Latest news with #OracleofOmaha
CNBC
6 days ago
- Business
- CNBC
Nvidia CEO Jensen Huang could soon be richer than Warren Buffett—he's worth $142 billion now
Nvidia co-founder and CEO Jensen Huang is now nearly as rich as longtime billionaire Warren Buffett — and could even soon surpass the Oracle of Omaha, in terms of net worth. Huang, 63, has a $142 billion net worth — including a $27.6 billion increase since January 1 — according to a Bloomberg estimate on Wednesday evening. Much of his wealth comes from his roughly 3.5% stake in Nvidia, which is currently the world's most valuable public company. Nvidia's market cap briefly passed $4 trillion on Wednesday, making it the first to ever reach that benchmark, and its stock is up roughly 22%, year-to-date. In the technology industry's artificial intelligence arms race, Nvidia's computer chips have become valuable components for multiple leading AI developers. The company currently has a market cap of $4 trillion. Its market valuation could peak near $6 trillion, Loop Capital analyst Ananda Baruah said in a client note on Wednesday, according to $144 billion estimated net worth has also grown since January 1 — by $2.19 billion, according to Bloomberg. His conglomerate holding company Berkshire Hathaway has performed well in 2025 — its stock is up approximately 5%, year-to-date — but given Nvidia's growth rate, Huang could soon overtake Buffett on the list of world's richest people. Buffett, 94, has also given away some of his wealth. He recently donated $6 billion to five different charities, and has now given over $60 billion of his fortune away over the past two decades — a number that's "substantially more than my entire net worth in 2006," Buffett announced in a press release on June 27. (Buffett's net worth that year was $46 billion, and he was the world's second-wealthiest person, behind Microsoft co-founder Bill Gates, according to Forbes.) Of course, Huang's net worth isn't guaranteed to surpass Buffett's. Despite Nvidia's year-to-date stock growth, the business has experienced large market swings in both directions in 2025. Nvidia's shares dropped 17% in one day on January 27, after a report that Chinese AI lab DeepSeek used reduced-capacity chips from Nvidia to power its then-new language model, sparking panic in investors. It was the biggest single-day drop for a U.S. company in history, with Nvidia losing almost $600 billion in market cap, CNBC reported at the time. The company's stock then fell 9% in one day on March 3, after U.S. President Donald Trump announced tariffs on Mexico, where the company hosts a portion of its manufacturing. But the company has been on a winning streak on Wall Street since June, perhaps a sign that investors' concerns have quelled — at least, for now. Huang co-founded Nvidia with fellow engineers Chris Malachowsky and Curtis Priem in 1993, when he was just 30 years old. None of them had never run a company before, which may have worked in their favor, Huang told the "Acquired" podcast, in an episode that aired on October 15, 2023. "If we realized the pain and suffering, just how vulnerable you're going to feel, and the challenges that you're going to endure, the embarrassment and the shame, and the list of all the things that go wrong, I don't think anybody would start a company," said Huang. "I think that's the superpower of an entrepreneur," he added. "They don't know how hard it is, and they only ask themselves, 'How hard can it be?'"
