlight his strategic concerns for preserving large cash reserves. The present high market values mostly guide Buffett's cautious approach to investing since they sometimes result in a lack of value-driven chances. These surroundings force him to save a lot of money instead of using capital on expensive companies. His approach is based on discovering significant value at reasonable prices; so, he likes the protection and preparedness that cash offers when such chances are few because of distorted market values.
Particularly with his investments in (OXY), Buffett's recent actions in the energy sector show great benefit from this calculated wealth buildup. Buffett's (BRK.B) was positioned to dramatically increase its ownership in (OXY) when market conditions changed, and the energy sector presented a profitable opening. Berkshire's capacity to purchase shares without outside funding helped it to accumulate a sizable portion of (OXY). The large financial reserves Buffett had enabled him to act quickly and forcefully when a worthwhile investment opportunity at last surfaced.
Moreover, a key element of Buffett's approach to risk management is carrying cash. It serves as a financial moat shielding (BRK.B) from having to sell other assets at a loss in recessionary times. This feature of liquidity guarantees that the business can negotiate financial uncertainty without sacrificing its investment objectives, therefore acting as a barrier against possible market corrections or economic downturns. The deliberate use of cash reserves during the purchase of OXY shares emphasizes how Buffett uses liquidity not just to protect the portfolio but also to grab investment opportunities matching with his long-term investing criterion. In Berkshire Hathaway's larger investment plan, this approach stresses cash not only as a reserve but also as an active strategic tool.
Buffett's Past Utilization Of Cash
Buffett's deliberate management of cash reserves has regularly let (BRK.B) take advantage of market downturns and buy distressed assets at discounted prices, a strategy that has greatly increased long-term shareholder value. Although there are many historical precedents, a couple especially show this approach clearly.
Buffett leveraged Berkshire's large cash reserves to offer critical funding to businesses like (GS) and (GE) during the financial crisis of 2008, when many businesses were barely surviving. Buffett obtained lucrative terms only by buying preferred stocks with appealing dividend yields and warrants for future purchases at cheap prices, therefore leveraging his available liquidity and the dire conditions of the sellers. These actions not only gave Berkshire significant profits when the market healed but also confirmed its standing as a financial powerhouse able to help big businesses in crisis.
Further noteworthy is Berkshire's early 2010s stake in (BAC). During a time the bank was rebuilding from the collapse of the housing market, Buffett bought $5 billion in preferred shares. Along with stabilizing the business, this calculated use of cash made great profits for Berkshire as the banking industry healed.
These events highlight how important Buffett's cash reserves have been in enabling Berkshire to make opportunistic investments that others would not be able to afford, hence supporting his reputation for strategic vision and patience. These purchases have shown great long-term value development, proving the continuing significance of liquidity in an investing plan.
Implications For Current Market Conditions
Given the changing interest rates, ongoing inflation, and uncertain market liquidity of today's economic environment, Warren Buffett's choice to keep significant cash reserves is especially illuminating. Based on current economic data, one finds a complex climate in which conventional investments can carry more risk. Designed to fight inflation, rising interest rates have the double impact of raising borrowing costs, so lowering market values and company profitability. Under such conditions, Buffett's inclination for cash holdings shows a defensive approach meant to protect assets from possible declines and market volatility.
Comparatively, this conservative approach reminds me of his attitude during the early 2000s dot-com bubble implosion and the 2008 financial crisis, where fast and strategic purchases within market turbulence were made possible by great cash reserves. But today's economic situation also differs greatly in terms of global economic interconnectedness and the speed of information flow, which can affect the time and type of Buffett's investments. His present cash-heavy posture may also represent a mistrust of the present high valuations in technology and other growth industries, repeating prior events whereby he eschewed overpriced markets in favor of waiting for more favorable conditions.
What Investors Can Learn From Buffett’s Strategy
Warren Buffett's cash holding technique teaches important lessons that individual investors can employ to improve their own investment methods. Buffett's approach emphasizes the need to keep enough liquidity not just as a defense against market downturns but also to grab possible investments that might become unannounced. Personal investors can avoid the usual mistake of being too leveraged by copying this strategy, therefore guaranteeing they have the freedom to move when rare chances arise free from the pressure of bad market conditions.
One must strike a balance between prudence and opportunism. Keeping cash can be seen not only defensively but also as an active approach ready to take advantage of market inefficiencies. This balanced view helps investors to negotiate financial markets more boldly and make deliberate actions in line with long-term financial objectives.
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BRK.B (Berkshire Hathaway) Weekly Analysis
By: TrendSpider | January 3, 2025
• Warren Buffett’s Berkshire Hathaway has started putting its massive $325 billion cash pile to work, recently adding to its stakes in Occidental Petroleum, Sirius XM, and VeriSign. SIRI, a leader in satellite radio, has struggled this past year, while VRSN, a dominant force in domain registrations, continues to deliver strong margins. These moves hint at renewed market optimism from the Oracle of Omaha.
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Berkshire Hathaway bought another $15.5 million worth of Versign $VRSN. Buffett has now bought about $90 million worth over the past 2 weeks
By: Barchart | January 1, 2025
• Warren Buffett Insider Trading Alert
Warren Buffett's Berkshire Hathaway bought another $15.5 million worth of Versign $VRSN. Buffett has now bought about $90 million worth over the past 2 weeks.
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Warren Buffett Insider Trading Alert: Warren Buffett's Berkshire Hathaway purchased $74 million worth of Verisign $VRSN
By: Barchart | December 27, 2024
• Warren Buffett Insider Trading Alert
Warren Buffett's Berkshire Hathaway purchased $74 million worth of Verisign $VRSN.
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