Berkshire Hathaway: Don't Be Fooled By The Naysayers

seekingalpha11-19 21:30

Berkshire Hathaway investors remain unfazed by recent sales and lack of Q3 stock buybacks.Buffett's reallocation of equity holdings is seen as a move to diversify and reduce concentration risks, not a...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBerkshire Hathaway: Don't Be Fooled By The Naysayers\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-19 21:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4738457-berkshire-hathaway-dont-be-fooled-by-the-naysayers><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Berkshire Hathaway investors remain unfazed by recent sales and lack of Q3 stock buybacks.Buffett's reallocation of equity holdings is seen as a move to diversify and reduce concentration risks, not a...</p>\n\n<a href=\"https://seekingalpha.com/article/4738457-berkshire-hathaway-dont-be-fooled-by-the-naysayers\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B1BXHZ80.USD","symbol_name":"Legg Mason ClearBridge - US Appreciation A Acc USD","start_time":0,"source_url":"https://seekingalpha.com/article/4738457-berkshire-hathaway-dont-be-fooled-by-the-naysayers","article_id":"2484994171","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/492446712/image_492446712.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484994171","pubTimestamp":1732023000,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Investors are urged not to overreact to such moves, as it's impossible to note why Buffett has decided to reduce its top holdings significantly. On another note, some investors could argue that Buffett's capital reallocation has bolstered Berkshire's portfolio diversification, lowering the assessed concentration risks in AAPL and BAC. Also, Berkshire's cash has risen to over $325B as of Q3, accounting for more than 30% of its market capitalization. Buffett's net purchases amounted to just $1.5B in Q3, while it sold $36B. Given the lack of marquee acquisitions or stock purchases, its cash and treasury bills holdings surged. Coupled with the lack of stock buyback activities in Q","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","IE000M9KFDE8.USD":"NEUBERGER BERMAN US LARGE CAP VALUE \"A\" (USD) ACC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","LU0157215616.USD":"FIDELITY GLOBAL FOCUS \"A\" INC","LU0787776722.HKD":"AB SELECT US EQUITY PORTFOLIO \"A\" (HKD) ACC","BK4176":"多领域控股","LU0971096721.USD":"富达环球金融服务 A","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU0251131958.USD":"FIDELITY AMERICA \"A\" (USD) ACC","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0154236417.USD":"BGF US FLEXIBLE EQUITY \"A2\" ACC","LU1366333091.USD":"FIDELITY GLOBAL FOCUS \"A\" (USD) ACC","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4534":"瑞士信贷持仓","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","BK4585":"ETF&股票定投概念","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","BK4533":"AQR资本管理(全球第二大对冲基金)","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","LU0234570918.USD":"高盛全球核心股票组合Acc Close","BRK.A":"伯克希尔","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","BRK.B":"伯克希尔B","BK4588":"碎股","BK4550":"红杉资本持仓","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","LU0251142724.SGD":"Fidelity America A-SGD","BK4581":"高盛持仓","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","IE00BK4W5L77.USD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (USD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","LU0149725797.USD":"汇丰美国股市经济规模基金","IE00BK4W5M84.HKD":"HSBC GLOBAL FUNDS ICAV US EQUITY INDEX \"HC\" (HKD) ACC","LU0683600562.USD":"AB SELECT US EQUITY \"A\" (USD) ACC"},"translate_title":"伯克希尔哈撒韦公司：不要被反对者愚弄","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BRK.A":0.9,"BRK.B":0.9},"content_text":"Berkshire Hathaway investors remain unfazed by recent sales and lack of Q3 stock buybacks.Buffett's reallocation of equity holdings is seen as a move to diversify and reduce concentration risks, not a bearish signal.Berkshire's significant cash reserves and consistent book value growth underpin confidence in future strategic buybacks or acquisitions.Berkshire stock's reasonable valuations and robust price action underpin my conviction in its bullish thesis.Listen to the market instead of being swayed by the naysayers.   Paul Morigi Berkshire Investors Not Shaken With Recent Sales Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) investors have not been shaken by the capital reallocation decisions by Warren Buffett, downplaying the assessed pessimism observed in the financial media. Bearish prognosticators have been drumming fears of an impending stock market crash or deep correction, given the recent significant changes made to Berkshire's leading constituents in its public equities portfolio. In addition, the lack of stock buyback in Q3 provides more fuel to these bearish investors, attributing Buffett's inaction to his assessed pessimism. Despite that, Berkshire stock's performance has kept in line with the S&P 500 (SPX) (SPY) since my previous update. Hence, Berkshire investors don't seem too troubled by the recent volatility, capitalizing on pullbacks as dip-buying opportunities. In my previous Berkshire article, I explained why investors shouldn't overstate the pessimism associated with Buffett's decision to reallocate his equity holdings. Buffett's decision to raise cash is sound, as the market is no longer assessed to be undervalued. Even then, Berkshire has likely missed out on gains in Apple stock (AAPL) based on the lower estimated average price of his exited stakes. Despite that, investors must note that Berkshire still owns 300M shares of AAPL. In addition, it's still the most significant stake in Berkshire's public equities portfolio, amounting to about 23% of its total exposure. Notwithstanding the continued reduction in Bank of America's (BAC) holdings, it still accounts for more than 12% of Berkshire's portfolio. Accordingly, the conglomerate's total stake in AAPL and BAC account for more than 35% of its total holdings. Do