Yahoo
09-07-2025
- Business
- Yahoo
53% of Warren Buffett's $259 Billion Stock Portfolio Is Invested in Just 3 Stocks
Buffett, who's stepping down soon as CEO, has been one of the greatest investors. Investors can always look for stock ideas in Berkshire's large equities portfolio. Buffett and his team do their homework and are never afraid to go all in on stocks. 10 stocks we like better than Apple › Warren Buffett will likely go down as the greatest investor of all time. Unfortunately for the countless market watchers that have followed the Oracle of Omaha for decades, the 94 year old is set to retire as the CEO of Berkshire Hathaway at the end of the year. He will remain chairman of the board of directors. Buffett has never been a big believer in portfolio diversification, calling it protection against ignorance. His strategy has certainly paid off. Between 1965 and 2024, Berkshire's stock generated compound annual gains of 19.9%, compared to 10.4% for the broader benchmark S&P 500 including dividends. Buffett and his team continue to deploy this strategy today. At the end of the first quarter of the year, over half of Berkshire's $259 billion equities portfolio was invested in just three stocks. Buffett and Berkshire began buying the consumer tech giant Apple (NASDAQ: AAPL) in 2016. Buffett reportedly first got interested in the stock after hearing how distraught one of his friends was after losing his iPhone. That made Buffett realize how strong the brand had become, something Buffett looks for in all of his major holdings. Berkshire eventually built its position in Apple to over 40% of the total portfolio. However, since the fourth quarter of 2023, Berkshire has sold some two-thirds of its position in Apple. Berkshire may have sold for several reasons including the iPhone losing market share or the stock being overvalued, or Berkshire simply deciding to get more defensive -- the large conglomerate has piled into record levels of cash. Berkshire also seems to have timed its sales of Apple right because the stock is down about 15% this year (as of July 3), largely due to tariffs. President Donald Trump's administration has levied high tariff rates in countries where Apple houses much of its production, such as China and Vietnam. I wouldn't say that Apple concerns me too much because the company will always have one of the most desirable brands and some of the most desirable products in the world. However, I'm not particularly optimistic about the company right now. For one, recent trade deals with China and Vietnam include much higher tariff rates than in the past. Analysts have also recently come out and said that the company's AI capabilities are not yet compelling enough to be a "game changer," particularly when it comes to the iPhone. Apple's current forward price-to-earnings ratio of 28.7 is right around its five-year average, another reason the stock is not at the top of my list right now. It will be interesting to see if Berkshire continues to sell more of its Apple position this year. Credit card powerhouse American Express (NYSE: AXP) is one of the longest-owned stocks by Buffett and Berkshire, with the company purchasing the bulk of its position in 1991. In the past, Buffett has reportedly called the AmEx brand "special," and it's easy to see why. People not only buy AmEx cards because they are credit cards, but also because flashing the AmEx brand comes with a certain status, whether it's being well off or trendy. Perhaps that's why AmEx's platinum card fetches close to a $700 annual subscription fee. AmEx also tends to attract higher-net-worth customers who are more resilient during economic downturns. This shows how AmEx's strong brand translates into a financial strength for the company. AmEx also has a very unique and attractive business model. Not only does the company extend credit on its debit and credit cards, but AmEx runs a closed-loop payments system in which it facilitates most of the work required in completing card transactions, collecting significant fee income from facilitating these transactions. Strong payment networks can receive strong multiples from the market. Despite trading around all-time highs, AmEx's unique business model and revenue diversification as well as looming deregulation in the banking sector (that should enable large banks to return more capital to shareholders) make the stock a buy. Iconic beverage maker Coca-Cola (NYSE: KO) is another stock that Buffett and Berkshire have owned for many years, since 1988. When Buffett and Berkshire buy stocks, they look for companies that will be strong enough to weather an entire economic and interest rate cycle. Coca-Cola is one of these companies. When Trump's tariff announcements crushed the market in April, Coca-Cola remained resilient and the stock has performed well this year, up over 15%. The company is guiding for 5% to 6% of organic growth this year and management also discussed how it has flexibility to offset some of the impact from aluminum tariffs by focusing on plastic packaging. Coca-Cola also regularly innovates in the beverage space. In addition to its iconic brands, the company now owns coffee and tea brands, juices, water, alcohol, and much more. The beverage king is also an excellent way for investors to generate passive income. Its dividend yield is close to 2.90%, and the company has paid and raised its annual dividend for 63 straight years. Coca-Cola has returned over $93 billion in dividends to shareholders since 2010. Expected free cash flow of $9.5 billion this year exceeds the projected nearly $8.8 billion of estimated dividend payments. Coca-Cola will never be a fast-growing AI stock, but it's good to have some exposure to the consumer staples sector, which tends to outperform during economic downturns. Coca-Cola is definitely one of the higher-quality consumer staple stocks and when you factor in the dividend, it's an easy buy. Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Apple 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 $695,481!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $969,935!* Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 179% 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 July 7, 2025 American Express is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy. 53% of Warren Buffett's $259 Billion Stock Portfolio Is Invested in Just 3 Stocks was originally published by The Motley Fool
Yahoo
01-07-2025
- Business
- Yahoo
Billionaire Warren Buffett Sold 39% of Berkshire's Stake in Bank of America and Is Piling Into a Historically Cheap Legal Monopoly
Investors closely follow Berkshire Hathaway's Form 13F and Form 4 filings to track which stocks Warren Buffett is buying and selling. Buffett has sold shares of Bank of America for three straight quarters -- and profit-taking might not be the only reason behind this persistent selling activity. Meanwhile, Berkshire's billionaire chief has added more than 14.6 million shares of an inexpensive consumer-facing business over a six-month stretch. 10 stocks we like better than Sirius XM › At the end of the year, billionaire Warren Buffett will officially step down as Berkshire Hathaway's (NYSE: BRK.A)(NYSE: BRK.B) CEO and hand the reins over to predetermined successor Greg Abel. In his 60 years at the helm, the aptly named "Oracle of Omaha" has overseen a cumulative return in his company's Class A shares (BRK.A) totaling more than 5,884,000%, as of the closing bell on June 27. Although Buffett is 94 years old, investors still wait on the edge of their seat for clues as to which stocks he's buying and selling. After all, mirroring his trading activity has been highly profitable for decades. Berkshire Hathaway's quarterly Form 13F filing with the Securities and Exchange Commission (SEC), along with select Form 4s, provides investors with a concise snapshot of which stocks Warren Buffett has been purchasing and selling. Based on a slew of regulatory filings, we know the Oracle of Omaha has been a persistent seller of Bank of America (NYSE: BAC) stock for three consecutive quarters. But we also know he's been absolutely piling into a historically cheap company that's one of Wall Street's few legal monopolies. In instances where Berkshire Hathaway holds a 10% or greater stake in a public company, such as Bank of America in July 2024, it's required to file Form 4 with the SEC within two business days. A Form 4 details all buying and selling activity in a stock. On July 17, Warren Buffett began dumping shares of Bank of America (also known as "BofA"). Between July 17, 2024 and March 31, 2025, Berkshire's billionaire chief sent more than 401 million shares of BofA to the chopping block, equating to a reduction of around 39%. Some of this selling may represent nothing more than simple profit-taking. Before Buffett ramped up his selling activity in BofA, he opined during Berkshire's 2024 annual shareholder meeting that the peak marginal corporate income tax rate would likely climb in the future. With President Trump's flagship Tax Cuts and Jobs Act reducing the peak marginal corporate income tax rate to 21%, which is its lowest level since 1939, Buffett intimated that investors would, in hindsight, appreciate Berkshire Hathaway for locking in gains at an advantageous rate. But it's also possible more nefarious factors have played a role in Buffett's decision to jettison north of 401 million shares of Bank of America since mid-July of last year. For example, BofA is the most interest sensitive of America's money-center banks. When the Federal Reserve rapidly increased interest rates from March 2022 to July 2023 to curb the highest prevailing rate of domestic inflation in four decades, it sent Bank of America's interest income screaming higher. However, with the nation's central bank now in a rate-easing cycle, there's the potential for BofA's interest income to decline at a faster pace than other large U.S. banks. It's possible Berkshire's billionaire chief was anticipating a decline in interest income. The other issue that may have enticed Warren Buffett to dump around 39% of his Bank of America stake -- it still represents one of Berkshire's largest holdings by market value -- is the company's valuation. Though some of Buffett's unwritten investment rules have, on occasion, been broken, the one unbendable rule Berkshire's CEO stands by is valuation. He won't chase after companies whose shares don't offer perceived value. When the Oracle of Omaha initially invested in BofA's preferred stock in August 2011, its common stock was trading at a 62% discount to its book value. As of this writing on June 27, BofA's common stock is now trading at a 29% premium to book value. While this isn't particularly pricey, it is well above average for BofA over the past 15 years. Despite being a net seller of stocks for 10 consecutive quarters, to the tune of $174.4 billion (in aggregate), Berkshire Hathaway's brightest investment mind has found a few companies that check all the right boxes. One of the stocks he can't seem to get enough of