Latest news with #BerkshireHathawayEnergy
Yahoo
09-06-2025
- Business
- Yahoo
Warren Buffett Shocks Wall Street With Retirement Plans. Is Berkshire Hathaway Stock Still a Buy? (Hint: Follow Buffett's Lead.)
Warren Buffett will step down as CEO of Berkshire Hathaway later this year. He will be replaced by Greg Abel, currently the CEO of Berkshire Hathaway Energy. Buffett, in the last six decades, has transformed Berkshire Hathaway from a doomed textile operation into a trillion-dollar company with diverse subsidiaries. Buffett has not repurchased any Berkshire stock in the last three quarters, and shares currently trade near the high end of the historical valuation range. 10 stocks we like better than Berkshire Hathaway › Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shares have advanced 9% year to date, but the stock has actually tumbled 8% over the last month because CEO Warren Buffett shocked Wall Street on May 3 when he announced plans to retire this year. Buffett recently said he has no plans to sell any Berkshire stock and reiterated his confidence in successor Greg Abel, currently CEO of Berkshire Hathaway Energy. "I think the time has arrived where Greg should become chief executive officer of the company at year end," Buffett told attendees at the recent shareholder meeting. However, Buffett's business acumen has been a central part of the investment thesis for decades. With his retirement imminent, is Berkshire stock still a buy? Warren Buffett took control of Berkshire Hathaway in 1965. While the last six decades have been nothing short of phenomenal for the company, Buffett says that in hindsight, he showed poor judgment. "Though the price I paid for Berkshire looked cheap, its business -- a large northern textile operation -- was headed for extinction," he wrote in his 2025 shareholder letter. Fortunately, Buffett soon realized his mistake and pivoted toward non-textile operations, the most important of which was insurance. His purchase of National Indemnity, a property and casualty insurance company, in 1967 charted a new course for Berkshire. Moving into insurance created a steady stream of investable capital in the form of premium payments, and Buffett has invested that capital to great effect over the years. Today, Berkshire is one of only 10 trillion-dollar companies. Its stock price has increased nearly 6,000,000% since Buffett assumed control in 1965, compounding at 20% annually. Meanwhile, the S&P 500 has returned about 10.4% annually. That outperformance was due in large part to savvy acquisitions, stock purchases, and share buybacks architected by Buffett, such that he has rightly earned a reputation as one of the greatest investors in American history. Buffett says Berkshire has "no possibility of eye-popping performance" in the future due to its size and the nature of its businesses. In the past, the company has expanded through acquisitions and stock purchases, but with a book value of $650 billion -- the largest of any American business -- very few investments will move the financial needle in a meaningful way for Berkshire. Additionally, Berkshire owns dozens of subsidiaries across a diverse range of industries, including insurance, freight rail transportation, manufacturing, retail, energy, and utilities. But none of those industries are known for high growth, which means Berkshire's earnings will likely increase at a modest pace (not an astonishing one) in the future. That doesn't automatically make Berkshire a bad investment. But investors must be aware of the constraints because high-growth businesses often warrant higher valuations. With that in mind, the stock currently trades at 1.63 times book value, near the high end of the historical range. The five-year average is 1.43. The present figure looks expensive for a business with no chance of eye-popping performance in the future. Buffett evidently agrees. He has not repurchased Berkshire stock since the second quarter of 2024. Prior to that, he repurchased stock in 24 consecutive quarters, spending a cumulative $78 billion on buybacks. Importantly, Berkshire held $348 billion in cash and equivalents on its balance sheet in the first quarter, so the company had plenty of capital to fund buybacks. Buffett simply chose not to take action. Here's the bottom line: Their only explanation as to why Buffett has not repurchased stock in three straight quarters is that he believes Berkshire shares are overvalued. In fact, we can assume he sees shares as less attractive than at any point since Q2 2018. And with the stock still trading near the high end of its historical price-to-book value range, I would be surprised if Buffett were buying shares today. So, while Berkshire is undoubtedly a great business with excellent management -- and Greg Abel is an excellent choice to succeed Buffett -- I think investors should pass on the stock today and wait for a better entry point. Most Wall Street analysts agree: Berkshire's Class B shares have a target price of $490, which implies about 1% downside from the current share price of $494. Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy. Warren Buffett Shocks Wall Street With Retirement Plans. Is Berkshire Hathaway Stock Still a Buy? (Hint: Follow Buffett's Lead.) was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-05-2025
