Is the Warren Buffett Premium Over?
(4:00) - Breaking Down Berkshire Hathaway's Stock Performance
(24:20) - Episode Roundup: Podcast@Zacks.com
Welcome to Episode #414 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
She has talked about Berkshire Hathaway, and Warren Buffett, dozens of times on the podcast. And why wouldn't she? Buffett is the world's greatest value investor.
But in recent months, Berkshire Hathaway has failed to break out to new all-time highs, even when the S&P 500 has done so. Instead, the shares have pulled back from their all-time highs.
In May 2025, Buffett announced he would step down from being CEO at the end of the year. He will remain on the board.
Coincidence that the shares weakened afterwards, or not?
Berkshire Hathaway Isn't Cheap
Berkshire Hathaway (
BRK.B
) has a share repurchase program, but for the last five quarters, Buffett has not bought back any shares.
Why not?
Buffett will only buy the shares if he thinks they are a good value. Berkshire Hathaway is trading with a price-to-book (P/B) ratio of 1.5. A P/B ratio under 3.0 usually designates a company has value.
But Buffett has indicated that he will only buy Berkshire shares when the P/B ratio is at 1.2 or less. Therefore, he's not buying right now.
If he's not willing to buy shares, why should you?
Additionally, the price-to-earnings (P/E) ratio is stretched. Earlier this year Berkshire Hathaway traded at 26x. It's currently trading at 22.9x after the recent weakness in the stock.
A forward P/E under 15 usually indicates value.
Berkshire Hathaway's Wild Card: It's Cash Hoard
By now, most of us know that Berkshire Hathaway is sitting on what is nearly its largest cash hoard ever. At the end of the second quarter, it was $344 billion, down from $347 billion at the end of the first quarter, which was the all-time high.
The cash is now 29.6% of the company's assets. The last time it was above 20%, outside of this cycle, was in 2003-2005.
Last time the cash got high, Buffett went on to buy many distressed assets for cheap prices during the Great Financial Crisis. But this time, assuming there may be some kind of economic downturn which will again unleash some bargains, Buffett will not be the CEO of Berkshire Hathaway. Greg Abel will be.
Are investors on the sidelines because the Buffett premium is gone?
Tune into this week's podcast to find out.
Zacks Names #1 Semiconductor Stock
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
See This Stock Now for Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
11 minutes ago
- Globe and Mail
Levi & Korsinsky Urges Alto Neuroscience, Inc. (ANRO) Shareholders to Act Before Lead Plaintiff Deadline September 19, 2025
New York, New York--(Newsfile Corp. - August 18, 2025) - If you suffered a loss on your Alto Neuroscience, Inc. (NYSE: ANRO) investment and want to learn about a potential recovery under the federal securities laws, follow the link below for more information: or contact Joseph E. Levi, Esq. via email at jlevi@ or call (212) 363-7500 to speak to our team of experienced shareholder advocates. THE LAWSUIT: This lawsuit is on behalf of a class consisting of all persons and entities that purchased or otherwise acquired: (a) Alto common stock pursuant and/or traceable to the Offering Documents issued in connection with the Company's initial public offering conducted on or about February 2, 2024; and/or (b) Alto securities between February 2, 2024 and October 22, 2024, both dates inclusive. CASE DETAILS: The filed complaint alleges that defendants made false statements and/or concealed that: (i) The Company's product pipeline, ALTO-100, was less effective in treating major depressive disorder than defendants had led investors to believe; (ii) accordingly, ALTO-100's clinical, regulatory, and commercial prospects were overstated; (iii) as a result, Alto's business and/or financial prospects were overstated; and (iv) as a result, the Company's public statements were materially false and misleading at all relevant times. WHAT'S NEXT? If you suffered a loss in Alto Neuroscience, Inc. stock during the relevant time frame - even if you still hold your shares - go to to learn about your rights to seek a recovery. There is no cost or obligation to participate. WHY LEVI & KORSINSKY: Over the past 20 years, Levi & Korsinsky LLP has established itself as a nationally-recognized securities litigation firm that has secured hundreds of millions of dollars for aggrieved shareholders and built a track record of winning high-stakes cases. The firm has extensive expertise representing investors in complex securities litigation and a team of over 70 employees to serve our clients. For seven years in a row, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report as one of the top securities litigation firms in the United States. Attorney Advertising. Prior results do not guarantee similar outcomes.