is satellite-radio provider Sirius XM Holdings (NASDAQ: SIRI). Since the merger of Sirius XM's common stock with that of multiple classes of Sirius XM's tracking stock, Liberty Sirius XM Group, during the second week of September last year, Buffett has been pressing the buy button with some degree of regularity. Between Sept. 30, 2024, and March 31, 2025, 14,621,663 additional shares of Sirius XM were purchased, which brought Berkshire Hathaway's total stake in the company to 119,776,692 shares. This represents more than 35% of Sirius XM's outstanding shares. The broad-based lure of Sirius XM as an investment is simple: It operates as a legal monopoly. While it still faces plenty of competition for listeners from terrestrial and online radio companies, there isn't another company licensed to operate satellite radio. This unique distinction does afford Sirius XM a degree of subscription pricing power that traditional and online radio companies would struggle to match. But what's arguably far more important than Sirius XM's legal monopoly status is the way it generates revenue. Traditional radio providers bring in almost all of their revenue through advertising. Though this works great during long-winded economic expansions, sales can dry up quickly during periods of heightened fear and/or downturns. In comparison, Sirius XM generated only 19% of its first-quarter net sales from advertising. The bulk of its revenue (77.5%, net) comes from subscriptions. When the going gets tough for the stock market or U.S. economy, subscribers are far less likely to cancel or alter their service than businesses are to pare back to marketing budget. This leads to more consistent cash flow for Sirius XM year after year. Something else that's helped differentiate Sirius XM from more traditional radio companies is the partial predictability of its cost structure. While royalty and talent acquisition costs are going to vary from one quarter to the next, transmission and equipment costs remain relatively static no matter how many subscribers the company has. This means a steady or growing subscriber base, coupled with Sirius XM's reasonably strong pricing power, should lead to operating margin expansion over time. Lastly, Sirius XM stock offers Warren Buffett something that he's struggled to find on Wall Street for almost three years: a good deal. Even with the "Buffett Indicator" just a fraction below its all-time high, shares of Sirius XM can be scooped up for less than 8 times forecast earnings in 2025 and 2026. This represents a 60% discount to its average trailing-12-month earnings multiple over the last five years, and a 45% discount to its average forward-year earnings multiple since 2020. Before you buy stock in Sirius XM, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Sirius XM 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 $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor's total average return is 1,062% — a market-crushing outperformance compared to 177% 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 30, 2025 Bank of America is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America and Sirius XM. The Motley Fool has positions in and recommends Bank of America and Berkshire Hathaway. The Motley Fool has a disclosure policy. Billionaire Warren Buffett Sold 39% of Berkshire's Stake in Bank of America and Is Piling Into a Historically Cheap Legal Monopoly 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
Globe and Mail
01-07-2025
- Business
- Globe and Mail
Billionaire Warren Buffett Sold 39% of Berkshire's Stake in Bank of America and Is Piling Into a Historically Cheap Legal Monopoly
At the end of the year, billionaire Warren Buffett will officially step down as Berkshire Hathaway 's (NYSE: BRK.A)(NYSE: BRK.B) CEO and hand the reins over to predetermined successor Greg Abel. In his 60 years at the helm, the aptly named "Oracle of Omaha" has overseen a cumulative return in his company's Class A shares (BRK.A) totaling more than 5,884,000%, as of the closing bell on June 27. Although Buffett is 94 years old, investors still wait on the edge of their seat for clues as to which stocks he's buying and selling. After all, mirroring his trading activity has been highly profitable for decades. Berkshire Hathaway's quarterly Form 13F filing with the Securities and Exchange Commission (SEC), along with select Form 4s, provides investors with a concise snapshot of which stocks Warren Buffett has been purchasing and selling. Based on a slew of regulatory filings, we know the Oracle of Omaha has been a persistent seller of Bank of America (NYSE: BAC) stock for three consecutive quarters. But we also know he's been absolutely piling into a historically cheap company that's one of Wall Street's few legal monopolies. Berkshire Hathaway's billionaire chief is ringing the register on Bank of America In instances where Berkshire Hathaway holds a 10% or greater stake in a public company, such as Bank of America in July 2024, it's required to file Form 4 with the SEC within two business days. A Form 4 details all buying and selling activity in a stock. On July 17, Warren Buffett began dumping shares of Bank of America (also known as "BofA"). Between July 17, 2024 and March 31, 2025, Berkshire's billionaire chief sent more than 401 million shares of BofA to the chopping block, equating to a reduction of around 39%. Some of this selling may represent nothing more than simple profit-taking. Before Buffett ramped up his selling activity in BofA, he opined during