these metrics sound bearish to you? Investors are urged not to overreact to such moves, as it's impossible to note why Buffett has decided to reduce its top holdings significantly. On another note, some investors could argue that Buffett's capital reallocation has bolstered Berkshire's portfolio diversification, lowering the assessed concentration risks in AAPL and BAC. Also, Berkshire's cash has risen to over $325B as of Q3, accounting for more than 30% of its market capitalization. Buffett's net purchases amounted to just $1.5B in Q3, while it sold $36B. Given the lack of marquee acquisitions or stock purchases, its cash and treasury bills holdings surged. Coupled with the lack of stock buyback activities in Q3, I can understand why pessimistic investors have jumped on these indicators to suggest that we could be at a significant stock market peak. Focus On Berkshire's Long-Term Value Accretion Berkshire's operating earnings in Q3 dipped more than 6%, mainly due to weakness in insurance underwriting (down to $750M from $2.42B in the previous year). In addition, there are concerns about whether the growth in Berkshire's insurance business could decelerate further, as premium growth was below peers. Also, hurricane-induced losses could affect its operating earnings for Q4, although these are not expected to persist. Berkshire's enviable record of delivering consistent underwriting profits over the long term should assure its shareholders that Berkshire's insurance operations remain sound.   Berkshire Hathaway TTM book value per share (TIKR)Berkshire's ability to create value through consistent increases in book value per share over time corroborates the confidence placed in the conglomerate by the market. The impact of Donald Trump's return in January 2025 is assessed to be uncertain in the near term. However, it should lower the potential risks of increases in corporate tax rates, given the Republican sweep of the executive branch and Congress. However, Buffett is known for having a long-term outlook. His assessment of potentially higher taxes in the future isn't unsound, given the possibility for future US governments to rein in the country's fiscal deficits and curtail excessive spending. These concerns likely stem from Buffett's recognition of the significant risks of US's fiscal imbalances and the anticipated tax impact on Berkshire's unrealized gains in its equity portfolio. Furthermore, taking significant profits from an outsized position (relative to portfolio exposure) while boosting Berkshire's cash reserves is an astute move. It has provided more cash certainty for investors (more than 30% of Berkshire's market cap), and it should also underpin management's ability to engage in potentially accretive or undervalued acquisitions in the future. Is Berkshire Stock Overvalued?   Berkshire stock TTM book value per share multiple (TIKR)Buffett's decision to not engage in stock repurchases in Q3 is also sound. BRK.A's TTM book value per share multiple of 1.61x is about 13% over its 10Y average. Despite that, Berkshire stock's \"B\" valuation grade suggests it doesn't seem to be overvalued relative to its financial sector peers (XLF). Moreover, Buffett's more cautious approach to stock repurchases is grounded in his belief in buying undervalued. Notwithstanding the significant cash holdings that Berkshire has amassed, his capital allocation discipline suggests that being patient could potentially reap substantial rewards when the opportunity arises. However, that doesn't necessarily translate into a bearish rating for Berkshire stock. If Berkshire thinks the market is significantly overvalued, I believe he could have disposed of his entire stake in AAPL, given its expensive premium. Buffett reminds us that paying a fair price for a wonderful business (like Berkshire) is a reasonable deal. However, Berkshire's strategy of getting more value requires management to buy back shares only when assessed to be undervalued. Coupled with a cash pile that surged to a high in Q3, I believe the market has evaluated that Buffett has what it takes to engage in significant buybacks when given the opportunity. Is Berkshire Stock A Buy, Sell, Or Hold?   Berkshire stock price chart (weekly, medium-term) (TradingView)Berkshire investors have demonstrated incredible resolve in supporting dip-buying opportunities over the past year. Buyers bolstered significant pullbacks (downward-pointing arrows), with no assessed bearish reversals potentially impacting the stock's uptrend bias. Hence, I'm perplexed by bearish prognosticators assessing that Berkshire stock's peak is near. They attributed a potential structural decline in the market (or Berkshire stock) to Buffett's decision to sell significant stakes in its leading holdings or the lack of stock buybacks in Q3. However, I have enunciated why these aren't decisive signals to turn bearish on the stock. My thesis is bolstered by its reasonable valuations, robust upward-trending price action (with no assessed possible bull traps), and the company's ability to consistently lift its book value per share. Berkshire's record cash pile has likely strengthened the market's confidence in management's ability to make the appropriate moves (buybacks and/or marquee acquisitions) when the time and opportunity are right. Hence, I maintain my bullish rating on the stock, suggesting investors should capitalize on near-term weakness to add more exposure. Rating: Maintain Buy. Important note: Investors are reminded to do their due diligence and not rely on the information provided as financial advice. Consider this article as supplementing your required research. Please always apply independent thinking. Note that the rating is not intended to time a specific entry/exit at the point of writing unless otherwise specified. I Want To Hear From You  Have constructive commentary to improve our thesis? Spotted a critical gap in our view? Saw something important that we didn’t? Agree or disagree? 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