- Business
- Yahoo
Warren Buffett reveals to WSJ why he's stepping down from Berkshire Hathaway
At 94 years old, Warren Buffett stunned the investor world when he announced he was stepping down as CEO of Berkshire Hathaway. But he had a simple answer for why he decided to hand over the position to Greg Abel at the end of the year. 'There was no magic moment,' Buffett said to The Wall Street Journal in an interview published Wednesday. 'How do you know the day that you become old?' Abel, the CEO of Berkshire Hathaway Energy and the vice chairman of non-insurance operations of Berkshire, is slated to succeed Buffett at the start of 2026. Buffett said in the annoucement he will remain as chairman until his death. 'I didn't really start getting old, for some strange reason, until I was about 90,' he continued to WSJ. 'But when you start getting old, it does become—it's irreversible.' Some of those symptoms, he said: losing his balance, having difficulty recalling names, a harder time reading the newspaper. Abel, 62, an Edmonton, Alberta-born businessman, was designated as Buffett's successor in 2021. Buffett, who has been with Berkshire Hathaway since 1965, made the announcement at the company's annual shareholder meeting, an event often called 'Woodstock for Capitalists.' But Buffett told the Journal he still plans to keep working, and his investing acumen is very much intact. 'My health is fine, in the sense that I feel good every day,' he said. 'I'm here at the office and I get to work with people I love, that they like me pretty well, and we have a good time.' As for his retirement plans from Omaha: 'I'm not going to sit at home and watch soap operas… My interests are still the same.' CNN's Auzinea Bacon contributed to this report. Sign in to access your portfolio
CNN
14-05-2025
- Business
- CNN
Warren Buffett reveals to WSJ why he's stepping down from Berkshire Hathaway
At 94 years old, Warren Buffett stunned the investor world when he announced he was stepping down as CEO of Berkshire Hathaway. But he had a simple answer for why he decided to hand over the position to Greg Abel at the end of the year. 'There was no magic moment,' Buffett said to The Wall Street Journal in an interview published Wednesday. 'How do you know the day that you become old?' Abel, the CEO of Berkshire Hathaway Energy and the vice chairman of non-insurance operations of Berkshire, is slated to succeed Buffett at the start of 2026. Buffett said in the annoucement he will remain as chairman until his death. 'I didn't really start getting old, for some strange reason, until I was about 90,' he continued to WSJ. 'But when you start getting old, it does become—it's irreversible.' Some of those symptoms, he said: losing his balance, having difficulty recalling names, a harder time reading the newspaper. Abel, 62, an Edmonton, Alberta-born businessman, was designated as Buffett's successor in 2021. Buffett, who has been with Berkshire Hathaway since 1965, made the announcement at the company's annual shareholder meeting, an event often called 'Woodstock for Capitalists.' But Buffett told the Journal he still plans to keep working, and his investing acumen is very much intact. 'My health is fine, in the sense that I feel good every day,' he said. 'I'm here at the office and I get to work with people I love, that they like me pretty well, and we have a good time.' As for his retirement plans from Omaha: 'I'm not going to sit at home and watch soap operas… My interests are still the same.' CNN's Auzinea Bacon contributed to this report.
CNN
14-05-2025
- Business
- CNN
Warren Buffett reveals to WSJ why he's stepping down from Berkshire Hathaway
At 94 years old, Warren Buffett stunned the investor world when he announced he was stepping down as CEO of Berkshire Hathaway. But he had a simple answer for why he decided to hand over the position to Greg Abel at the end of the year. 'There was no magic moment,' Buffett said to The Wall Street Journal in an interview published Wednesday. 'How do you know the day that you become old?' Abel, the CEO of Berkshire Hathaway Energy and the vice chairman of non-insurance operations of Berkshire, is slated to succeed Buffett at the start of 2026. Buffett said in the annoucement he will remain as chairman until his death. 'I didn't really start getting old, for some strange reason, until I was about 90,' he continued to WSJ. 'But when you start getting old, it does become—it's irreversible.' Some of those symptoms, he said: losing his balance, having difficulty recalling names, a harder time reading the newspaper. Abel, 62, an Edmonton, Alberta-born businessman, was designated as Buffett's successor in 2021. Buffett, who has been with Berkshire Hathaway since 1965, made the announcement at the company's annual shareholder meeting, an event often called 'Woodstock for Capitalists.' But Buffett told the Journal he still plans to keep working, and his investing acumen is very much intact. 'My health is fine, in the sense that I feel good every day,' he said. 'I'm here at the office and I get to work with people I love, that they like me pretty well, and we have a good time.' As for his retirement plans from Omaha: 'I'm not going to sit at home and watch soap operas… My interests are still the same.' CNN's Auzinea Bacon contributed to this report.
