No. of Recommendations: 2
“ Berkshire hasn't repurchased any of its own shares since May 2024. Back then the stock's price-to-book value was 1.5-1.6x. As the valuation expanded, Berkshire paused all buyback activity and instead started buying roughly 4% yielding T-bills. Berkshire's stock is now back below 1.5x, which previously marked the buyback territory, and we could see the firm resuming purchases in Q4 2025–Q1 2026. The one flaw here is the cash on its balance sheet. $380B cash distorts the valuation picture, by having to pay, e.g., $1.485 for each $1 worth of shares. This isn't ideal mathematics, and either paying out a dividend (Buffett strongly opposed this in the past) or finding investment opportunities would be deemed appropriate at this stage.
With the fall in the stock price, Berkshire's price-to-book valuation has finally fallen below the 1.5x mark to 1.485x. It's fair to say, in the last 5 years investors had the opportunity to scoop up the shares for 0.9-1.5x; hence, I wouldn't call this a bargain, but gauging it against high valuations of the market (e.g., S&P 500 Blended P/E of 24.67x), this is becoming more and more attractive.“
https://seekingalpha.com/article/4864771-berkshire...
No. of Recommendations: 1
Same piece, “ Investor's Takeaway
Berkshire's cash position is a gift to Greg Abel. While it weighs on the stock's performance, earning ≈4% via T-Bills, it opens up many opportunities for Abel. A dividend, large acquisition during a market pullback, or simply continuing to sit on it are all options on the table. This coincides with the market's trading at an all-time high, gauged by Buffett's metric, which could point to more volatility ahead.
For ourselves, we see Berkshire as a defensive asset in our portfolio, diversifying our exposure, and continuing to add shares as we don't see the performance of last month as a wavering Buffett premium, but instead, the firm has fallen out of favor amidst the ongoing AI-driven bull run. A perfect time to be adding the shares, as the valuation has now fallen below 1.5x price-to-book ratio.
Berkshire Hathaway continues to operate a wide portfolio, generating reliable cash flow, and while Buffett's departure is a loss for the company and the world, Abel, with a proven track record, is ready to take the lead and transform the business by potentially investing in new sectors, and cleaning up Berkshire's portfolio.“