CTV News
11 minutes ago
- CTV News
Wall Street holds near its records ahead of earnings from U.S. retailers and Fed news
Trader Michael Milano works on the floor of the New York Stock Exchange, Friday, Aug. 15, 2025. (AP Photo/Richard Drew) NEW YORK — Wall Street is holding near its records ahead of a week likely to be dominated by updates from the head of the U.S. Federal Reserve and big American retailers. The S&P 500 slipped 0.1 per cent early Monday. The Dow Jones Industrial Average was little changed, and the Nasdaq composite was also flat. Novo Nordisk's stock that trades in the United States rose after the Danish company said U.S. regulators approved its Wegovy drug for use as part of a treatment for a liver disease found in many overweight and obese people. Home Depot, Target and Walmart report their latest results this week. By Elaine Kurtenbach and Matt Ott
Globe and Mail
11 minutes ago
- Globe and Mail
Can Costco's Affirm Tie-Up Accelerate Digital Sales in Q4?
Costco Wholesale Corporation 's COST partnership with Affirm to offer "Buy Now, Pay Later" (BNPL) financing has the potential to boost digital sales, particularly for big-ticket items such as appliances, furniture and consumer electronics. The strategy is a direct investment in improving the digital member experience. With inflation still pressuring discretionary spending, BNPL can lower psychological purchase barriers, especially for budget-conscious households. The timing of this initiative aligns well with Costco's rapidly expanding digital ecosystem. E-commerce comparable sales jumped 14.8% in the third quarter of fiscal 2025. Website traffic surged 20%, while average order values ticked up 3%. Costco Logistics saw a 31% year-over-year increase in big and bulky e-commerce deliveries in the last reported quarter, an area where BNPL may further accelerate adoption. The Affirm partnership is a significant component of Costco's broader effort to enhance its digital and technology capabilities, aiming to drive future sales growth. By offering flexible monthly payment options, Costco is making its higher-value products more accessible, potentially broadening its customer base and deepening member loyalty. The success of this initiative is crucial for sustaining the strong digital sales growth into the fourth quarter and beyond. As members become more familiar with this financing option, it could notably boost average order values and enhance e-commerce performance. We note that e-commerce comparable sales increased 15.1% in July. This growth builds on June's 11.5% and May's 11.6% gains, underscoring ongoing strength in Costco's digital channel. How Are Costco Rivals WMT & AMZN Approaching? While Costco's BNPL rollout is in its nascent stage, competitors like Walmart Inc. WMT and Inc. AMZN have already embedded installment options into their ecosystems. Walmart offers BNPL both online and in-store, with a particular focus on seasonal items and electronics. This move aligns with Walmart's broader strategy to boost its e-commerce presence and cater to a growing base of price-sensitive consumers. Amazon has introduced Amazon Pay Later, allowing shoppers to break up their purchases into convenient monthly payments. The service aims to reduce the burden of paying the full amount upfront, giving customers easier access to higher-priced items while helping them manage their budgets more effectively. What Latest Metrics Say About Costco Costco stock has been a standout performer, with shares rallying 11.4% over the past year, outpacing the industry 's growth of 7.7%. From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 48.96, higher than the industry's ratio of 32.67. COST carries a Value Score of D. The Zacks Consensus Estimate for Costco's current financial-year sales and earnings per share implies year-over-year growth of 8.1% and 11.6%, respectively. Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Free Report: Profiting from the 2nd Wave of AI Explosion The next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives. Investors who bought shares like Nvidia at the right time have had a shot at huge gains. But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies. Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI's next leap forward. Access AI Boom 2.0 now, absolutely free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Walmart Inc. (WMT): Free Stock Analysis Report