Berkshire's 2024 annual shareholder meeting that the peak marginal corporate income tax rate would likely climb in the future. With President Trump's flagship Tax Cuts and Jobs Act reducing the peak marginal corporate income tax rate to 21%, which is its lowest level since 1939, Buffett intimated that investors would, in hindsight, appreciate Berkshire Hathaway for locking in gains at an advantageous rate. But it's also possible more nefarious factors have played a role in Buffett's decision to jettison north of 401 million shares of Bank of America since mid-July of last year. For example, BofA is the most interest sensitive of America's money-center banks. When the Federal Reserve rapidly increased interest rates from March 2022 to July 2023 to curb the highest prevailing rate of domestic inflation in four decades, it sent Bank of America's interest income screaming higher. However, with the nation's central bank now in a rate-easing cycle, there's the potential for BofA's interest income to decline at a faster pace than other large U.S. banks. It's possible Berkshire's billionaire chief was anticipating a decline in interest income. The other issue that may have enticed Warren Buffett to dump around 39% of his Bank of America stake -- it still represents one of Berkshire's largest holdings by market value -- is the company's valuation. Though some of Buffett's unwritten investment rules have, on occasion, been broken, the one unbendable rule Berkshire's CEO stands by is valuation. He won't chase after companies whose shares don't offer perceived value. When the Oracle of Omaha initially invested in BofA's preferred stock in August 2011, its common stock was trading at a 62% discount to its book value. As of this writing on June 27, BofA's common stock is now trading at a 29% premium to book value. While this isn't particularly pricey, it is well above average for BofA over the past 15 years. Warren Buffett is dialing up shares of this super cheap legal monopoly Despite being a net seller of stocks for 10 consecutive quarters, to the tune of $174.4 billion (in aggregate), Berkshire Hathaway's brightest investment mind has found a few companies that check all the right boxes. One of the stocks he can't seem to get enough of is satellite-radio provider Sirius XM Holdings (NASDAQ: SIRI). Since the merger of Sirius XM's common stock with that of multiple classes of Sirius XM's tracking stock, Liberty Sirius XM Group, during the second week of September last year, Buffett has been pressing the buy button with some degree of regularity. Between Sept. 30, 2024, and March 31, 2025, 14,621,663 additional shares of Sirius XM were purchased, which brought Berkshire Hathaway's total stake in the company to 119,776,692 shares. This represents more than 35% of Sirius XM's outstanding shares. The broad-based lure of Sirius XM as an investment is simple: It operates as a legal monopoly. While it still faces plenty of competition for listeners from terrestrial and online radio companies, there isn't another company licensed to operate satellite radio. This unique distinction does afford Sirius XM a degree of subscription pricing power that traditional and online radio companies would struggle to match. But what's arguably far more important than Sirius XM's legal monopoly status is the way it generates revenue. Traditional radio providers bring in almost all of their revenue through advertising. Though this works great during long-winded economic expansions, sales can dry up quickly during periods of heightened fear and/or downturns. In comparison, Sirius XM generated only 19% of its first-quarter net sales from advertising. The bulk of its revenue (77.5%, net) comes from subscriptions. When the going gets tough for the stock market or U.S. economy, subscribers are far less likely to cancel or alter their service than businesses are to pare back to marketing budget. This leads to more consistent cash flow for Sirius XM year after year. Something else that's helped differentiate Sirius XM from more traditional radio companies is the partial predictability of its cost structure. While royalty and talent acquisition costs are going to vary from one quarter to the next, transmission and equipment costs remain relatively static no matter how many subscribers the company has. This means a steady or growing subscriber base, coupled with Sirius XM's reasonably strong pricing power, should lead to operating margin expansion over time. Lastly, Sirius XM stock offers Warren Buffett something that he's struggled to find on Wall Street for almost three years: a good deal. Even with the " Buffett Indicator" just a fraction below its all-time high, shares of Sirius XM can be scooped up for less than 8 times forecast earnings in 2025 and 2026. This represents a 60% discount to its average trailing-12-month earnings multiple over the last five years, and a 45% discount to its average forward-year earnings multiple since 2020. Should you invest $1,000 in Sirius XM right now? Before you buy stock in Sirius XM, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sirius XM 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 $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $966,931!* Now, it's worth noting Stock Advisor 's total average return is1,062% — a market-crushing outperformance compared to177%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 30, 2025
Yahoo
26-06-2025
- Business
- Yahoo
The vanishing ‘Buffett premium': Has Berkshire Hathaway lost the Oracle of Omaha's aura?
