Berkshire Hathaway Inc. (BRK-A)

Key Updates

Berkshire Hathaway shares declined 2.06% to $701,475 since the April 28 report, erasing the prior recovery and deepening YTD losses to -7.06%. The first quarter under CEO Greg Abel delivered strong operational results—operating earnings rose 18% to $11.35 billion and net income more than doubled to $10.1 billion—yet the company extended its net stock-selling streak to 14 consecutive quarters while accumulating a record $381 billion cash position. Despite resuming buybacks for the first time since May 2024 with $234 million in repurchases, the stock continues to underperform the S&P 500 significantly, reflecting investor skepticism about capital deployment and Abel's ability to replicate Buffett's investment acumen. The annual shareholder meeting on May 2 highlighted the leadership transition but provided limited clarity on strategic direction for the unprecedented cash reserves.

Current Trend

Berkshire Hathaway Class A shares have declined 7.06% YTD to $701,475, underperforming the S&P 500's 5.6% gain by over 12 percentage points. The stock has experienced consistent downward pressure across all timeframes: down 0.19% over 1 day, 2.24% over 5 days, 2.07% over 1 month, 4.71% over 6 months, and 2.06% since the last report. The price-to-book ratio has compressed to approximately 1.4 from 1.8 a year ago, according to Bloomberg, marking the worst relative performance versus the S&P 500 since the tech bubble era around 2000. The stock broke below the $710,000 technical level prior to Q1 earnings, as noted by Investor's Business Daily, establishing new support near current levels. Trading activity reflects persistent selling pressure as investors reassess valuations without the "Buffett premium" that historically elevated the stock's multiple.

Investment Thesis

The investment thesis centers on Berkshire's fortress balance sheet, diversified operating businesses generating consistent cash flows, and unprecedented capital deployment capacity through its $381 billion cash position—representing 31% of total assets. The conglomerate operates high-quality businesses across insurance (Geico, reinsurance), transportation (BNSF Railway), energy (Berkshire Hathaway Energy), and manufacturing, projected to generate approximately $375 billion in revenue for 2025 according to Morningstar. Under CEO Greg Abel, the thesis emphasizes operational excellence and disciplined capital allocation, with the company positioned to capitalize on market dislocations similar to its 2008 financial crisis deployments. Abel has designated Apple, American Express, Coca-Cola, and Moody's as "core" holdings while demonstrating willingness to divest underperforming assets, per The Wall Street Journal. The company maintains significant optionality to take large non-controlling positions in publicly traded companies or execute major acquisitions when valuations become attractive. Insurance float provides permanent, low-cost capital that magnifies investment returns over time.

Thesis Status

The investment thesis remains structurally intact but faces near-term execution challenges that have compressed valuations. Q1 results validate operational strength—operating earnings increased 18% to $11.35 billion driven by insurance, railroad, and energy performance, as reported by The Wall Street Journal. However, the extended 14-quarter net stock-selling streak and ballooning cash position signal persistent difficulty deploying capital at scale in expensive markets, undermining confidence in near-term value creation. The resumption of buybacks with $234 million in repurchases represents a symbolic shift but remains immaterial relative to the $1.2 trillion market capitalization. UBS estimates the stock trades at an 8% discount to intrinsic value, according to CNBC, suggesting modest undervaluation. The leadership transition to Abel introduces execution risk, particularly given his operations-focused background versus Buffett's investment expertise, though his commitment to maintaining the "fortress-like" balance sheet provides continuity. The thesis hinges on Abel's ability to demonstrate capital allocation discipline while identifying compelling deployment opportunities for the record cash reserves.

Key Drivers

First-quarter operating earnings rose 18% to $11.35 billion, with net income more than doubling to $10.1 billion, driven by strong insurance underwriting, BNSF Railway, Berkshire Hathaway Energy, and manufacturing performance, per Reuters. The conglomerate's cash and Treasury bill holdings reached a record $381.1 billion (reported as $397.4 billion by Reuters, $380 billion by Financial Times), representing a 2% increase from year-end 2025 and nearly tripling from approximately $130 billion at end-2022. Berkshire remained a net stock seller for the 14th consecutive quarter, selling $24.1 billion in equities against $15.9 billion in purchases, with the largest sales since 2024 when it reduced its Apple position. The company resumed share buybacks for the first time since May 2024, repurchasing 33 Class A shares and 431,462 Class B shares totaling $234 million during Q1. CEO Greg Abel led his first annual shareholder meeting on May 2, signaling a more critical portfolio review than Buffett's approach, with Bank of America and Chevron identified as non-core positions subject to potential sales, according to The Wall Street Journal. Portfolio manager Todd Combs' departure to JPMorgan Chase at year-end 2025 may trigger additional portfolio adjustments in holdings he managed, including Visa and Mastercard. The stock has underperformed the S&P 500 by over 37 percentage points in the past year, creating investor concerns about Abel's ability to replicate Buffett's investment performance, per Bloomberg.