Business Insider
11-05-2025
- Business
- Business Insider
Classic recession-proof trades may not protect your portfolio anymore. Here's where to invest for downside protection instead.
What do you do when your old-school, recession-proof trades aren't working as intended? That's a question investors are grappling with in a stock market constantly being shaken up by news on tariffs and recession concerns. When the economy goes south, investors usually reach for reliable defensive stocks such as those in the consumer staples, healthcare, and utilities sectors. These companies provide essential goods and services that are always in demand, even when there's talk of the economy souring. However, some Wall Street experts are wary of these trades in the current market environment. Utilities stocks are beating the S&P 500 year-to-date and over the last 12 months. But legendary investor Warren Buffett recently warned at Berkshire Hathaway's annual shareholder meeting that utility companies, which investors love for their stable revenues, might not be as dependable as they once were going forward. "Berkshire Hathaway Energy is worth considerably less money than it was two years ago based on societal factors," Buffett said, citing wildfire risk as a threat to the sector. He warned investors to temper their valuation expectations going forward. Savita Subramanian, the head of US equity and quantitative strategy at Bank of America, is raising the alarm on another area of the defensive trade: consumer staples. "What's interesting is you're hearing more weakness around consumer and even in consumer staples. So if you think you can hide in the food stocks and the defense, that's not necessarily working this time," Subramanian said on an April 29th episode of the "Bloomberg Surveillance" podcast. Recent earnings reports revealed that consumer staples companies are indeed struggling under tariff-induced market turmoil. Take Kraft Heinz (KHC), for example. The company is one of the largest food and beverage manufacturers in the US and produces not only condiments but also Oscar Meyer hot dogs and Velveeta cheese, among other basic food staples — all seemingly recession-resistant products. Yet, the company lowered its sales outlook from -1.5 to -3.5% in fiscal 2025 on its Q1 earnings report. Similarly, Church & Dwight (CHD), which produces household essentials like laundry detergent and toothpaste, lowered its sales outlook to 0-2% growth (previously 3% to 4%). This isn't just the case for a handful of companies. Downward earnings revisions in the consumer staples sector were unusually large and came earlier than expected this year, according to Morgan Stanley consumer staples analysts Dara Mohsenian and Eric Serotta. The number of quality companies in the staples sector has also been on the decline. Bank of America considers 65.8% of companies in the staples sector high quality, which is 15.9 percentage points lower than the sector's long-term average. Go for value and quality Instead of turning to traditional defensives, Subramanian has her eye on value and quality stocks, which are more likely to be tied to essential spending. Value stocks are those that trade at low prices relative to their fundamentals — in other words, they are cheap or undervalued. Quality stocks, meanwhile, are companies with strong balance sheets, consistent earnings, high returns on equity, and other positive characteristics. "Russell 1000 Value companies have a much higher non-discretionary spend, either services or goods," Subramanian said. Seventy-six percent of the revenue in the Russell 1000 Value index comes from nondiscretionary spending, whereas only 56% of the Russell 1000 Growth index does. "If we're in an environment where we're cutting back, we're still going to pay insurance," Subramanian added. Companies in the insurance, industrials, and financial services sectors tend to be more recession-resilient, as spending is often required by law or driven by necessity. Additionally, the industrials and financials industries in the S&P 500 rank at the top of the list for having the highest percentage of high-quality stocks, according to Bank of America. The Russell 1000 Value index also has a higher percentage of companies paying dividends than the Russell 1000 Growth index. Dividend stocks can be a smart bet during an economic downturn, as they offer consistent cash flows and come from financially stable and mature companies. For investors looking to buffer their portfolios with more safe-haven trades, consider adding exposure to funds such as the iShares Russell 1000 Value ETF (IWD) and the Vanguard Dividend Appreciation ETF (VIG).