For decades, investors around the world have paid extra for Warren Buffett's capital-allocation genius when buying Berkshire Hathaway's stock. They have routinely paid up just to ride alongside the Oracle of Omaha — a phenomenon known as the 'Buffett premium.' But that premium, a piece of Wall Street lore that is hard to accurately quantify, is looking fragile. JPMorgan has a new way of forecasting the stock market — and there's a surprising finding 'He doesn't seem to care': My secretive father, 81, added my name to a bank account. What about my mom? My job is offering me a payout. Should I take a $61,000 lump sum or $355 a month for life? Sorry, but most American weddings are a lot more extravagant than the nuptials of Amazon's Jeff Bezos Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. Ever since the legendary investor announced in May that he plans to retire as CEO at the end of this year, Berkshire's Class A BRK.A and Class B shares BRK.B have both fallen over 10% to trade in correction territory as of Monday afternoon, while the large-cap S&P 500 index SPX has advanced over 6% in the same period, according to Dow Jones Market Data. Investors were no longer willing to pay a steep premium for Berkshire's stock, with Class B shares trading at 1.5 times book value as of Monday, down from a recent peak of around 1.7 times on May 2 — the last trading day before the company's annual shareholder meeting. It was at that meeting that Buffett told shareholders he planned to hand over the company's reins to longtime designated successor Greg Abel. 'It's completely natural that the premium would be reduced until the market really gets a full handle on what Berkshire Hathaway looks like in this new environment, with Greg Abel solely at the helm,' said Jim Thorne, chief market strategist at Wellington-Altus Private Wealth. The 'Buffett premium' refers to the additional amount investors are willing to pay for Berkshire's stock because of Buffett's reputation and investing track record. There's no exact formula to calculate the premium, but investors usually compare Berkshire's market value to its intrinsic value, or look at its price-to-book ratio to determine whether the stock is trading at an excess valuation that could partly be attributed to Buffett's presence. But many still question whether the 'Buffett premium' has ever been more than a psychological buffer granted to one of the most trusted figures in the investment world. 'Buffett has had the luxury of most shareholders turning a blind eye to the numbers and not focusing on how well [Berkshire's financial] returns have been over the past 10 to 15 years,' Greggory Warren, senior stock analyst at Morningstar, told MarketWatch in a phone interview. 'I'm not sure if there's a premium, but investors have been willing to give Buffett a lot of leeway to put up bad financial results.' Buffett has had a long and extraordinary track record of investing success, especially in times of extreme market uncertainty. His more conservative and value-based approach has helped Berkshire's Class B shares to deliver double-digit annual gains in six of the past 10 years and to outperform the S&P 500 in the same period, according to FactSet data. Berkshire's solid balance sheet and diversified portfolio holdings in insurance, utilities and consumer staples also make it less sensitive to economic cycles and higher interest rates. And then there's Berkshire's incomparable long-term record. The stock traded at around $20 per share in 1965, the year Buffett took control of the company. Since then, Berkshire's Class A shares have soared more than 40,000-fold. That means an investor who put $100 into Berkshire stock back then would be sitting on $4 million today. Against that backdrop, shares of Berkshire stood out as a defensive and resilient option in the stock market in the opening months of 2025 as investors grew increasingly concerned that President Donald Trump's aggressive and ever-changing trade policies could reignite inflation and plunge the U.S. economy into recession. Berkshire's Class B shares outpaced the S&P 500 in the first four months of 2025, rising 17.6% before tumbling in May and surrendering most of those gains after Buffett's announcement that Abel would take over as Berkshire CEO at the start of 2026, according to FactSet data. But Buffett's resignation isn't the only factor behind the shrinking premium for Berkshire's stock, as 'the market psychology has also started to pivot from a very defensive posture to a more balanced and almost offensive posture' over the past month, Thorne told MarketWatch via phone on Monday. 