Technical Analysis

Berkshire Class A shares trade at $701,475, down 7.06% YTD and establishing a lower trading range after breaking below the $710,000 technical level in late April. The stock has experienced consistent selling pressure across all timeframes, declining 2.06% since the last report and 4.71% over six months, indicating sustained downward momentum. Price action shows the stock testing support near $700,000, a psychologically significant level that represents a 5.9% decline from the $710,300 level referenced in early May reporting. The compression in price-to-book ratio from 1.8 to 1.4 over the past year suggests valuation reset following the leadership transition. The stock's relative underperformance versus the S&P 500—which gained 5.6% YTD while Berkshire declined 7.06%—represents a 12.66 percentage point gap and the worst one-year relative performance since 2000. Volume patterns around the May 2 shareholder meeting showed no significant reversal, indicating continued investor caution. Resistance appears established at $716,000-$720,000 based on recent failed rallies, while support exists at current levels near $700,000. The technical picture reflects a valuation de-rating as the market reprices the stock without the Buffett premium, requiring either improved capital deployment or further multiple compression to establish a new equilibrium.

Bull Case

• Record $381 billion cash position provides unprecedented optionality to capitalize on market dislocations or execute transformative acquisitions, with capital deployment capacity exceeding market capitalizations of Netflix, Chevron, and Bank of America combined, positioning Berkshire to act decisively when opportunities emerge similar to 2008 crisis investments (Business Insider, The Wall Street Journal)
• Operating earnings grew 18% to $11.35 billion in Q1 2026 driven by strong performance across insurance underwriting, BNSF Railway, Berkshire Hathaway Energy, and manufacturing divisions, demonstrating operational excellence under CEO Greg Abel's leadership and validating the diversified business model's resilience (The Wall Street Journal, Reuters)
• Stock trades at 8% discount to intrinsic value according to UBS analysts, with price-to-book ratio compressed to 1.4 from 1.8, creating attractive entry point as market overreacts to leadership transition while undervaluing permanent capital base and insurance float advantages (CNBC, Bloomberg)
• Resumption of share buybacks with $234 million in Q1 repurchases signals management confidence in valuation and establishes floor for stock price, with potential for accelerated buyback activity given substantial discount to intrinsic value and precedent for opportunistic capital return (The Wall Street Journal, CNBC)
• Abel's more critical portfolio review and willingness to divest underperforming assets represents potential catalyst for improved capital efficiency, with Bank of America and Chevron identified as non-core positions and Kraft Heinz targeted for reduction, potentially unlocking value through portfolio optimization (The Wall Street Journal, Morningstar)

Bear Case

• Extended 14-quarter net stock-selling streak with $24.1 billion in equity sales versus $15.9 billion in purchases demonstrates persistent inability to deploy capital at scale in expensive markets, raising concerns about management's capacity to generate returns on the $381 billion cash position and suggesting prolonged period of suboptimal capital allocation (The Wall Street Journal, Financial Times)
• Stock underperformed S&P 500 by over 37 percentage points in past year and 12.66 percentage points YTD, marking worst relative performance since 2000 tech bubble, reflecting investor skepticism about Abel's ability to replicate Buffett's investment acumen and elimination of the "Buffett premium" that historically elevated valuation multiples (Bloomberg, The Wall Street Journal)
• Abel's operations-focused background lacks asset management experience compared to Buffett's legendary investment track record, creating execution risk particularly in identifying compelling investment opportunities and managing the $313 billion equity portfolio during market volatility (Bloomberg, Morningstar)
• Massive $1.2 trillion market capitalization limits ability to outperform index through acquisitions or investments, with Berkshire matching rather than beating S&P 500 returns since 2006 after decades of outperformance, suggesting structural headwinds to generating alpha at current scale (The Wall Street Journal, Reuters)
• Portfolio manager Todd Combs' departure to JPMorgan Chase eliminates key investment talent and may trigger forced sales of positions he managed including Visa and Mastercard, while planned reduction of Kraft Heinz stake (28% ownership, $8.5 billion cost basis) and potential sales of Bank of America and Chevron could crystallize losses and reduce portfolio quality (Morningstar, The Wall Street Journal)