By Andrew Bary
One of the most intriguing purchases by Berkshire Hathaway in the first quarter was a tiny one by Berkshire standards: three million shares of Macy's now worth less than $60 million.
The buy could have been done personally by chairman Warren Buffett, who was succeeded as CEO by Greg Abel at year-end 2025. Berkshire had no immediate comment.
The retailer's stock has reacted favorably to the news, which was included in Berkshire's 13-F filing of its equity holdings released after the close of trading Friday. Macy's shares are up 2.5% to $18.86 in early Monday trading.
The company's appeal could be the combination of a low valuation, significant real-estate holdings, and two attractive franchises: Bloomingdale's and BlueMercury, a cosmetics retailer.
Why might the purchase have been made by Buffett? In a CNBC interview on March 31, Buffett was asked whether he was still "making new purchases" of stock as chairman. He replied: "Got one tiny purchase."
Macy's was Berkshire's only tiny purchase in the first quarter. Another clue is that Buffett has invested in a retail real estate play before. In 2015, he bought personally an 8% stake in Seritage Growth Properties, which held stores and other real estate spun off by Sears.
That stake was initially worth about $70 million with Seritage stock around $40. Buffett subsequently moved below a 5% holding and therefore didn't need to file with the Securities and Exchange Commission. Seritage's share count has increased since the Buffett buy.
Seritage stock hasn't done well, trading recently around $2. If Buffett still holds the stock, it has been a poor investment. Berkshire also lent more than $1.5 billion to Seritage, a loan that is nearly paid off.
Despite all the talk about Buffett's transformation into a growth-stock investor over the decades, he has a price-conscious value bent and rarely has paid more than 15 times earnings for a stock.
Macy's fits that bill. It now trades for under 10 times its projected earnings of about $2 a share in 2026 and trades around book value. It has a market value of about $5 billion. It pays a 4% dividend and bought back about 5% of its stock last year. It generated free cash flow of $800 million last year, resulting in a roughly 15% free cash flow yield.
It also owns 243 of its 665 stores, including its huge flagship store in Herald Square in Manhattan.
Macy's real-estate holdings have attracted activist investors in recent years -- as well as a takeover offer. The company has moved to monetize some of its real estate but rejected the takeover overture in 2024.
The negative for Macy's is that department stores are viewed by investors as declining businesses. Macy's earnings and sales are expected to be little changed this year from 2025.
But Bloomingdales has been a bright spot for Macy's with comparable sales up 7% last year. TD Cowen analyst Oliver Chen has called the chain the company's "secret weapon."
Macy's is a cheap stock, and it may have attracted the interest of Warren Buffett.
It would be notable if the Macy's buy was done by Buffett. It would show that at 95, he still loves the investment game and can't resist a bargain-priced stock even if the size of the holding is too small to matter at Berkshire.
Write to Andrew Bary at andrew.bary@barrons.com
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May 18, 2026 09:57 ET (13:57 GMT)
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