'The market is starting to become more resilient and more comfortable with Trump's economic policies, realizing that maybe they aren't as inflationary as expected, maybe Trump's 'big, beautiful bill' is attacking the deficit and maybe DOGE is slowly getting more efficient,' he said. 'In that type of environment, you wouldn't want to own Berkshire Hathaway because it's a 'Steady Eddie.'' See: How Trump's big bill will directly impact your wallet — from paying your taxes and healthcare to raising a child and owning a home Berkshire's recent underperformance has also reignited questions about whether Buffett's value-investing approach — focusing on corporate fundamentals, cash flow and the intrinsic value of a company — is losing its edge in today's market, which favors growth stocks and the rewards they have brought since the financial crisis of 2008-09. 'Berkshire's stock has had periods when it has underperformed the S&P 500, despite its stunning long-term returns. It will doubtless have them again,' said Russ Mould, investment director at AJ Bell, referring to the decades the company was run by Buffett and Charlie Munger, Berkshire's longtime vice chair, who died in 2023. 'No investment style can work each and every year, given the vagaries of economic and stock markets. … But Buffett and Munger still made it work through their disciplines and patience all the same, even if some will argue they were more buyers of franchises and quality than deep value in the end,' Mould told MarketWatch. Also see: How investors should think about Berkshire's stock price without Buffett Then there's the question of what Berkshire's future will look like under Abel, the current head of noninsurance operations. Abel has publicly stated that the company's investment philosophy will not change, and that he will continue to buy well-run, cash-generating companies with long-term prospects at fair prices when he takes over as CEO. Still, some market watchers and Berkshire shareholders do expect — and hope — that Abel will eventually tackle key issues that Buffett has yet to address, such as a balance sheet with excessive cash holdings, as well as the company's resistance to paying dividends to its investors. It remains unclear whether investors will extend the same level of patience to Abel as they did to Buffett. Berkshire has more than doubled its cash pile over the past two years. The company held roughly $350 billion in cash, cash equivalents and short-term Treasury bonds as of March 31, 2025, compared with around $160 billion at the end of 2023, according to data compiled by MarketWatch. At the same time, Berkshire has been a net seller of stocks in its equity portfolio for at least 10 straight quarters. In his annual letter to shareholders in May, Buffett addressed his company's massive and growing cash pile, reassuring investors that 'the great majority of your money remains in equities.' He also added that Berkshire would always prefer ownership of 'good companies, whether controlled or partially owned,' over cash-equivalent assets. 'Any sort of advantage that's been there when Buffett and Charlie Munger were running the show was that investors were willing to let them sit on tons of cash, even all that cash was dragging down returns,' Warren said. 'But Abel's going to be held to a completely different standard and be treated more like a normal CEO.' In Warren's view, Abel needs to come out strong with a clear game plan once he takes over. 'The first sentence out of his mouth should be, this company has too much capital and it's time to return more to its shareholders, but it was difficult to do so while he was still serving second in charge,' he said. Buffett will continue in his role as chair of Berkshire's board of directors, and said he will still 'hang around and conceivably be useful' in some cases after stepping aside as CEO. Buffett also assured shareholders he had no intention of selling any of his Berkshire shares. Also at issue is whether Berkshire will begin returning capital to investors through dividends under Abel. For decades, Buffett has said Berkshire's portfolio can generate higher returns for shareholders by reinvesting profits than by paying investors directly. Instead of dividends, Buffett favors share buybacks when he thinks the stock is trading at a meaningful discount to its intrinsic value. Warren thinks the new CEO could open the door to 'institute a small or special dividend payout,' as it is 'in Greg Abel's best interest over the long run to reduce the size of Berkshire's balance sheet,' he said. 'Buffett had avoided paying dividends and reinvested capital at high returns — which worked well early in his career, but it's been much harder to reinvest that capital over the past 10 years,' Warren said. 'So I think the dividends are coming. 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