Investment Strategies / Mechanical Investing
No. of Recommendations: 6
BRK/B closed at $485.68
SPY closed at $614.91
Interestingly, only a couple of months ago they were the very same price. They criss-crossed on a number of days in the first three weeks of April.
Berkshire's entire relative-to-market rally, roughly third week Feb to third week April, has now unwound. Back on the longer term market tracking trend, for the moment.
Jim
No. of Recommendations: 3
The stock price has fallen pretty steadily since the annual meeting. I think the major reasons are the announced retirement of WEB as CEO and the reduced valuation of BHE.
No. of Recommendations: 8
I think the major reasons are the announced retirement of WEB as CEO and the reduced valuation of BHE.
The reduced valuation of BHE has been known for sometime now; ever since BRK bought out the minority stake of Walter Scott Estate in 2024. So it's hard to imagine it was a new revelation for shareholders during the annual meeting in May.
Even Warren's retirement is not a complete surprise. We have known at least since 2018 that this is going to happen at some point. Perhaps the precise timing is a small surprise, i.e., the way it happened at the 2025 AM.
So it is very hard to attribute the recent correction in BRK stock price to either event. My guess is that BRK appeared to be a safe harbor during the tariff & geopolitical uncertainty during March & April when the markets were in risk off mode. They appear to be back in the risk on mode since May with the TACO thesis, which likely negatively affected BRK stock price.
Just my 2c.
No. of Recommendations: 3
"The reduced valuation of BHE has been known for sometime now; ever since BRK bought out the minority stake of Walter Scott Estate in 2024. So it's hard to imagine it was a new revelation for shareholders during the annual meeting in May."
It's one thing to infer that the value declined based on the price paid to the Scott family, but it's another thing for Buffett explicitly to say that the value declined. Some analysts, like Greg Warren, are still valuing BHE at $87 billion, based on the price paid to Greg Abel, not $49 Billion based on the price paid to the Scott family. A $38 billion decline in value, if that is the correct inference, is a big deal.
No. of Recommendations: 2
If BHE were publicly traded with a market cap of $49 billion I would be buying it hand over fist. What WEB said publicly about the valuation being lower should be viewed with skepticism. Remember when BRK bought BNSF and WEB said publicly how they had to overpay for it. And if you ask a question at the meeting about the valuation of one of BRK's holdings the response is, "We're not in the business of giving away free information."
No. of Recommendations: 2
It got ahead of itself and now it is reverting back. Mr. Market’s tastes evolve from time to time. Awaiting the time when repurchases happen and then I can look to add, if it makes sense considering my cash levels.
